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HomeMy WebLinkAbout2018-10-29 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, October 29, 2018 Special Meeting Council Chambers 5:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 11 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. Public comment may be addressed to the full City Council via email at City.Council@cityofpaloalto.org. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Closed Session 5:00-7:00 PM Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 1.CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION Government Code Section 54956.9(d)(2) and (e)(1) Five Potential Cases Agenda Changes, Additions and Deletions City Manager Comments 7:00-7:10 PM Oral Communications 7:10-7:25 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 7:25-7:30 PM 2.Approval of Action Minutes for the October 1 and 15, 2018 Council Meetings REVISED 2 October 29, 2018 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Consent Calendar 7:30-7:35 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 3.Approval of the Sale of Transferable Development Rights From City Owned Avenidas and College Terrace Buildings to Selected Qualified Buyers; Disbursement of the Sale Proceeds; and Approval of a Budget Amendment in the Community Center Impact Fund 4.Approval of the Fiscal Year 2018 Re-appropriation Requests to be Carried Forward Into Fiscal Year 2019 and Approve Budget Amendments in Various Funds 5.SECOND READING: Adoption of an Ordinance Amending Chapter 4.62 (Citywide Minimum Wage) of the Palo Alto Municipal Code to Correct and Clarify That the First Consumer Price Index (CPI) Adjustment to the Minimum Wage Will Occur in 2020 (FIRST READING: October 15, 2018 PASSED: 8-0 Kniss Absent) 6.QUASI-JUDICIAL: 3743 Redwood Circle [17PLN-00272]: Consideration of an Appeal of the Director's Individual Review Approval of a new Two-story, Single Family Home. Environmental Assessment: Exempt From the Provisions of the California Environmental Quality Act (CEQA) in Accordance With Guideline Section 15303 (New Construction). Zoning District: R-1 (Single Family Residential) 7.Approval of the Acceptance and Appropriation of State of California Citizens Options for Public Safety (COPS) Funds ...... STAFF REQUESTS THIS ITEM BE PULLED 8.Approval of the Agreement Between the City of Palo Alto and Racing Hearts, a Nonprofit Corporation.... STAFF REQUESTS THIS ITEM BE PULLED Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:35-8:00 PM 9.TEFRA HEARING: Regarding Conduit Financing for the Lytton Gardens Apartments Project Located at 656 Lytton Avenue, Palo Alto, and Approving the Issuance of Revenue Bonds by the California Municipal Finance Authority for the Purpose of the Acquisition, Rehabilitation, Improvement, and Equipping of Lytton Gardens Apartments MEMO MEMO Q & A 3 October 29, 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. 8:00-9:00 PM 10.Direct Staff to Amend Budget Assumptions for Pension Benefit Costs and Complete the Workplans to Address the City Council Fiscal Year (FY) 2019 Adopted Budget Referral to Identify $4 Million in General Fund Savings 9:00-10:00 PM 11.Adoption of an Ordinance Amending the Municipal Code and Adoption of Amendments to Council Procedures and Protocols to Conform to a Seven-member Council; Discussion and Direction to Staff or Referral to the Policy and Services Committee of Additional Discretionary Changes to the Code and/or Council Procedures and Protocols 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. MEMO 4 October 29, 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 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report CalPERS Pension Annual Valuation Reports as of June 30, 2017 and Pension Funding and Reporting Policy Guidelines Public Letters to Council Set 1 CITY OF PALO ALTO OFFICE OF THE CITY CLERK October 29, 2018 The Honorable City Council Attention: Finance Committee Palo Alto, California Approval of Action Minutes for the October 1, 2018 Council Meeting Staff is requesting Council review and approve the attached Action Minutes. ATTACHMENTS: • Attachment A: 10-01-18 DRAFT Action Minutes (PDF) Department Head: Beth Minor, City Clerk Page 2 CITY OF PALO ALTO CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 10 Regular Meeting October 1, 2018 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:07 P.M. Present: DuBois, Filseth, Fine, Holman, Kniss, Kou, Scharff, Tanaka, Wolbach Absent: Closed Session 1. CONFERENCE WITH LABOR NEGOTIATIONS. THIS ITEM HAS BEEN REMOVED. Special Orders of the Day 2. Proclamation Honoring Cybersecurity Awareness Month Study Session 3. 980 Middlefield Road [18PLN-00129]: Request for Prescreening of a Proposal to Amend the Existing Planned Community (PC) 2152 Zoning in Order to Change the Allowed Use From Mortuary to a Private Club or Similar use With Collaborative Office Workspaces and Areas for Workshops and Special Events. The Study Session Will Give the Council and the Community an Opportunity to Comment on the Applicant’s Proposal Prior to Submittal of a Formal Application. Environmental Assessment: Not a Project; any Subsequent Formal Application Would be Subject to the California Environmental Quality Act (CEQA). Zoning District: PC 2152 (Continued From September 10, 2018). NO ACTION TAKEN. Agenda Changes, Additions and Deletions None. Minutes Approval 4. Approval of Action Minutes for the September 10 and 17, 2018 Council Meetings. DRAFT ACTION MINUTES Page 2 of 10 City Council Meeting Draft Action Minutes: 10/01/18 MOTION: Council Member Scharff moved, seconded by Council Member Wolbach to approve the Action Minutes for the September 10 and 17, 2018 Council Meetings. MOTION PASSED: 9-0 Consent Calendar Council Member Tanaka registered a no vote on Agenda Item Numbers 7, 9, 11, 12a. Council Member DuBois registered a no vote on Agenda Item Number 7. Council Member Kou registered a no vote on Agenda Item Number 7. MOTION: Council Member Scharff moved, seconded by Council Member Wolbach to approve Agenda Item Numbers 5-12A. 5. Approval of an Extension of the Pilot Phase of the Southgate Residential Preferential Parking Program (RPP) for a Period of six Months. 6. Approval of Contract Number C19171565 With Brown and Caldwell in the Total Amount Not-to-Exceed $2,923,357 to Provide Design Services for Secondary Treatment Process Upgrades (WQ-19001) at the Regional Water Quality Control Plant. 7. Approval of Contract Amendment Number 2 With Verizon Wireless Through June 30, 2019, Utilizing the Western State Contracting Alliance (WSCA), California Participating Addendum for Wireless, Voice and Broadband Services, Accessories, and Equipment. 8. Resolution 9792 Entitled “Resolution of the Council of the City of Palo Alto Approving and Attesting to the Veracity of the 2017 Annual Power Source Disclosure Report.” 9. Resolution 9793 Entitled “Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Purchase a Portion of the City’s Verified Emission Reductions Requirements From ClimeCo Corporation Under Specified Terms and Conditions During Calendar Years 2018 Through 2027, Inclusive.” 10. Approval of Contract Number C19173445 With Charles Sowers Studio, LLC in the Not-to-Exceed Amount of $175,000 for the Fabrication and Delivery of Artwork Associated With the Junior Museum and Zoo (JMZ); Acceptance of Fund Contributions From the Friends of JMZ; and Approval DRAFT ACTION MINUTES Page 3 of 10 City Council Meeting Draft Action Minutes: 10/01/18 of a Budget Amendment in the Art in Public Places Capital Project (AC- 86017) in the Capital Improvement Fund. 11. Adoption of a new Memorandum of Agreement With the Palo Alto Police Management Association (PAPMA), International Association of Fire Fighters (IAFF), Local 1319, and Palo Alto Fire Chiefs' Association (PAFCA); and Approval of a Budget Amendment in the General Fund . 12. Ordinance 5450 Entitled “Ordinance of the Council of the City of Palo Alto Adding Sections 2.30.620 Through 2.30.690 to Title 2 of the Administrative Code to Establish Criteria and Procedures for Protecting Personal Privacy When Considering the Acquisition and use of Surveillance Technologies, and Provide for Ongoing Monitoring and Reporting (FIRST READING: September 10, 2018 PASSED: 8-1, Holman no).” 12A. Ordinance 5451 Entitled “Ordinance of the Council of the City of Palo Alto Amending Chapter 9.68 (Rental Housing Stabilization) of Title 9 (Public Peace, Morals, and Safety) of the Palo Alto Municipal Code to Require Relocation Assistance for No-fault Eviction for Multifamily Housing Developments Containing 50 or More Rental Units (Adopted on FIRST READING on September 17, 2018 (PASSED 8-1 Tanaka no)).” MOTION PASSED FOR AGENDA ITEM NUMBERS 5-6, 8, 10, 12: 9-0 MOTION PASSED FOR AGENDA ITEM NUMBER 7: 6-3 DuBois, Kou, Tanaka no MOTION PASSED FOR AGENDA ITEM NUMBERS 9, 11, and 12A: 8-1 Tanaka no MOTION TO RECONSIDER THE CONSENT CALENDAR: Council Member Scharff moved, seconded by Council Member Wolbach to reconsider approval of the Consent Calendar. MOTION TO RECONSIDER PASSED: 9-0 Consent Calendar MOTION: Council Member Scharff moved, seconded by Council Member Wolbach to approve Agenda Item Numbers 5-12A. 5. Approval of an Extension of the Pilot Phase of the Southgate Residential Preferential Parking Program (RPP) for a Period of six Months. DRAFT ACTION MINUTES Page 4 of 10 City Council Meeting Draft Action Minutes: 10/01/18 6. Approval of Contract Number C19171565 With Brown and Caldwell in the Total Amount Not-to-Exceed $2,923,357 to Provide Design Services for Secondary Treatment Process Upgrades (WQ-19001) at the Regional Water Quality Control Plant. 7. Approval of Contract Amendment Number 2 With Verizon Wireless Through June 30, 2019, Utilizing the Western State Contracting Alliance (WSCA), California Participating Addendum for Wireless, Voice and Broadband Services, Accessories, and Equipment. 8. Resolution 9792 Entitled “Resolution of the Council of the City of Palo Alto Approving and Attesting to the Veracity of the 2017 Annual Power Source Disclosure Report.” 9. Resolution 9793 Entitled “Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Purchase a Portion of the City’s Verified Emission Reductions Requirements From ClimeCo Corporation Under Specified Terms and Conditions During Calendar Years 2018 Through 2027, Inclusive.” 10. Approval of Contract Number C19173445 With Charles Sowers Studio, LLC in the Not-to-Exceed Amount of $175,000 for the Fabrication and Delivery of Artwork Associated With the Junior Museum and Zoo (JMZ); Acceptance of Fund Contributions From the Friends of JMZ; and Approval of a Budget Amendment in the Art in Public Places Capital Project (AC- 86017) in the Capital Improvement Fund. 11. Adoption of a new Memorandum of Agreement With the Palo Alto Police Management Association (PAPMA), International Association of Fire Fighters (IAFF), Local 1319, and Palo Alto Fire Chiefs' Association (PAFCA); and Approval of a Budget Amendment in the General Fund. 12. Ordinance 5450 Entitled “Ordinance of the Council of the City of Palo Alto Adding Sections 2.30.620 Through 2.30.690 to Title 2 of the Administrative Code to Establish Criteria and Procedures for Protecting Personal Privacy When Considering the Acquisition and use of Surveillance Technologies, and Provide for Ongoing Monitoring and Reporting (FIRST READING: September 10, 2018 PASSED: 8-1, Holman no).” 12A. Ordinance 5451 Entitled “Ordinance of the Council of the City of Palo Alto Amending Chapter 9.68 (Rental Housing Stabilization) of Title 9 (Public Peace, Morals, and Safety) of the Palo Alto Municipal Code to Require Relocation Assistance for No-fault Eviction for Multifamily DRAFT ACTION MINUTES Page 5 of 10 City Council Meeting Draft Action Minutes: 10/01/18 Housing Developments Containing 50 or More Rental Units (Adopted on FIRST READING on September 17, 2018 (PASSED 8-1 Tanaka no)).” MOTION: Council Member Scharff, moved seconded by Vice Mayor Filseth, third by Council Member Holman to remove Agenda Item Number 7 to be heard as Agenda Item Number 12B on Action. Council Member Tanaka registered a no vote on Agenda Item Numbers 9, 11, 12A. MOTION PASSED FOR AGENDA ITEM NUMBERS 5-6, 8, 10, 12: 9-0 MOTION PASSED FOR AGENDA ITEM NUMBERS 9, 11, 12A: 8-1 Tanaka no Action Items 12B. (Former Agenda Item Number 7) Approval of Contract Amendment Number 2 With Verizon Wireless Through June 30, 2019, Utilizing the Western State Contracting Alliance (WSCA), California Participating Addendum for Wireless, Voice and Broadband Services, Accessories, and Equipment. MOTION: Council Member Scharff moved, seconded by Council Member Holman to direct Staff to bring this item to the Finance Committee for consideration. MOTION PASSED: 9-0 13. Recommendations From the Human Relations Commission (HRC) in Response to Council Resolution Number 9653 Reaffirming Palo Alto’s Commitment to a Diverse, Supportive, Inclusive, and Protective Community (Continued From August 27, 2018). MOTION: Council Member Wolbach moved, seconded by Council Member Holman to: A. Direct the City Manager to review the City’s policies, procedures and programs, make any adjustments that may be appropriate, and report to Council on the City’s alignment with SB54; B. Direct the City Manager to review the City’s policies, procedures and programs, make any adjustments that may be appropriate, and report to Council on the City’s alignment with SB31; DRAFT ACTION MINUTES Page 6 of 10 City Council Meeting Draft Action Minutes: 10/01/18 C. Send a letter of endorsement to California State Senator Kevin de Leon in recognition of the City’s commitment to the values expressed in SB54; D. Send a letter of endorsement to California State Senator Ricardo Lara in recognition of City’s commitment to the values expressed in the SB31; E. Adopt Amnesty International’s resolution in support of Refugee Resettlement in Santa Clara County; and F. Direct Staff to study and return to Policy and Services Committee with options for a City ordinance endorsing the United Nations’ Convention on the Elimination of all forms of Discrimination Against Women (CEDAW). Staff’s work should include: i. Affirming the City’s commitment to the principals of the United Nations convention of the elimination of all forms of discrimination against women, and ii. Discussion of the potential for a gender analysis, including potential focus, scope, and phasing of an analysis, and roles of City Staff, the HRC, and Council. AMENDMENT: Council Member Scharff moved, seconded by Mayor Kniss to add to the Motion Part F: iii. Policy and Services Committee should return to Council with a recommendation of one to two areas to focus on; iv. Priorities should be given to areas where the City can make the greatest positive impact on the lives of the women and girls in Palo Alto; and v. Work generally within existing budgets, and City resources, and can accomplish goals within one to two years. INCORPORATED INTO THE AMENDMENT WITH THE CONSENT OF THE MAKER AND SECONDER to change the Motion Part F. iii to state “a recommendation with a prioritization of one or two areas of focus.” AMENDMENT AS AMENDED PASSED: 6-3 Kou, Tanaka, Wolbach no MOTION AS AMENDED RESTATED: Council Member Wolbach moved, seconded by Council Member Holman to: DRAFT ACTION MINUTES Page 7 of 10 City Council Meeting Draft Action Minutes: 10/01/18 A. Direct the City Manager to review the City’s policies, procedures and programs, make any adjustments that may be appropriate, and report to Council on the City’s alignment with SB54; B. Direct the City Manager to review the City’s policies, procedures and programs, make any adjustments that may be appropriate, and report to Council on the City’s alignment with SB31; C. Send a letter of endorsement to California State Senator Kevin de Leon in recognition of the City’s commitment to the values expressed in SB54; D. Send a letter of endorsement to California State Senator Ricardo Lara in recognition of City’s commitment to the values expressed in the SB31; E. Adopt Amnesty International’s resolution in support of Refugee Resettlement in Santa Clara County; and F. Direct Staff to study and return to Policy and Services Committee with options for a City ordinance endorsing the United Nations’ Convention on the Elimination of all forms of Discrimination Against Women (CEDAW). Staff’s work should include: i. Affirming the City’s commitment to the principals of the United Nations convention of the elimination of all forms of discrimination against women; ii. Discussion of the potential for a gender analysis, including potential focus, scope, and phasing of an analysis, and roles of City staff, the HRC, and Council; iii. Policy and Services Committee should return to Council with a prioritization of one or two areas of focus; iv. Priorities should be given to areas where the City can make the greatest positive impact on the lives of the women and girls in Palo Alto; and v. Work generally within existing budgets, and City resources, and can accomplish goals within one to two years. MOTION AS AMENDED PASSED: 9-0 Council took a break at 9:39 P.M. and returned at 9:52 P.M. 14. PUBLIC HEARING: Adoption of an Ordinance Amending Palo Alto Municipal Code (PAMC) Section 18.42.040 Related to Accessory and DRAFT ACTION MINUTES Page 8 of 10 City Council Meeting Draft Action Minutes: 10/01/18 Junior Accessory Dwelling (ADU/JADU) Units to Clarify or Modify Various Provisions Including Setback Requirements for Detached ADU Basements, Allowance for Setback and Daylight Plane Encroachments for Detached ADUs, Bonus Lot Coverage and Floor Area Eligibility, Bonus Floor Area Amount to Match Minimum Unit Size as Established by Building Code, Reduced Height Limit for Detached ADUs Located Within Identified Eichler Tracts, Replacement Parking Provisions as Applicable to JADUs, Allowance for Replacement Parking to be Located Within Driveways Located in Street-side Setbacks, Allowance for Existing Driveways to be Expanded to Accommodate Replacement Parking, Allowance for Noncomplying Structures to be Rebuilt as Part of Conversion to ADU, and Applicable Zoning Districts That Allow ADU Development; Finding the Ordinance Exempt From Review Under the California Environmental Quality Act (CEQA) Pursuant to CEQA Guidelines Section 15061(b)(3); and Discussion of Other Potential ADU- related Regulations. The Planning & Transportation Commission Recommended Approval of the Ordinance (Continued from August 27, 2018). Public Hearing was opened at 10:03 P.M. Public Hearing was closed at 10:17 P.M. MOTION: Council Member Fine moved, seconded by Council Member Scharff to: A. Find the proposed Ordinance exempt from the provisions of CEQA pursuant to CEQA Guidelines Section 15061(b)(3); and B. Adopt an Ordinance amending Palo Alto Municipal Code Se ction 18.42.040, Accessory and Junior Accessory Dwelling Units. AMENDMENT 1: Council Member Scharff moved, seconded by Council Member Fine to remove “the minimum lot size for the establishment of an accessory dwelling unit of 5,000 feet” from the Ordinance. AMENDMENT 2: Council Member Scharff moved, seconded by Council Member Fine to remove the Owner Occupancy provision from the Ordinance, Section 18.42.040 a.10.E. MOTION SPLIT FOR THE PURPOSE OF VOTING INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to direct Staff to investigate private ADU financing that would provide financing in exchange for deed restricted affordable ADUs. DRAFT ACTION MINUTES Page 9 of 10 City Council Meeting Draft Action Minutes: 10/01/18 AMENDMENT 3: Council Member Tanaka moved, seconded by Council Member Fine to add to the Motion, “clarify that basements are permitted in the 20-foot rear yard setbacks for detached ADUs”. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion “eliminate the development fees for JADUs or for garage conversions.” AMENDMENT 4: Council Member Wolbach moved, seconded by Council Member Fine to refer to Staff and the Planning and Transportation Commission to study the following: A. Perform additional financial analysis to understand the impacts of waiving fees; B. Establish a few ADU template plans that provide an “off the shelf” approvable project; C. Create a partnership program that identifies architects who specialize in ADUs who can be engaged by home owners to streamline the permit review process; D. Allow an opt-out provision for homeowners that no longer want to continue to provide their unit as affordable and require payment of fees that were waived; and E. Utilize a third party (e.g. Palo Alto Housing) to administer the program. AMENDMENT 4 PASSED: 8-1 Kou no AMENDMENT 3 FAILED: 3-6 Fine, Scharff, Tanaka yes AMENDMENT 2 FAILED: 4-5 Fine, Kniss, Scharff, Tanaka yes AMENDMENT 1 PASSED: 5-4 Filseth, Holman, Kniss, Kou no MOTION AS AMENDED RESTATED: Council Member Fine moved, seconded by Council Member Scharff to: A. Find the proposed Ordinance exempt from the provisions of CEQA pursuant to CEQA Guidelines Section 15061(b)(3); B. Adopt an Ordinance amending Palo Alto Municipal Code Section 18.42.040, Accessory and Junior Accessory Dwelling Units; DRAFT ACTION MINUTES Page 10 of 10 City Council Meeting Draft Action Minutes: 10/01/18 C. Direct Staff to investigate private ADU financing that would provide financing in exchange for deed restricted affordable ADUs; D. Eliminate the development fees for JADUs or for garage conversions; E. Remove “the minimum lot size for the establishment of an accessory dwelling unit of 5,000 feet” from the Ordinance; and F. Refer to Staff and the Planning and Transportation Commission to study the following: i. Perform additional financial analysis to understand the impacts of waiving fees; ii. Establish a few ADU template plans that provide an “off the shelf” approvable project; iii. Create partnership program that identifies architects who specialize in ADUs who can be engaged by home owners to streamline the permit review process; iv. Allow an opt-out provision for homeowners that no longer want to continue to provide their unit as affordable and require payment of fees that were waived; and v. Utilize a third party (e.g. Palo Alto Housing) to administer the program. MOTION AS AMENDED PASSED: 8-1 Kou no Adjournment: The meeting was adjourned at 11:55 P.M. City of Palo Alto (ID # 9596) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: Approval of the Sale of Transfer Development Rights & Budget Amendment Title: Approval of the Sale of Transfer Development Rights From City Owned Avenidas and College Terrace Buildings to Selected Qualified Buyers; Disbursement of the Sale P roceed; and Approval of a Budget Amendment in the Community Center Impact Fund From: City Manager Lead Department: Administrative Services Recommendation Staff requests that the City Council approve the following recommendations: 1. Direct the City Manager to accept the qualified bids for Transferable Development Rights (TDRs) from the City owned buildings Avenidas (450 Bryant Street) and College Terrace Library (2300 Wellesley Street) by authorizing the City Manager to execute the attached Offers and Agreements to Purchase (Attachments A, B, C) and Certified Development Rights (Attachments D, E, F, G) from the following qualified high bidders: a. $2,070,042 for the purchase of 5,844 square feet of TDRs submitted by Thoits Bros. b. $1,324,640 for the purchase of 3,896 square feet of TDRs submitted by Sal Giovannotto. c. $588,296 for the purchase of 1,948 square feet of TDRs submitted by Villa Rosa. 2. Authorize the City Manager to execute the Agreement and Declaration of Covenants and Restrictions for Historic Preservation and Certification of Development Rights for Avenidas Building with Avenidas (Attachment H). 3. Amend the Fiscal Year 2019 Budget Appropriation Ordinance for the Community Center Impact Fund by: a. Increasing the revenue from Transfer Development Rights in the amount of $3,982,978; b. Increasing Interagency Expenses in the amount of $2,500,000; and c. Increasing the Ending Fund Balance in the amount of $1,482,978. City of Palo Alto Page 2 Executive Summary On May 29, 2018, the City Council approved a resolution (CMR: 9245) designating the Avenidas building, located a 450 Bryant Street, as a sender site for the sale 9,188 square feet of TDRs. The Council also directed the staff to issue a request for bid (RFB) to market and sell the TDRs from the Avenidas building plus the previously approved 2,500 square feet of TDRs from the City-owned College Terrace building. Staff solicited bids by following the required steps in Policy and Procedure 1-46/ASD and obtained four bids from qualified buyers for the offered TDRs. Three of the bids to purchase various square footage amounts of the TDRs were accepted. The total proceeds from the sale of the TDRs once all the funds are collected will be $3,982,978. Staff will use sale proceeds to, transfer $2,500,000 in funds to fulfill the City’s remaining financial commitment to Avenidas. The remainder of the fund proceeds ($1,482,978) will be used to partially replenish1 the Community Center Impact Fund. This will allow the Community Center Impact Fund to support the construction cost of the upcoming Junior Museum and Zoo (JMZ) Renovation project (AC-18011) as recommended in CMR: 9245 and in the 2019-2023 Capital Improvement Plan. Background The purpose of the TDR program is to encourage and support the retention and rehabilitation of historic buildings. The program provides a floor area bonus for the qualified rehabilitation o f Category 1 and 2 historic buildings and Seismic Category I, II, and III buildings which are either owned by the City of Palo Alto or located in the Downtown CD zone district. Funds from the sale can be used to rehabilitate eligible City-owned historic buildings. On February 7, 2005, City Council approved revisions to the Zoning Code to allow eligible City-owned historic properties located in any zone district to be “sender sites” under the Transfer of Development Rights ordinance, transferring historic or seismic rehabilitation floor area bonuses from these sites to eligible “receiver” sites located in the Downtown CD Zone District. The proceeds from the sale of TDRs will be distributed to two important City obligations: $2,500,000 to support the rehabilitation of Avenidas Senior Center and $1,482,978 to support the JMZ Renovation project (AC-18011). On January 1, 2015, Avenidas and the City entered into a new fifty (50) year lease agreement in anticipation of Avenidas beginning a capital campaign to raise an estimated $18,000,000 for a major renovation project. The renovation project will address needed building repairs, seismic upgrades, and expansion of the existing building to meet the needs of the growing older adult population in Palo Alto. On February 5, 2018 the City entered into an agreement with the Friends of the JMZ to provide funding support for a project to rehabilitate and enhance capacity at the JMZ (CMR: 8851). The JMZ, originally built in 1941, and the zoo, built in 1969, are not adequately sized or designed to accommodate the JMZ’s vibrant programs, current requirements to support living and non-living collections, expanded educational programs, and current accessibility or seismic code requirements. Major goals of the rehabilitation project are to provide the JMZ with adequate storage and support space to 1 An initial payment of $2.5 million was approved to be transferred to Avenidas from the Community Center Impact Fund on April 9, 2018 (CMR: 8780). City of Palo Alto Page 3 meet standards for zoo accreditation, museum accreditation, and provide sufficient storage and preparation space for the on-site and off-site educational programs. The City sale of TDRs is to support the $5,000,000 commitment for the City-owned 450 Bryant Street (Avenidas) building and to fulfill the City’s commitment to support the Junior Museum and Zoo project . For additional information regarding the background of TDRs for Avenidas and College Terrace, please refer to CMR: 9245. Discussion Following City Council approval of the RFB to market the available TDRs from Avenidas and College Terrace buildings on May 29, 2018, staff solicited bid proposals by placing a RFB on City’s website, mailing an information flyer to persons owning eligible “receiver sites” in the Downtown CD Districts, sending notification to all parties on City’s Developers List, and placing an advertisement in Palo Alto Weekly for two consecutive weeks during the month of August, 2018 announcing the sale of the TDRS. The RFB offered the opportunity to purchase a total of 11,688 square feet of TDRs available for sale in six lots (units) of 1,948 square feet. On August 21, 2018, prior to the 3:00 PM deadline to submit bids the following four written bid proposals were received: Bidders (Company Name) Minimum Bid Price Per SQFT Lot #1 Lot #2 Lot #3 Lot # 4 Lot # 5 Lot # 6 James Lin $275 $286 - - - - - Thoits Bros $275 $406.25 $352.20 $304.20 - - - Sal Giovannotto $275 $340 $340 - - - - Villa Rosa $275 $302 $302 $302 $302 $302 $302 The following bids based on hierarchy of the price per square foot offered were accepted: Name Bid Price Per SQFT Square Footage Value of TDR Thoits Bios Lot 1 406.25 1,948 $791,375 Lot 2 352.2 1,948 $686,086 Lot 3 304.2 1,948 $592,582 Subtotal $2,070,042 Sal Giovannotto Lot 4 340 1,948 $662,320 Lot 5 340 1,948 $662,320 Subtotal $1,324,640 City of Palo Alto Page 4 Villa Rosa Lot 6 302 1,948 $588,296 Subtotal $588,296 Total Sale $3,982,978 The bids were opened immediately in front of the bidders and City staff fr om Purchasing and Real Estate Division after the expired time deadline. The bids from Thoits Bros, Sal Giovannotto, and Villa Rosa were accepted according to a descending price structure. There was a fourth offer from James Lin for one of the lots at price of $286 per square foot which did not qualify to purchase TDRs since the price per square foot was lower than all the other offers. As a condition of the sale of TDR, the Municipal Code requires that the sender site be subject to a covenant running with the land and requiring that the historic building be rehabilitated and maintained in conformance with the Secretary of Interior’s Standards and Guidelines for Rehabilitation of Historic Buildings. Agreement and Declaration of Covenants and Restrictions for Historic Preservation will need to be executed between the City of Palo Alto and Avenidas to comply with this requirement. Resource Impact A total of $3,982,978 from the sale of the TDRs will be generated, and staff is recommending to deposit the entire revenue amount into the Community Center Impact Fund. Of this amount, $2,500,000 will be transferred to Avenidas to fulfill the City’s $5,00,000 commitment. The remaining $1,482,978 will be added to the ending fund balance in order to allow the Community Center Impact Fund to support the construction cost of the upcoming JMZ Renovation project (AC-18011) as recommended in CMR: 9245 and in the 2019-2023 Capital Improvement Plan. The use of TDR revenue will reduce the need to impact the General Fund to support approved funding commitments for these projects. Policy Implication Sale of the TDRs generates revenue to be used for the rehabilitation of City-owned historical buildings and the JMZ project without placing pressure on General Fund. This outcome is consistent with prior City Council direction and policy. Environmental Review Sale of the TDRs for the City-owned buildings is Categorically Exempt from California Environmental Quality Act (CEQA) review under CEQA guidelines section 15305, Minor Alterations in Land Use Limitation. The rehabilitation project was Categorically Exempt from CEQA review pursuant to CEQA guidelines section 15331, Historical Resource Restoration/Rehabilitation, as a project limited to maintenance, repair, and rehabilitation in accordance with the Secretary of Interior standards for historic preservation. Attachments: City of Palo Alto Page 5 • Attachment A: Offer from Thoits Bros' • Attachment B: Offer from Sal Giovannotto's • Attachment C: Offer from Villa Rosa's • Attachment D: Certification TDR Avenidas Building Thoits Bros • Attachment E: Certification TDR Avenidas Building Villa Rosa • Attachment F: Certification TDR Avenidas Building Sal Giovannotto • Attachment G: Certification TDR College Terrace Building Sal Giovannotto • Attachment H: TDR Agreement Declaration Covenant Final 450 Bryant 2018 ATTACHMENT A 2. Acceptance or Rejection of Bid. Within thirty (30) days, or in as reasonable a time thereafter as possible, after BIDDER has paid SELLER the Supplemental Deposit referred to in Paragraph 1 above, SELLER shall consider this bid and accept or reject it. 3. Rejection or Withdrawal of Bid. Should this bid be rejected by SELLER or should SELLER fail to accept or reject this bid within the time period set forth in Paragraph 2 above, BIDDER may withdraw this bid and all money paid to SELLER by BIDDER shall be refunded to BIDDER. 4. Acceptance of Bid. If this bid is accepted all or in part by SELLER, the Proposal Deposit and the Supplemental Deposit paid to SELLER as provided in Paragraph 1 above shall constitute a portion of the Purchase Price, and BIDDER shall pay SELLER the balance of the Purchase Price within 30 days of SELLER'S written notification to BIDDER of SELLER'S acceptance of the bid. S. TDR Certification. Upon payment of the Purchase Price, SELLER shall deliver to BIDDER a fully executed copy of the Certification of Transfer of Development Rights in the form of Exhibit Al. SELLER shall have the Certification form recorded with the Santa Clara County Recorder's office and will provide BIDDER a certified recorded copy upon return of the original from the Santa Clara County Recorder's office. 6. Form of Deposit and Damages. The Proposal Deposit and the additional Supplemental Deposit shall be in the form of a cashier's or certified check made payable to the City of Palo Alto. The Proposal Deposit must be submitted together with this Agreement. Said Proposal Deposit shall be held by the SELLER as a guarantee securing the obligations BIDDER agrees to assume in this Agreement. BIDDER agrees that in the event that this Offer and Agreement to Purchase Certified Transferable Development Rights is accepted by SELLER and BIDDER fails to meet the terms hereof, said Proposal Deposit represents a fair and reasonable estimate of SELLER'S costs in connection with this transaction, and BIDDER further agrees that said sum shall be retained by SELLER as compensation for said costs. 7. Recording Fees. In addition to the amounts specified above, BIDDER shall pay all recording fees applicable to this transaction. 8. Withdrawal Prior to Bid Opening. BIDDER may withdraw this Offer and Agreement to Purchase Certified Transferable Development Rights at any time prior to the time set for opening bids without penalty. Except as provided under Paragraph 3 above, it may not be withdrawn after the time set for such opening, and any withdrawal after such opening will be subject to the penalties set forth in section 6 of this Agreement. 9. City's Right to Reject Bids. SELLER reserves the right to reject any or all bids and to accept bids, all or in part, which will, in its opinion, best serve the public interest 9 10. No Guarantee. The purchase of Certified Transferable Development to the provisions and limitations of the Palo Alto Municipal Code. includes no guarantee of a receiver site. Zoning regulations may repealed at any time. Rights is subject This agreement be changed or 11. All documents, correspondence, and communications concerning this transaction shall be directed as follows: TO: BIDDER John Snenk Thoits Bros., I (Name) 629 Emerson Street (Address) Palo Alto, CA 94301 Telephone: 650-323-4868 TO: SELLER CITY OF PALO ALTO c/o Real Estate Division 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94301 Attn: Hamid Ghaemmaghami 12. Time is of the essence of this Agreement. BIDDER hereby submits this offer with full cognizance of this agreement to the terms and conditions contained herein. SINA E(S) OF R(S Somas considered and accepts this offer: SELLER: CITY OF PALO ALTO Date By MAYOR (or designee), CITY OF PALO ALTO ATTEST: CITY CLERK By APPROVED AS TO FORM: SR. ASST. CITY ATTORNEY By RECOMMENDED FOR APPROVAL: DIRECTOR, PLANNING By 10 0000277 11-24 Office AU # 1210(8) Remitter: JOHN R SHENK Operator1.D.: u589396 u159706 CASHIER'S CHECK PAY TO THE ORDER OF ***THE CITY OF PALO ALTO*** ***Two hundred seven thousand four dollars and 22 cents*** Payee Address Memo WELLS FARGO BANK, N.A. 400 HAMILTON AVE PALO ALTO, CA 94301 FOR INQUIRIES CALL (480) 394-3122 0027707357 August 21, 2018 **$207,004.22** VOID IF OVER US $ 207,004.22 U r ORIZED SIGNATURE AUTHORIZED SIGNATURE 1'00 2 7 70 7 3 5 7►(' ,: L 2).000 240,:486 L 50530310 Details on Back. 8 Security Features Included. ATTACHMENT B OFFER AND AGREEMENT FOR PURCHASE OF CERTIFIED TRANSFERABLE DEVELOPMENT RIGHTS (Full Cash Payment) Date of the Offer: c3 1 (3i l r)fi, SELLER: CITY OF PALO ALTO BIDDER/BIDDERS: (7'1 'k00 CL1A (Fill in full legal name) In consideration of SELLER'S proposal to sell the development rights described and shown on the form of Certification of Transfer of Development Rights labeled Exhibits "Al" and "B1" attached hereto, by competitive bids to be received before on 3:00 P.M. Tuesday, August 21, 2018, BIDDER agrees to purchase said development rights as follows: Number of square foot lots (minimum of one (1) lot up to maximum of six (6 lots): Please r?ceive the purchase proposal/Bid From for *Lot Number Square Footage Offer Price Per Square Foot Sum Total of Each Bid (1) One 1,948 6. {-O v S (o (_o9 , ,3a -a (2) Two 1,948 5_ 7- b Y 5f Co (oa , 3(3-0 (3) Three 1,948 (4) Four 1,948 (5) Five 1,948 (6) Six 1,948 Total of all Bids ,3115°((0 S (ot(.) ,2-J S,P 1, 3a4 bob otal of six (6J lots consisting of 1,948 square feet each, for a total of 11,688 square feet. I (Bidder) asA C- colavvwkkv am offering the purchase price of $ (numerical), $ kkiNir,e249 Vwv y nr i.4- (value in text) per square foot for each lot. This is a total value of $ i4VI, numerical), $ Ov\Q vv+, a\'1trk t e [,,,ot (pi (value in extj. In accordance with subparagraph 6 below, and with this offer, I (Bidder) am including funds for the SELLER, as a good faith deposit (the "Proposal Deposit") of ten percent (10%) of the total Purchase Price in the amount of: $ 1, P, (ci.ei This bid is conditioned upon and made with BIDDER'S understanding and agreement to the following terms: 1. Supplemental Deposit. Upon written notice from SELLER'S Real Estate Division that BIDDER is a qualified high bidder, in all or in part, BIDDER shall within 7 calendar days after said notice pay SELLER an additional sum (the "Supplemental Deposit") equal to the difference between the Proposal Deposit and 50% of the total amount bid. Should BIDDER, for any reason whatsoever, fail to pay to SELLER the Supplemental Deposit, the Proposal Deposit shall be retained by SELLER as set forth in subparagraph 6 below. 8 2. Acceptance or Resection of Bid. Within thirty (30) days, or in as reasonable a time thereafter as possible, after BIDDER has paid SELLER the Supplemental Deposit referred to in Paragraph 1 above, SELLER shall consider this bid and accept or reject it. 3. Rejection or Withdrawal of Bid. Should this bid be rejected by SELLER or should SELLER fail to accept or reject this bid within the time period set forth in Paragraph 2 above, BIDDER may withdraw this bid and all money paid to SELLER by BIDDER shall be refunded to BIDDER. 4. Acceptance of Bid. If this bid is accepted all or in part by SELLER, the Proposal Deposit and the Supplemental Deposit paid to SELLER as provided in Paragraph 1 above shall constitute a portion of the Purchase Price, and BIDDER shall pay SELLER the balance of the Purchase Price within 30 days of SELLER'S written notification to BIDDER of SELLER'S acceptance of the bid. 5. TDR Certification. Upon payment of the Purchase Pricl, SELLER shall deliver to BIDDER a fully executed copy of the Certification of Transfer of Development Rights in the form of Exhibit Al. SELLER shall have the Certification form recorded with the Santa Clara County Recorder's office and will provide BIDDER a certified recorded copy upon return of the original from the Santa Clara County Recorder's office. 6. Form of Deposit and Damages. The Proposal Deposit and the additional Supplemental Deposit shall be in the form of a cashier's or certified check made payable to the City of Palo Alto. The Proposal Deposit must be submitted together with this Agreement. Said Proposal Deposit shall be held by the SELLER as a guarantee securing the obligations BIDDER agrees to assume in this Agreement. BIDDER agrees that in the event that this Offer and Agreement to Purchase Certified Transferable Development Rights is accepted by SELLER and BIDDER fails to meet the terms hereof, said Proposal Deposit represents a fair and reasonable estimate of SELLER'S costs in connection with this transaction, and BIDDER further agrees that said sum shall be retained by SELLER as compensation for said costs. 7. Recording Fees. In addition to the amounts specified above, BIDDER shall pay all recording fees applicable to this transaction. 8. Withdrawal Prior to Bid Opening. BIDDER may withdraw this Offer and Agreement to Purchase Certified Transferable Development Rights at any time prior to the time set for opening bids without penalty. Except as provided under Paragraph 3 above, it may not be withdrawn after the time set for such opening, and any withdrawal after such opening will be subject to the penalties set forth in section 6 of this Agreement. 9. City's Right to Reject Bids. SELLER reserves the right to reject any or all bids and to accept bids, all or in part, which will, in its opinion, best serve the public interest 9 10. No Guarantee. The purchase of Certified Transferable Development to the provisions and limitations of the Palo Alto Municipal Code. includes no guarantee of a receiver site. Zoning regulations may repealed at any time. Rights is subject This agreement be changed or 11. All documents, correspondence, and communications concerning this transaction shall be directed as follows: TO: BIDDER /� TO: SELLER r 1�1-ER(� - / CITY OF PALO ALTO (Name)6 �+ / c/o Real Estate Division / I/�Y��� 250 Hamilton Avenue (Address) P.O. Box 10250 g o 60 177 4 i Palo Alto, CA 94301 Attn: Hamid Ghaemmaghami TelephonEbg> 2.2.2 12. Time is of the essence of this Agreement. BIDDER hereby submits this offer with full cognizance of this agreement to the terms and conditions contained herein. SIGNATUR SELLER has considered and accepts this offer: SELLER: CITY OF PALO ALTO Date By MAYOR (or designee), CITY OF PALO ALTO ATTEST: CITY CLERK By APPROVED AS TO FORM: SR. ASST. CITY ATTORNEY By RECOMMENDED FOR APPROVAL: DIRECTOR, PLANNING By 10 BOSTON PRIVATE WEALTH TRUST PRIVATE BANKING CASHIERS CHECK ONE HUNDRED THIRTY TWO THOUSAND FOUR HUNDRED SIXTY FOUR DOLLARS AND NO CENTS PAY TO THE CITY OF PALO ALTO ORDER OF REMITTER VITTORIA MANAGEMENT CO 5-234/110 DATE: ►I' L4876711' 1:0 L L00 23431: 000 L000 L Lao 148767 August 21, 2018 ***$132,464.00*** AUTHORI 4I 0. 1 ATURE ATTACHMENT C 2. Acceptance or Rejection of Bid. Within thirty (30) days, or in as reasonable a time thereafter as possible, after BIDDER has paid SELLER the Supplemental Deposit referred to in Paragraph 1 above, SELLER shall consider this bid and accept or reject it. 3. Rejection or Withdrawal of Bid. Should this bid be rejected by SELLER or should SELLER fail to accept or reject this bid within the time period set forth in Paragraph 2 above, BIDDER may withdraw this bid and all money paid to SELLER by BIDDER shall be refunded to BIDDER. 4. Acceptance of Bid. If this bid is accepted all or in part by SELLER, the Proposal Deposit and the Supplemental Deposit paid to SELLER as provided in Paragraph 1 above shall constitute a portion of the Purchase Price, and BIDDER shall pay SELLER the balance of the Purchase Price within 30 days of SELLER'S written notification to BIDDER of SELLER'S acceptance of the bid. 5. TDR Certification. Upon payment of the Purchase Price, SELLER shall deliver to BIDDER a fully executed copy of the Certification of Transfer of Development Rights in the form of Exhibit Al. SELLER shall have the Certification form recorded with the Santa Clara County Recorder's office and will provide BIDDER a certified recorded copy upon return of the original from the Santa Clara County Recorder's office. 6. Form of Deposit and Damages. The Proposal Deposit and the additional Supplemental Deposit shall be in the form of a cashier's or certified check made payable to the City of Palo Alto. The Proposal Deposit must be submitted together with this Agreement. Said Proposal Deposit shall be held by the SELLER as a guarantee securing the obligations BIDDER agrees to assume in this Agreement. BIDDER agrees that in the event that this Offer and Agreement to Purchase Certified Transferable Development Rights is accepted by SELLER and BIDDER fails to meet the terms hereof, said Proposal Deposit represents a fair and reasonable estimate of SELLER'S costs in connection with this transaction, and BIDDER further agrees that said sum shall be retained by SELLER as compensation for said costs. 7. Recording Fees. In addition to the amounts specified above, BIDDER shall pay all recording fees applicable to this transaction. 8. Withdrawal Prior to Bid Opening. BIDDER may withdraw this Offer and Agreement to Purchase Certified Transferable Development Rights at any time prior to the time set for opening bids without penalty. Except as provided under Paragraph 3 above, it may not be withdrawn after the time set for such opening, and any withdrawal after such opening will be subject to the penalties set forth in section 6 of this Agreement. 9. City's Right to Reject Bids. SELLER reserves the right to reject any or all bids and to accept bids, all or in part, which will, in its opinion, best serve the public interest 9 10. No Guarantee. The purchase of Certified Transferable Development Rights is subject to the provisions and limitations of the Palo Alto Municipal Code. This agreement includes no guarantee of a receiver site. Zoning regulations may be changed or repealed at any time. 11. All documents, correspondence, and communications concerning this transaction shall be directed as follows: TO: BIDDER Villa Rosa Associates, LL (Name) 4966 El Camino Real #209 (Address) Los Altos, CA 94022 Telephone: (650) 961-1234 TO: SELLER CITY OF PALO ALTO c/o Real Estate Division 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94301 Attn: Hamid Ghaemmaghami 12. Time is of the essence of this Agreement. BIDDER hereby submits this offer with full cognizance of this agreement to the terms and conditions contained herein. SIGNATURE(S) OF BIDDER(S) SELLER has considered and accepts this offer: SELLER: CITY OF PALO ALTO Date By MAYOR (or designee), CITY OF PALO ALTO ATTEST: CITY CLERK By APPROVED AS TO FORM: SR. ASST. CITY ATTORNEY By RECOMMENDED FOR APPROVAL: DIRECTOR, PLANNING By 10 1 'FIRST REPUBLIC BANK ft's a privilege to sene you° 400 SOUTH SAN ANTONIO ROAD LOS ALTOS, CA 94022 PAY THE SUM OF CASHIER'S CHECK FDIC DATE INSURED 08/21/2018 AMOUNT 068002083 068002083 $352,977.60 ***THREE HUNDRED FIFTY TWO THOUSAND NINE HUNDRED SEVENTY SEVEN and 60/100*** DOLLARS TO THE ORDER THE CITY OF PALO ALTO VOID AFTER 90 DAYS IMPORTANT NOl1L I NO REFUND OR KLPLACF.MI1N`r FOR A LOS I. sE:)I.L'N OR DESIROYID CASHIER'S CHECK CAN OCCUR UNTIL 1111 90T11 DAS IY)1.1.OK'ING 111E LSSUE DATE 01 1111 CIILCK AND COSIPLCIION 111 1111 R \NK'S DECL\RA1ION OF I OSS 11/551 11'0 6800 208 311' ':3 2 L08 L6691: 9929999999911° 2 SIGN �f'E'1=rte IRED OVER 1000.00 xr Details on Back. IJ Security Features Included. 1 This document is recorded for the benefit of the City of Palo Alto and is entitled to be recorded free of charge in accordance with Section 6103 of the Government Code. After Recordation, mail to: REAL PROPERTY MANAGER City of Palo Alto P. O. Box 10250 Palo Alto, CA 94303 ______________________________________________________________________________ ___ CERTIFICATION OF TRANSFER OF DEVELOPMENT RIGHTS AVENIDAS BUILDING 450 Bryant Street, Palo Alto, CA APN: 120-26-095, 5,844 Square Feet of TDRs A. The City of Palo Alto, a municipal corporation (“Property Owner”) is the owner of a parcel of real property (the “Historic Site”), generally known as the Avenidas Building, located at 450 Bryant Street, City of Palo Alto, County of Santa Clara, State of California and more particularly described in Exhibits “A & B” attached to this document and made a part of it. B. To promote the preservation and rehabilitation of historic buildings, Palo Alto Municipal Code Chapter 18.18.080 permits transfer of 9,188 square feet of development rights from the Historic Site to an eligible receiver site. As a condition of such transfer, the Historic Site must be developed and maintained in conformance with the Secretary of Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings (the “Standards and Guidelines”). C. On May 26, 2015, the City’s Historic Resources Board (HRB) reviewed the plans for the renovation of Avenidas Building (the “Project”) and the Historic Structure Report as required for the project to participate in the TDR program. THE HRB supported participation of the Avenidas Building project in the TDR program and unanimously recommended approval of the Project as complying with the Secretary of the Interior’s Standards for historic and seismic rehabilitation. D. The Director of Planning approved the recommendation of the HRB and therefore certified that the Historic Site is an eligible sender site for 9,188 square feet of development rights for historic and seismic rehabilitation. No floor area bonus has been utilized at the Historic Site. The Transfer Development Rights for the Avenidas Building ATTACHMENT D 2 cannot be used as an exemption to offset the parking requirements of th e City of Palo Alto for additional square footage for new or existing developments . E. On May 29, 2018, the Palo Alto City Council confirmed the eligibility of the Historic Site as a “Sender Site” in the Transfer of Development Rights program. F. The City’s Planning Division has approved plans and issued permits for the rehabilitation of the historic property in accordance with the Project plans and the Secretary of Interior’s Standards for Rehabilitation and therefore has certified that the Historic Sender Site is an eligible Historic Sender site for 9,188 square feet of development rights for historic rehabilitation and seismic. G. On May 29, 2018 Council also approved a resolution (CMR: 9245) designating the former Avenidas building as a Sender Site in the TDR program, fulfilling the first of five provisions required for eligible City owned buildings to participate in the TDR program as set forth in Municipal Code 18.28.060(d) . The second provision, requiring the City Manager to establish a public bidding process to sell the bonus floor area development rights, has been completed and is documented according to policy and Procedures 1 - 46/ASD (Exhibits C). The third provision was fulfilled on May 26, 2015, Historic Structures Report prepared by Avenidas for the building and the fourth provision by the project approvals from the HRB, ARB and Director of Planning and Community Environment. Satisfaction of the fifth provision, the establishment by the City Manager of a fund for the proceeds from the TDR sale, will occur following the completion of the sale of the TDR. H. The holder of this Certification is entitled to 5,844 square feet of certified transferable development rights originating from the Avenidas building. I. This Certification shall be recorded in the off ice of the Recorder of the County of Santa Clara. J. The holder of this Certification has the right to transfer, sell or otherwise convey the transferable development rights granted in this certification in accordance with the provisions of Chapters 18.18.080 and 18.28 of the Palo Alto Municipal Code, as they may be amended from time to time. All transfers are subject to the limitations and possible termination of the transfer of development rights program in the future. 3 IN WITNESS WHEREOF, the parties have executed this Certification on the dates set forth below. PROPERTY OWNER: CITY OF PALO ALTO, a municipal Corporation ____________________ City Manager ____________________ Director of Planning & Community Environment APPROVED AS TO FORM: ______________________ Senior Assistant City Attorney 35 W N P. M. 829-M-52 • LLA. 18517643 6327062 19269614 9412718 6 •14 - OFFICE O F C OUNTY ASSESS OR WH . H. H. HARTS • SUBDIVISION OF BLOCK 4 - LYTTON P.M.510-M16 12 522 101 40 125;25;23;25 P1I 1 2 114 16 16 17 PCL 1 41 18 41515-L x a.. - 7-1 19,. .. 4 S$ 225 PCL. A 'w 27 29 0: 26 132 _ 20 e1 75 175-i.L! 75 125 E7 -N5 IH- 135 UNIVERSITY 12 111 TR. 40 (�zs so T !� M 4.3 • 44 8 CITY OF PALO ALTO g 88 PCL 1 0. 58 AC. 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PCL A 81 Ps331: 6,0618 P114. PCLA 8 • 4,934 at t:li- LA .21330434 PCL APN 103 2 1 a 30 X D 24 0 55 0 0N1 7S 100, 0403 Kw vE RS17r DETAIL 1 R1 anc 1M► LAYRENCE E. STI Ca iosbd mIp tar ass Campled under R. I Effective Rol Aar Nonumer or' lainoninnws Exhibit: B BRYANT STREET. COGS WELL T T • . T • T w 7.0L • �•�,117Y�Li�q•:L.�,.tt�y�"V ::T 132.0 ".i'ii+L...:6.f�vIPC?a:�.:7V , • TRUE F.O.B: i5 to L 4.O •PUBLIC PARKING • LOT .Z5 nio.01 1tCLvs" PARu,4 & 1. in 1 . J. •. •1 •• 0 44 RAMONA STREET j`; = s'.r,. LAND TO 8E LEAS ED FIELD BOOK. PAGE DATE LEASE DIAGRAM CITY OWNED LAND APPROVED: /=/'.,* 2/ i g 7' SCALE: rx 4G • DWG. NO. M e . IMOD lA 5 Exhibit C POLICY AND PROCEDURE 1-46/ASD FOR SALE/TRANSFER OF DEVELOPMENT RIGHTS FOR CITY‐OWNED PROPERTY POLICY STATEMENT It is the policy of the City of Palo Alto that the disposal of City property and assets, including the transfer of certified development rights, be accomplished through a public bid process. To assure the highest return for sale of its assets, the process involves an appraisal of fair market value and an open and competitive bid process. The City Council may reject any or all bids and accept that bid which will, in its opinion, best serve the public interest. PROCEDURE 1. Following designation of a city‐owned site as an eligible “sender site,” and determination of a floor area bonus in accordance with Palo Alto Municipal Code Chapters 18.18.070, 18.18.080, and 18.28.060 (d), the Real Property Manager shall appraise (or ha ve appraised) the value of the rights to be sold to determine a minimum bid. 2. The Real Estate Division shall prepare a Request for Proposals (RFP) to be released as follows: a. An ad shall be placed in the Real Estate section of the local newspapers. b. Flyers advising of the offering shall be sent to all persons on the Real Estate Division “Surplus Property Mailing List,” persons owning eligible “receiver sites,” local developers and others likely to be interested in the offering. 3. The bid opening shall be scheduled by the Real Property Manager and the Purchasing Manager. At the bid opening the Purchasing Division shall: a. Open Sealed bids b. If specified in the RFP, accept oral bidding beginning at 5% above the highest written bid. 4. The Real Estate Division shall forward the results of the bidding to the Council with a staff recommendation. The Council may reject any or all bids and accept that bid which will, in its opinion, best serve the public interest. NOTE: Questions and/or clarifications of this policy should be directed to the Administrative Services Department. 1 This document is recorded for the benefit of the City of Palo Alto and is entitled to be recorded free of charge in accordance with Section 6103 of the Government Code. After Recordation, mail to: REAL PROPERTY MANAGER City of Palo Alto P. O. Box 10250 Palo Alto, CA 94303 ______________________________________________________________________________ ___ CERTIFICATION OF TRANSFER OF DEVELOPMENT RIGHTS AVENIDAS BUILDING 450 Bryant Street, Palo Alto, CA APN: 120-26-095, 1,948 Square Feet of TDRs A. The City of Palo Alto, a municipal corporation (“Property Owner”) is the owner of a parcel of real property (the “Historic Site”), generally known as the Avenidas Building, located at 450 Bryant Street, City of Palo Alto, County of Santa Clara, State of California and more particularly described in Exhibits “A & B” attached to this document and made a part of it. B. To promote the preservation and rehabilitation of historic buildings, Palo Alto Municipal Code Chapter 18.18.080 permits transfer of 9,188 square feet of development rights from the Historic Site to an eligible receiver site. As a condition of such transfer, the Historic Site must be developed and maintained in conformance with the Secretary of Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings (the “Standards and Guidelines”). C. On May 26, 2015, the City’s Historic Resources Board (HRB) reviewed the plans for the renovation of Avenidas Building (the “Project”) and the Historic Structure Report as required for the project to participate in the TDR program. THE HRB supported participation of the Avenidas Building project in the TDR program and unanimously recommended approval of the Project as complying with the Secretary of the Interior’s Standards for historic and seismic rehabilitation. D. The Director of Planning approved the recommendation of the HRB and therefore certified that the Historic Site is an eligible sender site for 9,188 square feet of development rights for historic and seismic rehabilitation. No floor area bonus has been utilized at the Historic Site. The Transfer Development Rights for the Avenidas Building ATTACHMENT E 2 cannot be used as an exemption to offset the parking requirements of th e City of Palo Alto for additional square footage for new or existing developments . E. On May 29, 2018, the Palo Alto City Council confirmed the eligibility of the Historic Site as a “Sender Site” in the Transfer of Development Rights program. F. The City’s Planning Division has approved plans and issued permits for the rehabilitation of the historic property in accordance with the Project plans and the Secretary of Interior’s Standards for Rehabilitation and therefore has certified that the Historic Sender Site is an eligible Historic Sender site for 9,188 square feet of development rights for historic rehabilitation and seismic. G. On May 29, 2018 Council also approved a resolution (CMR: 9245) designating the former Avenidas building as a Sender Site in the TDR program, fulfilling the first of five provisions required for eligible City owned buildings to participate in the TDR program as set forth in Municipal Code 18.28.060(d) . The second provision, requiring the City Manager to establish a public bidding process to sell the bonus floor area development rights, has been completed and is documented according to policy and Procedures 1 - 46/ASD (Exhibit C). The third provision was fulfilled on May 26, 2015, Historic Structures Report prepared by Avenidas for the building and the fourth provision by the project approvals from the HRB, ARB and Director of Planning and Community Environment. Satisfaction of the fifth provision, the establishment by the City Manager of a fund for the proceeds from the TDR sale, will occur following the completion of the sale of the TDR. H. The holder of this Certification is entitled to 1,948 square feet of certified transferable development rights originating from the Avenidas historic building. I. This Certification shall be recorded in the office of the Recorder of the County of Santa Clara. J. The holder of this Certification has the right to transfer, sell or otherwise convey the transferable development rights granted in this certification in accordance with the provisions of Chapters 18.18.080 and 18.28 of the Palo Alto Municipal Code, as they may be amended from time to time. All transfers are subject to the limitations and possible termination of the transfer of development rights program in the future. 3 IN WITNESS WHEREOF, the parties have executed this Certification on the dates set forth below. PROPERTY OWNER: CITY OF PALO ALTO, a municipal Corporation ____________________ City Manager ____________________ Director of Planning & Community Environment APPROVED AS TO FORM: ______________________ Senior Assistant City Attorney 35 W N P. M. 829-M-52 • LLA. 18517643 6327062 19269614 9412718 6 •14 - OFFICE O F C OUNTY ASSESS OR WH . H. H. HARTS • SUBDIVISION OF BLOCK 4 - LYTTON P.M.510-M16 12 522 101 40 125;25;23;25 P1I 1 2 114 16 16 17 PCL 1 41 18 41515-L x a.. - 7-1 19,. .. 4 S$ 225 PCL. A 'w 27 29 0: 26 132 _ 20 e1 75 175-i.L! 75 125 E7 -N5 IH- 135 UNIVERSITY 12 111 TR. 40 (�zs so T !� M 4.3 • 44 8 CITY OF PALO ALTO g 88 PCL 1 0. 58 AC. NET 225 as 11 2 - HAMILTON - S SCp 25j25j'25j25;25;25;25;25;25 60 7 3 105 2x 100 1 125 W a - 55 54 53 52r 1 N =I._1 t 1-LST15 44 148147 rn73 i p_ -?T 6l37 46 ��$ SNIT 3I:- A .- so 7s __ 2 s 4412250 ,y 1St R ag P a.. B - 43 p ui 1111 .GO '"'11 26 42 • 8 o ▪ CITY 061 - + PALLO ALTO -- 1 in 4. 107 n N - - 62 lr.L , 1" 63 -J P 1of 109 2 O;2p 100 119 110 9 95-1 6,30430f PCL B 1.0 1 8 1=� ' I1_E A 12 3 Oaf100 tl so 5 ;s 2s 25 as 13 3 ...11 /67 ���r,�pp t 0.52AC.NET -- --rT T- rir 3IiI2iOT 30 31 32 33 34 35 36; 37 38 8 .1 xi le :mg ~ W es N 25 ! 25 125 1'25 i 25 73 i 25 1,23 25m 15 1 10d 171.3 105 P.M.598-M-29 154/344ms2/64 1 V 172.4 180-2-4 %� 100 •• 1 25 ; 2572715. Z57 ' 1• I i$ 1 45 ittteto I 331 LOT I 31 132:25 '34 35 loo 0 i X52 OZ 51 so Ku 41 8 ply,- Ty l to o 1230 50 49 46 47 46 45 44 43 42 40111',°' P. J. MARTIN'S BDIVISION OF BLOCK 5 $$8 36 _ _;? 15125125 177 r ias n S ANTA W .L W on 102 30 4 0 1n 21 20 19 18 17 16 - r o m 15 102.50 14 13 20 2S3 2 27 3 4 5 CL AR A COUNTY . MILLS SUBDIVISION OF BLOCK 13 -�----- AVENUE 550 100 2 10 10 •P2 23 24 25 1 :00 26 _- ,. 27 ,s N S :r7 0 .409 AC. 70 8 9 gg :$ :gm 1 iS '22 OP P -19 30 LLA 17134705 u 25 3.,5 25 0-40 rr0-5 21't 240 35 ; 25 j 25 ; 25 25 ; IS 25 CITY OF 1 �L 10 1 M 1 43 14 15 ;16 17 ; 18 1 19 20 PP4Q./iLLQL1 . 2s, -g :2 4 II _,Z610 0. 9 - i5 � Z - a 0 7 r z§ 6- 4 74 2 I 20 201-7-9-15-25 55 56 57 58 1 t 54 53 52 51 59 + 50 CITY OF - t PALO 60 ,{ 49 6424. 48 120 IA 441. 14, 6. k' • N !� ALTO 62 47 -I- 1.94 AC . 63 46 -I- 64 -1- 45 65 44 - 11 150 66 + 43 112.50 -� g 1 1 1 1 1 1 14 135 136 :371311139 40 41142 1.0 1 1 a& ; 1 .Q g 3 m 25 75 25 1 125 251, 25 1.A7 a 2 23 2.1-3 au 3-7 571 261 r.M.62o=�t A�JEMUE •' T/-' _ .�.1 1 '0.31 PC L 1 (UPPER A ND LOWER LEVE LS) Pa ... 2 (MID LEVEL) SEE DET AIL PAGE 26•A 00.0. 0 59 60 18-7 33.34'35'36 $ g 1Q 1 1 1 21 - 22169 23 24 25 2.i 27 72 is - �t T T 29 30 31 32 t 1 115 r rs-22.-: ss -ays - 2614-2E5 4- AVENUE - MILLERS SUBDIVISION P .M .274-5 OF BLOCK 12 4114 • r $ N C A L I F O R N II A • Itig 4.9310 40.31 CJ -IL 173360 021 471a aDo 48 :�. _ 45 'q. 44 - 10600 8 PTN. PCL A 81 Ps331: 6,0618 P114. PCLA 8 • 4,934 at t:li- LA .21330434 PCL APN 103 2 1 a 30 X D 24 0 55 0 0N1 7S 100, 0403 Kw vE RS17r DETAIL 1 R1 anc 1M► LAYRENCE E. STI Ca iosbd mIp tar ass Campled under R. I Effective Rol Aar Nonumer or' lainoninnws Exhibit: B BRYANT STREET. COGS WELL T T • . T • T w 7.0L • �•�,117Y�Li�q•:L.�,.tt�y�"V ::T 132.0 ".i'ii+L...:6.f�vIPC?a:�.:7V , • TRUE F.O.B: i5 to L 4.O •PUBLIC PARKING • LOT .Z5 nio.01 1tCLvs" PARu,4 & 1. in 1 . J. •. •1 •• 0 44 RAMONA STREET j`; = s'.r,. LAND TO 8E LEAS ED FIELD BOOK. PAGE DATE LEASE DIAGRAM CITY OWNED LAND APPROVED: /=/'.,* 2/ i g 7' SCALE: rx 4G • DWG. NO. M e . IMOD lA 1 This document is recorded for the benefit of the City of Palo Alto and is entitled to be recorded free of charge in accordance with Section 6103 of the Government Code. After Recordation, mail to: REAL PROPERTY MANAGER City of Palo Alto P. O. Box 10250 Palo Alto, CA 94303 ______________________________________________________________________________ ___ CERTIFICATION OF TRANSFER OF DEVELOPMENT RIGHTS AVENIDAS BUILDING 450 Bryant Street, Palo Alto, CA APN: 120-26-095, 1,396 Square Feet of TDRs A. The City of Palo Alto, a municipal corporation (“Property Owner”) is the owner of a parcel of real property (the “Historic Site”), generally known as the Avenidas Building, located at 450 Bryant Street, City of Palo Alto, County of Santa Clara, State of California and more particularly described in Exhibits “A & B” attached to this document and made a part of it. B. To promote the preservation and rehabilitation of historic buildings, Palo Alto Municipal Code Chapter 18.18.080 permits transfer of 9,188 square feet of development rights from the Historic Site to an eligible receiver site. As a condition of such transfer, the Historic Site must be developed and maintained in conformance with the Secretary of Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings (the “Standards and Guidelines”). C. On May 26, 2015, the City’s Historic Resources Board (HRB) reviewed the plans for the renovation of Avenidas Building (the “Project”) and the Historic Structure Report as required for the project to participate in the TDR program. THE HRB supported participation of the Avenidas Building project in the TDR program and unanimously recommended approval of the Project as complying with the Secretary of the Interior’s Standards for historic and seismic rehabilitation. D. The Director of Planning approved the recommendation of the HRB and therefore certified that the Historic Site is an eligible sender site for 9,188 square feet of development rights for historic and seismic rehabilitation. No floor area bonus has been utilized at the Historic Site. The Transfer Development Rights for the Avenidas Building ATTACHMENT F 2 cannot be used as an exemption to offset the parking requirements of th e City of Palo Alto for additional square footage for new or existing developments . E. On May 29, 2018, the Palo Alto City Council confirmed the eligibility of the Historic Site as a “Sender Site” in the Transfer of Development Rights program. F. The City’s Planning Division has approved plans and issued permits for the rehabilitation of the historic property in accordance with the Project plans and the Secretary of Interior’s Standards for Rehabilitation and therefore has certified that the Historic Sender Site is an eligible Historic Sender site for 9,188 square feet of development rights for historic rehabilitation and seismic. G. On May 29, 2018 Council approved a resolution (CMR: 9245) designating the former Avenidas building as a Sender Site in the TDR program, fulfilling the first of five provisions required for eligible City owned buildings to participate in the TDR program as set forth in Municipal Code 18.28.060(d) . The second provision, requiring the City Manager to establish a public bidding process to sell the bonus floor area development rights, has been completed and is documented according to policy and Procedures 1 - 46/ASD ( Exhibit C). The third provision was fulfilled on May 26, 2015, Historic Structures Report prepared by Avenidas for the building and the fourth provision by the project approvals from the HRB, ARB and Director of Planning and Community Environment. Satisfaction of the fifth provision, the establishment by the City Manager of a fund for the proceeds from the TDR sale, will occur following the completion of the sale of the TDR. H. The holder of this Certification is entitled to 1,396 square feet of certified transferable development rights originating from the Avenidas building. I. This Certification shall be recorded in the office of the Recorder of the County of Santa Clara. J. The holder of this Certification has the right to transfer, sell or otherwise convey the transferable development rights granted in this certification in accordance with the provisions of Chapters 18.18.080 and 18.28 of the Palo Alto Municipal Code, as they may be amended from time to time. All transfers are subject to the limitations and possible termination of the transfer of development rights program in the future. 3 IN WITNESS WHEREOF, the parties have executed this Certification on the dates set forth below. PROPERTY OWNER: CITY OF PALO ALTO, a municipal Corporation ____________________ City Manager ____________________ Director of Planning & Community Environment APPROVED AS TO FORM: ______________________ Senior Assistant City Attorney 35 W N P. M. 829-M-52 • LLA. 18517643 6327062 19269614 9412718 6 •14 - OFFICE O F C OUNTY ASSESS OR WH . H. H. HARTS • SUBDIVISION OF BLOCK 4 - LYTTON P.M.510-M16 12 522 101 40 125;25;23;25 P1I 1 2 114 16 16 17 PCL 1 41 18 41515-L x a.. - 7-1 19,. .. 4 S$ 225 PCL. A 'w 27 29 0: 26 132 _ 20 e1 75 175-i.L! 75 125 E7 -N5 IH- 135 UNIVERSITY 12 111 TR. 40 (�zs so T !� M 4.3 • 44 8 CITY OF PALO ALTO g 88 PCL 1 0. 58 AC. NET 225 as 11 2 - HAMILTON - S SCp 25j25j'25j25;25;25;25;25;25 60 7 3 105 2x 100 1 125 W a - 55 54 53 52r 1 N =I._1 t 1-LST15 44 148147 rn73 i p_ -?T 6l37 46 ��$ SNIT 3I:- A .- so 7s __ 2 s 4412250 ,y 1St R ag P a.. B - 43 p ui 1111 .GO '"'11 26 42 • 8 o ▪ CITY 061 - + PALLO ALTO -- 1 in 4. 107 n N - - 62 lr.L , 1" 63 -J P 1of 109 2 O;2p 100 119 110 9 95-1 6,30430f PCL B 1.0 1 8 1=� ' I1_E A 12 3 Oaf100 tl so 5 ;s 2s 25 as 13 3 ...11 /67 ���r,�pp t 0.52AC.NET -- --rT T- rir 3IiI2iOT 30 31 32 33 34 35 36; 37 38 8 .1 xi le :mg ~ W es N 25 ! 25 125 1'25 i 25 73 i 25 1,23 25m 15 1 10d 171.3 105 P.M.598-M-29 154/344ms2/64 1 V 172.4 180-2-4 %� 100 •• 1 25 ; 2572715. Z57 ' 1• I i$ 1 45 ittteto I 331 LOT I 31 132:25 '34 35 loo 0 i X52 OZ 51 so Ku 41 8 ply,- Ty l to o 1230 50 49 46 47 46 45 44 43 42 40111',°' P. J. MARTIN'S BDIVISION OF BLOCK 5 $$8 36 _ _;? 15125125 177 r ias n S ANTA W .L W on 102 30 4 0 1n 21 20 19 18 17 16 - r o m 15 102.50 14 13 20 2S3 2 27 3 4 5 CL AR A COUNTY . MILLS SUBDIVISION OF BLOCK 13 -�----- AVENUE 550 100 2 10 10 •P2 23 24 25 1 :00 26 _- ,. 27 ,s N S :r7 0 .409 AC. 70 8 9 gg :$ :gm 1 iS '22 OP P -19 30 LLA 17134705 u 25 3.,5 25 0-40 rr0-5 21't 240 35 ; 25 j 25 ; 25 25 ; IS 25 CITY OF 1 �L 10 1 M 1 43 14 15 ;16 17 ; 18 1 19 20 PP4Q./iLLQL1 . 2s, -g :2 4 II _,Z610 0. 9 - i5 � Z - a 0 7 r z§ 6- 4 74 2 I 20 201-7-9-15-25 55 56 57 58 1 t 54 53 52 51 59 + 50 CITY OF - t PALO 60 ,{ 49 6424. 48 120 IA 441. 14, 6. k' • N !� ALTO 62 47 -I- 1.94 AC . 63 46 -I- 64 -1- 45 65 44 - 11 150 66 + 43 112.50 -� g 1 1 1 1 1 1 14 135 136 :371311139 40 41142 1.0 1 1 a& ; 1 .Q g 3 m 25 75 25 1 125 251, 25 1.A7 a 2 23 2.1-3 au 3-7 571 261 r.M.62o=�t A�JEMUE •' T/-' _ .�.1 1 '0.31 PC L 1 (UPPER A ND LOWER LEVE LS) Pa ... 2 (MID LEVEL) SEE DET AIL PAGE 26•A 00.0. 0 59 60 18-7 33.34'35'36 $ g 1Q 1 1 1 21 - 22169 23 24 25 2.i 27 72 is - �t T T 29 30 31 32 t 1 115 r rs-22.-: ss -ays - 2614-2E5 4- AVENUE - MILLERS SUBDIVISION P .M .274-5 OF BLOCK 12 4114 • r $ N C A L I F O R N II A • Itig 4.9310 40.31 CJ -IL 173360 021 471a aDo 48 :�. _ 45 'q. 44 - 10600 8 PTN. PCL A 81 Ps331: 6,0618 P114. PCLA 8 • 4,934 at t:li- LA .21330434 PCL APN 103 2 1 a 30 X D 24 0 55 0 0N1 7S 100, 0403 Kw vE RS17r DETAIL 1 R1 anc 1M► LAYRENCE E. STI Ca iosbd mIp tar ass Campled under R. I Effective Rol Aar Nonumer or' lainoninnws Exhibit: B BRYANT STREET. COGS WELL T T • . T • T w 7.0L • �•�,117Y�Li�q•:L.�,.tt�y�"V ::T 132.0 ".i'ii+L...:6.f�vIPC?a:�.:7V , • TRUE F.O.B: i5 to L 4.O •PUBLIC PARKING • LOT .Z5 nio.01 1tCLvs" PARu,4 & 1. in 1 . J. •. •1 •• 0 44 RAMONA STREET j`; = s'.r,. LAND TO 8E LEAS ED FIELD BOOK. PAGE DATE LEASE DIAGRAM CITY OWNED LAND APPROVED: /=/'.,* 2/ i g 7' SCALE: rx 4G • DWG. NO. M e . IMOD lA 1 CERTIFICATION OF TRANSFER OF DEVELOPMENT RIGHTS – College Terrace Building This document is recorded for the benefit of the City of Palo Alto and is entitled to be recorded free of charge in accordance with Section 6103 of the Government Code. After Recordation, mail to: REAL PROPERTY MANAGER City of Palo Alto P. O. Box 10250 Palo Alto, CA 94303 Project: College Terrace Library, 2300 Wellesley Street, Palo Alto, CA CERTIFICATION OF TRANSFER OF DEVELOPMENT RIGHTS Palo Alto College Terrace Library 2300 Wellesley Street, Palo Alto, CA APN 137-02-025, 2,500 Square Feet of TDRS A. The City of Palo Alto, a municipal corporation (“Property Owner”) is the owner of a parcel of real property (the “Historic Site”), generally known as the Palo Alto College Terrace Library, located at 2300 Wellesley Street, City of Palo Alto, County of Santa Clara, State of California and more particularly described in Exhibit “A” attached to this document and made a part of it. B. To promote the preservation and rehabilitation of historic buildings, Palo Alto Municipal Code Chapter 18.18.080 permits transfer of 2,500 square feet of development rights from the Historic Site to an eligible receiver site. As a condition of such transfer, the Historic Site must be developed and maintained in conformance with the Secretary of Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings (the “Standards and Guidelines”). C. On January 21, 2009, the City’s Historic Resources Board (HRB) reviewed the plans for the renovation of College Terrace Library (the “Project”) and the Historic Structure Report as required for the project to participate in the TDR program. THE HRB supported participation of the College Terrace Library project in the TDR program and unanimously recommended approval of the Project as complying with the Secretary of the Interior’s Standards for Rehabilitation D. The Director of Planning approved the recommendation of the HRB and therefore ATTACHMENT G 2 certified that the Historic Site is an eligible sender site for 2,500 square feet of development rights for historic preservation. No floor area bonus has been utilized at the Historic Site. E. On April 13, 2009, the Palo Alto City Council confirmed the eligibility of the Historic Site as a “Sender Site” in the Transfer of Development Rights program. F. The City’s Planning Division has approved plans and issued permits for the rehabilitation of the historic property in accordance with the Project plans and the Secretary of Interior’s Standards for Rehabilitation and therefore has certified that the Historic Sender Site is an eligible Historic Sender site for 2,500 square feet of development rights for historic rehabilitation. G. On April 13, 2009 Council approved a resolution (CMR: 202:09) designating the College Terrace building as a Sender Site in the TDR program, fulfilling the first of five provisions required for eligible City owned buildings to participate in the TDR program as set forth in Municipal Code 18.28.060(d). The second provision, requiring the City Manager to establish a public bidding process to sell the bonus floor area development rights, has been completed and is documented according to policy and Procedures 1-46/ASD (Exhibit C). The third provision was fulfilled on May 21, 2009, Historic Structures Report prepared by the City of Palo Alto for the building and the fourth provision by the project approvals from the HRB, ARB and Director of Planning and Community Environment. Satisfaction of the fifth provision, the establishment by the City Manager of a fund for the proceeds from the TDR sale, will occur following the completion of the sale of the TDR. H. The holder of this Certification is entitled to 2,500 square feet of certified transferable development rights originating from the College Terrace Library Renovation Project. I. This Certification shall be recorded in the office of the Recorder of the County of Santa Clara. J. The holder of this Certification has the right to transfer, sell or otherwise convey the transferable development rights granted in this certification in accordance with the provisions of Chapters 18.18.080_ and 18.28 of the Palo Alto Municipal Code, as they may be amended from time to time. All transfers are subject to the limitations and possible termination of the transfer of development rights program in the future. 3 IN WITNESS WHEREOF, the parties have executed this Certification on the dates set forth below. PROPERTY OWNER: CITY OF PALO ALTO, a municipal Corporation ____________________ City Manager ____________________ Director of Planning & Community Environment APPROVED AS TO FORM: ______________________ Senior Assistant City Attorney LEGAL DESCRIPTION EXHIBIT 'A' "HOLLYWOOD PARK" All that certain real property situated in the City of Palo Alto, Santa Clara County, State of California, being portions of Blocks 36, 37, 38 and 39,.as shown an the map entitled "COLLEGE TERRACE", flied on October 8, 1891 In Book "E" of Maps at Page 121, Santa Clara County records, more particularly described as follows; BEGINNING at the most westerly corner of Lot 15, of said Block 39; thence along the southwesterly line of Lot 15 and Lot 16 of said Block 39, 50 feat to the most southerly corner of said Lot 16, Block 39; thence.contlnuing` along the southeasterly prolongation of the southwesterly line of said Lot 16, Block -39, 60 feet to the most westerly corner of Lot 16, of said Block 38; thence continuing along the southwesterly line of Lot 16 and Lot.15, said Block 38, 50 feet .to the mast southerly corner of said Lot 15, Block 38; thence leaving said southwesterly line, along the northwesterly line of Lot •17, of said .Block 38, 125 feet to the Most westerly corner of said Lot 17, Block 38; thence continuing along the southwesterly prolongation of the -northwesterly line of said Lot 17, Block 38, 60 feet to the most northerly corner of Lot 14, of said Block 37; thence along the northwesterly line of said Lot 14, Block 37, 125 feet to the most westarly,corner of said Lot 14, Block 37; thence leaving said northwesterly line, along the northeasterly line of Lot 16 and Lot 15, of said Block 37, 50 feet to the most northerly corner of said Lot 16, Block 37; thence continuing along the northwesterly prolongation of the northeasterly line of said Lot 15, Block 37, 60 feet to the most easterly corner of Lot 15, of sald Block 36; thence continuing along the northeasterly line of Lot 15 and Lot 16, of said Block 36, 50 feet to the most northerly corner of said Lot 16, Block 36; thence leaving said northeasterly line, along the southeasterly line of Lot 14, of said Block 36, 125 feet to the most easterly corner of Bald Lot 14, Block 36; thence continuing along the northeasterly prolongation. of the southeasterly line of said Lot 14, Block 36, 60 feet to the most southerly corner of Lot 17, of said Block 39; thence continuing along the southeasterly line of said Lot 17, Block 39, 125 feet to the POINT OF BEGINNING, Containing an area of 49,600 square feet (1.139 acres), more or Tess. Parcel is shown on attached plat EXHIBIT 8 and made a part thereof. END OF DESCRIPTION Page 1 of 2 14 11 19 BOCK 36 12 13 11 18 14 Y =MIDGE n� UE) 15 16 rn -40 2Q 19 BLOCK PLAT TO ACCOMPANY LEGAL DESCRIPIION EXHIBIT 'B' SCALE 1" = 60' 13 11 125' 50' • 125' POINT OF BEGINNING 137-02-025 MOST WESTERLY CORNER LANDS OF THE LOT 15. 9LO < 39 CITY OF PALO ALTO 125 HOLLYWO OD PAR{ COLLEGE IMAM 'E' . M APS 121 60'• 125' 15 1S (FO RMERL Y CAMBRIDGE to 15 14 u) ril 18 L� 37 13 .IC 1 f12 -I r- JRVEYOR' S STA ENENT ri f THIS N AP CORRECTLY REPRESENTS A SURVEY MADE BY ME CR UNDER 1Y DLRECRON 1N CONFORMANCE Wm THE REQUIRIFMENTS OF THE PROFESSIONAL LAND SURVEYORS' ACT AT THE RE TEST • OF MAR THA MUM ari OF PA LO ALTO, IN FEBR UARY 2.003. ICRZTINA 0:141e&, Ps fr' E6 UCEILSE EXPIRES Sleptember 30, 2010 DATE; • tG/t .. 2.Ei o 9 . 17 18 12 1 .133815 SilVilltM CROSS MS *L�A 'ND SURVEYI NG, INC. MIL 2210 . PLEASANT ROAD r SAN JOSE, CA 95148 ( ) 274-7994 PROJ ECT NO 09-12 1 This document is recorded for the benefit of the City of Palo Alto and is entitled to be recorded free of charge in accordance with Section 6103 of the Government Code. After Recordation, mail to: OFFICE OF THE CITY ATTORNEY 250 Hamilton Avenue Palo Alto, CA 94301 ______________________________________________________________________________ SPACE ABOVE THIS LINE FOR RECORDER'S USE AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS FOR HISTORIC PRESERVATION AND CERTIFICATION OF DEVELOPMENT RIGHTS 450 Bryant Street, PALO ALTO, CA Assessor's Parcel No. 120-26-095 This AGREEMENT AND DECLARATION OF COVENANTS AND RESTRICTIONS AND CERTIFICATION OF TRANSFER OF DEVELOPMENT RIGHTS is entered into as of ___________, 2018, by and between Avenidas, a California non-profit, tax exempt organization, whose address is 450 Bryant St, Palo Alto, CA 94301, ("Covenantor"), and the City of Palo Alto, a California chartered municipal corporation ("City"). RECITALS A. Covenantor is the holder of the Lease of a City owned real property, (the "Historic Site") generally located at 450 Bryant Street, Palo Alto, County of Santa Clara, State of California and more particularly described in Exhibit "A" and “B” attached to this document and a part of it. On May 26, 2016 the Historic Resources Board recommended inclusion of the property in the proposed designation as a Category 2 building. It was determined that the building meets the definition of “historic rehabilitation” as set forth in Municipal Code Section 18.18.080, and that the proposed historic rehabilitation plan for the building maintains the building’s identified historic character by conforming to the Secretary of Interior’s Standards for Rehabilitation with respect to preservation of character-defining features and with respect to compatibility and differentiation of the proposed new construction. B. On January 1, 2015, City granted Avenidas a long term lease of the Historic Site. That Lease currently expires on January 1, 2065. C. To promote the preservation and historic and seismic rehabilitation of historic buildings, Palo Alto Municipal Code Chapter 18.18.080 permits transfer of 9,188 square feet of development rights from the Historic Site to an eligible receiver site. As a condition of such transfer, the Historic Sender Site must be developed and maintained in conformance with the Secretary of the Interior's Standards for Rehabilitation and Guidelines for Reha bilitating Historic Buildings. City’s Historic Resources Board recommended approval of historic rehabilitation plans on May 26, 2016. The Architectural Review Board initially approved the ATTACHMENT H 2 project on June 16, 2016. D. The City of Palo Alto Planning Department has approved the project, building permits have been issued and the Covenantor is currently overseeing the historical rehabilitation, renovation and expansion of the Building. E. The Covenantor acknowledges and agrees that the covenants and restrictions in this Declaration are reasonable and acceptable conditions in an exchange of benefits received by Covenantor. AGREEMENT NOW, THEREFORE, Covenantor declares and covenants as follows: 1. Historic Site Shall Be Rehabilitated and Maintained as Historic Property. The Historic Site shall be burdened by the following restriction, which shall run with the Sender Site and be binding upon the successors and assigns of both Covenantor, as tenant, and City, as owner, that the Historic Sender Site shall be held, used , pledged, mortgaged and leased subject to and in accordance with the following restriction: Structures existing on the Historic Site as of the date of this Declaration shall be rehabilitated and maintained in accordance with the Secretary of the Interior's Standards for Rehabilitation of Historic Buildings, issued by the National Park Service, (36 Code of Federal Regulations Part 67) together with the accompanying interpretive Guidelines for Rehabilitation Historic Buildings, as they may be amended from time to time. The plan of rehabilitation was approved by the City on November 9, 2017, based upon a submittal prepared by Garavaglia Architecture, Inc., as it may be modified from time to time, in writing, by the Director of Planning or the City Council, in accordance with City rules and procedures. 2. Covenants Running with the Land. The covenants set forth herein shall be covenants running with the land and shall be binding upon Covenantor and City and their legal representatives, heirs, successors and assigns. Each of the covenants herein is expressly made for the benefit of the City of Palo Alto, and shall run with and burden the Historic Site. This Agreement is intended to be binding upon and enforceable against successive owners , users or tenants of the Historic Site under all applicable provisions of California law, including but not limited to Section 1468 of the California Civil Code. 3. Assumption by Transferee. Covenantor and any "Permitted Transferee," as hereinafter defined, agree and covenant not to transfer the Sender Sites except to a person or entity that expressly assumes all of the obligation of Covenantor hereunder with respect to the Sender Site or Sites transferred. A "Permitted Transferee" is any person or entity that agrees in writing to assume all of the obligations of Covenantor hereunder with respect to the property transferred. 4. Assignment of Right to Designate Receiver Site. In accordance with Palo Alto Municipal Code Chapter 18.18.080, the transfer of 9,188 square feet of development rights 3 from the Historic Site to an eligible receiver site may be made. In a separate transaction, City will assign the purchaser of the transfer of development rights the right to designate a receiver site for any transferable development rights from the Historic Resource Site. The sale of Transfer of Development Rights are made pursuant to Chapter 18.18.080 and 18.28.060 of the Palo Alto Municipal Code and are subject to the limitations and possible termination of the transfer of development rights program in the future. 5. Enforcement and Legal Expenses. City shall have the right to pursue any remedy at law or equity to secure Covenantor's compliance with the agreement, covenant and restrictions in this Declaration. If any legal action or proceeding is brought by City because of any default of Covenantor or to enforce a provision of this Declaration, the prevailing party shall be entitled, in addition to any other relief, to recover reasonable attorneys' fees and court costs from the losing party as determined by the court in which said action or proceeding is pending. The failure to enforce any of the agreements, covenants and restrictions set forth herein shall not be deemed to be a waiver of the right to do so thereaft er. CERTIFICATION OF TRANSFER OF DEVELOPMENT RIGHTS a. The City’s Director of Planning certifies that the Historic Sender Site is an eligible Historic Sender site for 9,188 square feet of development rights for historic rehabilitation. The Transfer Development Rights for the Avenidas Building cannot be used as an exemption to offset the parking requirements of the City of Palo Alto for additional square footage for new or existing developments. b. This Certification shall be recorded in the office of the Recorder of the County of Santa Clara. c. The Covenantor certifies that the lease referred to in Recital B shall be subject to the historic covenants herein. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below. CITY OF PALO ALTO AVENIDAS ___________________________ ______________________________ City Manager Executive Director ___________________________ Director of Planning and Community Environment APPROVED AS TO FORM: __________________________ City Attorney 4 5 City of Palo Alto (ID # 9630) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: Approval of Fiscal Year 2018 Reappropriation Requests and Budget Amendments Title: Approval of the Fiscal Year 2018 Reappropriation Requests to be Carried Forward Into Fiscal Year 2019 and Approve Budget Amendments in Various Funds From: Cit y Manager Lead Department: Administrative Services Recommendation Staff recommends that the City Council amend the Fiscal Year 2019 Budget Appropriation Ordinance for various funds as identified in Attachment A, various capital projects as identified in Attachment B, and technical clean-up actions as identified in Attachment C. Background As a part of the fiscal year-end process, staff reviews the City’s unencumbered and unspent appropriations of the fiscal year just ended, along with the City’s spend ing plans. Encumbered amounts are those subject to the legal claims of other parties due to contractual obligations (for example, commitments made through purchase orders), which are carried forward from one fiscal year to the next. Each year there are a small number of important projects which staff was not able to complete or encumber funds against. The reappropriation process allows staff to bring forward funding recommendations to City Council to continue these projects into the next fiscal year. On September 22, 2014, the City Council approved a recommendation to amend Chapter 2.28, Section 2.28.090 of the Municipal Code, reducing the previous two-step reappropriations process (preliminary and final reappropriation authorization) to one step as long a s the Administrative Services Director certifies that sufficient unencumbered and unexpended funds are available in the Fiscal Year that just ended to be carried forward to the subsequent Fiscal Year. Additionally, the City Council amended the Municipal Code to eliminate the provision allowing for the automatic reappropriation of capital project funds. However, capital projects may be delayed or deferred for various reasons. Therefore, there remains a need to reappropriate City of Palo Alto Page 2 funds for capital projects in some instances. This reappropriation is completed through a review of the status of projects as part of the annual budget process and built into the annual adopted budget. Now that Fiscal Year 2018 has closed and staff has processed necessary accounting transactions, any unexpended and unencumbered funds for each capital project have been reviewed one final time. Based on that review, staff recommends capital dollars remaining for some projects in various funds through Fiscal Year 2018 be reappropriated to Fiscal Year 2019. Also, as part of this review, staff realized that for some projects too much funding was recommended for reappropriation as additional expenditures occurred in Fiscal Year 2018. Therefore, this staff report also recommends reversing a portion of previously authorized reappropriations. In limited instances, budget actions are recommended in this report to technically correct operating and capital appropriations that were inadvertently misstated or omitted in the FY 2019 Adopted Budget. In total, 12 adjustments are recommended in this report to adjust the budget levels to align with anticipated revenue or expenditure levels. These adjustments are discussed in more detail in the subsequent section and are outlined separately in Attachment C. Discussion Attachment A identifies those operating budget requests that staff recommends for approval, while Attachment B lists recommended capital project requests. With the submission of this report for City Council consideration, the Administrative Services Director certifies sufficient unencumbered and unexpended funds are available from Fiscal Year 2018 to be reappropriated to Fiscal Year 2019. Operating Budget Reappropriations The projects for which operating budget reappropriations are recommended can generally be grouped into the following categories: • Timing and Workload Delays: Certain projects were delayed due to competing workload demands, appropriation of funds late in the fiscal year, or other unanticipated delays. Examples of projects in this category include but are not limited to: Purchasing Card Industry Analysis & Review ($50,000), Body Worn Cameras ($72,000), Labor Negotiation Contract Services ($50,000), City Hall 4th Floor Remodel ($45,000), Fire Hydrant Maintenance Program ($125,000), North Ventura Grant and Sobrato Funding Agreement ($188,847), Transportation Management Authority Services ($240,000), and Art Center Equipment Repairs ($40,181). • Technology Services: Funding was approved for technology system evaluation and upgrade projects but contracts were not awarded before the end of the fiscal year. Projects in this category include the Project Portfolio Management (PPM) Tool ($40,000), Geographical Information System (GIS) Modernization Project ($700,000), Police Public Safety Mobile Responder Technology ($30,400), SharePoint Training City of Palo Alto Page 3 Academy ($50,000), Secondary Offsite Data Center Facility ($120,000) and the Council Chambers Project ($226,000). • Library Donation and Grant: In June 2015, the City received a $320,000 donation from the Palo Alto Library Foundation. The Library has utilized this funding for the purchase of additional technology, such as tablets, e-readers, and other devices for staff development and customer instruction. This action will reappropriate the remaining $63,800 of the donation to continue workflow efficiency improvements, provide staff training, and help improve customer service efforts for the new facilities and products. • Human Services Resource Allocation Process (HSRAP) Reserve: At the June 9, 2014 City Council meeting, the Council established a one-time reserve of $50,000 for the HSRAP as part of the Budget Adoption for Fiscal Year 2015 and remained unspent through the close of Fiscal Year 2018. These unspent dollars are requested to be reappropriat ed to FY 2019. • Teen Services Programs: At the June 2, 2014 City Council meeting, the City Council approved a recommendation from the Policy and Services Committee to use a portion of the net revenue collected from 455 Bryant Street in Fiscal Years 2009 through 2013 to fund Teen Programs for Fiscal Year 2015 (CMR #4776). Staff returned to Policy and Services in the spring of 2018 for Committee Review of the FY 2017 and FY 2018 use of the Bryant Street Garage Fund for Teen Services and options for a spending plan (CMR #8887). In Fiscal Year 2019, Staff anticipates promoting a Request For Proposal (RFP) process throughout the Palo Alto community in order to engage youth serving organizations and encourage agencies to provide project proposals for use of the remaining funding. Teen Services programming includes but is not limited to: Think Fund grants, ClickPA website, Teen Arts Council, MakeX, Art Center, Think Fund Gala and the Buoyancy Teen Festival. As a result, this action will reappropriate $338,500 to continue supporting these programs as well as a sustainable, long-term approach for Teen Services utilizing Bryant Street funds. • Residential Housing In-Lieu Fund: At the June 22, 2015 City Council meeting, the Council approved a $375,000 loan with the Palo Alto Housing Corporation (PAHC) to deed restrict and rehabilitate property at 110-130 El Dorado Avenue. To date, $64,523 has been drawn by PAHC. The continuation of housing transactions will require reappropriation of these funds for PAHC to continue the rehabilitation of the property ($310,477). Capital Budget Reappropriations As discussed in the Background section of this report, starting with the Fiscal Year 2016 capital budget, all capital project reappropriations require City Council approval. The FY 2019 Adopted Budget included approximately $58.6 million in reappropriated funds, across all City funds City of Palo Alto Page 4 based on estimates of anticipated spending in FY 2018. Since the adoption of the capital budget, some adjustments and refinements to project reappropriat ions are required since FY 2018 year-end actuals and projects costs have been updated. These primarily reflect either increases or decreases to assumed reappropriations in the FY 2019 Adopted Budget: • Additional reappropriations are recommended when project expenditures originally anticipated to occur before the end of FY 2018 will now likely occur in FY 2019; • Downward adjustments to reappropriations are recommended when expenses were not anticipated to occur until FY 2019 and funding was reappropriated in the budget document to FY 2019. However, the expenses were realized in FY 2018, so an adjustment to reduce the budgeted reappropriation is needed because the activity no longer needs funding in FY 2019. Table 1 on the following page summarizes the recommended net adjustments as detailed in Attachment B. These Fiscal Year 2019 adjustments represent the final step in the City Council- approved change to the reappropriation process. There are sufficient expenditure savings in Fiscal Year 2018 to support all recommended adjustments. It should be noted that the revised process and active review of all project reappropriations results in a reduced level of reappropriated funding from one year to the next, compared to the process of automatically reappropriating unspent capital funding. Table 1: Capital Project Reappropriation Summary – By Fund Fund Number of Projects Recommended Revenue Reappropriation Adjustment Recommended Expense Reappropriation Adjustment Airport Fund 1 $53,800 $0 Capital Improvement Fund 49 $5,598,021 $3,393,801 Cubberley Fund 4 $0 $860,416 Electric Fund 16 $0 ($828,005) Fiber Optics Fund 1 $0 ($5,656) Gas Fund 1 $0 $100,000 Storm Drainage Fund 2 $0 ($37,062) Wastewater Collection Fund 4 $0 $53,429 Wastewater Treatment Fund 3 $10,490,575 $1,576,376 Water Fund 4 $0 $322,341 Technology Fund 5 $0 $455,995 Vehicle Replacement and Maintenance Fund 4 $0 ($1,466,752) Total All Funds 94 $16,142,396 $4,424,883 City of Palo Alto Page 5 Technical Clean-Up Actions Attachement C identifies a limited number of clean up adjustments that are recommended to correct operating and capital appropriations that were inadvertently misstated or omitted in the FY 2019 Adopted Budget. These adjustments can be grouped in the following categories: • Capital Projects: Several capital projects were overexpended in FY 2018 and did not have sufficient reappropriated funding in the FY 2019 Adopted Budget to return funding from FY 2019 to FY 2018. In order to keep the overall projects’ budgets the same across the life of the projects, the budget authority for these projects is recommended to be decreased in FY 2019 to offset the increase in FY 2018 recommended as part of the FY 2018 Year End process. These projects include: o Cubberley Repairs (CB-17001) o Gas Main Replacement – Project 22 (GS-12001) o Water Main Replacement – Project 26 (WS-12001) In addition to these projects, the Utilities Department reassessed the Coleridge/Cowper/Tennyson 4/12kV Coversion project (EL-14000) and determined that there was only $50,000 worth of work needed in FY 2019, so the project is recommended to be reduced by $350,000 and the funding returned to the Electric Fund fund balance for other electric capital needs. • Contract Services: At the May 29, 2018 meeting, the City Council approved a new citywide landscape maintenance contract (CMR 9114). As noted in the CMR the impact to the General Fund will be $82,500 after accounting for the increased reimbursement s for services to other funds; however, the additional costs associated with the new contract were erroneously left out of the FY 2019 Adopted Budget due to the timing of the CMR and the FY 2019 budget process. Therefore, an adjustment of $136,500 is recommended to increase the expense appropriation in the Community Services Department to align with anticipated landscaping costs in FY 2019 partially offset by an increased transfer from the the Wastewater Treatment Fund ($54,000) for landscaping services at the Wastewater Quality Control Plant. • Transfer alignment: As part of the FY 2019 Adopted Budget, an additional transfer of $160,400 from the General Fund to the Captial Improvement Fund was approved in the General Fund; however, the corresponding transfer was not recorded in the Capital Improvement Fund. This action is a technical clean‐up that will recognize and approve the other half of the transfer in the Capital Improvement Fund. A total of $660,000 was recommended to be transferred from the Storm Drainage Fund to the Charleston/Arastradero Corridor project (PE‐13011) in FY 2018 for green stormwater infrastructure installation. Due to a change in the timing of funding needed in FY 2018, only $330,000 of this transfer was approved in CMR 9111, so the remaining $330,000 is City of Palo Alto Page 6 recommended to be transferred in FY 2019 to fully fund the green stormwater portion of the Charleston/Arastradero Corridor project. Resource Impact The requested items have been previously reviewed and approved by City Council as part of annual budget processes. The Director of Administrative Services has certified that sufficient funds exist for the recommended Fiscal Year 2018 Operating Budget adjustments (Attachment A), and Capital Budget adjustments (Attachment B). For Operating reappropriations, staff recommends expense reappropriations of $1.8 million in the General Fund, $0.6 million in Special Revenue Funds, $0.2 million in Enterprise Funds, and $1.2 million in Internal Service Funds. For capital projects, staff recommends a net $4.3 million in expenses be reappropriated to FY 2019 in the Capital Improvement Funds and that $5.6 million in revenue be reappropriated. Also recommended is a net $1.2 million increase in expenditures in the various Enterprise Funds with reappropriated revenue of $10.5 million, and a net reduction of $1.0 million in expenditures in the Internal Service Funds. Policy Implications This recommendation is consistent with adopted Council policy. Environmental Review The action recommended is not a project for the purposes of the California Environmental Quality Act. Attachments: • Attachment A: FY 2018 to FY 2019 Operating Budget Reappropriations • Attachment B: FY 2018 to FY 2019 Capital Project Reappropriations • Attachment C: FY 2019 Technical Clean-up Actions FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  General Fund Office of the City Auditor Training and Development This action reappropriates funding for training and mentoring  services. This funding will be used to ensure that the City Auditor's  Office can further enhance its professional competency, improve  the quality of the audits performed, and comply with professional  standards for continuing education.   $                              5,000  General Fund Administrative Services City Hall 4th Floor Remodel This action reappropriates funding for furniture, fixtures and  equipment (FF&E) to supplement the City Hall 4th Floor Remodel  Capital Improvement project (PE‐17008). The capital costs  associated with this project ($445,000) are budgeted in the Capital  Improvement Fund, and were reappropriated to FY 2019 as part of  the Adopted 2019 Capital Budget, due to the project being delayed  to FY 2019. Supplemental funds in the Administrative Services  Department were set aside in FY 2018 to fund FF&E for the  remodel, which was not budgeted as part of PE‐17008, and must be  reappropriated to FY 2019 to complete the project as planned.  $                           45,000  General Fund Administrative Services Purchasing Card Industry  Analysis & Review This action reappropriates funding for a Payment Card Industry  Data Security Standards (PCI DSS) compliance report. PCI DSS  applies to entities of any size that accept credit card payments to  ensure data is being handled securely with a PCI compliant hosting  provider and is required every two years to remain in compliance  with PCI banking requirements. The FY 2018 report was delayed  due to staff turnover, but is anticipated to be completed in FY 2019.  $                           50,000  Page 1 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  General Fund Community Services Art Center Bequest This action reappropriates funds for the repair and replacement of  various equipment in the Palo Alto Art Center's Ceramics Studio. On  June 19, 2017, the City Council approved a bequest of $54,350 from  the Sherrie Innis Estate to the Palo Alto Art Center's Ceramics  Studio as part of CMR #8187. $49,130 of that was unspent at the  end of FY 2017 and reappropriated to FY 2018 . At the close of FY  2018, $40,181 remained unspent and is recommended to be  reappropriated.  These funds were specifically donated to the City  to maintain and upgrade the Ceramics Studio and it is anticipated  that the remaining funds will be needed to repair or replace  multiple pieces of equipment in FY 2019.  $                           40,181  General Fund Community Services Think Fund Teen Services  (Formerly Bryant Street  Garage Teen Programs) This action reappropriates funds in the 'Think Fund' (previously  named 'Bryant Street Garage Teen Program') that were previously  allocated from the net revenue collected from 455 Bryant Street in  Fiscal Years 2009 through 2013 to fund teen programs (CMR 4776)  along with unspent rental income collected from 455 Bryant Street  in FY 2018. The City leases out space on the ground floor of the  garage at 455 Bryant Street to retail vendors. Community Services  staff provided program updates to the Policy and Services  Committee at the May 8, 2018 meeting through CMR 8887 and  recommended engaging the community through a Request‐For‐ Proposal process in FY 2019 to evaluate innovative proposals and  determine the best use of the remaining funds. The  reappropriation of these funds ensures resources will be available  to continue providing quality teen services to the community and  develop a long‐term approach to maintain delivery of these  services.  $                         338,500  Page 2 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  General Fund Community Services Human Services Resource  Allocation Program (HSRAP)  Reserve This action reappropriates funding for the Human Services  Resource Allocation Program (HSRAP) Reserve into FY 2019. At the  June 9, 2014 City Council meeting, the City Council established a  one‐time reserve of $50,000 for the HSRAP as part of the Budget  Adoption for FY 2015. This reserve funding has remained unspent  through the close of FY 2018 and is recommended to be  reappropriated to FY 2019.  $                           50,000  General Fund Fire  Fire Hydrant Maintenance  Program This action reappropriates funding to establish a Fire Hydrant  Maintenance Program. In FY 2018, one‐time funding of $125,000  was appropriated to address a backlog of fire hydrant maintenance  including: clearing overgrowth, painting, flow testing, and ensuring  compliance with the National Fire Protection Agency (NFPA)  standards. Bringing fire hydrants into compliance with standards  set by the NFPA will increase safety of the community and assist in  improving the Department Insurance Service Office (ISO) rating.  The procurement process for these services was initiated in FY 2018  and is anticipated to be completed in FY 2019.   $                         125,000  General Fund Human Resources Citywide Management  Training This action reappropriates funding for management training and  professional development. The management benefit program  provides $1,000 per eligible employee with the purpose of  providing employees with resources to improve and supplement  their job and professional skills. In total, $260,000 of this funding  was reappropriated from the prior year and an additional savings of  $85,000 was realized in FY 2018 across departments in the General  Fund. This action is recommended for the continuation of the  program and will focus on the following training programs: Ethics,  Civics and Citizen Engagement, Leadership and Management,  Budget, Finance, Procurement, Interpersonal Communication,  Presentation Skills, Business Writing, Time Management, Project  Management, Change Management, Online based education, and  Safety & Security.   $                         345,000  Page 3 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  General Fund Human Resources Labor Negotiation Contract  Services This action reappropriates funding to continue contract services  necessary for outside counsel, salary surveys, and other expenses  expected in the upcoming labor negotiations in FY 2019. As of FY  2018 year end, the City reached agreements with two (SEIU‐Hourly  and PAPOA) of the six represented units, and completed  negotiatiations with the other safety units (IAFF, FCA, and PAPMA)  in early FY 2019. The Labor Team is currently in negotiations with  SEIU, the City's largest bargaining unit.  $                           50,000  General Fund Non‐Departmental Citywide Transportation  Services Study This action reappropriates funding for consultancy services to  evaluate the Transportation ecosystem in the City of Palo Alto. In FY  2018, one‐time funding of $150,000 was appropriated to  inform  the path forward for the City's parking and transportation efforts,  contribute to the integration of a strategic vision across each of  those efforts, and review what organizational structure would best  manage these new initiatives. This funding is recommended to be  reappropriated to FY 2019 so that this work can be completed.  $                         150,000  General Fund Non‐Departmental Sustainability Contingency This action reappropriates funding to the Sustainability Reserve,  originally appropriated in FY 2017 and unspent through June 30,  2018. As part of Budget Adoption for FY 2017, the City Council  established a one‐time reserve of $250,000 to potentially fund  specific requests brought forth by the Office of Sustainability.  Potential uses of the reserve include community engagement  around the Sustainability and Climate Action Plan (S/CAP), S/CAP  implementation scenarios, and management of existing and  pending pilots. Changes to the Office of Sustainability were  included in the Adopted FY 2019 Operating Budget and the  reappropriation of the sustainability contingency will ensure  sufficient resources remain available for sustainability initiatives.  $                         250,000  Page 4 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  General Fund Library Palo Alto Library Foundation  Donation for Training and  Customer Service  Improvement  This action reappropriates funding remaining from the Palo Alto  Library Foundation donation of $320,000 originally approved by the  City Council in June 2015 through CMR 6343. With the  implementation of a new library service platform, the  application  of 'Lean Library Principles' to library operations, and the ongoing  education needed to adopt new technologies, this funding will  continue to be used to improve and support outreach efforts and  staff development/training.  $                           63,800  General Fund Planning and Community  Environment North Ventura Grant and  Sobrato Funding Agreement  This action reappropriates funding for the North Ventura Grant and  Sobrato Funding Agreement. In total, $888,000 was appropriated in  March 2018 through CMR 8986 to the Planning and Community  Environment Department for the development of coordinated area  plans that will guide development of the North Ventura area and  the completion of the associated environmental clearance. The  Department initiated the procurement process for this project in FY  2018, including consultancy services to assist staff with the planning  and urban design of the area, but was unable secure all contracts  prior to year end. This funding will ensure that the final contracts  can be secured to complete the work.  $                         188,847  General Fund Police Body Worn Cameras This action reappropriates funding to purchase body worn cameras  for sworn Police personnel on duty. These cameras integrate with,  and enhance, the current in‐car camera system and will assist in  criminal prosecution, potentially reduce civil liability, and aid in the  review of alleged misconduct. The Department undertook a  comprehensive pilot program in 2017 utilizing ten cameras over a  six‐month period. In May 2018, the Department returned to City  Council with an implementation plan for the in‐field video program  and contract to complete the purchase of the remaining fifty (50)  body‐worn cameras  as discussed in CMR 9075. The procurement  process for this purchase was initiated in FY 2018 and is anticipated  to be completed in FY 2019.   $                           72,000  Total General Fund Reappropriation  $                      1,773,328  Page 5 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  Housing In‐ Lieu/Residential Planning and Community  Environment Affordable Housing  Agreement: El Dorado This action reappropriates funding for the El Dorado affordable  housing agreement. In total, $375,000 was approved by the City  Council in June 2015 for the Palo Alto Housing Corporation (PAHC)  to deed restrict and rehabilitate property at 110‐1030 El Dorado  Avenue through CMR 5712. The deed restriction ensures that the  three units on this property are leased only to qualifying low  income households. At FY 2018 year‐end, PAHC had only drawn on  $64,523 of the $375,000. The remaining funds are recommended to  be reappropriated so that there is sufficient funding to finish the  rehabilitation of the properties.  $                         310,477  University Avenue  Fund Planning and Community  Environment Transportation Management  Authority (TMA) This action reappropriates funding for services previously rendered  by the Transportation Management Association (TMA). In total,  $480,000 was appropriated as part of the FY 2018 Adopted Budget  to the TMA to support the reduction of single occupancy vehicle  (SOV) rates in Palo Alto. Due to significant invoicing delays, the  third and fourth installments for services from January 1, 2018  through June 30, 2018 are not anticipated to be billed to the City  until the beginning of FY 2019. This action will ensure that sufficient  funding is available to meet the City's obligations.  $                         240,000  Total Special Revenue Fund Reappropriation  $                         550,477  Page 6 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  Wastewater  Treatment Fund Public Works Environmental Impact Report  (EIR) Addendum for Advanced  Water Purification Facility This action reappropriates funding to conduct an Environmental  Impact Report (EIR) Addendum as part of the planning effort for  the Advanced Water Purification Facility capital project (WQ‐ 19003). The EIR was not completed prior to the end of FY 2018, and  this action ensures sufficient funding is available for the EIR  Addendum in FY 2019.  $                           75,000  Storm Drain Fund Public Works Embarcadero Pump Station  Maintenance This action reappropriates funding to perform maintenance at the  Embarcadero Pump Station to remove and examine two pumps for  necessary repairs, parts replacements, or complete rebuild and  installation. Completion of this maintenance will ensure that  potential failures during winter storms are avoided. Funding for this  was originally appropriated as part of the FY 2018 Adopted Budget;  however, due to staffing resource constraints the work will now be  completed in FY 2019.  $                         100,000   $                         175,000  Technology Fund Information Technology Project Portfolio Management  Tool This action reappropriates funding to procure and implement a  project management software solution, which will centralize  projects for the IT's Project Management Office in one view,  enabling staff to keep current projects on‐track and manage  upcoming projects in the pipeline. The procurement and  installation was originally scheduled to occur in FY 2017; however  after a series of delays, this project will now occur in FY 2019.  $                           40,000  Technology Fund Information Technology Geographical Information  System (GIS) Modernization  Project This action reappropriates funding for the Geographical  Information System (GIS) Modernization Project. Esri was selected  as the new GIS vendor for the City, and $750,000 was appropriated  as part of the FY 2018 Adopted Budget. Due to various delays, the  remaining  funding is recommended to be reappropriated to FY  2019.   This is a multi‐year project with many components to  upgrade the City's GIS. Full integration of Esri is anticipated by FY  2021.  $                         700,000  Total Enterprise Fund Reappropriation Page 7 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  Technology Fund Information Technology Mobile Responder and Online  Reporting Enhancement This action reappropriates funding necessary to complete  implementation of two Police Department applications, the Mobile  Responder Application and the Online Reporting Application. Both  provide enhanced functionality to the Computer Aided Dispatch  (CAD) system. Once fully implemented, these applications will  minimize staff report time and enhance service delivery to the  public. This project was initially anticipated to occur in FY 2017;  however, due to delays associated with integrating the records  management system, it will now occur in FY 2019. Remaining funds  will be used for the purchase of a Mobile Responder Application in  partnership with the cities of Mountain View and Los Altos.   $                           30,400  Technology Fund Information Technology SharePoint Training Academy This action reappropriates funding to establish a training solution  for the City of Palo Alto's SharePoint deployment (City Center 2).  The SharePoint Academy provides a framework for understanding  SharePoint features, functions, administration, and collaboration.  This course will provide attendees with professionally delivered  training classes. One‐time funding of $50,000 for this training  program was appropriated as part of the FY 2018 Adopted Budget;  however, the project was delayed and it is now scheduled to be  implemented in FY 2019.   $                           50,000  Technology Fund Information Technology Secondary Offsite Data Center  Facility This action reappropriates funding to identify, build‐out, and  deploy a secondary offsite facility to house and support critical data  center infrastructure. Providing a redundant set of servers offsite  ensures accessibility to core systems that could otherwise  be  inaccessible in the event that servers at the primary location are  damaged. This project was initially scheduled for FY 2017 but is  now anticipated to occur in FY 2019.  $                         120,000  Page 8 of 9 FY 2018 to FY 2019 Operating Budget Reappropriations ATTACHMENT A Fund Name Department Title Description  Recommended  Reappropriation  Technology Fund Information Technology Council Chambers Project  (Reserve) This action reappropriates funding to replace the current analog  media and recording equipment in the City Council Chambers with  digital equipment. The current equipment is past its serviceable life  and beyond its warranty, has no back‐up, and does not have a  redundancy capability, which jeopardizes the ability to stream and  record meetings in the City Council Chambers. The funding for  equipment replacement was already collected through the  technology surcharge to the General Fund, as well as from other  funds around the City. It is anticipated that the Department will  return to Finance Committee in Fall 2018 to determine the scope of  the full City Council Chamber Upgrade project, and that this funding  will be used to partially offset the full project costs at that time.  $                         226,000  Total Internal Service Fund Reappropriation 1,166,400$                       Total Reappropriation All Funds 3,665,205$                      Page 9 of 9 FY 2018 to FY 2019 Capital Project Reappropriations ATTACHMENT B Project ID Project Title Fund Revenue Reappropriation  Adjustment Expense Reappropriation  Adjustment AP‐16000 Airport Apron Reconstruction Airport 53,800$                                 ‐$                           AC‐18001 JMZ Renovation Capital Improvement Fund 259,187$                               790,335$                  AC‐86017 Art in Public Places Capital Improvement Fund 13,322$                    FD‐14002 Fire Ringdown System Replacement Capital Improvement Fund 96,977$                    FD‐18000 Self‐Contained Breathing Apparatus (SCBA) Replacement Capital Improvement Fund 83,417$                    OS‐00001 Open Space Trails & Amenities Capital Improvement Fund (1,979)$                     OS‐00002 Open Space Lakes/Ponds Maintenance Capital Improvement Fund 43,188$                    OS‐09001 Off‐Road Pathway Resurfacing and Repair Capital Improvement Fund 49,999$                    PE‐08001 Rinconada Park Improvements Capital Improvement Fund (300,000)$                 PE‐09003 City Facility Parking Lot Maintenance Capital Improvement Fund 3,995$                       PE‐11011 Highway 101 Pedestrian/Bicycle Overpass Project Capital Improvement Fund 333,000$                               ‐$                           PE‐12011 Newell Road Bridge / SFC Bridge Replacement Capital Improvement Fund (97,100)$                   PE‐12017 City Hall 1st Floor Capital Improvement Fund 202,625$                  PE‐13011 Charleston Arastradero Capital Improvement Fund 1,700,604$                            87,188$                    PE‐14015 Lucie Stern Building Capital Improvement Fund 25,320$                    PE‐15011 Ventura Building Improvements Capital Improvement Fund 405,821$                  PE‐15020 Civic Center Waterproofing Study Capital Improvement Fund 4,132$                       PE‐15028 Baylands Levee Improv Feasibility Study Capital Improvement Fund 500$                          PE‐17004 California Avenue District Gateway Signs Capital Improvement Fund 143,125$                  PE‐17005 Boulware Park Improvements Capital Improvement Fund (30,000)$                   PE‐17008 City Hall Floor 4 Remodel Capital Improvement Fund (18,449)$                   PE‐17009 City Hall Floor 5 Remodel Capital Improvement Fund 25,733$                    PE‐17010 Civic Center Electric Upgrade & EV Charger Installation Capital Improvement Fund 203,000$                               323,780$                  PE‐18000 New California Avenue Area Parking Garage Capital Improvement Fund (339,919)$                 PE‐18001 Caltrain Corridor Video Management System Installation Capital Improvement Fund (28,311)$                   PE‐18002 High Street Parking Garage Waterproofing Study and Repair Capital Improvement Fund 44,744$                    PE‐18006 Byxbee Park Completion Capital Improvement Fund 62,869$                    PE‐86070 Street Maintenance Capital Improvement Fund 826,639$                               (99,918)$                   PF‐00006 Roofing Replacement Capital Improvement Fund (60,242)$                   PF‐02022 Interior Finishes Construction Capital Improvement Fund (26,233)$                   PF‐14002 Fire Station 1 Improvements Capital Improvement Fund 100,000$                  PF‐14003 University Ave Parking Capital Improvement Fund 25,004$                    PF‐16003 Parking Lot Q Elevator Modernization Capital Improvement Fund 25,591$                                 ‐$                           PF‐16006 Municipal Service Center Improvements Capital Improvement Fund 582,323$                  Page 1 of 3 FY 2018 to FY 2019 Capital Project Reappropriations ATTACHMENT B Project ID Project Title Fund Revenue Reappropriation  Adjustment Expense Reappropriation  Adjustment PF‐93009 Americans With Disabilities Act Compliance Capital Improvement Fund (160,005)$                 PG‐06001 Tennis & Basketball Court Resurfacing Capital Improvement Fund 335,023$                   PG‐06003 Benches, Signage, Fencing, Walkways, Landscaping Capital Improvement Fund (98,103)$                   PG‐09002 Park & Open Space Emergency Repairs Capital Improvement Fund (3,638)$                     PG‐13003 Golf Reconfig & Baylands Capital Improvement Fund 2,250,000$                            408,482$                  PG‐15000 Buckeye Creek Hydrology Study Capital Improvement Fund 10,904$                    PL‐00026 Safe Routes to School (Local/Neigh. Coll St. Calming) Capital Improvement Fund (17,464)$                   PL‐04010 Bicycle Boulevards Implementation Project Capital Improvement Fund 225,435$                  PL‐05030 Traffic Signal Upgrades Capital Improvement Fund (42,077)$                   PL‐11002 California Avenue Transit Hub Corridor Capital Improvement Fund 15,000$                    PL‐14000 El Camino/ Churchill Intersection Improv Capital Improvement Fund 250,000$                  PL‐14001 Midtown Connector Capital Improvement Fund 53,120$                    PL‐15001 Embarcadero Road Corridor Improvements Capital Improvement Fund 288,155$                  PL‐17001 Railroad Grade Separation Capital Improvement Fund 303,115$                  PO‐12001 Curb and Gutter Repairs Capital Improvement Fund 70,375$                    PO‐89003 Sidewalk Repairs‐GF Capital Improvement Fund (356,767)$                 CB‐16001 Cubberley Community Center Master Plan Cubberley 665,972$                  CB‐16001 Cubberley Roof Replacements Cubberley 255,080$                  CB‐17001 Cubberley Repairs  Cubberley (247)$                         CB‐17002 Cubberley Field Restroom Cubberley (60,389)$                   EL‐04012 Utility Site Security Electric (337)$                         EL‐11003 Rebuild Underground District 15 Electric (2,040)$                     EL‐11010 Underground District 47 Electric (15,378)$                   EL‐12001 Underground District 46 Electric (14,279)$                   EL‐13003 Rebuild UG District 15 Electric (7,587)$                     EL‐13007 UG Distribution System Security Electric (300,000)$                 EL‐13008 Upgrade Electrical Estimating System Electric (19,136)$                   EL‐14000 Coleridge/Cowper/Tennyson 4/12kV Conversion Electric (120,000)$                 EL‐16001 UG System Rebuild Electric (30,496)$                   EL‐16002 Capacitor Bank Installation Electric (150,889)$                 EL‐17000 Rebuild Underground District 23 Electric (150,000)$                 EL‐17005 HCB Pilot Wire Relay Electric (76,324)$                   EL‐17007 Facility Relocation Electric (5,299)$                     EL‐17008 Utility Control Center Upgrade Electric (81,805)$                   Page 2 of 3 FY 2018 to FY 2019 Capital Project Reappropriations ATTACHMENT B Project ID Project Title Fund Revenue Reappropriation  Adjustment Expense Reappropriation  Adjustment EL‐89038 Substation Protection Electric 31,640$                    EL‐89044 Substation Facility Electric 113,925$                  FO‐16000 Fiber Optic System R Fiber Optics (5,656)$                     GS‐11000 GMR ‐ Project 21 Gas 100,000$                  SD‐06101 Storm Drain System R Storm Drainage (133,331)$                 SD‐13003 Matadero Creek Storm Water Storm Drainage 96,269$                    TE‐01012 IT Disaster Recovery Plan Technology 33,785$                    TE‐05000 Radio Infrastructure Replacement Technology (7,920)$                     TE‐10001 Utilities Customer Bill System Improvements Technology 66,480$                    TE‐12001 Development Center Blueprint Technology Enhancement Technology 313,650$                  TE‐13004 Infrastructure Management System Technology 50,000$                    VR‐15000 Vehicle Replacement FY 2015 Vehicle (23,922)$                   VR‐16000 Vehicle Replacement FY 2016 Vehicle (56,244)$                   VR‐17000 Vehicle Replacement FY 2017 Vehicle (278,612)$                 VR‐18000 Vehicle Replacement FY 2018 Vehicle (1,107,974)$             WC‐11000 Wastewater Collection Rehabilitation/Augmentation ‐ Project 24 Wastewater Collection 34,852$                    WC‐13001 Wastewater Collection Rehabilitation/Augmentation ‐ Project 26 Wastewater Collection 46,387$                    WC‐14001 Wastewater Collection Rehabilitation/Augmentation ‐ Project 27 Wastewater Collection 73,015$                    WC‐15001 Wastewater Collection Rehabilitation/Augmentation ‐ Project 28 Wastewater Collection (100,825)$                 WQ‐14001 Dewatering and Loadout Facility Wastewater Treatment 10,490,575$                         60,697$                    WQ‐14002 New Laboratory & Environmental Services Building Wastewater Treatment 400,034$                  WQ‐19002 Plant Repair, Retrofit, and Equipment Replacement Wastewater Treatment 1,115,645$               WS‐08001 Water Reservoir Coating Improvements Water (5,286)$                     WS‐09000 Seismic Water System Upgrades Water (53,450)$                   WS‐11000 Water Main Replacement ‐ Project 25 Water 381,939$                  WS‐13001 Water Main Replacement ‐ Project 27 Water (862)$                         Total All Funds 16,142,396$                         4,424,883$               Page 3 of 3 FY 2019 Technical Clean‐up Actions ATTACHMENT C Fund Name Department Title Description Expense Revenue General Fund Community  Services Citywide Landscape  Maintenance Contract At the May 29, 2018 meeting, the City Council approved a new  citywide landscape maintenance contract. The additional costs  associated with the new contract were erroneously omitted from  the FY 2019 Adopted Budget. This adjustment will increase the  funding for the contract in FY 2019 as well as the revenue from the  Wastewater Treatment Fund for landscaping services at the  wastewater control plant. 136,500$          54,000$            Capital Improvement  Fund Non‐ Departmental Transfer from General  Fund (Transient  Occupancy Tax for  Infrastructure) As part of the FY 2019 Adopted Budget, an additional transfer of  $160,400 associated, associated with Transient Occupancy Tax  revenues for Infrastructure, from the General Fund to the Capital  Improvement Fund was approved in the General Fund. However,  the corresponding recognition of the transfer was not included in  the Capital Improvement Fund. This action is a technical clean‐up  that will recognize and approve the other half of the transfer in  the Capital Improvement Fund. ‐$                   160,400$          Capital Improvement  Fund Public Works Transfer from Storm  Drainage Fund for  Charleston/Arastradero  Corridor Project A total of $660,000 was recommended to be transferred from the  Storm Drainage Fund to the Charleston/Arastradero Corridor  Project (PE‐13011) in FY 2018 for green stormwater infrastructure  installation. Only $330,000 of this transfer was approved in CMR  9111; the remaining $330,000 is recommended to be transferred  in FY 2019 to fully fund the green stormwater portion of the  project. The corresponding expense increase in the Storm  Drainage Fund is included in this document. ‐$                   330,000$          Cubberley Property  Infrastructure Fund Public Works Cubberley Repairs  Capital Project The Cubberley Repairs capital project (CB‐17001) was over  expended in FY 2018, and the budget was increased by $20,710 as  part of the FY 2018 Year‐End process. In order to maintain the  total project budget over the life of the project, a corresponding  decrease of $20,710 is recommended in FY 2019. (20,710)$           ‐$                   Page 1 of 2 FY 2019 Technical Clean‐up Actions ATTACHMENT C Fund Name Department Title Description Expense Revenue Electric Fund Utilities Coleridge/Cowper/ Tennyson 4/12kV  Conversion Capital  Project The Coleridge/Cowper/Tennyson 4/12kV Conversion capital  project (EL‐14000) was adopted with a budget of $400,000 in FY  2019; however, the Department has determined that there is only  $50,000 of work needed. A reduction of $350,000 is  recommended to reduce the project and return the funding to the  Electric Fund ending fund balance to use for other electric capital  needs. (350,000)$         ‐$                   Gas Fund Utilities Gas Main Replacement ‐  Project 22 Capital  Project The Gas Main Replacement ‐ Project 22 capital project (GS‐12001)  was over expended in FY 2018, and the budget was increased by  $132,365 as part of the FY 2018 Year‐End process. In order to  maintain the total project budget over the life of the project, a  corresponding decrease of $132,365 is recommended in FY 2019. (132,365)$         ‐$                   Storm Drainage Fund Public Works Transfer to Capital Fund  for Charleston/  Arastradero Corridor  Project A total of $660,000 was recommended to be transferred from the  Storm Drainage Fund to the Charleston/Arastradero Corridor  Project (PE‐13011) in FY 2018 for green stormwater infrastructure  installation. Only $330,000 of this transfer was approved in CMR  9111. Thee remaining $330,000 is recommended to be transferred  in FY 2019 to fully fund the green stormwater portion of the  project. The corresponding revenue increase in the Capital Fund is  included in this document. 330,000$          ‐$                   Wastewater  Treatment Fund Public Works Citywide Landscape  Maintenance Contract At the May 29, 2018 meeting, the City Council approved a new  citywide landscape maintenance contract through CMR 9114. The  additional costs associated with the new contract were  erroneously omitted from the FY 2019 Adopted Budget. This  adjustment will increase the funding for landscaping services at  the wastewater control plant. 54,000$            ‐$                   Water Fund Utilities Water Main  Replacement ‐ Project  26 Capital Project The Water Main Replacement ‐ Project 26 capital project (WS‐ 12001) was over expended in FY 2018, and the budget was  increased by $259,937 as part of the FY 2018 Year‐End process. In  order to maintain the total project budget over the life of the  project, a corresponding decrease of $259,937 is recommended in  FY 2019. (259,937)$         ‐$                   Total All Funds (242,512)$       544,400$         Page 2 of 2 CITY OF PALO ALTO OFFICE OF THE CITY CLERK October 29, 2018 The Honorable City Council Palo Alto, California SECOND READING: Adoption of an Ordinance Amending Chapter 4.62 (Citywide Minimum Wage) of the Palo Alto Municipal Code to Correct and Clarify That the First Consumer Price Index (CPI) Adjustment to the Minimum Wage Will Occur in 2020 (FIRST READING: October 15, 2018 PASSED: 8-0 Kniss Absent) The attached Ordinance was first heard by the City Council on October 15, 2018, where it passed 8-0, Kniss absent, with no changes. It is now before the City Council fo r second reading. ATTACHMENTS: • Attachment A: Minimum Wage Ordinance (PDF) Department Head: Beth Minor, City Clerk Page 2 Not Yet Approved Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Section 4.62.030 (Minimum Wage) of Chapter 4.62 (Citywide Minimum Wage) of Title 4 (Business License & Regulations) of the Palo Alto Municipal Code to Correct the Commencement Date of Annual Adjustments Relative to the Consumer Price Index The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Section 4.62.030 (Minimum Wage) of Chapter 4.62 (Citywide Minimum Wage) of the Palo Alto Municipal Code is hereby amended as follows: 4.62.030 Minimum wage. (a) Employers shall pay employees no less than the minimum wage set forth in this section for each hour worked within the geographic boundaries of the City of Palo Alto. (b) The minimum wage shall be an hourly rate of eleven dollars ($11.00) through December 31, 2016. On January 1, 2017, the minimum wage shall be an hourly rate of twelve dollars ($12.00). On January 1, 2018, the minimum wage shall be an hourly rate of thirteen dollars and fifty cents ($13.50). On January 1, 2019, the minimum wage shall be an hourly rate of fifteen dollars ($15.00). To prevent inflation from eroding its value, beginning on January 1, 20192020, and each January 1st thereafter, the minimum wage shall increase by an amount corresponding to the increase, if any, in the cost of living, not to exceed 5%. The prior year's increase in the cost of living shall be measured by the percentage increase, if any, as of August of the immediately preceding year of the Bay Area Consumer Price Index (Urban Wage Earners and Clerical Workers, San Francisco-Oakland-San Jose, CA for All Items) or its successor index as published by the U.S. Department of Labor or its successor agency, with the amount of the minimum wage increase rounded to the nearest multiple of five cents ($.05). If there is no net increase in the cost of living, the minimum wage shall remain unchanged for that year. The adjusted minimum wage shall be announced by October 1st of each year, or as soon as practicable thereafter if the Consumer Price Index for August has not yet been published, and shall become effective as the new minimum wage on January 1st of each year. (c) A violation for unlawfully failing to pay the minimum wage shall be deemed to continue from the date immediately following the date that the wages were due and payable as provided in Part 1 (commencing with Sec. 200) of Division 2 of the California Labor Code, to the date immediately preceding the date the wages are paid in full. SECTION 2. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the 1 Not Yet Approved fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION3. The Council finds that this Ordinance is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the Ordinance will have a significant effect on the environment. SECTION 4. This Ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Administrative Services 2 City of Palo Alto (ID # 9671) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: 3743 Redwood Circle: Appeal of IR Approval Title: QUASI -JUDICIAL: 3743 Redwood Circle [17PLN -00272]: Consideration of an Appeal of the Director's Individual Review Approval of a new Two -story, Single Family Home. Environmental Assessment: E xempt From the Provisions of the California Environmental Quality Act (CEQA) in Accordance With Guideline Section 15303 (New Construction). Zoning District: R -1 (Single Family Residential) From: City Manager Lead Department: Planning and Community Environ ment Recommendation Staff recommends that the City Council decline to hear the appeal of the Individual Review (IR) application (file #17PLN-00272) for a new two-story home at 3743 Redwood Circle, thereby upholding the Director of Planning and Community Environment’s approval. Executive Summary The rear neighbors of the subject property request an appeal (Attachment B) of the director’s approval of a single family Individual Review (IR) application for the construction of a new two- story home. Three or more Council Members’ votes would be needed to remove this item off the consent calendar to set the matter for a future hearing. Not pulling the item of consent affirms the director’s decision. The property, located within the Fairmeadow Eichler Homes tract, is not subject to single story overlay zoning and is adjacent to one- and two-story homes. There are two two-story homes abutting the subject property. One is directly south of the subject property and the other is to the rear. The appellants are the two property owners to the immediate rear of the site, Manoj and Jasleen Raisinghani (3714 Carlson Circle), and Tim Perkins (3712 Carlson Circle). The Raisinghanis requested the initial director’s hearing on staff’s tentative approval of the house. City of Palo Alto Page 2 In response to the director’s hearing, plan modifications were required to address privacy concerns and are reflected on the attached plans. The director approved the project on August 31, 2018; a timely appeal was filed thereafter. The appellants object to the distance of the new second story’s rear wall from the rear property line and request the City: • impose a 40 foot rear setback (twice the minimum rear setback requirement and increase by eleven feet from the approximate 29-foot second floor setback in the approved plans), • require re-positioning of the second floor such that it is more centrally located above the first floor, • relocate three egress windows at second floor rear elevation to the side elevations, and • require opaque glass on a 1’8” wide window facing the two-story home on the right side. The subject application was filed on July 26, 2017, however the application was only determined complete for filing in May 2018. The project was controversial from the outset and during this period of time there was considerable conversation between the applicant, neighbors and the city staff. The request for a director’s hearing followed those conversations and issuance of tentative decision letter. Background The IR guidelines include criteria related to basic site planning; neighborhood compatibility for height, mass and scale; resolution of architectural form, massing and roof lines; visual character of street facing facades and entries; and placement of second-story windows and decks for privacy. The Individual Review program applies to construction of new two story homes and second story additions, and is intended to mitigate the effects of that construction on neighboring single family homes (per PAMC Section 18.12.110(a)). Development applications subject to the IR regulations must be consistent with the IR guidelines (per PAMC Section 18.12.110(d)). Council Review Authority Individual Review applications are typically reviewed and approved through a staff-level process. Following a tentative decision, any adjacent property owner or occupant may request a director’s hearing. The director or designee then conducts a noticed public hearing on the project, receives testimony, and makes a final decision. Following this approval, owners and occupants of abutting properties may appeal the decision to Council. When this occurs, the appeal is placed on the Council consent calendar for final action on the project. The Council has two options. First, Council may approve the project on consent, after hearing any speakers who wish to comment on consent agenda items. Second, if three Council members vote to remove City of Palo Alto Page 3 the project from the consent calendar, the Council may determine whether to set a new hearing before the City Council. If the Council agrees to hear an appeal, a hearing is scheduled as soon as practical, in accordance with Palo Alto Municipal Code (PAMC) Section 18.77.075. Eichler’s Fairmeadow Tract The new two-story home is proposed on a property located on the outer edge of one of three circles of the Fairmeadow Tract, an original Eichler Homes tract. The location of the subject property is shown in the larger subdivision diagram below left (and on an attached location map, Attachment D). The view of the sky from the appellant’s property through the existing mature vegetation on the subject property (to be retained and supplemented with three additional evergreen trees) is shown in the image below right. Chronology On July 26, 2017 the applicant submitted plans showing a stucco and clay tile roof two-story home that was over 24 feet tall and included a second floor balcony set back 20 feet from the rear property line. Following staff’s comments on the initial plans, as well as public comments from several neighbors, the applicant submitted revised plans in early 2018, which received staff’s additional feedback. Plans submitted in May 2018 showing a deleted rear balcony, increased rear setback, rear yard screen trees and greater architectural compatibility (including lower overall height) with the neighborhood, were tentatively approved. Further detail is provided in the attached chronology (Attachment E). Redesign of Rear Elevation July 2017 May 2018 Between Hearings 2018 City of Palo Alto Page 4 August 31, 2018 Final elevation employing obscured glass The Raisinghanis shared their privacy concerns in their hearing request and these were reiterated in their verbal testimony at the Director’s hearing. The other appellant, Mr. Perkins, wrote emails to staff voicing concerns with the project prior to and after the hearings, but did not attend the Director’s Hearings. Mr. Perkins’ concerns at that time were stated in the Director’s Hearing staff report viewable here: https://www.cityofpaloalto.org/civicax/filebank/documents/66121. Staff also met with the Raisinghanis at their property to learn of concerns related to impacts of the second story volume on privacy and solar access. Discussion As described in Attachment B, the appellants seek a greater second floor rear setback, second floor centering, the removal of rear wall bedroom egress windows, and additional opaque glass on a slim, tall window that does not face the appellants’ properties (now resolved as the plans indicate opaque glass on the slim, tall window). Staff has provided an analysis of each of the appellants’ requested changes below. (1) Provide a Forty Foot Setback The appellants have requested that the rear setback of the second floor be increased from The 28’-11” currently proposed to 40’ in order to mimic the rear setback of the adjacent two- story house and to provide additional privacy for their properties. The subject R-1 Zoning District provides two development standards that affect the placement of second stories, a 20’ rear setback, as well as a rear daylight plane. Additionally, the Individual Review Guidelines provide that second floor volumes should be designed to mitigate perceived mass and scale from the street, which is often accomplished by stepping the second story back and placing more of the volume in the rear. The project’s second story exceeds the required setback by over 8 feet, and is far under the required daylight plane. While staff understands the City of Palo Alto Page 5 appellants’ concerns, staff believes that the privacy issues raised have been sufficiently addressed through a combination of high and obscured rear-facing windows, the elimination of a previously-proposed rear balcony and rear-facing bay windows, and the addition of required trees along the rear property line. Moreover, an increase in the rear setback would push the second floor volume forward, and potentially impact the project’s compliance with the Individual Review Guidelines. (2) Center the Second Floor Volume The appellants have requested that the volume of the second story be centered on the site in order to reduce the perceived scale and privacy impacts of the volume from the Raisinghani’s property. The second floor is roughly centered from side to side, with a slight difference of two feet. The right side second floor setback is approximately 31 feet and the left side second floor setback is approximately 29 feet. Adjusting the second floor to provide an equal setback across the entire rear wall would not improve privacy for the rear neighbors, but would actually decrease the setback from the right side of the rear wall to the Raisinghani’s property. (3) No Egress Windows on Second Floor Rear Wall The appellants have requested that the required egress windows on the second floor rear wall be relocated to the side elevations in order to protect the rear neighbor’s privacy. Typically, it is best practice to have the bedroom egress windows placed on the rear elevation rather than on the side elevations due to the large expanse of space enabled by back-to-back rear yard setbacks. For example, the rear setback from the proposed second story to the adjacent rear property is 29 feet, while the side setbacks on either side are 6 feet. Staff explored this option for the subject site, and found that relocating the egress windows to the sides would potentially result in a privacy issue for the side neighbors. In response to the appellants concern, the City has required additional mitigations for the rear-facing windows, including obscured glazing up to 5’ feet above the floor, the elimination of window seats on the rear to prevent casual viewing, and three pittosporum trees at the rear property line to fill in gaps in the existing landscaping. With these structural and landscaping measures, as well as the existing trees and shrubs at the rear, which are substantial, staff believes that the privacy concerns of the neighbor have been sufficiently addressed. (4) Opaque Glass Use on Side Window The appellants have requested that a narrow (1’8”) side window on the right elevation be obscured. The plans have since been modified to accommodate this request, and the change is included in the project plans. The below image shows the approved opaque glass window located at the far right. City of Palo Alto Page 6 Eichler Neighborhood Design Guidelines Council adopted the Eichler Design Guidelines in April 2018. Unlike the Individual Review Guidelines, adherence to the Eichler Guidelines is voluntary and not required by the Municipal Code. Nevertheless, staff did provide Eichler Guideline 4.2.2 regarding new construction to the applicant. Eichler Guideline 4.2.2 begins as follows: “Place as much interior living space on the first floor of a home as possible, using a footprint that spreads across the lot.” During the second Director’s hearing, it was noted the amount of available floor area for use at the first floor level was minimal, due to maximum lot coverage standard for a two story home (The project as currently designed proposes 1,979 square feet on the first floor, whereas 2,101 square feet is the maximum permitted). Given the minimal amount of space that could be added to the first floor, staff believes that the project adheres to this voluntary Guideline. Other bulleted items under Eichler Design Guideline 4.2.2 are summarized as follows: • employ simple massing techniques with a unified form for the mass rather than diverse attached components, • floor level heights to conform to those of surrounding Eichler homes, and. • include an even façade plane at the front façade rather than projections toward the street that complicate the massing and roof form, and The proposed home has multiple sloped roofs and a flat roof, as seen at the front elevation below. With somewhat simple massing, there are no diverse attached components. The floor level heights are similar to the adjacent homes’ floor level heights as demonstrated in the streetscape drawing below. The first floor wall is an even façade plane with a recessed entry, like many original Eichler homes. The second floor jogs and steps back on the property in accordance with a technique outlined in the IR streetscape guideline; it is not aligned in an even façade plane in a parallel City of Palo Alto Page 7 configuration with the first floor front wall. The below site plan shows the jogged and stepped back second floor as shaded and the first floor is shown in white. Alternative to Staff Recommendation The Council’s alternative to the staff recommendation, outlined in PAMC Section 18.77.075(g)(2), is to remove the recommendation from the consent calendar and set the application for a new hearing before the City Council. If the Council so directs, staff will identify a date for the hearing and will provide appropriate public notice in advance of the hearing. Policy Implications The Director’s decision to approve the application is consistent with staff’s implementation of the Individual Review Guidelines, and with the policies and intent of the Individual Review Process. The last two appeals of IR approvals were also new homes in Eichler tracts. The most recent appeals, in 2014, were for a new home at 1066 Metro (Council staff report viewable at https://www.cityofpaloalto.org/civicax/filebank/documents/44873) and a new home at 808 Richardson (Council staff report viewable at https://www.cityofpaloalto.org/civicax/filebank/documents/43228). These appeals led to Council’s adoption of several Single Story Overlay Zones in Eichler tracts, and the creation of voluntary-use Eichler Neighborhood Design Guidelines. In 2016, staff brought forward a study of the IR program to the Planning and Transportation Commission in August 2016 (staff report viewable here: https://www.cityofpaloalto.org/civicax/filebank/documents/53365). In April 2018, Council directed staff to return with concepts for an Eichler Zone Combining District so that Eichler tract homeowners could “opt in” similar to Single Story Overlay zones. At this time, however, there are insufficient resources to move this policy project forward. Timeline The attached chronology (Attachment E) provides a timeline for processing this project. City of Palo Alto Page 8 Environmental Review This project is exempt from the provision of the California Environmental Quality Act (CEQA) per Section 15303(a) of the CEQA Guidelines. The proposal includes the demolition of an existing residence and construction of a new residence. A single family residence is a type of exempt project provided as an example in Guidelines Section 15301(a). Attachments: Attachment A: Approval letter dated August 31, 2018 (PDF) Attachment B: Appeal Letter (PDF) Attachment C: Tentative Approval Letter dated May 15, 2018 (PDF) Attachment D: Location Map (PDF) Attachment E: Chronology of the Process and Plan Revisions (DOCX) Attachment F: Correspondence (PDF) Attachment F: Correspondence part 2 (PDF) Attachment G: Project Plans (DOCX) PLANNING & COMMUNITY ENVIRONMENT CITY OF 250 Hamilton Aiinue 5th Fio- i PALO Palo Alto, CA 94301 ALTO 650 329 2441 August 31, 2018 Ming Li Meng Long 3743 Redwood Circle Palo Alto, CA 94306 Email: minggingli@gmail.com Architect's email: ketlel@yahoo.com SUBJECT: 3743 Redwood Circle (17PLN-00272) Individual Review Dear Ms. Li and Mr. Long: This letter reflects my approval of your two-story home Individual Review application for the demolition of an existing single family residence in an original Eichler homes R-1 tract and construction of a new two-story single family residence with an attached one -car garage. This approval follows two Director's Hearings and is made on behalf of the Interim Director of Planning and Community Environment. This Final, Conditional Approval is appealable to the Palo Alto City Council. As the designated Hearing Officer, I considered all testimony and submittals received in person and by email during the extended hearing process. This letter references August 31, 2018 modifications you made to the May 2018 plans which had been used for the Proposed Decision. My decision, based upon sketches dated August 31, 2018 showing proposed modifications to the May 2018 plans, requires submittal of revised plans consistent with these sketches and addressing the attached approval conditions. This decision is granted pursuant to the Palo Alto Municipal Code Sections 18.12.110 and 18.77.075. The revised project meets all five of the Palo Alto Single Family Individual Review Guidelines and complies with the R-1 Zone District development regulations. Appeal: This approval will become effective 14 days from the postmark date of this letter, unless the Planning Department receives an appeal prior to the end of the business day 14 calendar -days after the postmark date. Only an applicant, or the owner or tenant of an adjacent property may appeal this decision. If a timely appeal is received, staff will schedule the appeal within 45 days of receiving the appeal on a City Council agenda, on the 'consent calendar'. It would take three Councilmembers to pull the item off consent calendar and schedule for a future, noticed public hearing where the Council would adopt findings and take action on the application. If three Councilmembers do not remove the item from the consent agenda, my decision would remain in effect. cc: Neighbor notification list (150 ft) Attachment: Conditions of Approval Property Owner 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 2 of 12 Approval Findings and Conditions: This letter, which contains approval findings, and the attached approval conditions (Attachment A) shall be printed onto building permit plans submitted with a Building Permit application, which may now be submitted to staff at the Development Center. lithe building permit has not been issued and construction commenced within one year from the effective approval date, this approval will expire. A written request for an extension may be submitted prior to the expiration date, and the Director may grant a one-year extension of this approval. Findings for Approval As noted, the project meets all five of the Individual Review (IR) Guidelines, and the development standards of the R-1 Zone District. The Zoning Code, IR Guidelines and Eichler Guidelines do not set a minimum distance for second floors, nor place restrictions on the amount of floor area on residential second floors. As noted previously, the IR Guidelines encourage the technique of stepping back of the second floor at the front of the house to meet the streetscape guideline; and these plans employ this technique to meet this guideline. It should be noted that in April 2018, City Council adopted the Eichler Guidelines for voluntary use during the IR process and for use in any future Eichler Overlay zones, once such a zone type is created and once homeowners of properties within an Eichler Tract seek together to rezone the tract. Also noted is that this property is not within a Single Story Overlay zone. Should you have any questions regarding this approval, please do not hesitate to call Amy French, Chief Planning Official at (650) 329-2336 or e-mail amy.french @cityofpaloalto.org. You may also email Graham.Owen@cityofpaloalto.org to ask about next steps in the process. Amy French Chief Planning Official Cc: Ket Le, 793 Kyle Street, San Jose, CA 95127 Adjacent neighbors 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 3 of 12 ATTACHMENT A INDIVIDUAL REVIEW CONDITIONS OF APPROVAL 3743 Redwood Circle, 17PLN-00272 The property owner is solely responsible for meeting the below conditions of approval. Planning staff recommends the property owner discuss these conditions of approval with the contractor, designer, and others as appropriate, and contact Planning staff with any questions. The approval is subject to the following conditions (annotated to show changes to conditions after Director's Hearings): PLANNING DIVISION CONDITIONS: 1. CONFORMANCE WITH PLANS. Construction and development shall conform to the approved plans entitled, "New Home for Ming Li, 3743 Redwood Circle, Palo Alto, California, 94306" stamped as received by the City on May 2, 2018, subject to modifications reflecting sketches received August 31, 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. A copy of this cover letter and conditions of approval shall be printed on the second page of the plans submitted for building permit. Project plans submitted for Building permits shall incorporate the following changes: A. Plan Modifications: i. Sheet Al New Site Plan, Sheet A3 New Neighborhood Site Plan, and Sheet Al2 Landscape Plan shall be modified to (a) indicate planting of an additional evergreen tree in the rear yard — located roughly between the two new pittosporum trees that were shown on the May 2018 plans and (b) show the proper tree protection fencing for all trees to remain on site including the street trees. Sheet Al2 Landscape Plan shall be modified to clarify the botanical name and planting size of the pittosporum undulatum or similar shrubs on the building permit plans. The shrubs should be indicated as 24 -inch sized box at planting and the height should be at least 8 feet at time of installation. ii. Sheets Al, A3 and Al2 shall be modified to (a) show the location of the proposed accessory structure located at least 75 feet from the front property line, and to (b) adjust the location of the corner privacy landscaping (pittosporum) to be between the accessory structure and fence to provide optimal screening at the northeasterly corner. Given the need for adequate screen trees growing environment and the fact that the existing lot depth is less than 100 feet, the size, placement and orientation of the accessory structure may need further adjustment to not impact this screening. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 4 of 12 B. Elevations and Floor Plans Modifications: i. Sheet A7: Elevations shall be modified (as seen on the left side elevation) to extend the length of the eave (overhang) at the shed form adjacent the front -right corner of the house so that it extends at least 3 feet past the front wall of the master suite (dimension line 4). ii. Sheet A7 Elevations and Sheet A-6 2nd Floor Plan shall be modified in accordance with the August 31, 2018 sketches, submitted to the Chief Planning Official for the planning file within two weeks, and with building permit plans, reflecting the following: a. There shall be no protruding window boxes on the rear wall (boxes deleted in sketches during the hearing process, prior to the Director's Hearing of August 23, 2018) b. All rear -facing windows shall only be clear glass above a height of five feet from the finished floor of the second floor bedrooms (as shown on the August 31, 2018 sketch). Only obscured glass shall be used below a height of five feet on second floor windows (with the exception of the stair window facing the left side elevation) and the selected and installed product shall be further monitored as noted in condition of approval #5. c. The rear -facing 2"d floor bedrooms shall have only one egress "double hung" window at the rear wall with obscured glazing installed on the bottom half of the window (where the bottom panel of the window is openable in order to provide emergency egress). d. Both rear facing bedrooms shall have high clear "horizontal sliding" windows with the bottom of the windows at 5'-0" above the floor level for privacy. e. Below the rear -facing horizontal sliding window on the master bedroom, another "fixed", obscured glass window below the 5'-0" level as measured from the finished second floor (as shown on August 31st sketch) is allowed. f. The master bedroom shall be allowed a new 1'-8" wide clear "fixed" window on the side wall in order to bring in more daylight. g. All second floor windows shown in building permit plans shall show the window operations and whether they are casements or vertical sliders. h. A new 1'8" wide clear window is allowed as indicated on the right side elevation in the second floor bedroom in the narrow return wall that is set back approximately 28'4" from the property at 3747 Redwood Circle. As this window would not face the rear, it may extend as a clear window below the five foot level, to a height of one foot above the finished floor level. 4. REQUIRED LANDSCAPING/TREES. The following landscaping is required to ensure the project's conformance with the City's IR Guidelines and therefore must remain for the life of the structure. Trees shall be a minimum of 8 feet when planted. Privacy landscaping shall be planted prior to occupancy. A. Three (3) 24" -box evergreen privacy shrubs, including pittosporum or similar species, shall be planted and maintained along the rear yard property line to provide screening of the second floor of the proposed house from the rear neighbors. Plantings shall be located consistent with the 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 5 of 12 approved Site Plan to the satisfaction of the Director of Planning. The landscape plan shall specify the planting size as 24" -box. B. The existing trees and shrubs along the rear property line as shown on Sheet Al2 shall be maintained to provide privacy screening from the second floor of the proposed residence. If removed the plantings shall be replaced with equivalent screening prior to occupancy. 5. OBSCURED GLAZING. All obscure glazing, as shown on the plan set and as modified per the August 31st submittal, shall be permanent in nature and shall remain for the life of the structure. Obscure glazing is either decorative glazing that does not allow views through placed into the window frame or acid etched or similar permanent alteration of the glass. Films or like additions to clear glass are not permitted where obscure glazing is shown. Obscure glazing shall not be altered in the future and shall be replaced with like materials if damaged. If operable, these windows shall open towards the public right-of-way. The actual window type with obscured glazing and manufacturer shall be provided to the Chief Planning Official for review and approval with the building permit plans; along with a sample of the obscured glass for verification the glass will be obscure. 6. 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. 7. REQUIRED PARKING: All single family homes shall be provided with a minimum of one covered parking space (10 foot by 20 foot interior dimensions) and one uncovered parking space (8.5 feet by 17.5 feet). 8. UTILITY LOCATIONS: In no case shall utilities be placed in a location that requires equipment and/or bollards to encroach into a required parking space. In no case shall a pipeline be placed within 10 feet of a proposed tree and/or tree designated to remain. 9. BAY WINDOWS: Bay windows if at least 18 inches above the interior floor, projecting no more than two feet, and with more than 50% window surface shall not be counted towards the homes floor area ratio (FAR). Any changes to proposed bay windows must first be reviewed and approved by the Director of Planning and Community Environment. 10. NOISE PRODUCING EQUIPMENT: All noise producing equipment shall be located outside of required setbacks, except they may project 6 feet into the required street side setbacks. In accordance with Section 9.10.030, No person shall produce, suffer or allow to be produced by any machine, animal or device, or any combination of same, on residential property, a noise level more than six dB above the local ambient at any point outside of the property plane. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 6 of 12 11. IMPERVIOUS SURFACE: A minimum of 60 % of the required front yard shall have a permeable surface that permits water absorption directly into the soil (Section 18.12.040 (h)). The building permit plan set shall include a diagram demonstrating compliance. 12. FENCES. Fences and walls shall comply with the applicable provisions of Chapter 16.24, Fences, of the Palo Alto Municipal Code (PAMC). Heights of all new and existing fencing must be shown on the Building Permit plans. 13. PLANNING 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, fenestration and hard surface locations. Contact your Project Planner at the number below to schedule this inspection. 14. 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. GREEN BUILDING & ENERGY REACH CODE REQUIREMENTS: NOTICE FOR PERMIT APPLICATIONS SUBMITTED ON OR AFTER 1/1/17: Please be advised that the Palo Alto City Council has approved Energy Ordinance 5383 and Green Building Ordinance 5393 for all new permit applications with an effective date for January15, 2017. To review the upcoming changes, visit the Development Services webpaqe .On the left-hand side under "EXPLORE"; hover over "Green Building" and select "Compliance." For information regarding the Model Water Efficient Landscape Ordinance, please see the Outdoor Water Efficiency Webpaqe for compliance documentation. You may also email Green Building at GreenBuildinq@cityofpaloalto.orq for specific questions about your project. 1. GREEN BUILDING CONDITIONS OF APPROVAL a) The project is a new construction residential building of any size and therefore must meet the California Green Building Code mandatory requirements outlined in Chapter 4, (with local amendments) plus Tier 2 minimum pre -requisites and electives outlined in Appendix A4* (with local amendments). The project must hire a Green Building Special Inspector for a pre - permit third -party design review and a third -party green building inspection process. The project must select a Green Building Special Inspector from the City's list of approved inspectors. PAMC 16.14.080 (Ord. 5393 § 1, 2016) (1) *Note: Projects subject to Tier 1 or Tier 2 shall not be required to fulfill any requirements outlined in Appendix A4.2 Energy Efficiency. All energy efficiency measures are found in the 2016 California Energy Code and the Palo Alto Energy Reach Code PAMC 16.17 & 16.18 as described in the Energy Reach Code section of this letter. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 7 of 12 b) Model Water Efficient Landscape Ordinance (MWELO): The project is a residential new construction project with an aggregate landscape area of 500 square feet or more included in the project scope of work and therefore shall comply with the requirements of the Landscape Documentation Package (§492.3). Please see the Outdoor Water Efficiency Webpage for compliance documentation. (MWELO Title 23, Chapter 2.7) c) The project is a residential construction project of any size and therefore must meet the enhanced construction waste reduction at Tier 2 (80% construction waste reduction). PAMC 16.14.160 (Ord. 5393 § 1 (part), 2016) d) The project is a new detached single-family dwelling and therefore shall comply with the following requirements for electric vehicle supply equipment (EVSE): (a) The property owner shall provide as minimum a panel capable to accommodate a dedicated branch circuit and service capacity to install at least a 208/240V, 50 amperes grounded AC outlet (Level 2 EVSE). The raceway shall terminate in close proximity to the proposed location of the charging system into a listed cabinet, box, enclosure, or receptacle. The raceway shall be installed so that minimal removal of materials is necessary to complete the final installation. The raceway shall have capacity to accommodate a 100 -ampere circuit. (b) Design. The proposed location of a charging station may be internal or external to the dwelling, and shall be in close proximity to an on -site parking space. The proposed design must comply with all applicable design guidelines, setbacks and other code requirements. PAMC 16.14.420 (Ord. 5393 §2, 2016) 2. LOCAL ENERGY REACH CODE CONDITIONS OF APPROVAL a) The project includes new residential construction of any size and therefore triggers the Local Energy Efficiency Reach Code. For all new single-family residential there are two compliance options and one all -electric exception. i) Single -Family Residential Options: (1) OPTION 1: Performance: New single- family residential construction projects without a solar photovoltaic (PV) system, the performance approach specified within the 2016 California Energy Code shall be used to demonstrate that the TDV Energy of the proposed building is at least 10% Tess than the TDV Energy of the Standard Design, if the proposed building does not include a PV systems. (a) Solar Ready Infrastructure: A dedicated solar zone shall be located on the rood or overhang of the building and have a total area no less than 500 square feet. Install a conduit extending from the roofline and terminating at the electrical panel. (2) OPTION 2: Performance: New single- family residential construction projects with a solar photovoltaic (PV) system, the performance approach specified within the 2016 California Energy Code shall be used to demonstrate that the TDV Energy of proposed single-family residential construction is at least 20% less than the TDV Energy of the Standard Design, if the proposed building includes a photovoltaic system. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 8 of 12 (a) Solar Ready Infrastructure: A dedicated solar zone shall be located on the rood or overhang of the building and have a total area no less than 500 square feet. Install a conduit extending from the roofline and terminating at the electrical panel. b) All Electric Exemption: i) All- Electric Exception to the Local Energy Reach Code: New single-family residential construction that is designed and built to be all -electric shall be exempt from the requirements of Section 100.3. Local Energy Efficiency Reach Code. 3. Additional Green Building and Energy Reach Code information, ordinances and applications can be found at http://www.cityofpaloalto.org/gov/depts/ds/green_building/default.asp. If you have any questions regarding Green Building requirements please call the Green Building Consultant at (650) 329-2179. PUBLIC WORKS URBAN FORESTRY CONDITIONS — Elizabeth Lanham 650-617-3173 PRIOR TO DEMOLITION, BUILDING OR GRADING PERMIT ISSUANCE 1. BUILDING PERMIT SUBMITTAL- PROJECT ARBORIST CERTIFICATION LETTER. Prior to submittal for staff review, attach a Project Arborist Certification Letter that he/she has; (a) reviewed the entire building permit plan set submittal and, f) affirm that ongoing Contractor/Project Arborist site monitoring inspections and reporting have been arranged with the contractor or owner (see Sheet T-1) and, j1 understands that design revisions (site or plan changes) within a TPZ will be routed to Project Arborist/Contractor for review prior to approval from City. 2. PLAN SET REQUIREMENTS. The final Plans submitted for building permit shall include the following information and notes on relevant plan sheets: a. SHEET T-1, BUILDING PERMIT. The building permit plan set will include the City's full-sized, Sheet T-1 (Tree Protection -it's Part of the Plan!), available on the Development Center website at http://www.cityofpaloalto.org/civicax/filebank/documents/31783. The Applicant shall complete and sign the Tree Disclosure Statement and recognize the Project Arborist Tree Activity Inspection Schedule. Monthly reporting to Urban Forestry/Contractor is mandatory. (Insp. #1: applies to all projects; with tree preservation report: Insp. #1-7 applies) b. The Tree Preservation Report (TPR). All sheets of the Applicant's TPR approved by the City for full implementation by Contractor shall be printed on numbered Sheet T-1 (T-2, T-3, etc) and added to the sheet index. c. Plans to show protective tree fencing. The Plan Set (esp. site, demolition, grading & drainage, foundation, irrigation, tree disposition, utility sheets, etc.) must delineate/show the correct configuration of Type I, Type II or Type III fencing around each Regulated Street Tree, using a bold dashed line enclosing the Tree Protection Zone 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 9 of 12 (Standard Dwg. #605, Sheet T-1; City Tree Technical Manual, Section 6.35 -Site Plans); or by using the Project Arborist's unique diagram for each Tree Protection Zone enclosure. DURING CONSTRUCTION 3. TREE PROTECTION VERIFICATION. Prior to any site work a written verification from the contractor that the required protective fencing is in place shall be submitted to the Urban Forestry Section (derek.sproat@cityofpaloalto.org). The fencing shall contain required warning sign and remain in place until final inspection of the project. 4. EXCAVATION RESTRICTIONS APPLY (TTM, Sec. 2.20 C & D). Any approved grading, digging or trenching beneath a tree canopy shall be performed using 'air -spade' method as a preference, with manual hand shovel as a backup. For utility trenching, including sewer line, roots exposed with diameter of 1.5 inches and greater shall remain intact and not be damaged. If directional boring method is used to tunnel beneath roots, then Table 2-1, Trenching and Tunneling Distance, shall be printed on the final plans to be implemented by Contractor. 5. PLAN CHANGES. Revisions and/or changes to plans before or during construction shall be reviewed and responded to by the project site arborist with written letter of acceptance before submitting the revision to the Building Department for review by Planning, PW or Urban Forestry. 6. CONDITIONS. All Planning Department conditions of approval for the project shall be printed on the plans submitted for building permit. 7. TREE PROTECTION COMPLIANCE. The owner and contractor shall implement all protection and inspection schedule measures, design recommendations and construction scheduling as stated in the TPR & Sheet T-1, and is subject to code compliance action pursuant to PAMC 8.10.080. The required protective fencing shall remain in place until final landscaping and inspection of the project. Project arborist approval must be obtained and documented in the monthly activity report sent to the City. The mandatory Contractor and Arborist Monthly Tree Activity Report shall be sent monthly to the City (pwps@citvofpaloalto.org) beginning with the initial verification approval, using the template in the Tree Technical Manual, Addendum 11. 8. TREE DAMAGE. Tree Damage, Injury Mitigation and Inspections apply to Contractor. Reporting, injury mitigation measures and arborist inspection schedule (1-5) apply pursuant to TTM, Section 2.20-2.30. Contractor shall be responsible for the repair or replacement of any publicly owned or protected trees that are damaged during the course of construction, pursuant to Title 8 of the Palo Alto Municipal Code, and city Tree Technical Manual, Section 2.25. 9. GENERAL. The following general tree preservation measures apply to all trees to be retained: No storage of material, topsoil, vehicles or equipment shall be permitted within the tree 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 10 of 12 enclosure area. The ground under and around the tree canopy area shall not be altered. Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. PRIOR TO OCCUPANCY 10. PROJECT ARBORIST CERTIFICATION LETTER. Prior to written request for temporary or final occupancy, the contractor shall provide to the Planning Department and property owner a final inspection letter by the Project Arborist. The inspection shall evaluate the success or needs of Regulated tree protection, including new landscape trees, as indicated on the approved plans. The written acceptance of successful tree preservation shall include a photograph record and/or recommendations for the health, welfare, mitigation remedies for injuries (if any). The final report may be used to navigate any outstanding issues, concerns or security guarantee return process, when applicable. PUBLIC WORKS ENGINEERING CONDITIONS-Ajay Kumar 650-329-2209 1. EASEMENT: Indicate existing easements on proposed site plan. Accessory structure including roof overhangs and drainage features shall be kept clear out of the easement area. 2. DEMOLITION PLAN: Place the following note adjacent to an affected tree on the Site Plan and Demolition Plan: "Excavation activities associated with the proposed scope of work shall occur no closer than 10 -feet from the existing street tree, or as approved by the Urban Forestry Division contact 650-496-5953. Any changes shall be approved by the same". 3. GRADING PERMIT: Separate Excavation and Grading Permit will be required for grading activities on private property that fill, excavate, store or dispose of 100 cubic yards or more based on PAMC Section 16.28.060. Applicant shall prepare and submit an excavation and grading permit to Public Works separately from the building permit set. The permit application and instructions are available at the Development Center and on our website. http://www.cityofpaloalto.org/gov/depts/pwd/forms and permits.asp 4. GRADING & DRAINAGE PLAN: The plan set must include a grading & drainage plan prepared by a licensed professional that includes existing and proposed spot elevations, earthwork volumes, finished floor elevations, area drain and bubbler locations, drainage flow arrows to demonstrate proper drainage of the site. Adjacent grades must slope away from the house a minimum of 2% or 5% for 10 -feet per 2013 CBC section 1804.3. Downspouts and splashblocks should be shown on this plan, as well as any site drainage features such as swales, area drains, bubblers, etc. Grading that increases drainage onto, or blocks existing drainage from neighboring properties, will not be allowed. 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 on the City's website. http://www.cityofpaloalto.org/civicax/filebank/documents/2717 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 11 of 12 5. UTILITIES: Note that all above ground utilities, such as transformer, backflow preventer, gas meters, etc., shall be located within project site but accessible from the street. Any new or relocated utilities will correspond with approved locations from City Utilities Department. 6. 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 that 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. 7. Provide the following note on the Site Plan and adjacent to the work within the Public road right- of-way. "Any construction within the city's public road right-of-way shall have an approved Permit for Construction in the Public Street prior to commencement of this work. THE PERFORMANCE OF THIS WORK IS NOT AUTHORIZED BY THE BUILDING PERMIT ISSUANCE BUT SHOWN ON THE BUILDING PERMIT FOR INFORMATION ONLY." 8. Provide the following note on the Site Plan and Grading and Drainage Plan: "Contractor shall not stage, store, or stockpile any material or equipment within the public road right-of-way." Construction phasing shall be coordinate to keep materials and equipment onsite. 9. SIDEWALK, CURB & GUTTER: As part of this project, the applicant shall 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. Contact Public Works' inspector at 650-496-6929 to arrange a site visit so that the inspector can discuss the extent of replacement work along the public road. The site plan submitted with the building permit plan set must show the extent of the replacement work. 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. Include a scan copy of the site inspection directive obtained form site visit in the plan set. 10. Any existing driveway to be abandoned shall be replaced with standard curb & gutter. This work must be included within a Permit for Construction in the Public Street from the Public Works Department. A note of this requirement shall be placed on the plans adjacent to the area on the Site Plan. 11. PAVEMENT: Redwood Circle was resurfaced in 2013, this street is under a moratorium. Any cutting into the pavement will trigger additional pavement requirements. Add the following note to the Site Plan: "Applicant and contractor will be responsible for resurfacing portions of Redwood Circle based the roadway surface condition after project completion and limits of trench work. At a minimum pavement resurfacing of the full width of the street along the project frontage may be required." Plot and label the area to be resurfaced as hatched on the site plan. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 12 of 12 12. 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. 13. 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. Copies are available from Public Works on our website http://www.cityofpaloalto.org/civicax/filebank/documents/2732 14. This project triggers 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 on the grading and drainage plan: • 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 lots onto vegetated areas. • Construct sidewalks, walkways, and/or patios with permeable surfaces. • Construct driveways, and/or uncovered parking lots with permeable surfaces 15. Provide the following as a note on the Site Plan: "The contractor may be required to 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 surrounding properties , and schedule of work. The requirement to submit a logistics plan will be dependent on the number of applications Public Works Engineering receives within close proximity to help mitigate and control the impact to the public -right-of-way. If necessary, Public Works may require a Logistics Plan during construction." \ arm e+nir 1 v.. 1--S )(P - G4A-12 (riXt' 0 1--) fiiH?si°rs— / —_ CUf[SIa. MOWS // leyq• I I >4 M i• / it ' k I I / 4 RIGHT SID E ELEV ATION 1/4" = 1'-0" ti Y LEFT SIDE ELEVA TION 1/4" = 1'-0" Y Y Y / a[msryea. we als s em av T au. [f!'L'fi brsc., 4- FRO NT ELEV ATI ON 1/4" = 1'-0" I.P+rz ;t-1455 wc11DoLJ W i-rt 6 Di" pri y' _on Xb ovf- 0f2 *•�g-c�l� f►t-- 5LID ttt tt,190 I N -o (9°U8� 1A-111J49wit120 F oE-cl• REAR ELEVATION 1 /4" = 1'-0" ti. • l 881. 83 of (. ! I {-°• I -_ _-4 __ It ri §t - °I CIF ! r -o h84 2N D FLOOR PLA N 1/4" = 1'-0" - ---4 3o tfL CH wipe- aG 5- LAitPow wrVF4 (30f-t'oM ikp-L-F V51614 o6560 9 4141/4-S1144 (potl f t. A-044 wi d9 (et,55) �at `'�tl�iFF 6 -1.44k -k. wrt4Dow, Fio1hM or Jij1POW /r -T 51 o" MoVg- pliook (f4o12.l'iof4T/ . 51.47144 WitL9O LJ S) s at AG 110 . M IT A6 CITY OF PALO ALTO Office of the City Clerk APPEAL FROM THE DECISION OF DIRECTOR OF PLANNING AND COMMUNITY ENVIRONMENT* 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 public 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, 5th 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 comer of Bryant and Hamilton). * Director of Planning includes his designees, which are Planning Managers or the Chief Planning Official Appeal Application No. (2 Receipt No. Name of Appellant J Ol S l -e -L' R c.; 5 ; �^ �( Lew nu, Phone ( )GDS - R 3 e - 5 (-k 3 Address 34i' -1 Ca•YIS.ovl Ci 'ck fpn.10 A)6 (.A ( -t30 Street City ZIP LOCATION OF PROPERTY SUBJECT TO APPEAL: Street Address 3 1-y 3 R-cdt Locock C, Y cl e. Name of Property Owner (if other than appellant) 1ts-kA L, Property Owner's Address Street City ZIP The decision of the Director of Planning and Community Environment dated iii - 31 -.R0 I A , 20 1 S whereby the application Oak - by (file number) (original project applicant) was 0.P P Y. V. ck , is hereby appealed for the reasons stated in the attached letter (in duplicate) (approved/denied) Date: 0 '1 $- ��l $ Signature of Appellant U,Si 0 ct - t PLANNING COMMISSION RECOMMENDATION TO THE CITY COUNCIL (TO BE FILLED OUT BY STAFF): Date Approved Remarks and/or Conditions: Denied CITY COUNCIL DECISION (TO BE FILLED OUT BY STAFF): Date Approved Remarks and/or Conditions: Denied SUBMITTAL REQUIREMENTS SATISFIED: 1. Letter stating reasons for appeal Q • 1 • ki) Received by: "..Q_x) 2 Fee (currently $280.00) Received by: 1 a City of Palo Alto Revenue Collections *** idol Jawolsnj *** Received From:. \--€—e-- N V.(1 • "i 1 In Payment Of 3r43 ITEM Date: C * 1 By. ( ) Certified Mail Fee 40050009 18990 $ ( ) False Alarm Late Fee 70020002 13110 $ ( ) Miscellaneous Revenue 10200000 18990 $ ( ) Transient Occupancy Tax 10200000 11850 $ ( ) Sales Tax 10200000 60050 $ ( ) Utility User Tax , 10300000 11870 $ ( ) ZoneMapSales 60020201 17030 $ ( ) Univ Ave Parking 23600000 14510 $ ( ) Calif Ave Parking 23700000 14520 $ ( ) Lot S Parking 23600000 14500 $ (\f,) Other iot:61 ;-(02- () $ WO --- Total $ $O -. - Copies to: 22-37 REV 10/03 Cash ( ) Check ( ) PO D. 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'ti vjv '1I • 4 1 • _r E . i r ff 1 • 44 , Rr l it ' 4 1 iJ 11 1 1- liwt 1 Lt 4 IF t_ J • 1 :f • • II • 4 Ir ,114 13$6401,.•_.•1 .Ifi 11 0.1 uj gol :; ,:. 'Ii , valij 1 OFLOT .'iiilVWl` 1 11f . el 1 64x1 4' r -r. — a 4 I r- 1 ng r 11 "1IK : 1, • ff t• or e .-r i• 37, . • • i 1 1 —4 1 .p 1 b .. J '1 • • • • Lk Jasleen Raisinghani To:Amy French, Graham Owen Cc:Timothy Perkins, Manoj Raisinghani, Jasleen Raisinghani Dear Amy, First, our best wishes are with you for a swift and complete recovery! We would like to thank you and the city staff for your time, consideration and all the efforts to help with our privacy concerns. We really appreciate your attempts to maintain our quality of life and rights to privacy in our beloved Eichler community. Based on your letter to us, we are further emphasizing our primary asks. Following is our feedback on the updated proposal: 1. 3743 has taken a good step in moving some windows to 5" above floor level. We really appreciate that gesture. 2. The current 2 story home on the right side of 3743 (Burt's) has a 40 feet set -back. We have had enough time to review and discuss among us and also gather inputs from our neighbors - And we are requesting that the 2nd level setback on 3743 be at 40 feet. We are requiring the 40 feet setback as our primary need for privacy to our homes. In addition, the 40 feet setback on the 2nd level will help keep the harmony between us neighbors. 3. Please center the 2nd level placement. We are unable to reconcile why the 2nd level placement is on the side with the largest area of the new construction facing into our backyard. With your current design, the 3714 Carlson (Raisinghani home) takes the biggest brunt of this new construction. 4. Please glaze the 1"-8" wide clear window (which is fixed pane). 5. We believe by centering the 2nd level construction, the egress windows can be moved to the sides (left and right vs. the back) of the home. The original concern of space with neighbors on the sides of 3743 would be much alleviated. Being in an Eichler community our back wall of the house, opens into the back yard and is a series of full length sliding glass doors. This is our outside -in and inside -out experience that Eichlers are so well known for. The city development guidelines need to uphold that experience in such classic neighborhoods and communities. We hope the city planning and development office uses our asks as a 'model' for updating the Eichler community construction guidelines to keep privacy as the primary right if the neighbors. At this point we continue to see concerns for our privacy based on the updated 2nd level design. Hence, we have decided to further pursue the case and make an earnest appeal to the City Council. We are ready to invite any council member to our homes - Perkins and Raisinghani - for an on -site view of why we believe so strongly in guarding our privacy and earnestly requesting you to uphold it with respect. Please let us know the next steps and dates we need to engage with the council and it's executives. Once again, thank you and also thanks to the planning department for spending the time, and listening to us with an open mind and heart - we sincerely appreciate it. Warmest Regards, Manoj & Jasleen Raisinghani Tim Perkins 1 - ff • SET 41: • • 1 4 11 - r4:r r Libor. "rt. y -r. Iri �F4� Lv, n rvr- k - • I: mittami t ti&P+$ • 4. 1-4 1.e4 ,f41.1 wW'r.l r . , 1 1 • ` 4. 7. r} -��+ frrj ,1 190 r 1 ., y Iknik 1 `+aIr 3 � rri MI 1 d di -701 'V1 r . 4144511i • • 41117$11 JAI t rt1 t 1 > 1 11gV►. T •'r« "Vk t1 rLC 1=1,141" 1 -.1'•1 1m t 01 -..r j hI I 1.... • 4 ,t r 'ti 1.'11 _ It . 1 -a 1 11. 4. r .-_ 1 I • 11 F u., :'L- ii - , i Tt L to ✓ W 4 f .iI . 4 - 11 1 Ll5tl•y► 3 111 ' .W ,4 n . • 11 , r ut a 1 t1'iI I I' • k .& ,4 IL=: .ge Of ,A1 .1i,a R , '1 ! tit. j+IK 1 .[r LL a �t 1 11 4A .4 ff ■ L' 4 c3 .1 '`t-./ • 1 /.1 1 r i1_, I k 1. 11. a mm4 - di j PLANNING & COMMUNITY ENVIRONMENT CITY OF T3I HarnmIton Avenue Sth F o_, PALO Palo Alto. CA 94301 ALTO 650 329 2=.'41 August 31, 2018 Ming Li Meng Long 3743 Redwood Circle Palo Alto, CA 94306 Email: mingqingli@gmail.com Architect's email: ketle1@vahoo.com SUBJECT: 3743 Redwood Circle (17PLN-00272) Individual Review Dear Ms. Li and Mr. Long: This letter reflects my approval of your two-story home Individual Review application for the demolition of an existing single family residence in an original Eichler homes R-1 tract and construction of a new two-story single family residence with an attached one -car garage. This approval follows two Director's Hearings and is made on behalf of the Interim Director of Planning and Community Environment. This Final, Conditional Approval is appealable to the Palo Alto City Council. As the designated Hearing Officer, I considered all testimony and submittals received in person and by email during the extended hearing process. This letter references August 31, 2018 modifications you made to the May 2018 plans which had been used for the Proposed Decision. My decision, based upon sketches dated August 31, 2018 showing proposed modifications to the May 2018 plans, requires submittal of revised plans consistent with these sketches and addressing the attached approval conditions. This decision is granted pursuant to the Palo Alto Municipal Code Sections 18.12.110 and 18.77.075. The revised project meets all five of the Palo Alto Single Family Individual Review Guidelines and complies with the R-1 Zone District development regulations. Appeal: This approval will become effective 14 days from the postmark date of this letter, unless the Planning Department receives an appeal prior to the end of the business day 14 calendar -days after the postmark date. Only an applicant, or the owner or tenant of an adjacent property may appeal this decision. If a timely appeal is received, staff will schedule the appeal within 45 days of receiving the appeal on a City Council agenda, on the 'consent calendar'. It would take three Councilmembers to pull the item off consent calendar and schedule for a future, noticed public hearing where the Council would adopt findings and take action on the application. If three Councilmembers do not remove the item from the consent agenda, my decision would remain in effect. cc: Neighbor notification list (150 ft) Attachment: Conditions of Approval Property Owner 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 2 of 12 Approval Findings and Conditions: This letter, which contains approval findings, and the attached approval conditions (Attachment A) shall be printed onto building permit plans submitted with a Building Permit application, which may now be submitted to staff at the Development Center. If the building permit has not been issued and construction commenced within one year from the effective approval date, this approval will expire. A written request for an extension may be submitted prior to the expiration date, and the Director may grant a one-year extension of this approval. Findings for Approval As noted, the project meets all five of the Individual Review (IR) Guidelines, and the development standards of the R-1 Zone District. The Zoning Code, IR Guidelines and Eichler Guidelines do not set a minimum distance for second floors, nor place restrictions on the amount of floor area on residential second floors. As noted previously, the IR Guidelines encourage the technique of stepping back of the second floor at the front of the house to meet the streetscape guideline; and these plans employ this technique to meet this guideline. It should be noted that in April 2018, City Council adopted the Eichler Guidelines for voluntary use during the IR process and for use in any future Eichler Overlay zones, once such a zone type is created and once homeowners of properties within an Eichler Tract seek together to rezone the tract. Also noted is that this property is not within a Single Story Overlay zone. Should you have any questions regarding this approval, please do not hesitate to call Amy French, Chief Planning Official at (650) 329-2336 or e-mail amv.french @citvofpaloalto.org. You may also email Graham.Owen@citvofpaloalto.org to ask about next steps in the process. Amy French Chief Planning Official Cc: Ket Le, 793 Kyle Street, San Jose, CA 95127 Adjacent neighbors 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 3 of 12 ATTACHMENT A INDIVIDUAL REVIEW CONDITIONS OF APPROVAL 3743 Redwood Circle, 17PLN-00272 The property owner is solely responsible for meeting the below conditions of approval. Planning staff recommends the property owner discuss these conditions of approval with the contractor, designer, and others as appropriate, and contact Planning staff with any questions. The approval is subject to the following conditions (annotated to show changes to conditions after Director's Hearings): PLANNING DIVISION CONDITIONS: 1. CONFORMANCE WITH PLANS. Construction and development shall conform to the approved plans entitled, "New Home for Ming Li, 3743 Redwood Circle, Palo Alto, California, 94306" stamped as received by the City on May 2, 2018, subject to modifications reflecting sketches received August 31, 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. A copy of this cover letter and conditions of approval shall be printed on the second page of the plans submitted for building permit. Project plans submitted for Building permits shall incorporate the following changes: A. Plan Modifications: i. Sheet Al New Site Plan, Sheet A3 New Neighborhood Site Plan, and Sheet Al2 Landscape Plan shall be modified to (a) indicate planting of an additional evergreen tree in the rear yard — located roughly between the two new pittosporum trees that were shown on the May 2018 plans and (b) show the proper tree protection fencing for all trees to remain on site including the street trees. Sheet Al2 Landscape Plan shall be modified to clarify the botanical name and planting size of the pittosporum undulatum or similar shrubs on the building permit plans. The shrubs should be indicated as 24 -inch sized box at planting and the height should be at least 8 feet at time of installation. ii. Sheets Al, A3 and Al2 shall be modified to (a) show the location of the proposed accessory structure located at least 75 feet from the front property line, and to (b) adjust the location of the corner privacy landscaping (pittosporum) to be between the accessory structure and fence to provide optimal screening at the northeasterly corner. Given the need for adequate screen trees growing environment and the fact that the existing lot depth is less than 100 feet, the size, placement and orientation of the accessory structure may need further adjustment to not impact this screening. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 4 of 12 B. Elevations and Floor Plans Modifications: i. Sheet A7: Elevations shall be modified (as seen on the left side elevation) to extend the length of the eave (overhang) at the shed form adjacent the front -right corner of the house so that it extends at least 3 feet past the front wall of the master suite (dimension line 4). ii. Sheet A7 Elevations and Sheet A-6 2"d Floor Plan shall be modified in accordance with the August 31, 2018 sketches, submitted to the Chief Planning Official for the planning file within two weeks, and with building permit plans, reflecting the following: a. There shall be no protruding window boxes on the rear wall (boxes deleted in sketches during the hearing process, prior to the Director's Hearing of August 23, 2018) b. All rear -facing windows shall only be clear glass above a height of five feet from the finished floor of the second floor bedrooms (as shown on the August 31, 2018 sketch). Only obscured glass shall be used below a height of five feet on second floor windows (with the exception of the stair window facing the left side elevation) and the selected and installed product shall be further monitored as noted in condition of approval #5. c. The rear -facing 2nd floor bedrooms shall have only one egress "double hung" window at the rear wall with obscured glazing installed on the bottom half of the window (where the bottom panel of the window is openable in order to provide emergency egress). d. Both rear facing bedrooms shall have high clear "horizontal sliding" windows with the bottom of the windows at 5'-0" above the floor level for privacy. e. Below the rear -facing horizontal sliding window on the master bedroom, another "fixed", obscured glass window below the 5'-0" level as measured from the finished second floor (as shown on August 31St sketch) is allowed. f. The master bedroom shall be allowed a new 1'-8" wide clear "fixed" window on the side wall in order to bring in more daylight. g. All second floor windows shown in building permit plans shall show the window operations and whether they are casements or vertical sliders. h. A new 1'8" wide clear window is allowed as indicated on the right side elevation in the second floor bedroom in the narrow return wall that is set back approximately 28'4" from the property at 3747 Redwood Circle. As this window would not face the rear, it may extend as a clear window below the five foot level, to a height of one foot above the finished floor level. 4. REQUIRED LANDSCAPING/TREES. The following landscaping is required to ensure the project's conformance with the City's IR Guidelines and therefore must remain for the life of the structure. Trees shall be a minimum of 8 feet when planted. Privacy landscaping shall be planted prior to occupancy. A. Three (3) 24" -box evergreen privacy shrubs, including pittosporum or similar species, shall be planted and maintained along the rear yard property line to provide screening of the second floor of the proposed house from the rear neighbors. Plantings shall be located consistent with the 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 5 of 12 approved Site Plan to the satisfaction of the Director of Planning. The landscape plan shall specify the planting size as 24" -box. B. The existing trees and shrubs along the rear property line as shown on Sheet Al2 shall be maintained to provide privacy screening from the second floor of the proposed residence. If removed the plantings shall be replaced with equivalent screening prior to occupancy. 5. OBSCURED GLAZING. All obscure glazing, as shown on the plan set and as modified per the August 31st submittal, shall be permanent in nature and shall remain for the life of the structure. Obscure glazing is either decorative glazing that does not allow views through placed into the window frame or acid etched or similar permanent alteration of the glass. Films or like additions to clear glass are not permitted where obscure glazing is shown. Obscure glazing shall not be altered in the future and shall be replaced with like materials if damaged. If operable, these windows shall open towards the public right-of-way. The actual window type with obscured glazing and manufacturer shall be provided to the Chief Planning Official for review and approval with the building permit plans; along with a sample of the obscured glass for verification the glass will be obscure. 6. 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. 7. REQUIRED PARKING: All single family homes shall be provided with a minimum of one covered parking space (10 foot by 20 foot interior dimensions) and one uncovered parking space (8.5 feet by 17.5 feet). 8. UTILITY LOCATIONS: In no case shall utilities be placed in a location that requires equipment and/or bollards to encroach into a required parking space. In no case shall a pipeline be placed within 10 feet of a proposed tree and/or tree designated to remain. 9. BAY WINDOWS: Bay windows if at least 18 inches above the interior floor, projecting no more than two feet, and with more than 50% window surface shall not be counted towards the homes floor area ratio (FAR). Any changes to proposed bay windows must first be reviewed and approved by the Director of Planning and Community Environment. 10. NOISE PRODUCING EQUIPMENT: All noise producing equipment shall be located outside of required setbacks, except they may project 6 feet into the required street side setbacks. In accordance with Section 9.10.030, No person shall produce, suffer or allow to be produced by any machine, animal or device, or any combination of same, on residential property, a noise level more than sik dB above the local ambient at any point outside of the property plane. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 6 of 12 11. IMPERVIOUS SURFACE: A minimum of 60 % of the required front yard shall have a permeable surface that permits water absorption directly into the soil (Section 18.12.040 (h)). The building permit plan set shall include a diagram demonstrating compliance. 12. FENCES. Fences and walls shall comply with the applicable provisions of Chapter 16.24, Fences, of the Palo Alto Municipal Code (PAMC). Heights of all new and existing fencing must be shown on the Building Permit plans. 13. PLANNING 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, fenestration and hard surface locations. Contact your Project Planner at the number below to schedule this inspection. 14. 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. GREEN BUILDING & ENERGY REACH CODE REQUIREMENTS: NOTICE FOR PERMIT APPLICATIONS SUBMITTED ON OR AFTER 1/1/17: Please be advised that the Palo Alto City Council has approved Energy Ordinance 5383 and Green Building Ordinance 5393 for all new permit applications with an effective date for January f, 2017. To review the upcoming changes, visit the Development Services webpage .On the left-hand side under "EXPLORE", hover over "Green Building" and select "Compliance." For information regarding the Model Water Efficient Landscape Ordinance, please see the Outdoor Water Efficiency Webpaoe for compliance documentation. You may also email Green Building at GreenBuildinq@cityofpaloalto.orq for specific questions about your project. 1. GREEN BUILDING CONDITIONS OF APPROVAL a) The project is a new construction residential building of any size and therefore must meet the California Green Building Code mandatory requirements outlined in Chapter 4, (with local amendments) plus Tier 2 minimum pre -requisites and electives outlined in Appendix A4* (with local amendments). The project must hire a Green Building Special Inspector for a pre - permit third -party design review and a third -party green building inspection process. The project must select a Green Building Special Inspector from the City's list of approved inspectors. PAMC 16.14.080 (Ord. 5393 § 1, 2016) (1) *Note: Projects subject to Tier 1 or Tier 2 shall not be required to fulfill any requirements outlined in Appendix A4.2 Energy Efficiency. All energy efficiency measures are found in the 2016 California Energy Code and the Palo Alto Energy Reach Code PAMC 16.17 & 16.18 as described in the Energy Reach Code section of this letter. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 7 of 12 b) Model Water Efficient Landscape Ordinance (MWELO): The project is a residential new construction project with an aggregate landscape area of 500 square feet or more included in the project scope of work and therefore shall comply with the requirements of the Landscape Documentation Package (§492.3). Please see the Outdoor Water Efficiency Webpage for compliance documentation. (MWELO Title 23, Chapter 2.7) c) The project is a residential construction project of any size and therefore must meet the enhanced construction waste reduction at Tier 2 (80% construction waste reduction). PAMC 16.14.160 (Ord. 5393 § 1 (part), 2016) d) The project is a new detached single-family dwelling and therefore shall comply with the following requirements for electric vehicle supply equipment (EVSE): (a) The property owner shall provide as minimum a panel capable to accommodate a dedicated branch circuit and service capacity to install at least a 208/240V, 50 amperes grounded AC outlet (Level 2 EVSE). The raceway shall terminate in close proximity to the proposed location of the charging system into a listed cabinet, box, enclosure, or receptacle. The raceway shall be installed so that minimal removal of materials is necessary to complete the final installation. The raceway shall have capacity to accommodate a 100 -ampere circuit. (b) Design. The proposed location of a charging station may be internal or external to the dwelling, and shall be in close proximity to an on -site parking space. The proposed design must comply with all applicable design guidelines, setbacks and other code requirements. PAMC 16.14.420 (Ord. 5393 §2, 2016) 2. LOCAL ENERGY REACH CODE CONDITIONS OF APPROVAL a) The protect includes new residential construction of any size and therefore triggers the Local Energy Efficiency Reach Code. For all new single-family residential there are two compliance options and one all -electric exception. i) Single -Family Residential Options: (1) OPTION 1: Performance: New single- family residential construction projects without a solar photovoltaic (PV) system, the performance approach specified within the 2016 California Energy Code shall be used to demonstrate that the TDV Energy of the proposed building is at least 10% less than the TDV Energy of the Standard Design, if the proposed building does not include a PV systems. (a) Solar Ready Infrastructure: A dedicated solar zone shall be located on the rood or overhang of the building and have a total area no less than 500 square feet. Install a conduit extending from the roofline and terminating at the electrical panel. (2) OPTION 2: Performance: New single- family residential construction projects with a solar photovoltaic (PV) system, the performance approach specified within the 2016 California Energy Code shall be used to demonstrate that the TDV Energy of proposed single-family residential construction is at least 20% less than the TDV Energy of the Standard Design, if the proposed building includes a photovoltaic system. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 8 of 12 (a) Solar Ready Infrastructure: A dedicated solar zone shall be located on the rood or overhang of the building and have a total area no less than 500 square feet. Install a conduit extending from the roofline and terminating at the electrical panel. b) All Electric Exemption: i) All- Electric Exception to the Local Energy Reach Code: New single-family residential construction that is designed and built to be all -electric shall be exempt from the requirements of Section 100.3. Local Energy Efficiency Reach Code. 3. Additional Green Building and Energy Reach Code information, ordinances and applications can be found at http://www.cityofpaloalto.org/gov/depts/ds/green_building/default.asp. If you have any questions regarding Green Building requirements please call the Green Building Consultant at (650) 329-2179. PUBLIC WORKS URBAN FORESTRY CONDITIONS — Elizabeth Lanham 650-617-3173 PRIOR TO DEMOLITION, BUILDING OR GRADING PERMIT ISSUANCE 1. BUILDING PERMIT SUBMITTAL- PROJECT ARBORIST CERTIFICATION LETTER. Prior to submittal for staff review, attach a Project Arborist Certification Letter that he/she has; (a) reviewed the entire building permit plan set submittal and, {) affirm that ongoing Contractor/Project Arborist site monitoring inspections and reporting have been arranged with the contractor or owner (see Sheet T-1) and, (c) understands that design revisions (site or plan changes) within a TPZ will be routed to Project Arborist/Contractor for review prior to approval from City. 2. PLAN SET REQUIREMENTS. The final Plans submitted for building permit shall include the following information and notes on relevant plan sheets: a. SHEET T-1, BUILDING PERMIT. The building permit plan set will include the City's full-sized, Sheet T-1 (Tree Protection -it's Part of the Plan!), available on the Development Center website at http://www.cityofpaloalto.org/civicax/filebank/documents/31783. The Applicant shall complete and sign the Tree Disclosure Statement and recognize the Project Arborist Tree Activity Inspection Schedule. Monthly reporting to Urban Forestry/Contractor is mandatory. (Insp. #1: applies to all projects; with tree preservation report: Insp. #1-7 applies) The Tree Preservation Report (TPR). All sheets of the Applicant's TPR approved by the City for full implementation by Contractor shall be printed on numbered Sheet T-1 (T-2, T-3, etc) and added to the sheet index. c. Plans to show protective tree fencing. The Plan Set (esp. site, demolition, grading & drainage, foundation, irrigation, tree disposition, utility sheets, etc.) must delineate/show the correct configuration of Type I, Type II or Type III fencing around each Regulated Street Tree, using a bold dashed line enclosing the Tree Protection Zone 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 9 of 12 (Standard Dwg. #605, Sheet T-1; City Tree Technical Manual, Section 6.35 -Site Plans); or by using the Project Arborist's unique diagram for each Tree Protection Zone enclosure. DURING CONSTRUCTION 3. TREE PROTECTION VERIFICATION. Prior to any site work a written verification from the contractor that the required protective fencing is in place shall be submitted to the Urban Forestry Section (derek.sproat@cityofpaloalto.org). The fencing shall contain required warning sign and remain in place until final inspection of the project. 4. EXCAVATION RESTRICTIONS APPLY (TTM, Sec. 2.20 C & D). Any approved grading, digging or trenching beneath a tree canopy shall be performed using 'air -spade' method as a preference, with manual hand shovel as a backup. For utility trenching, including sewer line, roots exposed with diameter of 1.5 inches and greater shall remain intact and not be damaged. If directional boring method is used to tunnel beneath roots, then Table 2-1, Trenching and Tunneling Distance, shall be printed on the final plans to be implemented by Contractor. 5. PLAN CHANGES. Revisions and/or changes to plans before or during construction shall be reviewed and responded to by the project site arborist with written letter of acceptance before submitting the revision to the Building Department for review by Planning, PW or Urban Forestry. 6. CONDITIONS. All Planning Department conditions of approval for the project shall be printed on the plans submitted for building permit. 7. TREE PROTECTION COMPLIANCE. The owner and contractor shall implement all protection and inspection schedule measures, design recommendations and construction scheduling as stated in the TPR & Sheet T-1, and is subject to code compliance action pursuant to PAMC 8.10.080. The required protective fencing shall remain in place until final landscaping and inspection of the project. Project arborist approval must be obtained and documented in the monthly activity report sent to the City. The mandatory Contractor and Arborist Monthly Tree Activity Report shall be sent monthly to the City (pwos@ cityofpaloalto.org) beginning with the initial verification approval, using the template in the Tree Technical Manual, Addendum 11. 8. TREE DAMAGE. Tree Damage, Injury Mitigation and Inspections apply to Contractor. Reporting, injury mitigation measures and arborist inspection schedule (1-5) apply pursuant to TTM, Section 2.20-2.30. Contractor shall be responsible for the repair or replacement of any publicly owned or protected trees that are damaged during the course of construction, pursuant to Title 8 of the Palo Alto Municipal Code, and city Tree Technical Manual, Section 2.25. 9. GENERAL. The following general tree preservation measures apply to all trees to be retained: No storage of material, topsoil, vehicles or equipment shall be permitted within the tree 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 10 of 12 enclosure area. The ground under and around the tree canopy area shall not be altered. Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. PRIOR TO OCCUPANCY 10. PROJECT ARBORIST CERTIFICATION LETTER. Prior to written request for temporary or final occupancy, the contractor shall provide to the Planning Department and property owner a final inspection letter by the Project Arborist. The inspection shall evaluate the success or needs of Regulated tree protection, including new landscape trees, as indicated on the approved plans. The written acceptance of successful tree preservation shall include a photograph record and/or recommendations for the health, welfare, mitigation remedies for injuries (if any). The final report may be used to navigate any outstanding issues, concerns or security guarantee return process, when applicable. PUBLIC WORKS ENGINEERING CONDITIONS-Ajay Kumar 650-329-2209 1. EASEMENT: Indicate existing easements on proposed site plan. Accessory structure including roof overhangs and drainage features shall be kept clear out of the easement area. 2. DEMOLITION PLAN: Place the following note adjacent to an affected tree on the Site Plan and Demolition Plan: "Excavation activities associated with the proposed scope of work shall occur no closer than 10 -feet from the existing street tree, or as approved by the Urban Forestry Division contact 650-496-5953. Any changes shall be approved by the same". 3. GRADING PERMIT: Separate Excavation and Grading Permit will be required for grading activities on private property that fill, excavate, store or dispose of 100 cubic yards or more based on PAMC Section 16.28.060. Applicant shall prepare and submit an excavation and grading permit to Public Works separately from the building permit set. The permit application and instructions are available at the Development Center and on our website. http://www.cityofpaloalto.org/gov/depts/pwd/forms and permits.asp 4. GRADING & DRAINAGE PLAN: The plan set must include a grading & drainage plan prepared by a licensed professional that includes existing and proposed spot elevations, earthwork volumes, finished floor elevations, area drain and bubbler locations, drainage flow arrows to demonstrate proper drainage of the site. Adjacent grades must slope away from the house a minimum of 2% or 5% for 10 -feet per 2013 CBC section 1804.3. Downspouts and splashblocks should be shown on this plan, as well as any site drainage features such as swales, area drains, bubblers, etc. Grading that increases drainage onto, or blocks existing drainage from neighboring properties, will not be allowed. 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 on the City's website. http://www.cityofpaloalto.org/civicax/filebank/documents/2717 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page it of 12 5. UTILITIES: Note that all above ground utilities, such as transformer, backflow preventer, gas meters, etc., shall be located within project site but accessible from the street. Any new or relocated utilities will correspond with approved locations from City Utilities Department. 6. 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 that 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. 7. Provide the following note on the Site Plan and adiacent to the work within the Public road right- of-way. "Any construction within the city's public road right-of-way shall have an approved Permit for Construction in the Public Street prior to commencement of this work. THE PERFORMANCE OF THIS WORK IS NOT AUTHORIZED BY THE BUILDING PERMIT ISSUANCE BUT SHOWN ON THE BUILDING PERMIT FOR INFORMATION ONLY." 8. Provide the following note on the Site Plan and Grading and Drainage Plan: "Contractor shall not stage, store, or stockpile any material or equipment within the public road right-of-way." Construction phasing shall be coordinate to keep materials and equipment onsite. 9. SIDEWALK, CURB & GUTTER: As part of this project, the applicant shall 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. Contact Public Works' inspector at 650-496-6929 to arrange a site visit so that the inspector can discuss the extent of replacement work along the public road. The site plan submitted with the building permit plan set must show the extent of the replacement work. 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. Include a scan copy of the site inspection directive obtained form site visit in the plan set. 10. Any existing driveway to be abandoned shall be replaced with standard curb & gutter. This work must be included within a Permit for Construction in the Public Street from the Public Works Department. A note of this requirement shall be placed on the plans adjacent to the area on the Site Plan. 11. PAVEMENT: Redwood Circle was resurfaced in 2013, this street is under a moratorium. Any cutting into the pavement will trigger additional pavement requirements. Add the following note to the Site Plan: "Applicant and contractor will be responsible for resurfacing portions of Redwood Circle based the roadway surface condition after project completion and limits of trench work. At a minimum pavement resurfacing of the full width of the street along the project frontage may be required." Plot and label the area to be resurfaced as hatched on the site plan. 3743 Redwood Circle Post DH approval Individual Review 17PLN-00272 Page 12 of 12 12. 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. 13. 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. Copies are available from Public Works on our website http://www.citvofpaloalto.org/civicax/filebank/documents/2732 14. This project triggers 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 on the grading and drainage plan: • 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 lots onto vegetated areas. • Construct sidewalks, walkways, and/or patios with permeable surfaces. • Construct driveways, and/or uncovered parking lots with permeable surfaces 15. Provide the following as a note on the Site Plan: "The contractor may be required to 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 surrounding properties , and schedule of work. The requirement to submit a logistics plan will be dependent on the number of applications Public Works Engineering receives within close proximity to help mitigate and control the impact to the public -right-of-way. If necessary, Public Works may require a Logistics Plan during construction." RIGHT SID E EL EVAT IO N I/4" = 1'-0" . s} {t} LEFT SID E ELEVATION 1/4" = 1'-0" 1r} 1 w i\ . w.o " YI I (10 W�o :1}C%i Y4 �Q 1 .! 71 ` -t".. .mn// 4} I n i t__r iam1 1- --1 I I 1 1 1 } I 'I 1 I i (ii\. I fop f -1 .7 4R • -F - e 1 0 u o 0 0 0 = = 1 ,• : E-11 ,1 _ ,1 \MY •-If am.% q 111 A} 1 g���p�ry (,I\ l* -yypYl�laLU-ryi� `„ � !MI!_WA �1_'. •). 4A NMi.LD q . \G/ ti FR ONT E LEV ATION 1/4" = 1'-0 " t - tirk- 41465 LJfgpotJ" IA" T1-om p, -Y- c -o f.bov_- ok -((.#1Z- .P.� L•117 ,4b 1- J. tr REA R ELEVATION 1/4" = 1'-0" D USt. RVA.14 t (po F -o k • i 881. 83 al "l'et t.711.1 ' — — ---------�____ i 4,..... A FL -4 " "" z I- L-2.1',__ __ ' I I 1 I i.. - I , 1... _� i I -(^). .4 4 I- 1 1 1 1 1J. T. _ ..._ 1 1 1 i _4.-e)- i 44 - 'a lt{U1 Wtp - 9.GI{- v11ttpow w0Tl+ 1,01"-r om t4 r LF V51K4 oe,5cOle_gD 4t pr6114 (p oLpLt p-0,14 w1iJ9 Foie- i--lit - 55 ) -c 14ff GLEpck. wtt1DolJl Fiof oM of c, .IINDow Yr 51-0" m„coig. ! ^ooh (Et*tee t(T&L 5LI9U Lr w1t190 W 5 .24 2ND FLO OR PLAN 1/4" = 1'-011 --I -t Lrr ° t ✓ -- —orurt—^ anu— A6 cc: Neighbor notification list (150 ft) Attachment: Conditions of Approval Property Owner May 15, 2018 Ming Li Meng Long 3743 Redwood Circle Palo Alto, CA 94306 Email: mingqingli@gmail.com SUBJECT: 3743 Redwood Circle (17PLN-00272) Individual Review The Director of Planning and Community Environment has conditionally approved your Single Family Individual Review application to allow for the demolition of an existing single family residence, and construct a new two-story single family residence with an attached one-car garage. Zone District: R- 1.This approval was granted pursuant to the Palo Alto Municipal Code Sections 18.12.110 and 18.77.075. As conditioned, the project meets all five of the Palo Alto Single Family Individual Review Guidelines and complies with the R-1 Zone District development regulations. This approval will become effective 14 days from the postmark date of this letter, unless the Planning Department receives a written request for a Directors Hearing prior to the end of the business day 14 calendar-days after the postmark date. Only an applicant, or the owner or tenant of an adjacent property may request a hearing. As the plans may have been revised since the original submittal, interested parties may wish to review the tentatively approved plans online at the City’s Planning webpage http://www.cityofpaloalto.org/planningprojects. If you need assistance reviewing the plans, you may visit the City’s Development Center at 285 Hamilton Avenue. This letter and attached conditions and findings shall be printed onto building permit plans relating to this approval. If the building permit has not been issued and construction commenced within one year from the effective approval date, this approval will expire. A written request for an extension may be submitted prior to the expiration date. The Director may grant a one-year extension of this approval. Should you have any questions regarding this approval, please do not hesitate to call Jodie Gerhardt, Manager of Current Planning at (650) 329-2575 or e-mail at jodie.gerhardt@cityofpaloalto.org. Sincerely, Haleigh King Associate Planner Cc: Ket Le, 793 Kyle Street, San Jose, CA 95127 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 2 of 10 INDIVIDUAL REVIEW CONDITIONS OF APPROVAL 3743 Redwood Circle, 17PLN-00272 The approval is subject to compliance with the following conditions. The property owner is solely responsible for the conditions of approval being met. Planning staff recommends the property owner discuss the conditions of approval with the contractor, designer, etc. and contact Planning staff with any questions. The approval is subject to the following conditions: PLANNING DIVISION CONDITIONS: 1. CONFORMANCE WITH PLANS. Construction and development shall conform to the approved plans entitled, "New Home for Ming Li, 3743 Redwood Circle, Palo Alto, California, 94306” stamped as received by the City on May 2, 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. A copy of this cover letter and conditions of approval shall be printed on the second page of the plans submitted for building permit. Project plans submitted for Building permits shall incorporate the following changes: a. Sheet A1: Plans shall show the proper tree protection fencing for all trees to remain on site including the street trees. b. Sheet A1: Revise the location of the accessory structure to be at least 75 feet from the front property line and adjust location of privacy landscaping to be behind the accessory structure to provide screening along rear property line. c. Sheet A7: As seen on the left side elevation extend the length of the eave (overhang) at the shed form adjacent the front-right corner of the house so that it extends at least 3 feet past the front wall of the master suite (dimension line 4). d. Clarify the botanical name and planting size of the pittosporum undulatum or similar shrubs on the building permit plans. The shrubs should be indicated as 24-inch box planting size and should be at least 8 feet tall at time of installation. 4. REQUIRED LANDSCAPING/TREES. The following landscaping is required to ensure the project’s conformance with the City’s IR Guidelines and therefore must remain for the life of the structure. Trees shall be a minimum of 8 feet when planted. Privacy landscaping shall be planted prior to occupancy. a. Two (2) 24”-box evergreen privacy shrubs, including pittosporum or similar shall be planted and maintained along the rear yard property line to provide screening from the second floor of the proposed house. Plantings shall be located consistent with the 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 3 of 10 approved Site Plan to the satisfaction of the Director of Planning. The landscape plan shall specify the planting size as 24”-box. b. The existing trees and shrubs along the rear property line as shown on Sheet A12 shall be maintained to provide privacy screening from the second floor of the proposed residence. If removed the plantings shall be replaced with equivalent screening prior to occupancy. 5. OBSCURED GLAZING. All obscure glazing, as shown on the plan set, shall be permanent in nature and shall remain for the life of the structure. Obscure glazing is either decorative glazing that does not allow views through placed into the window frame or acid etched or similar permanent alteration of the glass. Films or like additions to clear glass are not permitted where obscure glazing is shown. Obscure glazing shall not be altered in the future and shall be replaced with like materials if damaged. If operable, these windows shall open towards the public right-of-way. 6. 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. 7. REQUIRED PARKING: All single family homes shall be provided with a minimum of one covered parking space (10 foot by 20 foot interior dimensions) and one uncovered parking space (8.5 feet by 17.5 feet). 8. UTILITY LOCATIONS: In no case shall utilities be placed in a location that requires equipment and/or bollards to encroach into a required parking space. In no case shall a pipeline be placed within 10 feet of a proposed tree and/or tree designated to remain. 9. BAY WINDOWS: Bay windows if at least 18 inches above the interior floor, projecting no more than two feet, and with more than 50% window surface shall not be counted towards the homes floor area ratio (FAR). Any changes to proposed bay windows must first be reviewed and approved by the Director of Planning and Community Environment. 10. NOISE PRODUCING EQUIPMENT: All noise producing equipment shall be located outside of required setbacks, except they may project 6 feet into the required street side setbacks. In accordance with Section 9.10.030, No person shall produce, suffer or allow to be produced by any machine, animal or device, or any combination of same, on residential property, a noise level more than six dB above the local ambient at any point outside of the property plane. 11. IMPERVIOUS SURFACE: A minimum of 60 % of the required front yard shall have a permeable surface that permits water absorption directly into the soil (Section 18.12.040 (h)). The building permit plan set shall include a diagram demonstrating compliance. 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 4 of 10 12. FENCES. Fences and walls shall comply with the applicable provisions of Chapter 16.24, Fences, of the Palo Alto Municipal Code (PAMC). Heights of all new and existing fencing must be shown on the Building Permit plans. 13. PLANNING 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, fenestration and hard surface locations. Contact your Project Planner at the number below to schedule this inspection. 14. 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. GREEN BUILDING & ENERGY REACH CODE REQUIREMENTS: NOTICE FOR PERMIT APPLICATIONS SUBMITTED ON OR AFTER 1/1/17: Please be advised that the Palo Alto City Council has approved Energy Ordinance 5383 and Green Building Ordinance 5393 for all new permit applications with an effective date for January 1st, 2017. To review the upcoming changes, visit the Development Services webpage .On the left-hand side under “EXPLORE”, hover over “Green Building” and select “Compliance.” For information regarding the Model Water Efficient Landscape Ordinance, please see the Outdoor Water Efficiency Webpage for compliance documentation. You may also email Green Building at GreenBuilding@cityofpaloalto.org for specific questions about your project. 1. GREEN BUILDING CONDITIONS OF APPROVAL a) The project is a new construction residential building of any size and therefore must meet the California Green Building Code mandatory requirements outlined in Chapter 4, (with local amendments) plus Tier 2 minimum pre-requisites and electives outlined in Appendix A4* (with local amendments). The project must hire a Green Building Special Inspector for a pre- permit third-party design review and a third-party green building inspection process. The project must select a Green Building Special Inspector from the City’s list of approved inspectors. PAMC 16.14.080 (Ord. 5393 § 1, 2016) (1) *Note: Projects subject to Tier 1 or Tier 2 shall not be required to fulfill any requirements outlined in Appendix A4.2 Energy Efficiency. All energy efficiency measures are found in the 2016 California Energy Code and the Palo Alto Energy Reach Code PAMC 16.17 & 16.18 as described in the Energy Reach Code section of this letter. b) Model Water Efficient Landscape Ordinance (MWELO): The project is a residential new construction project with an aggregate landscape area of 500 square feet or more included in the project scope of work and therefore shall comply with the requirements of the Landscape 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 5 of 10 Documentation Package (§492.3). Please see the Outdoor Water Efficiency Webpage for compliance documentation. (MWELO Title 23, Chapter 2.7) c) The project is a residential construction project of any size and therefore must meet the enhanced construction waste reduction at Tier 2 (80% construction waste reduction). PAMC 16.14.160 (Ord. 5393 § 1 (part), 2016) d) The project is a new detached single-family dwelling and therefore shall comply with the following requirements for electric vehicle supply equipment (EVSE): (a) The property owner shall provide as minimum a panel capable to accommodate a dedicated branch circuit and service capacity to install at least a 208/240V, 50 amperes grounded AC outlet (Level 2 EVSE). The raceway shall terminate in close proximity to the proposed location of the charging system into a listed cabinet, box, enclosure, or receptacle. The raceway shall be installed so that minimal removal of materials is necessary to complete the final installation. The raceway shall have capacity to accommodate a 100-ampere circuit. (b) Design. The proposed location of a charging station may be internal or external to the dwelling, and shall be in close proximity to an on-site parking space. The proposed design must comply with all applicable design guidelines, setbacks and other code requirements. PAMC 16.14.420 (Ord. 5393 §2, 2016) 2. LOCAL ENERGY REACH CODE CONDITIONS OF APPROVAL a) The project includes new residential construction of any size and therefore triggers the Local Energy Efficiency Reach Code. For all new single-family residential there are two compliance options and one all-electric exception. i) Single-Family Residential Options: (1) OPTION 1: Performance: New single- family residential construction projects without a solar photovoltaic (PV) system, the performance approach specified within the 2016 California Energy Code shall be used to demonstrate that the TDV Energy of the proposed building is at least 10% less than the TDV Energy of the Standard Design, if the proposed building does not include a PV systems. (a) Solar Ready Infrastructure: A dedicated solar zone shall be located on the rood or overhang of the building and have a total area no less than 500 square feet. Install a conduit extending from the roofline and terminating at the electrical panel. (2) OPTION 2: Performance: New single- family residential construction projects with a solar photovoltaic (PV) system, the performance approach specified within the 2016 California Energy Code shall be used to demonstrate that the TDV Energy of proposed single-family residential construction is at least 20% less than the TDV Energy of the Standard Design, if the proposed building includes a photovoltaic system. 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 6 of 10 (a) Solar Ready Infrastructure: A dedicated solar zone shall be located on the rood or overhang of the building and have a total area no less than 500 square feet. Install a conduit extending from the roofline and terminating at the electrical panel. b) All Electric Exemption: i) All- Electric Exception to the Local Energy Reach Code: New single-family residential construction that is designed and built to be all-electric shall be exempt from the requirements of Section 100.3. Local Energy Efficiency Reach Code. 3. Additional Green Building and Energy Reach Code information, ordinances and applications can be found at http://www.cityofpaloalto.org/gov/depts/ds/green_building/default.asp. If you have any questions regarding Green Building requirements please call the Green Building Consultant at (650) 329-2179. PUBLIC WORKS URBAN FORESTRY CONDITIONS – Elizabeth Lanham 650-617-3173 PRIOR TO DEMOLITION, BUILDING OR GRADING PERMIT ISSUANCE 1. BUILDING PERMIT SUBMITTAL- PROJECT ARBORIST CERTIFICATION LETTER. Prior to submittal for staff review, attach a Project Arborist Certification Letter that he/she has; (a) reviewed the entire building permit plan set submittal and, (b) affirm that ongoing Contractor/Project Arborist site monitoring inspections and reporting have been arranged with the contractor or owner (see Sheet T-1) and, (c) understands that design revisions (site or plan changes) within a TPZ will be routed to Project Arborist/Contractor for review prior to approval from City. 2. PLAN SET REQUIREMENTS. The final Plans submitted for building permit shall include the following information and notes on relevant plan sheets: a. SHEET T-1, BUILDING PERMIT. The building permit plan set will include the City’s full-sized, Sheet T-1 (Tree Protection-it's Part of the Plan!), available on the Development Center website at http://www.cityofpaloalto.org/civicax/filebank/documents/31783. The Applicant shall complete and sign the Tree Disclosure Statement and recognize the Project Arborist Tree Activity Inspection Schedule. Monthly reporting to Urban Forestry/Contractor is mandatory. (Insp. #1: applies to all projects; with tree preservation report: Insp. #1-7 applies) b. The Tree Preservation Report (TPR). All sheets of the Applicant’s TPR approved by the City for full implementation by Contractor shall be printed on numbered Sheet T-1 (T-2, T-3, etc) and added to the sheet index. c. Plans to show protective tree fencing. The Plan Set (esp. site, demolition, grading & drainage, foundation, irrigation, tree disposition, utility sheets, etc.) must delineate/show the correct configuration of Type I, Type II or Type III fencing around each 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 7 of 10 Regulated Street Tree, using a bold dashed line enclosing the Tree Protection Zone (Standard Dwg. #605, Sheet T-1; City Tree Technical Manual, Section 6.35-Site Plans); or by using the Project Arborist’s unique diagram for each Tree Protection Zone enclosure. DURING CONSTRUCTION 3. TREE PROTECTION VERIFICATION. Prior to any site work a written verification from the contractor that the required protective fencing is in place shall be submitted to the Urban Forestry Section (derek.sproat@cityofpaloalto.org). The fencing shall contain required warning sign and remain in place until final inspection of the project. 4. EXCAVATION RESTRICTIONS APPLY (TTM, Sec. 2.20 C & D). Any approved grading, digging or trenching beneath a tree canopy shall be performed using ‘air-spade’ method as a preference, with manual hand shovel as a backup. For utility trenching, including sewer line, roots exposed with diameter of 1.5 inches and greater shall remain intact and not be damaged. If directional boring method is used to tunnel beneath roots, then Table 2-1, Trenching and Tunneling Distance, shall be printed on the final plans to be implemented by Contractor. 5. PLAN CHANGES. Revisions and/or changes to plans before or during construction shall be reviewed and responded to by the project site arborist with written letter of acceptance before submitting the revision to the Building Department for review by Planning, PW or Urban Forestry. 6. CONDITIONS. All Planning Department conditions of approval for the project shall be printed on the plans submitted for building permit. 7. TREE PROTECTION COMPLIANCE. The owner and contractor shall implement all protection and inspection schedule measures, design recommendations and construction scheduling as stated in the TPR & Sheet T-1, and is subject to code compliance action pursuant to PAMC 8.10.080. The required protective fencing shall remain in place until final landscaping and inspection of the project. Project arborist approval must be obtained and documented in the monthly activity report sent to the City. The mandatory Contractor and Arborist Monthly Tree Activity Report shall be sent monthly to the City (pwps@cityofpaloalto.org) beginning with the initial verification approval, using the template in the Tree Technical Manual, Addendum 11. 8. TREE DAMAGE. Tree Damage, Injury Mitigation and Inspections apply to Contractor. Reporting, injury mitigation measures and arborist inspection schedule (1-5) apply pursuant to TTM, Section 2.20-2.30. Contractor shall be responsible for the repair or replacement of any publicly owned or protected trees that are damaged during the course of construction, pursuant to Title 8 of the Palo Alto Municipal Code, and city Tree Technical Manual, Section 2.25. 9. GENERAL. The following general tree preservation measures apply to all trees to be retained: No storage of material, topsoil, vehicles or equipment shall be permitted within the tree 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 8 of 10 enclosure area. The ground under and around the tree canopy area shall not be altered. Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. PRIOR TO OCCUPANCY 10. PROJECT ARBORIST CERTIFICATION LETTER. Prior to written request for temporary or final occupancy, the contractor shall provide to the Planning Department and property owner a final inspection letter by the Project Arborist. The inspection shall evaluate the success or needs of Regulated tree protection, including new landscape trees, as indicated on the approved plans. The written acceptance of successful tree preservation shall include a photograph record and/or recommendations for the health, welfare, mitigation remedies for injuries (if any). The final report may be used to navigate any outstanding issues, concerns or security guarantee return process, when applicable. PUBLIC WORKS ENGINEERING CONDITIONS-Ajay Kumar 650-329-2209 1. EASEMENT: Indicate existing easements on proposed site plan. Accessory structure including roof overhangs and drainage features shall be kept clear out of the easement area. 2. DEMOLITION PLAN: Place the following note adjacent to an affected tree on the Site Plan and Demolition Plan: “Excavation activities associated with the proposed scope of work shall occur no closer than 10-feet from the existing street tree, or as approved by the Urban Forestry Division contact 650-496-5953. Any changes shall be approved by the same”. 3. GRADING PERMIT: Separate Excavation and Grading Permit will be required for grading activities on private property that fill, excavate, store or dispose of 100 cubic yards or more based on PAMC Section 16.28.060. Applicant shall prepare and submit an excavation and grading permit to Public Works separately from the building permit set. The permit application and instructions are available at the Development Center and on our website. http://www.cityofpaloalto.org/gov/depts/pwd/forms_and_permits.asp 4. GRADING & DRAINAGE PLAN: The plan set must include a grading & drainage plan prepared by a licensed professional that includes existing and proposed spot elevations, earthwork volumes, finished floor elevations, area drain and bubbler locations, drainage flow arrows to demonstrate proper drainage of the site. Adjacent grades must slope away from the house a minimum of 2% or 5% for 10-feet per 2013 CBC section 1804.3. Downspouts and splashblocks should be shown on this plan, as well as any site drainage features such as swales, area drains, bubblers, etc. Grading that increases drainage onto, or blocks existing drainage from neighboring properties, will not be allowed. 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 on the City’s website. http://www.cityofpaloalto.org/civicax/filebank/documents/2717 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 9 of 10 5. UTILITIES: Note that all above ground utilities, such as transformer, backflow preventer, gas meters, etc., shall be located within project site but accessible from the street. Any new or relocated utilities will correspond with approved locations from City Utilities Department. 6. 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 that 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. 7. Provide the following note on the Site Plan and adjacent to the work within the Public road right- of-way. “Any construction within the city’s public road right-of-way shall have an approved Permit for Construction in the Public Street prior to commencement of this work. THE PERFORMANCE OF THIS WORK IS NOT AUTHORIZED BY THE BUILDING PERMIT ISSUANCE BUT SHOWN ON THE BUILDING PERMIT FOR INFORMATION ONLY.” 8. Provide the following note on the Site Plan and Grading and Drainage Plan: “Contractor shall not stage, store, or stockpile any material or equipment within the public road right-of-way.” Construction phasing shall be coordinate to keep materials and equipment onsite. 9. SIDEWALK, CURB & GUTTER: As part of this project, the applicant shall 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. Contact Public Works’ inspector at 650-496-6929 to arrange a site visit so that the inspector can discuss the extent of replacement work along the public road. The site plan submitted with the building permit plan set must show the extent of the replacement work. 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. Include a scan copy of the site inspection directive obtained form site visit in the plan set. 10. Any existing driveway to be abandoned shall be replaced with standard curb & gutter. This work must be included within a Permit for Construction in the Public Street from the Public Works Department. A note of this requirement shall be placed on the plans adjacent to the area on the Site Plan. 11. PAVEMENT: Redwood Circle was resurfaced in 2013, this street is under a moratorium. Any cutting into the pavement will trigger additional pavement requirements. Add the following note to the Site Plan: “Applicant and contractor will be responsible for resurfacing portions of Redwood Circle based the roadway surface condition after project completion and limits of trench 3743 Redwood Circle. approval Individual Review 17PLN-00272 Page 10 of 10 work. At a minimum pavement resurfacing of the full width of the street along the project frontage may be required.” Plot and label the area to be resurfaced as hatched on the site plan. 12. 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. 13. 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. Copies are available from Public Works on our website http://www.cityofpaloalto.org/civicax/filebank/documents/2732 14. This project triggers 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 on the grading and drainage plan: • 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 lots onto vegetated areas. • Construct sidewalks, walkways, and/or patios with permeable surfaces. • Construct driveways, and/or uncovered parking lots with permeable surfaces 15. Provide the following as a note on the Site Plan: “The contractor may be required to 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 surrounding properties , and schedule of work. The requirement to submit a logistics plan will be dependent on the number of applications Public Works Engineering receives within close proximity to help mitigate and control the impact to the public-right-of-way. If necessary, Public Works may require a Logistics Plan during construction.” 57.5' 95.0' 71.2' 95.0' 60.0' 95.0' 71.5' 95.0' 60.0' 95.0' 71.5' 95.0' 60.0' 95.0' 71.5' 95.0' 95.0' 71.5' 95.0' 71.2' 57.5' 95.0' 71.2' 95.0' 95.0' 33.7' 30.6' 95.0' 24.7' 42.0' 48.5' 48.5' 37.1' 62.2' 0' 95.0' 75.0' 95.0' 95.0' 80.8'54.0'95.0' 75.0' 95.0' 95.0' 80.9' 95.0' 95.0' 75.0' 95.0' 54.0' 95.0' 75.0' 95.0' 54.0' 95.0' 75.0' 95.0' 54.0' 80.9' 95.0' 95.0' 2060.3' 95.0' 54.0' 95.0'75.0' 95.0' 80.9' 95.0' 95.0' 57.0' 95.0' 75.7' 75.7' 95.0' 57.0' 95.0' 95.0' 57.8' 95.0' 72.0' 72.0' 95.0' 57.8' 95.0' 72.0' 95.0' 57.8' 95.0' 95.0' 41.9' 18.2' 95.0' 15.2' 55.6' 68.5' 56.2' 59.3' 44.8' 95.0' 68.5' 95.0' 49.3'31.0' 77.1' 80.1' 101.0' 44.9' 101.0' 80.1' 101.0' 44.9' 101.0' 80.1' 101.0' 44.9' 101.0' 101.0' 44.9' 101.0' 80.1' 101.0' 44.9' 101.0' 80.1' 44.9'80.1' 101.0' 89.0' 89.0' 162.9'1 23.7' 89.0' 44.7' 89.0' 144.1' 44.7' 89.0' 144.1' 89.0' 53.1'64.2' 29.0' 96.0' 73.0' 56.0' 96.0' 76.7' 94.8' 49.9' 21.2' 94.8' 57.2' 97.0' 96.4' 73.0' 91.6' 61.2' 73.6' 73.0' 96.2'18.8' 48.2' 27.3' 60.0' 96.2' 58.5' 18.7'91.6' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 74.9' 93.0' 93.0' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 74 .9' 93.0' 54.2' 93.0' 74.9' 93.0' 54.2'93.0' 74.9' 101.0' 44.9' 101.0' 80.1' 95.0'75.0' 95.0' 54.0' ' 95.0' 75.0' 95.0' 4.0' 95.0' 75.0' 95.0'54.0' 95.0' 80.8' 95.0' 68.6' 97.0' 68.6' 97.0' 55.2' 97.0' 69.3' 97.0'58.0' 97.0' 69.3' 97.0' 58.0' 97.0' 69.3' 97.0' 58.0' 97.0' 69.3' 97.0' 58.0' 97.0' 68.6' 97.0' 55.2' 97.0' 68.6' 97.0' 55.2' 97.0' 68.6' 97.0'55.2' 97.0' 68.6' 97.0' 55.2' 97.0' 69.3' 97.0' 58.0' 97.0' 69.3' 97.0' 58.0' 97.0' 97.0'68.6' 97.0' 55.2' 97.0' 55.2' 97.0'68.6' 53.4' 57.8' 63.0' 46.0' 97.0' 67.8' 97.0' 59.0' 97.0' 67.8' 97.0' 59.0' 97.0' 67.8' 97.0'59.0' 97.0' 65.8' 97.0'58.3' 97.0' 65.8' 97.0' 58.3' 97.0' 67.8' 97.0'59.0' 97.0' 58.0' 97.0' 30.8' 38.6' 96.4' 67.8' 97.0' 59.0' 97.0'97.0' 59.0' 97.0' 58.3' 65.8' 97.0'58.3' 97.0' 97.0' 58.0' 97.0' 97.0' 58.0' 9 80.1' 101.0'44.9' 101.0' 80.1' 101.0' 44.9' 101.0' 101.0' 238 7' 47.0' 113.1' 60.3' 112.3' 47.0' 121.2' 61.4' 113.1' 47.0' 137.1' 64.3' 121.2' 112.3' 52.6' 78.6' 59.3'35.6'108.4' 68.6' 137.1' 47.6' 55.0' 108.4' 51.5' 93.0' 83.4' 93.0' 51.5' 93 .0' 83.4' 93.0' 51.5' 93.0' 83.4' 93.0' 51.5' 93.0' 83.4' 93.0' 51.5' 93.0' 83.4' 93.0' 51.5' 93.0' 83.4' 93.0' 93.0' 83.4'93.0' 51.5' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 74.9' 93.0' 93. 0 ' 74.9' 93.0' 54.2' 54.2' 9 93. 0 ' 54.2' 40.2' 25.4'78.7' 93.0' 74.9' 93.0' 54.2' 93.0' 51.5' 93.0' 83.4' 93.0' 93.0' 51.5' 93.0' 83.4' 93.0' 51.5'93.0' 83.4' 93.0' 54.2' 93.0' 74.9' 54.2' 93.0' 74.9' 93.0' 51.5' 93.0' 83.4' 93.0' 83.4' 93.0' 51.5' 93.0' 83.4' 93.0' 51.5' 93.0' 74.9' 93.0' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 59.5' 123.5'48.0' 146.0' 77.4' 82.6'29.1' 31.0' 123.5' 86.2' 174.4' 47.0' 223.9' 62.4' 146.0'48.0' 172.6' 37.2' 24.7' 172.6' 47.0' 169.6'169.6' 47.0' 149 48.0' 65.8' 97.0' 58.3' 97.0' 42.6' 29.0' 82.7' 76.3' 97.0' 93.0' 54.2' 93.0' 74.9' 83.4' 93.0' 51.5' 93.0' 83.4' 93.0' 51.5' 93.0' 74.9' 93.0' 54.2' 93.0' 74.9' 93.0' 54.2' 93.0' 68 9 52.0' 114.8' 66.6' 114.8' 47.0' 139.2' 74.4' 139.2' 47.0' 174.4' 93.0' 40.2' 25.4'78.7' 93.0' 54.2' 3723 14 3731 3737 12 3637 3633 87 91 93 9 11 3741 3745 37533749 3757 10 8 6 2 4 3762 3750 3756 3744 3738 2 3765 3750 3744 90 88 3748 3629 3625 79 75 81 85 3676 3688 3671 3663 3696 3680 3670 3658 3648 3638 3624 82 80 78 76 74 84 86 3688 3 3668 3657 3647 36 3618 3606 72 70 37 3782 37803778 3774 780 3776 3772 3775 3766 3787 3783 377537733771 3767 3763 3759 3755 3732 3730 37283726 3724 3722 3720 3718 3779 3679 3687 3730 3694 3681 3689 3703 3697 3724 3751 3743 3739 3735 3731 3727 3723 3716 3714 3712 3710 3708 3706 3709 3733 3719 3747 3720 3718 3716 3714 3719 3 3711 3715 3702 3700 3704 3776 L I N D E R O D R I V E S T R E E T R O O S E V E L T C I R C L E C A R L S R E D W O O D R-1 This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend abc Building Roof Outline Underlying Lot Line abc Easement abc Lot Dimensions Zone Districts abc Zone District Labels City Jurisdictional Limits: Palo Alto City Boundary Tree 3743 Redwood Circle 0' 135' 3743 Redwood Circle CITY OF PALO ALTOI N C O R P O R A T E D CAL I F ORN I A P a l o A l t oT h e C i t y o f A P R I L 1 6 1 8 9 4 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2016 City of Palo Alto gowen, 2018-07-05 14:54:46 (\\cc-maps\Encompass\Admin\Personal\Planning.mdb) Attachment E: Chronology 3743 Redwood Circle Initial Submittal On July 26, 2017, the applicant submitted plans showing a stucco and clay tile roof two-story home that was over 24 feet tall and included a second floor balcony set back 20 feet from the rear property line. The initial plans did not include any new screen trees in the rea r yard. Images from the July 26, 2017 plans are provided below. Plan Revisions Prior to Tentative Approval Following staff’s comments on the initial plans, as well as public comments from several neighbors, the applicant submitted revised plans in January 2018 and again in May 2018. May 2, 2018 Tentatively Approved Plans The revised plans better addressed the IR guideline for streetscape; the streetscape guideline focuses on reducing the scale and height of the front massing to help the home fit with the neighborhood streetscape character. The revised plans showed: • the deletion of the rear second floor balcony, • an increase in the rear setback (to 23’10” at first floor and 26 feet to the second floor egress windows), • the addition of two new rear yard screen trees, and • change to the architectural style of the home as compatible with the Eichler neighborhood’s character. Given the owner’s desire to be able to view the backyard from the rear bedrooms, window seat egress windows were included in the May 2018 plans tentatively approved by the Manager of Current Planning on behalf of the PCE Director on May 15, 2018. Tentative Approval The Tentative Director’s Approval of May 2018 was based upon the project’s compliance with the Zoning Code and IR Guidelines, as noted in the Tentative Approval letter (Attachment C). Director’s Hearings The Chief Planning Official, as Hearing Officer, conducted two Director’s Hearings, visited the appellant’s home to view the subject property from that vantage point, and required modifications to the plans to increase the rear second floor window setback and impose additional privacy mitigations, as reflected in the Final Director’s Approval letter (Attachment A). May 26, 2018 Director’s Hearing Request and Process The Director’s Hearing was requested by Mr. and Mrs. Raisinghani (one of the appellant groups) on May 26, 2018. Staff had not received any comments from the Raisinghanis prior to receiving their hearing request after the Tentative Approval was issued. After receiving the hearing request, staff met with the Raisinghanis, and learned that their concerns were related to the impacts of the second story volume on privacy and solar access. These concerns were reiterated in verbal testimony at the Director’s hearing. The other appellant, Mr. Perkins, wrote emails to staff voicing concerns with the project, but did not attend the Director’s Hearings. Mr. Perkins concerns at that time were stated in the Director’s Hearing staff report viewable here: https://www.cityofpaloalto.org/civicax/filebank/documents/66121. August 2, 2018 Director’s Hearing At the Director’s Hearing on August 2, 2018, the Hearing Officer reviewed the plans, heard testimony from the applicants and the Raisinghanis, and continued the hearing to a second hearing date certain of August 23, 2018. Following the first hearing, the Hearing Officer: (1) met with the applicant to discuss changing the rear elevation and increasing the number of trees in the rear yard, (2) visited the Raisinghani home mid-August in response to their invitation to view the subject property from the appellant’s living room and rear yard, (3) reviewed conceptual sketches of changes August 17, 2018 and requested information about dimensions not shown on the plans, (4) received sketches August 20, 2018, and emailed them to the Raisinghanis. The sketches showed: (a) removal of window seats and increased setback from the rear property line to the second floor windows (master bedroom window at 29’-4” and 31’-0” ), (b) reduction in the width of second floor windows but no use of obscured glazing, and (c) an additional rear yard tree. August 23, 2018 Director’s Hearing The applicants, hearing requestors, and the neighbor to the south (who supported the project) attended the second hearing. At the conclusion of the continued hearing, the Hearing Officer noted that: • there would not be a requirement for the applicant to move the second floor toward the street to provide a 40-foot rear yard setback to the second floor, and • there would be minor additional changes imposed to improve privacy, with respect to window sizes, placement and glazing, and tree plantings, with final approval of the project. Following the hearing, the Hearing Officer directed the applicant to provide a rear elevation sketch in line with staff direction proposing to: • only place clear glass above the five foot line above the second floor and • use obscure glazing on portions of the three egress windows below the five foot line. The submitted rear elevation sketch showed obscured glazing below five feet, and high sill windows, and thus became the basis for the Final Director’s Approval. August 31, 2018 Final Plans and Approval The Final Approval conditions included a requirement for a third new tree to be planted in the rear yard (for a total of three new 24” box sized trees) to enhance privacy screening for the rear neighbors, and reflected the window design changes made on the rear elevation leading up to and following the hearings; i.e.: • removal of window box seats, • only opaque glass used below five feet, • clear glass used only above five feet, • limitation of only one rear-wall egress window for each of two rear second floor bedrooms, and • allowance for a new 1’8” wide side window not facing the appellants’ homes, to compensate for loss of clear glazing and light given the other required window changes. The applicant has since provided a final rear elevation to reflect the changes shown on the sketch used for the Final approval. The rear elevation is shown below. Also, due to the appeal request for opaque glazing on the new side window, the applicant has chosen to use opaque glass for that window. PALO ALTO French, Amy From: Owen, Graham Sent: Thursday, September 13, 2018 9:10 AM To: Jasleen Raisinghani; French, Amy Cc: Timothy Perkins; Manoj Raisinghani; Gerhardt, Jodie; Lait, Jonathan Subject: RE: Neighbors feedback on - Approval of Revised Two Story Home at 3743 Redwood Circle Hello Manoj and Jasleen, Thank you for the update. Amy is out of the office, so allow me to respond to your question. If you wish to appeal the Director's decision on the 3743 Redwood Circle house you will need to file written appeal with the City Clerk's office before the date that the Director's decision becomes final, which is the end of business next Thursday, September 20, 2018. The written appeal must be accompanied by an appeal fee of $280 as provided in the Municipal Fee Schedule. The City Clerk's office is located on the 7th floor of City Hall at 250 Hamilton Avenue, Palo Alto, CA 94301. Sincerely, Graham Graham Owen, AICP 1 Planner 1 P&CE Department 250 Hamilton Avenue 1 Palo Alto, CA 94301 D: 650.329.2552 1 E: graham.owen@citvofpaloalto.org Please think of the environment before printing this email — Thank you! From: Jasleen Raisinghani[mailto:hellojasleen(ayahoo.com] Sent: Wednesday, September 12, 2018 8:42 PM To: French, Amy; Owen, Graham Cc: Timothy Perkins; Manoj Raisinghani; Jasleen Raisinghani Subject: Neighbors feedback on - Approval of Revised Two Story Home at 3743 Redwood Circle Dear Amy, First, our best wishes are with you for a swift and complete recovery! We would like to thank you and the city staff for your time, consideration and all the efforts to help with our privacy concerns. We really appreciate your attempts to maintain our quality of life and rights to privacy in our beloved Eichler community. Based on your letter to us, we are further emphasizing our primary asks. Following is our feedback on the updated proposal: 1. 3743 has taken a good step in moving some windows to 5" above floor level. We really appreciate that gesture. 2. The current 2 story home on the right side of 3743 (Burt's) has a 40 feet set -back. We have had enough time to review and discuss among us and also gather inputs from our 1 neighbors - And we are requesting that the 2nd level setback on 3743 be at 40 feet. We are requiring the 40 feet setback as our primary need for privacy to our homes. In addition, the 40 feet setback on the 2nd level will help keep the harmony between us neighbors. 3. Please center the 2nd level placement. We are unable to reconcile why the 2nd level placement is on the side with the largest area of the new construction facing into our backyard. With your current design, the 3714 Carlson (Raisinghani home) takes the biggest brunt of this new construction. 4. Please glaze the 1"-8" wide clear window (which is fixed pane). 5. We believe by centering the 2nd level construction, the egress windows can be moved to the sides (left and right vs. the back) of the home. The original concern of space with neighbors on the sides of 3743 would be much alleviated. Being in an Eichler community our back wall of the house, opens into the back yard and is a series of full length sliding glass doors. This is our outside -in and inside -out experience that Eichlers are so well known for. The city development guidelines need to uphold that experience in such classic neighborhoods and communities. We hope the city planning and development office uses our asks as a 'model' for updating the Eichler community construction guidelines to keep privacy as the primary right if the neighbors. At this point we continue to see concerns for our privacy based on the updated 2nd level design. Hence, we have decided to further pursue the case and make an earnest appeal to the City Council. We are ready to invite any council member to our homes - Perkins and Raisinghani - for an on -site view of why we believe so strongly in guarding our privacy and earnestly requesting you to uphold it with respect. Please let us know the next steps and dates we need to engage with the council and it's executives. Once again, thank you and also thanks to the planning department for spending the time, and listening to us with an open mind and heart - we sincerely appreciate it. Warmest Regrads, Manoj & Jasleen Raisinghani Tim Perkins 2 French, Amy From: French, Amy Sent: Friday, August 31, 2018 3:48 PM To: Manoj R (hellomanoj@yahoo.com); Jasleen Raisinghani (hellojasleen@yahoo.com); 'tim.perkins@yahoo.com' Cc: Owen, Graham (Graham.Owen@CityofPaloAlto.org) Subject: Approval of Revised Two Story Home at 3743 Redwood Circle Attachments: Approval letter dated August 31, 2018.pdf; Redwood redmarked floor plan elevation 8-31-18.pdf Hello neighbors to the rear of 3743 Redwood Circle, Thank you for your input during the public hearing process. As you will recall, I closed the public hearing last Thursday, noting I was not planning to impose a 40 -foot setback for the second floor for this 93' deep property and that I would be making a decision with respect to the project. I prepared the attached letter of Final Approval (first attachment), which is appealable to Council. Please note the appeal submittal timeframe. The architect has reworked the elevations and second floor plan (see second attachment), with specifics about opacity and operations. The revised approval conditions are based on the revised plans and include an additional evergreen tree planting with strategic placement. Conditions allow my direct review and approval of window glass opaque glazing. Please see below images of double and single -hung windows. Of course City staff believe the revised project meets the IR guidelines. We appreciate the neighbors' involvement during the process, and appreciate the additional "good neighbor" modifications the applicant has made in response to privacy concerns. We know Eichler neighborhoods are special communities in Palo Alto and we hope for open communication and cordial relationships with your neighbors going forward and during construction. Once you have reviewed the attached letter, please let Graham know if you have questions. I will be out next Monday for the holiday, then out of office for major surgery beginning next Thursday September 6th for several weeks. Sincerely, Amy French, AICP Chief Planning Official 1 Double -Hung Single -Hung 2 French, Amy From: French, Amy Sent: Friday, August 24, 2018 4:44 PM To: 'tim.perkins@yahoo.com' Cc: Manoj Raisinghani Subject: RE: 3714 Circle PA two story plan Thank you for your email. I received the photos prior to the hearing. I concluded the hearing and I will be working again next week on this with staff. From: tim.perkins@yahoo.com [mailto:tim.perkins yahoo.com] Sent: Friday, August 24, 2018 9:59 AM To: French, Amy Cc: Manoj Raisinghani Subject: 3714 Circle PA two story plan Dear Ms. French, Manoj shared with me the revised drawings for 3743 Redwood Circle. At the planning event for the Fairmeadow Neighborhood Association fall party planning session, I pointed out to Manoj the impact of the two-story home behind me and the window placement, and lack of privacy due to window placement. Privacy is such a problematic issue for Eichler neighborhoods that are facing two-story rebuilds. I strongly request the windows placement on the second story for 4743 Redwood Circle be adapted to a horizontal orientation towards the ceiling. I realize one window is needed for emergency egress but this solution for all other second story windows affords lots of light, air, and privacy for neighbors. It really should be seriously considered for inclusion the Eichler Guidelines during the next revision. My previous email had photographs (interior/exterior) of what I am proposing. I had hoped to send my email before the next meeting (which I believe was yesterday) and ask that my feedback still be considered. Sincerely, Tim Perkins 3712 Carlson Circle Forwarded Message From: Manoj R <hellomanoina yahoo.com> To: Tim Perkins <tim.perkins a(�yahoo.com>; Jasleen Raisinghani <helloiasleen anyahoo.com> Sent: Tuesday, August 21, 2018, 1:19:01 AM PDT Subject: Fw: RE: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA <deleted> Forwarded Message 1 From: French. Amy <Amy.French@CityofPaloAlto.org> To: Manoj R <hellomanoiCa�vahoo.com>; Jasleen Raisinghani <hellolasleen a(�vahoo.com> Cc: Owen, Graham <Graham.Owen(cDCityofPaloAlto.orq> Sent: Monday, August 20, 2018, 5:54:21 PM PDT Subject: RE: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA LEFT SIDE ELEVATION 14" =1'-0" Hello, above drawings reflect changes the owner is proposing. REAR ELEVATION 1 4" = 1'-0" French, Amy From: French, Amy Sent: Tuesday, August 21, 2018 5:35 PM To: 'Jasleen Raisinghani' Cc: Manoj R; Owen, Graham Subject: RE: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA The code does not require two egress windows from the master bedroom. From: Jasleen Raisinghani [mailto:hellojasleen@yahoo.com] Sent: Tuesday, August 21, 2018 5:29 PM To: French, Amy Cc: Manoj R; Owen, Graham Subject: Re: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA Hi Amy, Hmm....it's very surprising. The reason for egress window is to provide an escape route in case of emergency. Why does 3743 need two egress windows in the Master bedroom? Tim and our preference is no egress window or other windows in the back . We are willing to compromise on high horizontal windows in the back to let light into the room while protecting the privacy of our Echlier homes. We may be willing to compromise with one egress window of the same dimension as the drawing for master bedroom if absolutely needed - we are hopeful 3743 is willing to include some Feng Shui remedy and move all windows to the side so as not to compromise both Tim and our Echlier home's privacy. Our reasonable ask is based on ethos of Echlier homes which have a wall of glass on the first level to enjoy indoor- outdoor living whereas most bedrooms have curtains to provide privacy. So windows both egress and horizontal should be placed on the sides of the 2nd level vs. the back of the house. Thank you so much for taking the time. Warmest Regards Jasleen On Aug 21, 2018, at 11:58 AM, French, Amy <Amy.French a,CityofPaloAlto.org> wrote: I do understand your desire for no egress windows on the back. The applicant's proposed master bedroom redesign shows two egress windows at the back, and one egress window for the other bedroom on the back. No egress windows are on the sides. From: Jasleen Raisinghani[mailto:hellojasleenCayahoo.com] Sent: Tuesday, August 21, 2018 11:55 AM To: French, Amy Cc: Manoj R; Owen, Graham Subject: Re: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA 1 Hi Amy, On the egress window my understanding from looking at the drawing and your email is only the Master Bedroom has the egress window on the back. My assumption is the other bedroom egress window is on the side and not facing us - our preference would be to have egress windows on the sides vs. the back to maintain the privacy of our Echlier home. Thank you so much Warmest Regards Jasleen 408-930-5743 Jasleen On Aug 21, 2018, at 11:10 AM, French, Amy<Amy.Frenchr(CityofPaloAlto.org> wrote: Hello Jasleen, Regarding the centering, I don't think the applicants plans to move the volume farther back. This can certainly be part of the conversation on Thursday. When you say 'one egress window' facing on the top level - do you mean the Master Bedroom window? There is the minimum need for one egress window per bedroom (that would result in two egress windows on the rear elevation, one for each bedroom, given the floor plan). From: Jasleen Raisinghani [mailto:hellojasleen©vahoo.com] Sent: Tuesday, August 21, 2018 10:40 AM To: Manoj R; French, Amy Cc: Owen, Graham Subject: Re: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA Hi Amy, Just wanted to clarify the following: 1. Before the last hearing we had requested the 2nd level to be moved away from our side- we are willing to compromise to have it centered so it it beneficial to all neighbors and not a burden on anyone neighbour. 2. The compromise on one egress window on the top level should be of the same dimension as proposed in the drawing. Thank you so much Warmest Regards Jasleen On Aug 21, 2018, at 9:14 AM, Jasleen Raisinghani <hellojasleen a,yahoo.com> wrote: 2 Hi Amy, Good morning! Thank you so much for working with the owners on their construction plans so we can hopefully arrive at a mutually agreeable compromise. Our family has been living in Palo Alto for over 20 years and specifically in 3714 Carlson since 2003. We spent over 3 years looking for a property which meets "Vastu Shastra" (Indian) guidelines to ensure our family's good health and well-being. Of course, it is tough to find every attribute but where Vastu guidelines could not be met we had to find & enable a remedy - which is also the case with Feng Shui! We spent over over a year making modifications to our home to comply with Vastu Shastra at the same time being mindful of the Echlier community - we had chosen to live in. 1. As stated in the last hearing - we would request the owner to center the top level vs. have it on our side of the property & try to keep 40 feet setback vs the current proposal. Having it centered will also be beneficial to the other neighbors. We have seen no modification in this request. 2. Our stated preference is no windows on the back -side. The hallmark feature of an Echlier home is windows on the 1st level in the back - a wall of windows - for an inside -outside experience. The back -yard is an extension of the living room! Windows on the second story of 3743 - on the back - will completely compromise our standard and quality of living - as we will feel like fish in an aquarium. Most people have curtains in their bedrooms and so even if there are windows on the sides which may be closer to other homes - curtains on top floor are a good remedy for everyone. But once the 2nd story is centered it will be a better fit for everyone. As a compromise we would be willing to consider horizontal windows on the 2nd story in the back (seen in Echlier homes) to ensure everyone's privacy - this gives owner plenty of light and ability to add as many windows as needed. We are not excited but willing to understand the need to have 3 one egress window to comply with building guidelines but 3 vertical windows is hard to digest. We request the owner keep just one egress window if absolutely needed ( preferably none on the back side) and change the others to horizontal windows (here again our preference as stated is none). Based on my husband, my son & my engineering knowledge (we are all MS in Engineering) the viewing angle from these windows (as shown) - will give the owners a direct view into 3714 Carlson circle 1st level & their own rooftop vs. a view into their backyard (stated reason for having all the windows on the back) We would like to see 3743 take concrete steps to meet our request, they have kept us out of the loop from the very beginning. We find this very strange for neighbors who share property line and are embarking on a project of this magnitude! We are hopeful we will see our request met during Thursday's hearing otherwise we are willing to escalate to the next level to maintain our privacy in our lovely Echlier home. Thank you once again for the care and attention to detail you have shown. We sincerely appreciate it. Warmest Regards Jasleen Raisinghani 408-930-5743 (cell) On Monday, August 20, 2018, 5:54:23 PM PDT, French, Amy <Amy.French@CityofPaloAlto.org> wrote: <image001.png> Hello, above drawings reflect changes the owner is proposing. From: Manoj R imailto:hellomanoi(a vahoo.coml Sent: Monday, August 20, 2018 5:50 PM 4 To: French, Amy; Jasleen Raisinghani Cc: Owen, Graham Subject: Re: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA Hi Amy .. appreciate your notes and response. Also thank you for representing our asks to the owners. I am not surprised that the 3743 owners continue to push back. Over the weekend, we met with multiple residents in the Palo Alto circles and discussed our requests. Neighbors agree we need more help from you and the city including the board of directors and the architecture committee in making this work in terms of maintenance of privacy. Our expectations are not unrealistic by any means. To give you an example, attached is the breach of privacy while you sit in Tim Perkins home. The tree has not grown enough and it has become the responsibility of Tim to protect his privacy so neighbors cannot see into his room. This is real and the second example we are demonstrating to you about breach of privacy between my neighbor (Tim) and our property that you saw for yourself. The attached pictures from Tim's home are unacceptable where neighbors have egress windows and are able to look into their homes. That's why we are clear with our ask of having egress windows in the front of the 2nd level which allows them to have the space (sq ft) they need. We are requesting you to contact the 3743 neighbors (again please) and stop their plans from including egress windows on the wall that faces our home. 5 We consider their non -adherence as a blatant violation of our privacy after repeated requests and enough time to modify their plans and accommodate our requests. We know that 3743 did not have egress doors in their plans. We wanted to make sure they don't add egress doors later -on for lack of our mentioning it. Looking forward to meeting you and getting this resolved. We are grateful for all your help in working with the 3743 owners and also listening to our case and working with us. At this point, their plans are unacceptable to us and we are ready to escalate. That is, if you believe that it would help us address the issues we are working to resolve. Best regards Manoj 650 556 3455 <image002.jpg> <image003.jpg> On Monday, August 20, 2018, 3:19 PM, French, Amy <Amy.French@CityofPaloAlto.org> wrote: Hello, Manoj and Jasleen, we will see you at the continued public hearing this Thursday, when revised plans will be available (if not before - I am hopeful). 6 1. There were no egress doors shown on the rear elevation in the previously approved set. After our meeting, I passed on your desire for no rear -facing egress windows on Wednesday afternoon in a meeting with the applicant. The rear bedroom does not include a front -facing wall, and placement of an egress window on the side would be very close to that neighbor. The owner did not wish to reverse the master closet and bathroom to face the rear wall (for'feng shui' reasons). At that meeting, I told the owners: (a) the egress windows shown on the previously approved plans must be revised to be much narrower in width (so that no window would be wider than the minimum necessary to meet egress window requirements), and (b) they should delete the second floor rear 'bay window' pop -outs (two foot extensions beyond rear wall) and associated window seats. 2. I did recall your statement that you would be satisfied if the second floor distance from the rear property line were the same as the neighbor's second floor distance and I passed that on to the owners, asking them to find out that distance. The neighbor's first floor is approximately 20 feet back, and the second floor is nearly 40 feet back. The previously approved drawings reflect about a 29 - foot setback to the second floor master bedroom and approximately 31'8" setback to the other rear bedroom - discounting the two -foot bay window protrusions - so the true setback in those drawings was 27 feet to the master bedroom window and 29'8" to the other bedroom window. With removal of the bay windows I directed, the true distance would be 29 feet (to the master bedroom) and 31'8" (to the rear bedroom, which is respectively. The nearest bedroom window would be the master bedroom window. I also asked for the planting of another evergreen tree strategically in the rear yard, and as I noted to you at our meeting, such tree is tied to the capability of condition enforcement over time in the event of failure (unlike the neighbor's tree, the existence of which was not tied to an approval condition). I anticipate plans will show this additional tree. 3. The previously approved plans show obscure glazing of the side wall, second floor windows. I anticipate there will be a high -placed window, not very tall window near the ceiling to allow for light but to better preserve privacy. 4. Egress windows on the rear wall cannot begin at 5.5' above the floor; such sill placement would be compliant with building code egress requirements. The applicant's architect reminded staff that: (1) the Individual Review guidelines note that "complete privacy is not a realistic expectation", and (2) they still feel that privacy screening using trees is the best solution in order to comply with the city's privacy guidelines while at the same time still allow the owners to have two rear facing bedroom windows to look into their own rear yard. From: Manoj R [mailto:hellomanoj(a�yahoo.com] Sent: Saturday, August 18, 2018 3:57 PM To: French, Amy Cc: Owen, Graham; Jasleen Raisinghani Subject: Re: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA Appreciate it Amy. We are looking forward to the new plans. Specifically for the new 2nd level being built that faces our back of the home we request that the owners of 3743 not breach our privacy by revising their plans to: 1 - not include egress windows or egress doors. These egresses can be in the front of the 2nd level. 2 - line-up the new 2nd level with Burt's 2nd level which allows for the distance away from our property as we had discussed and maintains our privacy. (Burt's property is to the left of 3743 when looking from my back yard.) 8 3 - adhere to Tim Perkins and our request with respect to maintaining privacy by glazing the windows on their side walls of the 2nd level so to avoid anyone in the room (on the 2nd level) to peek into the neighbors. 4 - place smaller height windows about 5.5 ft above floor on the wall that faces Tim and my house. This will stop inadvertent breach of our privacy while allowing the entry of good light into their room on the 2nd level. Hope the above helps summarize some of our conversations on Wednesday. Thank you! Manoj 650 556 3455 On Thursday, August 16, 2018, 11:30 AM, French, Amy<Amy.French(a,CityofPaloAlto.orq wrote: Thanks it was my pleasure to meet at your home. I hope to receive conceptual plans prior to the continued hearing next Thursday. If I receive them I will forward them to you. Sent from my iPad On Aug 16, 2018, at 8:44 AM, Manoj R <hellomanojt yahoo.com> wrote: Hi Amy .. it was great to have you over for a visit. Thank you for taking the time and efforts early on your day to be with us. Our neighbor, Tim Perkins as well as we would really appreciate 9 if you and Graham can let us review the revised plans for 3743 redwood before the updated plans are finalized and approved by the city of Palo Alto. Once again thank you for all your considerations and help. Best regards Manoj 650 556 3455 On Tuesday, August 14, 2018, 5:25 PM, Manoj R <hellomanol(a)vahoo .com> wrote: Hi Amy Appreci ate the call earlier. As you propos ed, let's try for 9:30- 9:45 am tomorro w (Wed 15th). Graha m and you are very welcom 10 French, Amy From: Sent: To: Cc: Subject: French, Amy Monday, August 20, 2018 5:54 PM 'Manoj R'; Jasleen Raisinghani Owen, Graham RE: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA LEFT SIDE ELEVATION 114" = Hello, above drawings reflect changes the owner is proposing. From: Manoj R [mailto:hellomanoj@yahoo.com] Sent: Monday, August 20, 2018 5:50 PM To: French, Amy; Jasleen Raisinghani Cc: Owen, Graham Subject: Re: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA - - REAR ELEVATION 1 4" = 1'-0" Hi Amy .. appreciate your notes and response. Also thank you for representing our asks to the owners. I am not surprised that the 3743 owners continue to push back. Over the weekend, we met with multiple residents in the Palo Alto circles and discussed our requests. Neighbors agree we need more help from you and the city including the board of directors and the architecture committee in making this work in terms of maintenance of privacy. Our expectations are not unrealistic by any means. To give you an example, attached is the breach of privacy while you sit in Tim Perkins home. The tree has not grown enough and it has become the responsibility of Tim to protect his privacy so neighbors cannot see into his room. This is real and the second example we are demonstrating to you about breach of privacy between my neighbor (Tim) and our property that you saw for yourself. 1 The attached pictures from Tim's home are unacceptable where neighbors have egress windows and are able to look into their homes. That's why we are clear with our ask of having egress windows in the front of the 2nd level which allows them to have the space (sq ft) they need. We are requesting you to contact the 3743 neighbors (again please) and stop their plans from including egress windows on the wall that faces our home. We consider their non -adherence as a blatant violation of our privacy after repeated requests and enough time to modify their plans and accommodate our requests. We know that 3743 did not have egress doors in their plans. We wanted to make sure they don't add egress doors later -on for lack of our mentioning it. Looking forward to meeting you and getting this resolved. We are grateful for all your help in working with the 3743 owners and also listening to our case and working with us. At this point, their plans are unacceptable to us and we are ready to escalate. That is, if you believe that it would help us address the issues we are working to resolve. Best regards Manoj 650 556 3455 2 On Monday, August 20, 2018, 3:19 PM, French, Amy <Amy.French@CityofPaloAlto.org> wrote: Hello, Manoj and Jasleen, we will see you at the continued public hearing this Thursday, when revised plans will be available (if not before - I am hopeful). 1. There were no egress doors shown on the rear elevation in the previously approved set. After our meeting, I passed on your desire for no rear -facing egress windows on Wednesday afternoon in a meeting with the applicant. The rear bedroom does not include a front -facing wall, and placement of an egress window on the side would be very close to that neighbor. The owner did not wish to reverse the master closet and bathroom to face the rear wall (for `feng shui' reasons). At that meeting, I told the owners: (a) the egress windows shown on the previously approved plans must be revised to be much narrower in width (so that no window would be wider than the minimum necessary to meet egress window requirements), and (b) they should delete the second floor rear 'bay window' pop -outs (two foot extensions beyond rear wall) and associated window seats. 2. I did recall your statement that you would be satisfied if the second floor distance from the rear property line were the same as the neighbor's second floor distance and I passed that on to the owners, asking them to find out that distance. The neighbor's first floor is approximately 20 feet back, and the second floor is nearly 40 feet back. The previously approved drawings reflect about a 29 -foot setback to the second floor master bedroom and approximately 31'8" setback to the other rear bedroom - discounting the two -foot bay window protrusions - so the true setback in those drawings was 27 feet to the master bedroom window and 29'8" to the other bedroom window. With removal of the bay windows I directed, the true distance would be 29 feet (to the master bedroom) and 31'8" (to the rear bedroom, which is respectively. The nearest bedroom window would be the master bedroom window. I also asked for the planting of another evergreen tree strategically in the rear yard, and as I noted to you at our meeting, such tree is tied to the capability of condition enforcement over time in the event of failure (unlike the neighbor's tree, the existence of which was not tied to an approval condition). I anticipate plans will show this additional tree. 3. The previously approved plans show obscure glazing of the side wall, second floor windows. I anticipate there will be a high -placed window, not very tall window near the ceiling to allow for light but to better preserve privacy. 4. Egress windows on the rear wall cannot begin at 5.5' above the floor; such sill placement would be compliant with building code egress requirements. The applicant's architect reminded staff that: (1) the Individual Review guidelines note that "complete privacy is not a realistic expectation", and (2) they still feel that privacy screening using trees is the best solution in order to comply with the city's privacy guidelines while at the same time still allow the owners to have two rear facing bedroom windows to look into their own rear yard. From: Manoj R [mailto:hellomanoj ,yahoo.coni] Sent: Saturday, August 18, 2018 3:57 PM To: French, Amy Cc: Owen, Graham; Jasleen Raisinghani Subject: Re: 9:30-9:45 Wed (Aug 15th) at 3714 Circle PA Appreciate it Amy. We are looking forward to the new plans. Specifically for the new 2nd level being built that faces our back of the home we request that the owners of 3743 not breach our privacy by revising their plans to: 1 - not include egress windows or egress doors. These egresses can be in the front of the 2nd level. 2 - line-up the new 2nd level with Burt's 2nd level which allows for the distance away from our property as we had discussed and maintains our privacy. (Burt's property is to the left of 3743 when looking from my back yard.) 3 - adhere to Tim Perkins and our request with respect to maintaining privacy by glazing the windows on their side walls of the 2nd level so to avoid anyone in the room (on the 2nd level) to peek into the neighbors. 4 - place smaller height windows about 5.5 ft above floor on the wall that faces Tim and my house. This will stop inadvertent breach of our privacy while allowing the entry of good light into their room on the 2nd level. Hope the above helps summarize some of our conversations on Wednesday. Thank you! 8 Manoj 650 556 3455 On Thursday, August 16, 2018, 11:30 AM, French, Amy <Amy.French@CityofPaloAlto.org> wrote: Thanks it was my pleasure to meet at your home. I hope to receive conceptual plans prior to the continued hearing next Thursday. If I receive them I will forward them to you. Sent from my iPad On Aug 16, 2018, at 8:44 AM, Manoj R <hellomanoj@yahoo.com> wrote: Hi Amy .. it was great to have you over for a visit. Thank you for taking the time and efforts early on your day to be with us. Our neighbor, Tim Perkins as well as we would really appreciate if you and Graham can let us review the revised plans for 3743 redwood before the updated plans are finalized and approved by the city of Palo Alto. Once again thank you for all your considerations and help. Best regards Manoj 650 556 3455 On Tuesday, August 14, 2018, 5:25 PM, Manoj R <hellomanoj ayyahoo.com> wrote: Hi Amy .. Appreciate the call earlier. As you proposed, let's try for 9:30-9:45 am tomorrow (Wed 15th). Graham and you are very welcome to our home. 9 3714 Carlson Circle Palo Alto Best regards Manoj 650 556 3455 10 Attachment G Project Plans A hardcopy of the project plans will be available at the hearing. Prior to the hearing, these plans are available to the public by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Project plans may also be viewed online by following these directions: 1. Go to: https://paloalto.buildingeye.com/planning 2. Search for “3743 Redwood Circle” and open the record by clicking on the blue dot 3. Review the record details and open the “more details” option 4. Use the “Records Info” drop down menu and select “Attachments” 5. Open the attachment named “Approved Plans” City of Palo Alto (ID # 9682) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: State of CA COPS Funding 2018 Title: Approval of the Acceptance and Appropriation of State of California Citizens Options for Public Safety (COPS) Funds and Approval of a Budget Amendment in the Supplemental Law Enforcement Services Fund From: City Manager Lead Department: Police Recommendation Staff recommends that the City Council: 1. Approve the acceptance and appropriation of Citizens Options for Public Safety (COPS) funds from the State of California; and 2. Amend the Fiscal Year 2019 Budget Appropriation for the Supplemental Law Enforcement Services Fund by: a. Increasing the estimate for Revenue from the State of California by $105,964; and, b. Increasing the Police Department Facilities and Equipment appropriation by $133,000. c. Decreasing the Ending Fund Balance by $27,036. Background Since 1997, the California State Budget Act has included allocations to counties and cities for the COPS program. This funding is intended to fill the need for additional resources at the local level to ensure public safety. Under the provisions of Government Code Section 30061, a percentage of the funds are allocated to counties and cities, based upon population, for law enforcement services. Funds must supplement existing services and cannot be used to supplant any existing funds. Each city is also required to deposit the funds into a separate Supplemental Law Enforcement Services Fund so that these funds are not intermingled with General Fund dollars. The funds must be used to benefit front-line law enforcement efforts. Previous uses of COPS funds have included the purchase of a replacement K -9 unit; crime scene evidence collection vehicle; firearm instructor hearing protection; mobile data terminals, youth program activities; upgrades to the telecommunications infrastructure; upgrades to the patrol vehicle and traffic motorcycle programs; and property and evidence operational and security improvements. City of Palo Alto Page 2 Discussion Staff proposes to use the COPS funds in the following manner: • Automated External Defibrillators (AED) ($30,000) The proposed Palo Alto Automated External Defibrillator (AED) purchase matches a contribution of $30,000 from the County of Santa Clara, in partnership with Racing Hearts, a Palo Alto-based non-profit. The County funding comes from the County EMS Trust Funds and 2012 Measure A Funds for public safety and health programs. The AED purchase will allow the Palo Alto Police Department to equip every patrol car (deployed on the street) with an AED device for the first time. Previous AED deployments required police officers to check out an AED on a daily basis. This program will provide the community with faster, more efficient access to these life saving devices by having one AED mounted in every patrol car. When an automated external defibrillator (AED) is deployed within the first 4-6 minutes and in combination with CPR, the survival rates of sudden cardiac arrest can increase up to 80 percent. This purchase would ensure constant, around the clock accessibility to ensure lifesaving measures fo r our aging citizenry and assist with the increasing volume of medical aid calls for service. • Electronic Citation Software ($50,000) Electronic citation software (“E-cite”) provides officers with a more efficient and accurate means of issuing citations. E-citations eliminate two common issues, writing illegibility and a failure to complete all required cite information. The system’s improved accuracy and faster processing time should increase the ability to issue cites or warnings and enhance revenue. The Council previously approved $45,000 of COPS funding for the E-cite program (CMR 5425) in 2015. This additional allocation is to fully fund the E-cite program ($95,000) to include all patrol officers, rather than just traffic officers. • Rifle Magnifiers ($53,000) The purchase of the rifle magnifiers decreases liability to the City and officers and improves safety for citizens by increasing accuracy should the need to use a rifle in the field arise. The rifle magnifiers are a safety extension for the rifle. The new magnifiers will allow an officer to see the object three times larger than currently allowed. All officers (except a handful of our newest officers) are rifle-certified, and all patrol cars are outfitted with rifles. The deployment of rifles is a long-standing, standard law enforcement practice. Palo Alto officers have been outfitted with rifles for over twenty years. The Department hosts an in-house course approved by the California Peace Officer Standards and Training (POST) Commission to train all of our officers in the use of the patrol rifle. Resource Impact The Police Department has received funds each year under this program since its inception in 1998. Annual allocations have averaged approximately $100,000 over the last few years. The City of Palo Alto Page 3 City received the official notice from the California Department of Finance in September 2018 that the City’s COPS allocation for Fiscal Year 2019 is $105,964. Revenues of $105,964 are recommended to be recognized in the City’s Supplemental Law Enforcement Services Fund. A total of $133,000 of expenditures are anticipated as described previousl y in the memorandum, which will be covered by the COPS grant funding appropriated in FY 2019 ($105,964), as well as COPS funding received in previous years that was unspent ($27,036). There will be no impact to the General Fund as ongoing maintenance costs for the items purchased by the SLESF will be absorbed in the Department’s existing non-salary budget. Policy Implications Expenditures of funds associated with COPS funds are consistent with City Policy. Environmental Assessment Acceptance of COPS funding and the proposed expenditures for public safety equipment are not projects subject to CEQA requirements. Attachments: • 2018-19 Citizens' Option for Public Safety (COPS) and Juvenile Justice �$T ❑A, /.4‘ aQ IAdiIlk Z W II II T1 n7 DEPARTMENT OF FDR��P F1 NANCE September 11, 2018 Honorable Betty T. Yee State Controller 300 Capitol Mall, Suite 1850 Sacramento, CA 95814 EDMUND G. BROWN JR. • GOVERNOR 915 L STREET ■ SACRAMENTO CA ■ 95814-3706 • WWW.DOF.CA.GOV Attention: Ms. Debra Morton Local Government Programs and Services Division, Manager, Local Apportionments Dear Controller Yee: Pursuant to Government Code section 30029.05, subdivision (e), paragraph (2), the Department of Finance respectfully submits the attached (Attachments I and II) percentages for the 2018-19 allocation of $214,200,000 in Citizens' Option for Public Safety (COPS) and Juvenile Justice Crime Prevention Act (JJCPA) funds deposited in the Enhancing Law Enforcement Activities Subaccount (ELEAS) in the Law Enforcement Services Account within the Local Revenue Fund 2011. Pursuant to Government Code section 30061, subdivisions (b) and (g), subsequent to the allocation described in subdivision (d) of Section 29552, 47.08727192 percent of the remaining funds deposited in the ELEAS for the COPS (23.54363596 percent) and JJCPA (23.54363596 percent) programs are to be allocated, according to the relative population for each county and city, as follows: (1) 5.15 percent to the county sheriff for county jail construction and operation ($11,031,300). (2) 5.15 percent to the district attorney for criminal prosecution ($11,031,300). (3) 50 percent to the county or city and county to implement a comprehensive multi -agency juvenile justice plan ($107,100,000). (4) 39.7 percent to the county and the cities within the county for front-line law enforcement ($85,037,400). Note that pursuant to Government Code section 30061, subdivision (b), paragraph (3), each law enforcement jurisdiction receiving front-line law enforcement funding is to receive a minimum grant of $100,000. The percentages included in Attachment II are calculated in a manner that provides for a minimum grant allocation of $100,000 to each law enforcement jurisdiction listed in Attachment II . Note that the by -county percentages for the first three allocations above: (1) county jail construction, (2) district attorney criminal prosecution, and (3) multi -agency juvenile justice plans, are specified on Attachment I and the by-county/city, percentages for the fourth allocation, front-line law enforcement, are identified on Attachment II. Honorable Betty T. Yee September 11, 2018 Page 2 Also note that the allocations shown on Attachments I and II may be slightly different from the final allocations made by the State Controller's Office due to rounding. If you have any questions, or need additional information, please call Madelynn McClain, Principal Program Budget Analyst, at (916) 445-8913. Sincerely, AMY JARVI Program Budget Manager Attachments cc: Mr. George Lolas, Chief Operating Officer, State Controller's Office Ms. Jill Kanemasu, Chief, Local Government Programs and Services Division, State Controller's Office Ms. Evelyn Calderon -Yee, Chief, Bureau of Payments, Local Government Programs and Services Division, State Controller's Office Ms. Melma Dizon, Supervisor, Local Government Programs and Services Division, State Controller's Office Ms. Kathleen Howard, Executive Director, Board of State and Community Corrections Attachment I 2018-19 Enh ancing L aw Enf orc em ent Activities Sub acc ount Citizens' Opti on f or Public S af ety and Ju venile Justice Crime Prevention Act Allocations Based on Jan . 1, 2018 Population Estimates COUNTY 1/1/2018 Population by Co unty Percent of 1/1/2018 Population by County COPS (E xcluding Front-line Enf orcement) * JJCPA Total Net Total (Including Front-line E nforcemn et) 5 .15 % 5 .15% 50 .00% 6030% 100.0056 11,031,300 11,031,300 107 100,000 129, 62,600 214,200,000 Co. Jail Operation Allocation by County Percent of Co. Jail Operation Allocation by County District Att orney Allocation by Co unty Percent of District Att orn ey Allocati on by County Juvenile Justice All ocati on by County Percent of Juvenile Justice Allocation by C ou nty Total All ocation by Co unty - Percent of Total All ocation by County Net Total All oc ation by County Fr ont-line Law Enf orcem ent Percent of Net T otal Allocati on by Cou nty Ala meda - 1,660,202 4.17034615% $460,043 4.17034615% $460,043 4 .1703461556 $4,466,441 4 .17034615% $5,386,528 4 .17034615% 68,177,104 $2,790,577 3 .2815875156 Alpin e 1,154 0.00289879% $320 0 .00289879% $320 0 .00289879% $3,105 0 .00289879% $3,744 . 0.00289879% $103,744 9100,000 0 .11759532% Amador 38,094 0 .09569026 % $10,556 0.09569026% $10,556 0 .09569026% $102,484 0 .09569026% $123,596 0 .09569026% $723,596 9600,000 0 .70557190% Butte 227,621 0 .57177281% 963,074 0 .57177281% $63,074 0.57177281% $612,369 0 .57177281% $738,517 0 .57177281% $1,403,050 $664,534 0.78146044% Calav eras 45,157 0.11343217 % 912,513 0.11343217% 912,513 0 .11343217% 9121,486 0 .11343217% 9146,512 0.11343217% $346,512 9200000 0 .23519063% Colusa 22,098 0 .05550909% 96,123 0.05550909% $6,123 0 .05550909% 959,450 0 .05550909 % - 971,697 0.05550909% 9371,697 $300,000 0.35278595 % Contra Costa 1,149,363 2.88714359 % $318,489 2.88714359% 9318,489 2.88714359% 93,092,131 2.88714359% $3,729,110 2.88714359% 96,271,499 92,542,389 2.98973073 % Del Norte 27,221 0.06837782 % $7,543 0.06837782% 97,543 0.06837782% $73,233 0.06837782% $88,319 0.06837782 % • 9288,319 9200,000 0.23519063% El Dorado 188,399 0.47324907 % 852,206 0.4732490756 $52,206 0 .47324907% 6506,850 0.47324907 % $611,261 0 .47324907 % 91,048,149 $436,888 0.51375980% Fresno 1,007,229 2.53010994% $279,104 2.53010994% 9279,104 2.53010994% . 92,709,748 2.53010994 % $3,267,956 2.53010994 % $5,817,856 $2,549,900 2 .99856343% Glenn 28,796 0.07233414% $7,979 0.07233414% $7,979 0 .07233414% 977.470 0 .07233414 % $93,429 0.07233414 % $393,429 $300,000 0.35278595 % Humboldt 136,002 0.34163037 % $37,686 0.34163037% 937,686 0.34163037 % $365,886 0 .34163037 % 9441,259 0.34163037 % 91,252,001 9810,742 0 .95339493% Imperial 190,624 047883816% $52,822 0.47883816 % 952,822 0.47883816 % 9512,836 0 .47883816% 9618,480 0 .47883816% 91,418,480 9800,000 0.94076254% Inyo 18,577 0.04666451% $5,148 0.04666451% $5,148 0.046664515 $49,978 0 .04666451 % $60,273 0.04666451 % 9260,273 9200,000 0.23519063% Kem 905,801 2.27532777% $250,998 2.27532777 % 9250,998 2.27532777 % 92,436,876 227532777% $2,938,873 227532777 % 95,205,986 92,267,114 2 .66601956 % Kings 151,662 0. 38096752% $42,026 0 .38096752 % $42,026 0.38096752 % 9408,016 0.38096752 % 9492,068 0 .38096752 % 9992,068 $500,000 0 .58797658% Lake 65,081 0. 16348029% $18,034 0 .16348029 % 918,034 0 .16348029% 9175,087 0.1634802956 $211,155 0.16348029 % $511,155 $300,000 0.35278595 % Lassen 30,911 0. 07764692% $8,565 0 .07764692 % 98,565 0.07764692% $83,160 0.07764692 % $100,291 0.07764692% $300,291 9200,000 0 .23519063% Los Angeles 10,283,729 . 25. 8322238300% 92,849,630 25 .83222383 % $2,849,630 25.89222383% $27,666,312 25 .83222383% $33,365,572 25.11.4272383% $52,343,217 $18,977,645 22.31682134% Ma dera 158,894 0. 39913395% 944,030 0 .39913395 % $44,030 0.39913395% $427,472 0 .39913395% $515,532 0.39913395% $828,397 9312,866 0 .36791526% Ma rin 263,886 0. 66286871% $73,123 0 .66286871 % 973,123 0 .66286871% 9709,932 0 .66286871% $856,178 0.6628687156 92,061,434 91,205,256 1 .41732424% Ma riposa 18,129 0. 04553916% $5,024 0.04553916% 95,024 0 .04553916% $48,772 0.04553916% $58,820 0.04553916 % $158,820 $100,000 0.11759532% Me ndocino 89,299 0. 22431472% $24,745 0.22431472% 924,745 022431472% 9240,241 0.22431472% 9289,731 0.22431472 % $789,731 9500,000 0.58797658 % Me rced 279,977 0. 70328852% $77,582 0.7032885256 977,582 0.70328852% $753,222 0 .70328852% 9908,386 0.70328852% $1,684,804 $776,419 0.91303203% Modoc 9,612 0. 02414487% 92,863 0.0241448756 92,663 0.02414487% $25,859 0 .02414487% $31,186 0 .02414487% 9231,186 9200,000 0.23519063% Mono 13,822 0. 03472019% 93,830 0.03472019% 93,830 0.03472019% $37,185 0.0347201956 $44,846 0 .03472019% $244,846 $200,000 0 .2351906356 Monterey 443,281 1. 11350017% 9122,834 1.11350017% $122,834 1.11350017% - $1,192,559 1.11350017 % 91,438,226 1.11350017% 92,947,132 91,508,907 1 .77440356% Napa • 141,294 0.35492361% 939,153 0. 35492361% $39,153 - 0 .35492361% $380,123 0.35492361% $458,429 0.35492361% 91,080,627 9622,199 0 .73167656% Nevada 99,155 0.24907251% $27, 476 0. 24907251% $27,476 0.24907251% $266,757 0.24907251% $321,709 0.24907251% $722,332 $400,623 0 .47111418 % O ra nge 3,221,103 8.09125305% 9892,570 8.09125305% $692,570 8 .09125305% $8,665,732 8 .09125305% 910,450,873 8.09125305% $16,119,652 $5,668,780 6 .66621927 % Placer 389,532 0. 97848532% $107,940 0. 97848532% $107,940 0.97848532% $1,047,958 0 .97848532% 91,263,837 0.97848532% $2,146,164 $882,327 1.03757465 % Plu mas 19,773 0. 04966881% 95,479 0. 04966881% $5,479 0.0496688156 953,195 0.04966881% 964,154 0.04966881 % $264,154 9200,000 0.23519063 % Riverside 2,415,955 6.06876069% - $669,463 6.06876069% $669,463 6.06876069% $6,499,643 6.06876069% $7,838,569 6.06876069 % $12,315,868 54,477,298 5 .26509327% Sacramento 1,529,501 3.84203164% 9423,826 3.84203164% $423,826 3.84203164 % $4,114,816 3.84203164% 94,962,468 3 .84203164 % 97,446,231 $2,483,763 2 .92078933% San Benito 57,088 0.14340226% $15,819 0.14340226% 915,819 0.14340226 % $153,584 0.14340226% 9185,222 0 .14340226 % 9485,222 • 9300,000 0.35278595 % San Bemardino 2,174,938 5.46333779% $602,677 5.4633377956 $602,677 5 .46333779% $5,851,235 5.463337795 97,056,589 5 .46333779% $11,017,711 $3,961,121 4.65809337% San Diego 3,337,456 8.38352609% $924,612 8.38352609% $924,812 8.38352609 % $8,978,756 8.38352609 % $10,828,380 8 .38352609% $16,309,804 $5,481,424 6.44589770% San Francisco 883,963 2.22047178% $244,947 2. 22047178% $244,947 2.22047178 % $2,378,125 2.22047178% 92,868,019 2.22047178% 94,211,491 $1,343,472 1.57985972% San Joaquin 756,744 1.90592778% $210,249 1. 90592778% 9210,249 1.90592778% $2 ,041,249 1.90592778% 92,461,746 1.90592778% 93,842,451 $1,380,706 1.62364506% San Luis Obispo 280,101 0.70360000% 577,616 0.70360000% 977,616 0. 70360000% $753,556 0.70360000% $908,788 0.70360000% $1,792,139 9883,351 1.03877884% San Mateo 774,155 1. 94463946% 5214,519 1. 94463946% $214,519 1.9446394656 $2 ,082,709 1.94463946% $2,511,747 1.94463946% $4,867,771 $2,356,025 2.77057459% Santa Barbara - 453,457 1. 13906179% $125,653 1.13906179% $125,653 1.13906179% $1 ,219,935 1.13906179% $1,471,242 1.13906179% 92,596,402 91,125,160 1.32313525 % Santa Clara 1,956,598 4. 91487839% $542,175 4.91487839% $542,175 4.9148783956 $5,263,835 4 .91487839% 96,348,185 4.91487839% $9,752,995 $3,404,810 4 .00389725 % Santa Cruz 276,864 0.69546881% $76,719 0.69546881% $76,719 0.69546881% 9744,847 0.69546881% $898,286 0.69546881% 91,503,273 $604 ,987 0.71143627 % Shasta 178,271 0. 44780803% $49,399 0.44780803% $49,399 0.4478080356 $479,602 0.44780803% 9578,400 0.44780803% 91,018,328 $439,928 0.51733429% Sierra 3,207 0. 00805583% $889 0.00805583% $889 0.00805583% $8,628 0.00805583% $10,405 0.00805583 % $210,405 $200,000 0.235190635 Siskiyou 44,612 0. 11206316% $12,362 0.11206316% $12,362 0.11206316% $120,020 0 .11206316 % $144,744 0.11206316 % $1244,744 91,100,000 1 .29354849 % Solano 439,793 1. 10473849% $121,867 1.10473849% ' $121,867 1.10473849% $1,183,175 1 .10473849% $1,426,909 1 .10473849% $2,435,117 91,008,208 1 .18560498% Sono ma 503,332 1. 26434534% $139,474 1.26434534% $139,474 126434534% 91,354,114 126434534 % $1,633,061 1 .26434534% 92,920,742 91,287 ,681 1.51425238 % Stanislaus 555,624 1.39570029% 9153,964 1.3957002956 $153,964 1.39570029% $1,494,795 1.39570029% $1,802,723 1.39570029% $3,121,844 91,319 ,122 1.55122529% Sutter 97,238 0.24425710% 526,945 0.24425710% $26,945 0. 24425710% $261,599 0.24425710 % 9315,489 0.24425710% $617,743 $302,254 0.35543657% Tehama 64,039 0. 16086283% $17,745 0.16086283% 917,745 0. 16086283% $172,284 0.16086283 % $207,775 0 .16086283 % $607,775 $400,000 0.47038127 % TriNty 13,635 0.03425045% $3, 778 0.03425045% $3,778 0.03425045% $36,682 0. 03425045% $44,239 0 .03425045 % 9144,239 $100,000 0.11759532 % Tulare 475,834 1. 19527171% 9131,854 1.19527171% 9131,854 1.19527171% $1,280,136 1. 19527171% 91,543,844 1 .19527171% 92,670,621 $1,126,777 1.32503688 % Tuolu mn e 54,740 0.13750420% $15,169 0.13750420% 915,169 0.13750420% $147267 0. 13750420% • 9177,604 0.13750420% $377,604 $200,000 0 .23519063 % Ven tura 859,073 2.15794932% 9238,050 2. 15794932% 9238,050 2.15794932% $2,311,164 2. 15794932% $2,787,263 2.15794932% $4,416,997 $1,629,734 1 .91649047 % Yolo 221,270 0.55581941% 961,314 0. 55581941% $61,314 0. 55581941% $595,283 0. 55581941% $717,911 0.55581941% $1,222,329 $504,418 0.59317225 % Yu ba 74,727 ' 0.18771057% 920,707 0.18771057% $20,707 0.18771057% $201,038 _ 0. 18771057% $242,452 0.18771057 % $542,452 $300,000 0.35278595 % Total 39,809, 693 100. 00000000% $11,031,300 100.00000000% 911,031,300 100. 00000000% $107,100,000 100. 0000000056 $129,162,600 100 .00000000 % $214,200,000 585,037,400 100.00000000 % * Note that the COPS Front-line Law Enforcement breakdown by county and city for SCO distribution is provided In Attachment II. 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Alameda 1,660,202 $2,790,577 3.28158752% Alameda 78,863 $119,858 0.14094762% Albany 19,053 $100,000 0.11759532% Berkeley 121,874 $185,228 0.21781887% Dublin 63,241 $100,000 0.11759532% Emeryville 11,994 $100,000 0.11759532% Fremont 235,439 $357,827 0.42078751% Hayward 162,030 $246,258 0.28958754% Livermore 91,411 $138,929 0.16337398% Newark 47,467 $100,000 0.11759532% Oakland 428,827 $651,743 0.76641953% Piedmont 11,318 $100,000 0.11759532% Pleasanton 79,201 $120,372 0.14155170% San Leandro 87,598 $133,134 0.15655921% Union City 72,991 $110,934 0.13045290% Unincorporated 148,895 $226,295 0.26611206% Alpine 1,154 $100,000 0.11759532% Amador 38,094 $600,000 0.70557192% Amador 186 $100,000 0.11759532% lone 8,058 $100,000 0.11759532% Jackson 4,679 $100,000 0.11759532% Plymouth 1,002 $100,000 0.11759532% Sutter Creek 2,479 $100,000 0.11759532% Unincorporated 21,690 $100,000 0.11759532% Butte 227,621 $664,534 0.78146045% Biggs 1,913 $100,000 0.11759532% Chico 92,348 $140,353 0.16504863% Gridley 6,937 $100,000 0.11759532% Oroville 18,144 $100,000 0.11759532% Paradise 26,572 $100,000 0.11759532% Unincorporated 81,707 $124,181 0.14603054% Calaveras 45,157 $200,000 0.23519064% Angels City 4,121 $100,000 0.11759532% Unincorporated 41,036 $100,000 0.11759532% Colusa 22,098 $300,000 0.35278596% Colusa 6,241 $100,000 0.11759532% Williams 5,465 $100,000 0.11759532% Unincorporated 10,392 $100,000 0.11759532% Contra Costa 1,149,363 $2,542,389 2.98973076% Antioch 113,061 $171,833 0.20206787% Brentwood 63,042 $100,000 0.11759532% Clayton 11,431 $100,000 0.11759532% Concord 129,159 $196,299 0.23083896% Danville 44,396 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County El Cerrito 24,939 $100,000 0.11759532% Hercules 26,317 $100,000 0.11759532% Lafayette 25,655 $100,000 0.11759532% Martinez 38,097 $100,000 0.11759532% Moraga 16,991 $100,000 0.11759532% Oakley 41,742 $100,000 0.11759532% Orinda 19,199 $100,000 0.11759532% Pinole 19,236 $100,000 0.11759532% Pittsburg 72,647 $110,411 0.12983809% Pleasant Hill 35,068 $100,000 0.11759532% Richmond 110,967 $168,651 0.19832537% San Pablo 31,593 $100,000 0.11759532% San Ramon 82,643 $125,603 0.14770341 Walnut Creek 70,667 $107,402 0.12629934% Unincorporated 172,513 $262,190 0.30832324% Kensington Police Department 0 $100,000 0.11759532% Del Norte 27,221 $200,000 0.23519064% Crescent City 6,590 $100,000 0.11759532% Unincorporated 20,631 $100,000 0.11759532% El Dorado 188,399 $436,888 0.51375980% Placerville 10,642 $100,000 0.11759532% South Lake Tahoe 21,892 $100,000 0.11759532% Unincorporated 155,865 $236,888 0.27856916% Fresno 1,007,229 $2,549,900 2.99856348% Clovis 113,883 $173,083 0.20353699% Coalinga ' 16,791 $100,000 0.11759532% Firebaugh 8,112 $100,000 0.11759532% Fowler 6,241 $100,000 0.11759532% Fresno 538,330 $818,169 0.96212837% Huron 7,302 $100,000 0.11759532% Kerman 15,083 $100,000 0.11759532% Kingsburg 12,392 $100,000 0.11759532% Mendota 12,051 $100,000 0.11759532% Orange Cove 9,469 $100,000 0.11759532% Parlier 15,493 $100,000 0.11759532% Reedley 26,390 $100,000 0.11759532% Sanger 26,648 $100,000 0.11759532% San Joaquin 4,119 $100,000 0.11759532% Selma 24,742 $100,000 0.11759532% Unincorporated 170,183 $258,649 0.30415896% Glenn 28,796 $300,000 0.35278596% Orland 7,932 $100,000 0.11759532% willows 6,064 $100,000 0.11759532% Unincorporated 14,800 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT H City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Humboldt 136,002 $810,742 0.95339495% Arcata 18,398 $100,000 0.11759532% Blue Lake 1,280 $100,000 0.11759532% Eureka 26,362 $100,000 0.11759532% Ferndale 1,367 $100,000 0.11759532% Fortuna 12,042 $100,000 0.11759532% Rio Dell 3,348 $100,000 0.11759532% Trinidad 340 $100,000 0.11759532% Unincorporated 72,865 $110,742 0.13022771 % Imperial 190,624 $800,000 0.94076256% Brawley 27,417 $100,000 0.11759532% Calexico 41,199 $100,000 0.11759532% Calipatria 7,488 $100,000 0.11759532% El Centro 46,315 $100,000 0.11759532% Holtville 6,501 $100,000 0.11759532% Imperial 19,372 $100,000 0.11759532% Westmorland 2,325 $100,000 0.11759532% Unincorporated 40,007 $100,000 0.11759532% Inyo 18,577 $200,000 0.23519064% Bishop 3,922 $100,000 0.11759532% Unincorporated 14,655 $100,000 0.11759532% Kern 905,801 $2,267,114 2.66601960% Arvin 21,696 $100,000 0.11759532% Bakersfield 386,839 $587,929 0.69137662% California City 14,875 $100,000 0.11759532% Delano 53,276 $100,000 0.11759532% Maricopa 1,156 $100,000 0.11759532% McFarland 15,105 $100,000 0.11759532% Ridgecrest 28,822 $100,000 0.11759532% Shafter 19,271 $100,000 0.11759532% Taft 9,482 $100,000 0.11759532% Tehachapi 12,299 $100,000 0.11759532% Wasco 27,691 $100,000 0.11759532% Unincorporated 315,289 $479,185 0.56349914% Bear Valley Community Services District 0 $100,000 0.11759532% Stallion Springs Community Services District 0 $100,000 0.11759532% Kings 151,662 $500,000 0.58797660% Avenal 13,053 $100,000 0.11759532% Corcoran 21,450 $100,000 0.11759532% Hanford 58,176 $100,000 0.11759532% Lemoore 25,892 $100,000 0.11759532% Unincorporated 33,091 $100,000 0.11759532% Lake 65,081 $300,000 0.35278596% Clearlake 15,917 $100,000 0.11759532% Lakeport 5,134 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Unincorporated 44,030 $100,000 0.11759532% Lassen 30,911 $200,000 0.23519064% Susanville 14,954 $100,000 0.11759532% Unincorporated 15,957 $100,000 0.11759532% Los Angeles 10,283,729 $18,977,645 22.31682040%. Agoura Hills 20,878 $100,000 0.11759532% Alhambra 86,665 $131,716 0.15489171 % Arcadia 57,704 $100,000 0.11759532% Artesia 16,792 $100,000 0.11759532% Avalon 3,867 $100,000 0.11759532% Azusa 49,954 $100,000 0.11759532% Baldwin Park 76,708 $116,583 0.13709610% Bell 36,325 $100,000 0.11759532% Bellflower 77,682 $118,063 0.13883688% Bell Gardens 43,051 $100,000 0.11759532% Beverly Hills 34,504 $100,000 0.11759532% Bradbury 1,069 $100,000 0.11759532% Burbank 107,149 $162,848 0.19150167% Calabasas 24,296 $100,000 0.11759532% Carson 93,799 $142,558 0.16764193% Cerritos 50,058 $100,000 0.11759532% Claremont 36,446 $100,000 0.11759532% Commerce 13,067 $100,000 0.11759532% Compton 99,872 $151,788 0.17849588% Covina 49,006 $100,000 0.11759532% Cudahy 24,343 $100,000 0.11759532% Culver City 39,860 $100,000 0.11759532% Diamond Bar 57,460 $100,000 0.11759532% Downey 114,146 $173,482 0.20400703% Duarte 22,013 $100,000 0.11759532% El Monte 117,204 $178,130 0.20947243% El Segundo 16,784 $100,000 0.11759532% Gardena 61,246 $100,000 0.11759532% Glendale 205,536 $312,379 0.36734348% Glendora 52,703 $100,000 0.11759532% Hawaiian Gardens 14,666 $100,000 0.11759532% Hawthorne 88,772 $134,918 0.15865744% Hermosa Beach 19,673 $100,000 0.11759532% Hidden Hills 1,892 $100,000 0.11759532% Huntington Park 59,473 $100,000 0.11759532% Industry 437 $100,000 0.11759532% Inglewood 113,559 $172,590 0.20295792% Irwindale 1,450 $100,000 0.11759532% La Canada Flintridge 20,683 $100,000 0.11759532% La Habra Heights 5,454 $100,000 0.11759532% Lakewood 81,179 $123,378 0.14508688% La Mirada 49,590 $100,000 0.11759532% Lancaster 161,485 $245,429 0.28861349% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County La Puente 40,686 $100,000 0.11759532% La Verne 33,260 $100,000 0.11759532% Lawndale 33,607 $100,000 0.11759532% Lomita 20,715 $100,000 0.11759532% Long Beach 478,561 $727,330 0.85530644% Los Angeles 4,054,400 $6,161,990 7.24621080% Lynwood 72,015 $109,450 0.12870855% Malibu 12,957 $100,000 0.11759532% Manhattan Beach 35,991 $100,000 0.11759532% Maywood 28,044 $100,000 0.11759532% Monrovia 38,787 $100,000 0.11759532% Montebello 64,327 $100,000 0.11759532% Monterey Park 62,240 $100,000 0.11759532% Norwalk 107,546 $163,451 0.19221120% Palmdale 158,905 $241,508 0.28400239% Palos Verdes Estates 13,519 $100,000 0.11759532% Paramount 56,000 $100,000 0.11759532% Pasadena 144,388 $219,445 0.25805694% Pico Rivera 64,260 $100,000 0.11759532% Pomona 155,687 $236,617 0.27825104% Rancho Palos Verdes 42,723 $100,000 0.11759532% Redondo Beach 68,677 $104,377 0.12274272% Rolling Hills 1,939 $100,000 0.11759532% Rolling Hills Estates 8,111 $100,000 0.11759532% Rosemead 55,267 $100,000 0.11759532% San Dimas 34,507 $100,000 0.11759532% San Fernando 24,602 $100,000 0.11759532% San Gabriel 40,920 $100,000 0.11759532% San Marino 13,272 $100,000 0.11759532% Santa Clarita 216,589 $329,178 0.38709792% Santa Fe Springs 18,335 $100,000 0.11759532% Santa Monica 92,416 $140,456 0.16517017% Sierra Madre 10,986 $100,000 0.11759532% Signal Hill 11,749 $100,000 0.11759532% South El Monte 20,882 $100,000 0.11759532% South Gate 98,133 $149,145 0.17538785% South Pasadena 26,047 $100,000 0.11759532% Temple City 36,411 $100,000 0.11759532% Torrance 149,245 $226,827 0.26673759% Vernon 209 $100,000 0.11759532% Walnut 30,457 $100,000 0.11759532% West Covina 108,245 $164,514 0.19346049% West Hollywood 36,723 $100,000 0.11759532% Westlake Village 8,358 $100,000 0.11759532% Whittier 87,369 $132,786 0.15614993% Unincorporated 1,057,162 $1,606,704 1.88940901% Madera 158,894 $312,866 0.36791526% Chowchilla 18,835 $100,000 0.11759532% Madera 66,225 $100,651 0.11836039% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT 11 City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Unincorporated 73,834 $112,215 0.13195955% Marin 263,886 $1,205,256 1.41732427% Belvedere 2,135 $100,000 0.11759532% Corte Madera 10,039 $100,000 0.11759532% Fairfax 7,534 $100,000 0.11759532% Larkspur 12,351 $100,000 0.11759532% Mill Valley 14,963 $100,000 0.11759532% Novato 54,551 $100,000 0.11759532% Ross 2,533 $100,000 0.11759532% San Anselmo 13,000 $100,000 0.11759532% San Rafael 60,651 $100,000 0.11759532% Sausalito 7,226 $100,000 0.11759532% Tiburon 9,648 $100,000 0.11759532% Unincorporated 69,255 $105,256 0.12377575% Mariposa 18,129 $100,000 0.11759532% Mendocino 89,299 $500,000 0.58797660% Fort Bragg 7,512 $100,000 0.11759532% Point Arena 448 $100,000 0.11759532% Ukiah 16,226 $100,000 0.11759532% Willits 5,128 $100,000 0.11759532% Unincorporated 59,985 $100,000 0.11759532% Merced 279,977 $776,419 0.91303205% Atwater 31,235 $100,000 0.11759532% Dos Palos 5,679 $100,000 0.11759532% Gustine 5,874 $100,000 0.11759532% Livingston 14,328 $100,000 0.11759532% Los Banos 40,986 $100,000 0.11759532% Merced 86,750 $131,845 0.15504363% Unincorporated 95,125 $144,574 0.17001182% Modoc 9,612 $200,000 0.23519064% Alturas 2,868 $100,000 0.11759532% Unincorporated 6,744 $100,000 0.11759532% Mono 13,822 $200,000 0.23519064% Mammoth Lakes 8,316 $100,000 0.11759532% Unincorporated 5,506 $100,000 0.11759532% Monterey 443,281 $1,508,907 1.77440360% Carmel -by -the -Sea 3,750 $100,000 0.11759532% Del Rey Oaks 1,692 $100,000 0.11759532% Gonzales 8,587 $100,000 0.11759532% Greenfield 18,007 $100,000 0.11759532% King City 14,880 $100,000 0.11759532% Marina 22,424 $100,000 0.11759532% Monterey 28,323 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Pacific Grove 15,660 $100,000 0.11759532% Salinas 161,784 $245,884 0.28914788% Sand City 394 $100,000 0.11759532% Seaside 34,270 $100,000 0.11759532% Soledad 26,246 $100,000 0.11759532% Unincorporated 107,264 $163,023 0.19170720% Napa 141,294 $622,199 0.73167657% American Canyon 20,990 $100,000 0.11759532% Calistoga 5,334 $100,000 0.11759532% Napa 80,403 $122,199 0.14369997% St Helena 6,118 $100,000 0.11759532% Yountville 2,874 $100,000 0.11759532% Unincorporated 25,575 $100,000 0.11759532% Nevada 99,155 $400,623 0.47111418% Grass Valley 13,041 $100,000 0.11759532% Nevada City 3,226 $100,000 .0.11759532% Truckee 16,681 $100,000 0.11759532% Unincorporated 66,207 $100,623 0.11832822% Orange 3,221,103 $5,668,780 6.66621930% Aliso Viejo 51,950 $100,000 0.11759532% Anaheim 9 357,084 $542,706 0.63819710% Brea 44,890 $100,000 0.11759532% Buena Park 83,995 $127,658 0.15011976% Costa Mesa 115,296 $175,230 0.20606236% Cypress 49,978 $100,000 0.11759532% Dana Point 34,071 $100,000 0.11759532% Fountain Valley 56,920 $100,000 0.11759532% Fullerton 144,214 $219,180 0.25774596% Garden Grove 176,896 $268,851 0.31615674% Huntington Beach 202,648 $307,990 0.36218191% Irvine 276,176 $419,740 0.49359457% Laguna Beach 23,309 $100,000 0.11759532% Laguna Hills 31,818 $100,000 0.11759532% Laguna Niguel 65,377 $100,000 0.11759532% Laguna Woods _ 16,597 $100,000 0.11759532% La Habra 62,850 $100,000 0.11759532% Lake Forest 84,845 $128,950 0.15163892% La Palma 15,948 $100,000 0.11759532% Los Alamitos 11,863 $100,000 0.11759532% Mission Viejo 95,987 $145,884 0.17155242% Newport Beach 87,182 $132,502 0.15581572% Orange 141,952 $215,743 0.25370321% Placentia 52,755 $100,000 0.11759532% Rancho Santa Margarita 49,329 $100,000 0.11759532% San Clemente 65,543 $100,000 0.11759532% San Juan Capistrano 36,759 $100,000 0.11759532% Santa Ana 338,247 $514,077 0.60453074% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Seal Beach 25,984 $100,000 0.11759532% Stanton 39,470 $100,000 0.11759532% Tustin 82,344 $125,149 0.14716902% Villa Park 5,951 $100,000 0.11759532% Westminster 94,476 $143,587 0.16885189% Yorba Linda 69,121 $105,052 0.12353626% Unincorporated 129,278 $196,480 0.23105164% Placer 389,532 $882,327 1.03757465% Auburn 14,611 $100,000 0.11759532% Colfax 2,150 $100,000 0.11759532% Lincoln 48,591 $100,000 0.11759532% Loomis 6,824 $100,000 0.11759532% Rocklin 66,830 $101,570 0.11944168% Roseville 137,213 $208,540 0.24523344% Unincorporated 113,313 $172,216 0.20251825% Plumas 19,773 $200,000 0.23519064% Portola 2,161 $100,000 0.11759532% Unincorporated 17,612 $100,000 0.11759532% Riverside 2,415,955 $4,477,298 5.26509333% Banning 31,282 $100,000 0.11759532% Beaumont 48,237 $100,000 0.11759532% Blythe 19,389 $100,000 0.11759532% Calimesa 8,876 $100,000 0.11759532% Canyon Lake 11,018 $100,000 0.11759532% Cathedral City 54,791 $100,000 0.11759532% Coachella 45,635 $100,000 0.11759532% Corona 168,574 $256,203 0.30128328% Desert Hot Springs 29,742 $100,000 0.11759532% Eastvale 64,855 $100,000 0.11759532% Hemet 83,166 $126,398 0.14863814% Indian Wells 5,574 $100,000 0.11759532% Indio 87,883 $133,567 0.15706858% Jurupa Valley 106,054 $161,184 0.18954463% Lake Elsinore 63,365 $100,000 0.11759532% La Quinta 41,204 $100,000 0.11759532% Menifee 91,902 $139,675 0.16425152% Moreno Valley 207,629 $315,560 0.37108419% Murrieta 113,541 $172,563 0.20292575% Norco 26,761 $100,000 0.11759532% Palm Desert 52,769 $100,000 0.11759532% Palm Springs 47,706 $100,000 0.11759532% Perris 77,837 $118,299 0.13911390% Rancho Mirage 18,738 $100,000 0.11759532% Riverside 325,860 $495,251 0.58239212% San Jacinto 48,146 $100,000 0.11759532% Temecula 113,181 $172,016 0.20228234% Wildomar • 36,287 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Unincorporated 385,953 $586,582 0.68979312% Sacramento 1,529,501 $2,483,763 2.92078934% Citrus Heights 87,731 $133,336 0.15679692% Elk Grove 172,116 $261,587 0.30761371% Folsom 78,447 $119,226 0.14020412% Galt 26,018 $100,000 0.11759532% Isleton 837 $100,000 0.11759532% Rancho Cordova 74,210 $112,786 0.13263156% Sacramento 501,344 $761,957 0.89602527% Unincorporated 588,798 $894,872 1.05232712% San Benito 57,088 $300,000 0.35278596% Hollister 36,703 $100,000 0.11759532% San Juan Bautista 1,873 $100,000 0.11759532% Unincorporated 18,512 $100,000 0.11759532% San Bernardino 2,174,938 $3,961,121 4.65809342% Adelanto 35,293 $100,000 0.11759532% Apple Valley 73,984 $112,443 0.13222764% Barstow 24,411 $100,000 0.11759532% Big Bear Lake 5,512 $100,000 0.11759532% Chino 86,757 $131,856 0.15505614% Chino Hills 83,159 $126,387 0.14862563% Colton 53,724 $100,000 0.11759532% Fontana 212,000 $322,204 0.37889624% Grand Terrace 12,524 $100,000 0.11759532% Hesperia 94,829 $144,124 0.16948279% Highland 54,761 $100,000 0.11759532% Loma Linda 23,946 $100,000 0.11759532% Montclair 39,326 $100,000 0.11759532% Needles 5,177 $100,000 0.11759532% Ontario 177,589 $269,905 0.31739531% Rancho Cucamonga 176,671 $268,510 0.31575461 % Redlands 71,196 $108,206 0.12724480% Rialto 107,041 $162,684 0.19130865% San Bernardino 221,130 $336,080 0.39521380% Twentynine Palms 27,046 $100,000 0.11759532% Upland 77,017 $117,053 0.13764836% Victorville 123,701 $188,004 0.22108417% Yucaipa 54,651 $100,000 0.11759532% Yucca Valley 21,834 $100,000 0.11759532% Unincorporated 311,659 $473,668 0.55701144% San Diego 3,337,456 $5,481,424 6.44589772% Carlsbad 114,622 $174,206 0.20485776% Chula Vista 267,503 $406,559 0.47809378% Coronado 21,683 $100,000 0.11759532% Del Mar 4,322 $100,000 0.11759532% El Cajon 105,557 $160,428 0.18865637% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Encinitas 63,158 $100,000 0.11759532% Escondido 151,478 $230,220 0.27072851 % Imperial Beach 28,163 $100,000 0.11759532% La Mesa 61,261 $100,000 0.11759532% Lemon Grove 26,834 $100,000 0.11759532% National City 62,257 $100,000 0.11759532% Oceanside 177,362 $269,560 0.31698960% Poway 50,207 $100,000 0.11759532% San Diego 1,419,845 $2,157,920 2.53761291 % San Marcos 95,768 $145,551 0.17116102% Santee , 56,994 $100,000 0.11759532% Solana Beach 13,938 $100,000 0.11759532% Vista 103,381 $157,121 0.18476732% Unincorporated 513,123 $779,859 0.91707725% San Francisco 883,963 $1,343,472 1.57985972% San Joaquin 758,744 $1,380,706 1.62364507% Escalon 7,558 $100,000 0.11759532% Lathrop 24,268 $100,000 0.11759532% Lodi 67,121 $102,012 0.11996177% Manteca 81,345 $123,630 0.14538356% Ripon 15,847 $100,000 0.11759532% Stockton 315,103 $478,902 0.56316671% Tracy 92,553 $140,665 0.16541502% Unincorporated 154,949 $235,496 0.27693205% San Luis Obispo 280,101 $883,351 1.03877886% Arroyo Grande 17,912 $100,000 0.11759532% Atascadero 31,147 $100,000 0.11759532% El Paso de Robles 31,559 $100,000 0.11759532% Grover Beach 13,560 $100,000 0.11759532% Morro Bay 10,503 $100,000 0.11759532% Pismo Beach 8,233 $100,000 0.11759532% San Luis Obispo 46,548 $100,000 0.11759532% Unincorporated 120,639 $183,351 0.21561162% San Mateo 774,155 $2,356,025 2.77057465% Atherton 7,135 $100,000 0.11759532% Belmont 27,388 $100,000 0.11759532% Brisbane 4,692 $100,000 0.11759532% Burlingame 30,294 $100,000 0.11759532% Colma 1,501 $100,000 0.11759532% Daly City 107,864 $163,935 0.19277955% East Palo Alto 30,917 $100,000 •0.11759532% Foster City 33,490 $100,000 0.11759532% Half Moon Bay 12,639 $100,000 0.11759532% Hillsborough 11,543 $100,000 0.11759532% Menlo Park 35,268 $100,000 0.11759532% Millbrae 22,854 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Pacifica 38,418 $100,000 0.11759532% Portola Valley 4,767 $100,000 0.11759532% Redwood City 86,380 $131,283 0.15438235% San Bruno 46,085 $100,000 0.11759532% San Carlos 29,897 $100,000 0.11759532% San Mateo 104,490 $158,807 0.18674938% South San Francisco 67,082 $101,953 0.11989207% Woodside 5,623 $100,000 0.11759532% Unincorporated 65,828 $100,047 0.11765086% Broadmoor Police Protection District 0 $100,000 0.11759532% Santa Barbara 453,457 $1,125,160 1.32313526% Buellton 5,291 $100,000 0.11759532% Carpinteria 13,704 $100,000 0.11759532% Goleta 31,949 $100,000 0.11759532% Guadalupe 7,604 $100,000 0.11759532% Lompoc 43,599 $100,000 0.11759532% Santa Barbara 94,807 $144,090 0.16944347% Santa Maria . 108,470 $164,856 0.19386262% Solvang 5,771 $100,000 0.11759532% Unincorporated 142,262 $216,214 0.25425725% Santa Clara 1,956,598 $3,404,810 4.00389728% Campbell 42,696 $100,000 0.11759532% Cupertino 60,091 $100,000 0.11759532% Gilroy 55,615 $100,000 0.11759532% Los Altos 31,361 $100,000 0.11759532% Los Altos Hills 8,568 $100,000 0.11759532% Los Gatos 30,601 $100,000 0.11759532% Milpitas 74,865 $113,782 0.13380220% Monte Sereno 3,630 $100,000 0.11759532% Morgan Hill 44,513 $100,000 0.11759532% Mountain View 81,527 $123,907 0.14570884% Palo Alto 69,721 $105,964 0.1 2460861 % San Jose 1,051,316 $1,597,819 1.87896077% Santa Clara 129,604 $196,976 0.23163429% Saratoga 31,435 $100,000 0.11759532% Sunnyvale 153,389 $233,125 0.27414394% Unincorporated 87,666 $133,237 0.15668075% Santa Cruz 276,864 $604,987 0.71143627% Capitola 10,563 $100,000 0.11759532% Santa Cruz 66,454 $100,999 0.11876967% Scotts Valley 12,195 $100,000 0.11759532% Watsonville 53,434 $100,000 0.11759532% Unincorporated 134,218 $203,988 0.23988064% Shasta 178,271 $439,928 0.51733430% Anderson 10,263 $100,000 0.11759532% Redding 91,357 $138,847 0.16327747% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Shasta Lake 10,143 $100,000 0.11759532% Unincorporated 66,508 $101,081 0.11886619% Sierra 3,207 $200,000 0.23519064% Loyalton 757 $100,000 0.11759532% Unincorporated 2,450 $100,000 0.11759532% Siskiyou 44,612 $1,100,000 1.29354852% Dorris 966 $100,000 0.11759532% Dunsmuir 1,680 $100,000 0.11759532% Etna 744 $100,000 0.11759532% Fort Jones 739 $100,000 0.11759532% Montague 1,428 $100,000 0.11759532% Mount Shasta 3,385 $100,000 0.11759532% Tulelake 977 $100,000 0.11759532% Weed 2,769 $100,000 0.11759532% Yreka 7,840 $100,000 0.11759532% Unincorporated 24,084 $100,000 0.11759532% Lake Shastina Community Services District 0 $100,000 0.11759532% Solano 439,793 $1,008,208 1.18560500% Benicia 27,499 $100,000 0.11759532% Dixon 19,896 $100,000 0.11759532% Fairfield 116,156 $176,537 0.20759940% Rio Vista 9,188 $100,000 0.11759532% Suisun City 29,192 $100,000 0.11759532% Vacaville 98,977 $150,428 0.17689629% Vallejo 119,252 $181,243 0.21313271 % Unincorporated 19,633 $100,000 0.11759532% Sonoma 503,332 $1,287,681 1.51425241% Cloverdale 9,134 $100,000 0.11759532% Cotati 7,716 $100,000 0.11759532% Healdsburg 12,061 $100,000 0.11759532% Petaluma 62,708 $100,000 0.11759532% Rohnert Park 43,598 $100,000 0.11759532% Santa Rosa 178,488 $271,271 0.31900204% Sebastopol 7,786 $100,000 0.11759532% Sonoma 11,390 $100,000 0.11759532% Windsor 28,060 $100,000 0.11759532% Unincorporated 142,391 $216,410 0.2544878.1 % Stanislaus 555,624 $1,319,122 1.55122531% Ceres 48,326 $100,000 0.11759532% Hughson 7,738 $100,000 0.11759532% Modesto 215,692 $327,815 0.38549476% Newman 11,801 $100,000 0.11759532% Oakdale 23,324 $100,000 0.11759532% Patterson 22,679 $100,000 0.11759532% Riverbank 25,244 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Turlock 74,730 $113,577 0.13356093% Waterford 9,149 $100,000 0.11759532% Unincorporated 116,941 $177,730 0.20900238% Sutter 97,238 $302,254 0.35543658% Live Oak 8,781 $100,000 0.11759532% Yuba City 67,280 $102,254 0.12024594% Unincorporated 21,177 $100,000 0.11759532% Tehama 64,039 $400,000 0.47038128% Corning 7,515 $100,000 0.11759532% Red Bluff 13,858 $100,000 0.11759532% Tehama 430 $100,000 0.11759532% Unincorporated 42,236 $100,000 0.11759532% Trinity 13,635 $100,000 0.11759532% Tulare 475,834 $1,126,777 1.32503689% Dinuba 24,873 $100,000 0.11759532% Exeter 11,169 $100,000 0.11759532% Farmersville 11,443 $100,000 0.11759532% Lindsay 13,162 $100,000 0.11759532% Porterville 60,798 $100,000 0.11759532% Tulare 65,982 $100,281 0.11792609% Visalia 136,246 $207,070 0.24350518% Woodlake 7,786 $100,000 0.11759532% Unincorporated 144,375 $219,425 0.25803370% Tuolumne 54,740 $200,0.00 0.23519064% Sonora 4,890 $100,000 0.11759532% Unincorporated 49,850 $100,000 0.11759532% Ventura 859,073 $1,629,734 1.91649049% Camarillo 68,741 $104,474 0.12285711% Fillmore 15,953 $100,000 0.11759532% Moorpark 37,044 $100,000 0.11759532% Ojai 7,679 $100,000 0.11759532% Oxnard 206,499 $313,843 0.36906460% Port Hueneme 23,929 $100,000 0.11759532% San Buenaventura 111,269 $169,110 0.19886512% Santa Paula 31,138 $100,000 0.11759532% Simi Valley 128,760 $195,693 0.23012585% Thousand Oaks 130,196 $197,876 0.23269234% Unincorporated 97,865 $148,738 0.17490887% Yolo 221,270 $504,418 0.59317226% Davis 68,704 $104,418 0.12279098% West Sacramento 54,163 $100,000 0.11759532% Winters 7,292 $100,000 0.11759532% Woodland 60,426 $100,000 0.11759532% 2018-19 Enhancing Law Enforcement Activities Subaccount Citizens' Option for Public Safety Front-line Law Enforcement Allocation for 2018-19 ATTACHMENT II City/County City/County Population Estimates 1/1/2018 Projected Allocations by City/County Percent of Allocation by City/County Unincorporated 30,685 $100,000 0.11759532% Yuba 74,727 $300,000 0.35278596% Marysville 11,883 $100,000 0.11759532% Wheatland 3,497 $100,000 0.11759532% Unincorporated 59,347 $100,000 0.11759532% CALIFORNIA TOTAL 39,809,693 $85,037,400 100.00000000% CALIFORNIA CITY TOTAL 33,327,425 $73,267,482 86.5912774% TO: FROM: DATE: CITY OF PALO ALTO HONORABLE CITY COUNCIL ROBERT JONSEN, CHIEF OF POLICE OCTOBER 29, 2018 7&8 SUBJECT: AGENDA ITEM NUMBER 7 (#9682) -Approval of the Acceptance and Appropriation of State of California Citizens Options for Public Safety (COPS) Funds and Approval of a Budget Amendment in the Supplemental Law Enforcement Services Fund AGENDA ITEM NUMBER 8 (#9683) -Approval of the Agreement Between the City of Palo Alto and Racing Hearts, a Nonprofit Corporation, for the Purchase of Automatic External Defibrillators (AEDs) for the Palo Alto Police Department These items have been pulled to allow staff to explore the legalities of accepting County funds. b~ Barbara Teixeira Ed Shikada Administrative Assistant Assistant City Manager 1of1 City of Palo Alto (ID # 9683) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: Palo Alto Agreement for AEDs Title: Approval of the Agreement Between the City of Palo Alto and Racing Hearts, a Nonprofit Corporation, for the Purchase of Automatic External Defibrillators (AEDs) for the Palo Alto Police Department From: City Manager Lead Department: Police Recommendation Staff recommends that the City Council: a. Authorize the City Manager or his/her designee to enter into a Memorandum of Understanding between Racing Hearts, a nonprofit public benefit corporation, and the City of Palo Alto Police Department for the purchase of Automatic External Defibrillators (AEDs). Background The County of Santa Clara, in partnership with nonprofit Racing Hearts, is deploying over $1,000,000 to fund and install lifesaving heart defibrillators (Automated External Defibrillators, AEDs) in high-risk community locations. Racing Hearts has worked with the Santa Clara County Public Health Department to help identify key locations within the county to make this life-saving equipment available, and to provide education to the community. In just two years, the matching grant program has received enormous support to increase the heart safety of more than 1.8 million individuals that live in Santa Clara County: more than 660 AEDs will be installed in 553 locations Discussion The Racing Hearts and County funding for AEDs comes from the County EMS Trust Funds and 2012 Measure A Funds for public safety and health programs. Racing Hearts will facilitate the purchase of 30 AEDs for the Police Department. The County is funding one half ($30,000) of the purchase of the AEDs, and the Police Department will use $30,000 of State of California Citizens Options for Public Safety (COPS) funds to pay for the balance ($30,000). The use of COPS funds for this purchase is outlined in CMR #9682. The AED purchase will allow the Police Department to equip each patrol car (deployed on the street) with an AED device. This program will provide City of Palo Alto Page 2 the community with faster, more efficient access to these life saving devices. When an automated external defibrillator (AED) is deployed within the first 4 -6 minutes and in combination with CPR, the survival rates of sudden cardiac arrest can increase up to 80 percent. This purchase will ensure constant, around the clock accessibility to lifesaving measures, and assist with the increasing volume of medical aid calls for service. Resource Impact A total of $30,000 of Citizens Options for Public Safety (COPS) Grant funding from the State will be used to fund the City’s matching portion of the full $60,000 AED purchase. The use of COPS funds for this purchase is outlined in CMR #9682. There will be no impact to the General Fund as ongoing maintenance costs for the AEDs will be absorbed in the Police Department’s existing non-salary budget. Policy Implications The Memorandum of Understanding between Racing Hearts and the City of Palo Alto has been reviewed and approved for signature by the City Attorney’s Office. Expenditures of funds for the AEDs and use of COPS funds are consistent with City Policy. Environmental Assessment Acceptance of COPS funding and the proposed expenditures for public safety equipment are not projects subject to CEQA requirements. Attachments: • ATTACHMENT A - Racing Hearts MOU MEMORANDUM OF UNDERSTANDING  between  Racing Hearts  Nonprofit Public Benefit Corporation  and   Palo Alto Police Department    This Memorandum of Understanding (hereinafter referred to as “Memorandum”) is made and  entered into the 28th day of August, 2018 by and between Racing Hearts, nonprofit public  benefit corporation (hereafter referred to as “RH”) and the Palo Alto Police Department  (hereafter referred to as “P.A.P.D.”). RH and P.A.P.D. may be referred to individually as a  “Party” or collectively as the “Parties” of the “Parties of this memorandum.”    WHEREAS, the Parties have reached an understanding regarding the purchase of Automatic  External Defibrillators (AED),    WHEREAS, the Parties desire to ensure that these AED devices are available on 30  locations/campuses for providing improved life-saving and emergency response; and    WHEREAS, RH agrees to provide the P.A.P.D. with 30 AED devices, which include Adult and  pediatric capability, one battery, and set of standard accessories (e.g. carry case, pediatric  key, spare adult pad, first response kit, and    WHEREAS, RH agrees to assist the P.A.P.D. with additional supplies, which includes two new  adult pads at the beginning of year 3, a spare new battery at the end of year 3,    WHEREAS, RH agrees to assist the P.A.P.D. with their initial program set up (update policy if  needed, submit to county EMS file, and    WHEREAS, the P.A.P.D. agrees to provide the CPR/AED training for staff members (which  includes information describing a Sudden Cardiac Arrest (SCA), the P.A.P.D. emergency  response plan during a SCA, location(s) of all AEDs on site, and the proper use of an AED),  complete AED quarterly checks as required by Title 22, and    WHEREAS, the P.A.P.D. agrees to provide the vendors with an annual brief report of AED  compliance of the above information,     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:    1.RH is responsible for the entire purchase cost of all AED’s. To the extent permitted by law,  RH will agree to purchase AEDs that are of the same manufacturer as those already used  within the nearby school district or city. The purpose of this requirement is to ensure  operational efficiency with first responders and fiscal responsibility for the disposable  supplies associated within the use of the AED’s.  2.The P.A.P.D. will serve as the “AED program coordinator.” The P.A.P.D. will serve as the  “Police Department Coordinator” and “Medical Control.”   3.The P.A.P.D. may accept donated new AED’s and accessories as noted above.   4.The P.A.P.D. shall be responsible for installation of all AED equipment and accessories.  5.The P.A.P.D. shall be responsible for exchanging disposable AEDs equipment to the vendor.  6.The P.A.P.D.shall be responsible for all subsequent AED training as noted above.   7.The P.A.P.D. is responsible for updating and maintaining an AED Policy Manual (initial  template will be provided by the Vendor).   8.The P.A.P.D. shall be solely responsible for the replacement of lost, stolen, or damaged  AED’s.  9.The P.A.P.D. shall be solely responsible for the required operational evaluation of the AED’s  (e.g. quarterly checks).   10. The P.A.P.D. shall provide its own insurance coverage for liability arising from actions  or failures to act by its employees, students, and/or volunteers using or related to the AED’s.  To the fullest extent permitted by law, the P.A.P.D. shall indemnify, defend, and hold  harmless RH, its officers, agents, employees, and/or volunteers from all liability or claims  arising from or occurring as a results of the negligent or wrongful act or omission of P.A.P.D.  personnel using or related to the AED’s.   11. This Memorandum shall become effective as of the date first set forth above written.   12. RH and P.A.P.D. bind themselves, their partners, successors, assigns, executors, and  administrators to all covenants of this Memorandum. Except as otherwise set forth in this  Memorandum, no interest in this Memorandum shall be assigned or transferred, either  voluntarily or by operation of law, without the prior written approval of the Parties.   13. It is mutually understood and agreed that no alteration or variation of the terms of this  Memorandum shall be valid unless made in writing and signed by the Parties and  incorporated into this Memorandum.   14. This Memorandum shall not be construed or deemed to be an agreement for the  benefit of any third party or parties, and no third party or parties shall have any claim or right  of action under this Memorandum for any cause whatsoever.   15. This Memorandum embodies the agreement between RH and P.A.P.D. and its terms  and conditions. No other understanding, agreements, or conversations, or otherwise, with  any agent or employee of the P.A.P.D. prior to execution of this Memorandum shall affect or  modify any of the terms or obligations contained in any documents comprising this  Memorandum. Any such verbal agreement shall in no way bind the Parties.                         16.All notices to the Parties shall, unless otherwise requested in writing, be sent to RH  address as follows:    Racing Hearts  Attention: Stephanie Martinson, Founder-President  4123 Park Blvd.  Palo Alto, CA 94306    And to M.H.P.D. addressed as follows:  _____________________________  Attention: _____________________  _____________________________  _____________________________    The Parties acknowledge and accept the terms and conditions of this Memorandum as  evidenced by the following signatures of their duly authorized representatives. It is the intent of  the Parties that this Memorandum shall become operative on the Effective Date first set forth  above.    Racing Heart, A Nonprofit Public Benefit Corporation  Approved as to form:    Racing Hearts  by: _____________________  Stephanie Martinson, Founder-President        __________________________________________    By:  ________________________  ________________________  ________________________  ________________________  City of Palo Alto (ID # 9637) City Council Staff Report Report Type: Action Items Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: PUBLIC HEARING: TEFRA Hearing for Lytton Gardens to Issue Bonds Title: TEFRA HEARING Regarding Conduit Financing for the Lytton Gardens Apartments Project Located at 656 Lytton Avenue, Palo Alto, and Approving the Issuance of Revenue Bonds b y the California Municipal Finance Authority for the Purpose of the Acquisition, Rehabilitation, Improvement and Equipping of Lytton Gardens Apartments From: City Manager Lead Department: Administrative Services Recommendation 1) Conduct a public hearing under the requirements of the Tax Equity and Fiscal Responsibility Act of 1983 (TEFRA) and the Internal Revenue Code of 1986, as amended (Code); and 2) Adopt a resolution (Attachment A) approving the issuance of the bonds by the California Municipal Finance Authority (CMFA) for the benefit of Lytton Gardens 1 LP (Borrower). Background Covia Affordable Communities (the “Sponsor”) on behalf of Lytton Gardens 1 LP, or another entity created by the Sponsor or an affiliate thereof (collectively, the “Borrower”), ha s requested that the California Municipal Finance Authority (the “CMFA”) issue one or more series of revenue bonds in an aggregate principal amount not to exceed $95,000,000 including but not limited to revenue bonds issued as part of a plan to finance the Project described herein (the “Bonds”) for the acquisition, rehabilitation, improvement and equipping of a 220 - unit affordable apartment complex for low-income seniors (the “Project”) to be owned and operated by the Borrower and located at 656 Lytton Aven ue within the City of Palo Alto, California (the “City”). In order for all or a portion of the bonds to qualify as tax-exempt bonds, the City of Palo Alto must conduct a public hearing (TEFRA Hearing), providing the members of the community an opportunity to speak in favor of or against the use of tax-exempt bonds for the financing of the project. Prior to the hearing, reasonable notice must be provided to the members of the City of Palo Alto Page 2 community. Following the close of the TEFRA hearing, an “applicable elected representative” of the governmental unit hosting the proposed project must provide its approval of the issuance of the bonds for the financing of the project. Discussion Since the facilities to be financed with the proceeds of the CMFA’s debt are located withi n the jurisdiction of the City of Palo Alto, the City has been asked to conduct a TEFRA hearing and adopt a resolution (Attachment A) that approves both the issuance of bonds by the CMFA for the benefit of Lytton Gardens 1 LP. As cited in the published notice of October 5 , 2018, the public hearing is simply an opportunity for all interested persons to speak or to submit written comments concerning the proposal to issue the debt and the nature or location of the facility to be financed; however there is no formal obligation on the part of the borrower or the Council to respond to any specific comments made during the hearing or submitted in writing. The bonds are intended to finance the Project described herein for the acquisition, rehabilitation, improvement and equipping of a 220-unit affordable apartment complex for low-income seniors to be owned and operated by the Borrower and located at 656 Lytton Avenue within the City of Palo Alto, California. The CMFA is a joint exercise of powers authority that t he City became a member of on April 14, 2008. The Joint Exercise of Powers Agreement provides that the CMFA is a public entity, separate and apart from each member executing such agreement. The debts, liabilities and obligations of the CMFA do not constitute debts, liabilities or obligations of the members executing such agreement. The bonds to be issued by the CMFA for the project will be the sole responsibility of the borrower, and the City of Palo Alto will have no financial, legal, moral obligation, liability or responsibility for the project or the repayment of the bonds for the financing of the project. All financing documents with respect to the issuance of the bonds will contain clear disclaimers that the bonds are not obligations of the City of Palo Alto or the State of California but are to be paid for solely from funds provided by the borrower. The City is in no way exposed to any financial liability by reason of its membership in the CMFA. In addition, participation by the City in the CMFA does n ot impact the City’s appropriations limits and will not constitute any type of indebtedness by the City. Outside of holding the TEFRA hearing, adopting the required resolution, no other participation or activity of the City or the City Council with respect to the issuance of the bonds will be required. Based on the benefits of the project to the Palo Alto community and the lack of any financial obligations on the part of the City, staff recommends that Council approve the attached resolution. City of Palo Alto Page 3 Resource Impact As stated, the City will incur no financial obligation from approval of the recommendations. Lytton Gardens is requesting authority to issue up to $95 million in bonds through the CMFA. The City will receive a fee of approximately $19,000 for its services when the bonds are issued. Policy Implications Actions recommended in this report are consistent with Council’s prior actions in supporting non-profit financings under the TEFRA (e.g., most recently approving tax -exempt financing through the California Municipal Finance Authority for Channing House on March 20, 2017 , Staff Report ID #7801). Environmental Review Action on this item does not constitute a project under Sect ion 21065 of the Public Resources Code. Attachments: • Attachment A: TEFRA Resolution for Lytton Gardens NOT YET APPROVED Attachment A 181018 ms 0140185 Resolution No. Resolution of The City Council of The City Of Palo Alto Approving the Issuance of Revenue Bonds by the California Municipal Finance Authority in an Aggregate Principal Amount not to Exceed $95,000,000 to Finance a 220-Unit Affordable Apartment Complex for Seniors for the Benefit of Lytton Gardens 1, Lp, A Limited Partnership Formed by Covia Affordable Communities, and Certain Other Matters Relating Thereto R E C I T A L S A. Covia Affordable Communities (the “Sponsor”) on behalf of Lytton Gardens 1 LP, or another entity created by the Sponsor or an affiliate thereof (collectively, the “Borrower”), has requested that the California Municipal Finance Authority (the “Authority”) issue one or more series of revenue bonds in an aggregate principal amount not to exceed $95,000,000 including but not limited to revenue bonds issued as part of a plan to finance the Project described herein (the “Bonds”) for the acquisition, rehabilitation, improvement and equipping of a 220- unit affordable apartment complex for low-income seniors (the “Project”) to be owned and operated by the Borrower and located at 656 Lytton Avenue within the City of Palo Alto, California (the “City”); and B. Pursuant to Section 147(f) of the Internal Revenue Code of 1986 (the “Code”), the issuance of the Bonds by the Authority must be approved by the City because the Project is located within the territorial limits of the City; and C. The City Council of the City (the “City Council”) is the elected legislative body of the City and is one of the “applicable elected representatives” required to approve the issuance of the Bonds under Section 147(f) of the Code; and D. The Authority has requested that the City Council approve the issuance of the Bonds by the Authority in order to satisfy the public approval requirement of Section 147(f) of the Code and the requirements of Section 4 of the Joint Exercise of Powers Agreement Relating to the California Municipal Finance Authority, dated as of January 1, 2004 (the “Agreement”), among certain local agencies, including the City; and E. Pursuant to Section 147(f) of the Code, the City Council has, following notice duly given, held a public hearing regarding the issuance of the Bonds, and now desires to approve the issuance of the Bonds by the Authority. NOW, THEREFORE, the City Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The foregoing recitals are true and correct. NOT YET APPROVED Attachment A 181018 ms 0140185 SECTION 2. The City Council hereby approves the issuance of the Bonds by the Authority. It is the purpose and intent of the City Council that this resolution constitute approval of the issuance of the Bonds by the Authority, for the purposes of (a) Section 147(f) of the Code by the applicable elected representative of the governmental unit having jurisdiction over the area in which the Project is located, in accordance with said Section 147(f) and (b) Section 4 of the Agreement. SECTION 3. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they deem necessary or advisable in order to carry out, give effect to and comply with the terms and intent of this resolution and the financing transaction approved hereby. SECTION 4. The Clerk shall forward a certified copy of this Resolution and an originally executed Agreement to the Authority in care of its counsel: Ronald E. Lee, Esq. Jones Hall, APLC 475 Sansome Street, Suite 1700 San Francisco, CA 94111 / / / / / / / / / / / / / / / / / / / / / / / / NOT YET APPROVED Attachment A 181018 ms 0140185 Section 5. This resolution shall take effect immediately upon its adoption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: City Attorney City Manager or Designee Director of Administrative Services [SEAL] City of Palo Alto (ID # 9740) City Council Staff Report Report Type: Action Items Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: Amend Budget Assumptions & Address the City Council Referral to Identify $4M in General Fund Savings Title: Direct Staff to Amend Budget Assumptions for Pension Benefit Costs and Complete the Workplans to Address the City Council FY 2019 Ado pted Budget Referral to Identify $4 Million in General Fund Savings From: City Manager Lead Department: Administrative Services Recommendation Finance Committee recommends the City Council: 1. Direct Staff, when they develop the next budget, to include the full normal cost for pension benefits in the budget assuming an equivalent of 6.2% discount rate and transfer additional funding beyond CalPERS actuarial determined contribution levels to the 115 Trust Fund; 2. Direct Staff to begin work and return with a strategic action plan according to staff’s recommended Strategic Action workplan; and 3. Direct Staff to return in November 2018 with suggestions on ways to save money and find $4 million in balancing actions that are not detrimental to the organization and including what it would look like if the remaining gap was funded by the Budget Stabilization Reserve. Summary On September 18, 2018, the Finance Committee discussed potential workplans to address the City Council’s referral to Return to the Finance Committee with a work plan and timeline to discuss the $4 million in structural reductions in the General Fund and the impacts of the reduction in expenses when the City Council returns from break, including a discussion of optimizing library hours. Also include discussion regarding the implications of closing the pension gap, at a commensurate 50% level to the General Fund, accounting for rising costs in non-general funds, specifically Enterprise and Other Funds. City of Palo Alto Page 2 As outlined in City Manager’s Report #9553, staff provided two options to address this referral. Contained in this report is the staff report as Attachment A for ease of reference. City Manager’s Report #9553: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=59644.61&BlobID=66719 Action minutes can be found here: https://www.cityofpaloalto.org/civicax/filebank/documents/67316 Sense Minutes: https://www.cityofpaloalto.org/civicax/filebank/documents/67317 Ultimately, the Finance Committee unanimously approved the report and recommend that staff work to complete both workplans proposed, both immediate action and strategic action to address concerns of prudent financial planning. Staff reviewed that increases in pension benefit costs are not the only pressure on the city’s finances and a more measured approach would be necessary. Lastly, the Committee recommends that the City forecast and develop the annual budget assuming higher pension costs, specifically, assuming the full “normal cost” for pension benefits at a 6.2% discount rate. This varies from the current CalPERS actuarial determined contribution (ADC) level which assumes a 7.25% discount rate in FY 2020, the City’s current budgeting practice. The additional funding that would be budgeted above the ADC would be recommended to be transferred to the City’s irrevocable Section 115 Pension Trust Fund. The ADC for FY 2020 is $30.4 million for the Miscellaneous Plan and $15.2 million for the Safety Plan. These figures reflect the blended, or combined, cost of both the Normal Cost (NC) and the Unfunded Accrued Liability (UAL) and are within the estimates used during the development of the FY 2019 – FY 2029 Long Range Financial Forecast. Should the City Council approve this recommendation regarding the “normal cost,” budgeted employer expense costs are estimated to increase approximately 15.3%, or $7 million in FY 2020 in all funds, $5.5 million in the General Fund. These estimates are based on CalPERS sensitivity analysis figures and will be refined if approved. Environmental Review The recommended action is not a project for purposes of the California Environmental Quality Act (CEQA). Environmental review is not required. Attachments: • Attachment A: City Manager's Report #9553 "Discuss and Confirm the Workplan to Address the City Council FY 2019" City of Palo Alto (ID # 9553) Finance Committee Staff Report Report Type: Action Items Meeting Date: 9/18/2018 City of Palo Alto Page 1 Summary Title: Discuss FY 2019 Adopted Budget Referral to Identify $4 Million in General Fund Savings Title: Discuss and Confirm the Workplan to Address the City Council FY 2019 Adopted Budget Referral to Identify $4 Million in General Fund Savings From: City Manager Lead Department: Administrative Services Recommendation Discuss and provide direction on the workplan to address City Council’s referral to identify $4 million in General Fund structural reductions including identification of implications in n on- general funds as well. Background As part of the adoption of the FY 2019 Budget, the City Council directed staff to: Return to the Finance Committee with a work plan and timeline to discuss the $4 million in structural reductions in the General Fund and the impacts of the reduction in expenses when the City Council returns from break, including a discussion of optimizing library hours. Also include discussion regarding the implications of closing the pension gap, at a commensurate 50% level to the General Fund, accounting for rising costs in non-general funds, specifically Enterprise and Other Funds. In the FY 2019 Adopted Budget, a $4 million negative adjustment was recorded in the Non- Departmental section of the General Fund expenses. These funds were added to the General Fund Budget Stabilization Reserve (BSR). Prior to this action, the City Manager’s FY 2019 Proposed Budget was balanced with estimated revenue supporting the estimated levels of expenditures and the BSR slightly above the Council recommended level of 18.5% of General Fund operating expenditures. This additional $4 million in the BSR increased the BSR beyond the City Council target of 18.5% of General Fund expenses to 21.4% of General Fund expenses. The specific implications associated with the lower expense level in the General Fund were left to be discussed during the FY 2019 budget year. Should the City Council choose not to reduce FY 2019 expenses by this $4 million, an adjustment to reinstate this reduction would simply drop the BSR to Council approved levels of 18.5 percent of General Fund expenses. ATTACHMENT A City of Palo Alto Page 2 Discussion Staff has developed two workplans for Finance Committee review including rough timelines to address this referral: 1) “immediate action” and/or 2) “strategic action”. When considering the approach, it is important to take a step back and understand this referral in the landscape of where the City is as an organization. This broader lens includes review and acknowledgement of the current economic conditions, the knowledge depth and capacity in the organization, desired capital investments, desire for service levels juxtaposed with the costs to provide those services, etc. These largely opposing forces will make a comprehensive discussion of available resources - and providing services within limited resources - very challenging. In short, growing pension liabilities are not the only variable placing strain on the prioritization of City expenses. As the economy in the valley prospers, the demand on resources for services increases, as well as the cost to live in the Bay Area. This simple economic theory of supply and demand impacts the City on multiple levels - the cost of services the City seeks as a consumer (capital project construction costs, general day to day business such as janitorial services), and the cost to provide service to the community (majority is staff costs). At the Finance Committee meeting, staff will be prepared to review these additional fiscal demands on our current budget. Ultimately, the City is faced with a few issues despite and because of the economic prosperity that both the City and community are enjoying. - Attracting and retaining a highly qualified workforce to provide services to the community - Safeguarding employee retirement benefits by proactively saving for the future - Rising costs for services due to the hot economy and competition in the Bay Area Every organization faces tough conversations at certain points, and the City is no exception. As always, community input is welcomed and encouraged through open, public discussions regarding the services purchased with taxpayer funds. City employees, those on the front lines every day ensuring residents are safe, have learning centers in libraries and community centers, and general utilities such as electricity and water, will also be encouraged to participate as their work and expertise are valued contributions to the community. Even as the organization may shift, it is the City’s commitment to be open and honest and manage the challenges that the work ahead may present for employees. Potential Approaches As mentioned earlier, staff have two potential workplans for review and discussion to address the prioritization of how the City spends its funding on services to the community. Immediate Action This approach would allow for potential resolution of this $4 million referral by December 2018, with final budget adjustments completed during the FY 2019 Mid -Year Budget review, considered by the Council in early February. City of Palo Alto Page 3 Returning to the Finance Committee in November/December, staff would bring forward recommended reductions based on a review of basic criteria. Examples of criteria in this review may include but are not limited to: - Statutory or legally mandated services, versus discretionary expenses/programs) - Service levels that exceed other agencies or are replicated by other organizations - Complexity of divestment of current service or service delivery model - Ability to quickly realize reductions in expenses This expedited review would focus on the General Fund. Staff would strive to identify reductions across all funds including Enterprise Funds to identify a commensurate amount of expense reductions: however, this may lag until the new calendar year given the timeframes. After the Finance Committee review, staff’s recommended reductions would be brought forward to the full Council for review and approval, including budget adjustments to redistribute the $4 million adjustment in the General Fund. Strategic Action This approach would allow for a more comprehensive strategy to address the $4 million referral with more lasting results. Setting the City up for future discussions this would could be leveraged beyond just the immediate referral but provide a platform to proactively and strategically address the competing priorities and polarities facing the City. Specifically, this workplan would require an initial approximately six-month intensive citywide program review effort, with budgetary actions occurring no earlier than the FY 2020 budget process. Staff would begin a citywide review of all programs and services currently provided by the City of Palo Alto resulting in a “catalogue of services.” Services are defined as discrete programs to identifiable users and vary in size across the organization. Variables that this compilation of programs and services may include: - concise descriptions and outcomes, - approximate costing and staffing resources, - resources managed (i.e. vehicles), - funding source(s) and cost recovery levels, - Statutory or legal mandates (as opposed to discretionary expenses/programs), - Service levels that exceed most other agencies or are replicated by other organizations. Once the catalogue is complete it would provide a foundation to develop a more strategic basis of prioritization of services across the organization. This catalogue would also establish a common language and format for future discussions, agnostic of the department or division. Although this comprehensive approach has the promise of actionable and valuable information, the organizational effort to undertake such a project must not be underestimated. This work would require a focused prioritization of this effort amid a very active workload and transition cycle the City is currently moving through. An explicit commitment to ensure the capacity of staff during this project would be key to its success, by restraining new initiatives and some curtailment of existing work. City of Palo Alto Page 4 Resource Impact There are no immediate budget adjustments necessary; however, significant staffing resources will need to be dedicated to address either approach. The City Council will need to ensure that space and capacity are provided to execute the action plan. Both short term and long-term impacts to services to the community as well as City staff may result from these evaluations. It will take significant dedicated time to determine the impacts of recommended actions, and communicate with and hear feedback from key stakeholders, community forums, and City staff at large in a strategic manner. In addition, depending on the approach, consultant costs may be necessary. Environmental Impact This report is not a project for the purposes of the California Environmental Quality Act. Environmental review is not required. CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY October 29, 2018 The Honorable City Council Palo Alto, California Adoption of an Ordinance Amending the Municipal Code and Adoption of Amendments to Council Procedures and Protocols to Conform to a Seven-Member Council; Discussion and Direction to Staff or Referral to Policy & Services of Additional Discretionary Changes to the Code and/or Council Procedures and Protocols Recommendation 1. Amend the Municipal Code and Council Procedures and Protocols to conform to a seven- member Council: a. Adopt on first reading an ordinance (Attachment A) amending Municipal Code section 2.04.190 to reduce number of Council Members on Finance and Policy & Services from four to three and section 12.10.060 to change the votes required to resolve a certain type of appeal from five to a majority; and b. Amend the Council Procedures and Protocols to reduce four to three the number of Council Members who may sign a Colleagues’ Memo and who may serve on an Ad Hoc Committee. 2. Discuss and Provide Direction to Staff or Refer to Policy & Services additional discretionary changes to the Municipal Code and/or Procedures and Protocols Background and Discussion On November 4, 2014, Palo Alto voters amended the Palo Alto Charter to reduce the number of Council seats from nine to seven, effective January 1, 2019. Many provisions of the Municipal Code and Procedures and Protocols Handbook provide for Council action by “a majority” of Council. When Council had nine members, a majority was five; when it has seven members, a majority will be four. This will occur seamlessly and requires no action to implement. In a few places, however, the Code and the Procedures and Protocols refer to a specific number of Council Members. In several situations, the number must be reduced to comply with state law. In others, Council has d iscretion to maintain or change the number specified. First, the Municipal Code and Procedures and Protocols provide for four-member Council committees. This must be changed to comply with the Ralph M. Brown Act. The Brown Act, which sets procedural requirements local governmental bodies, states that subcommittees are limited to less than a majority of the primary body. When the number of seats on Council is reduced to seven, Council committees (both regular “standing” committees, and temporary “ad hoc” committees) will be limited to a maximum of three Council Members. The attached Page 2 changes to the Municipal Code and Procedures and Protocols adjust the size of standing and ad hoc committees to three Council Members. In addition, and also to comply with the Brown Act, the Procedures and Protocols should be amended to provide that no more than three Council Members may participate in a Colleagues Memo. Staff identified one additional section of the Municipal Code that should be changed to align with a seven-member Council. Section 2.10.060 states that five votes are required to resolve a type of permit appeal. In context, it is clear that section 2.10.060 intends to refer to a simple majority of Council. The attached ordinance updates the language to provide for a simple majority. In addition to these changes, there are a number of changes that are not legally -mandated, but that Council may wish to consider. Staff recommends that Council refer these to Policy & Services for discussion and recommendation, or, in the alternative Council could provide direction to staff. These include: 1. Current procedure requires three votes to remove an item from Consent. (Procedures and Protocols, section 2.4(H).) Council could retain the three vote procedure or modify it. 2. The Zoning Code specifies the number of Council votes required to remove appeals from the Consent calendar. (For example, Municipal Code section 18.78.040(a)(2) provides that three votes are required to remove appeals from Consent.) Council could retain current requirements or modify them. 3. Various changes to the Procedures and Protocols were previously recommended by Policy & Services but have not been finally approved by Council. If the matter is referred to Policy & Services, staff will refresh those items with the Committee and forward the resulting recommendations to Council. In addition, Council Members may wish to propose additional modifications, as part of a regular review and updating process. Environmental Review The proposed procedural changes to the Code and Procedures and Protocols are not a project for the purposes of the California Environmental Quality Act. Environmental review is not required. ATTACHMENTS: • Attachment A: ORD Amending to Conform to 7 Member Council (10-12) (PDF) • Amendment to Council Handbook (PDF) Department Head: Molly Stump, City Attorney Page 3 Attachment A *NOT YET ADOPTED* th TS/ORD Amending 2.04 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Section 2.04.190 (Standing Committees – Special Committees) of Chapter 2.04 (Council Organization and Procedure) of Title 2 (Administrative Code); and Amending Section 12.10.060 (Coordination with City) of Chapter 12.10 (Street Cut Fees) of Title 12 (Public Works and Utilities) of the Palo Alto Municipal Code to Conform to a Seven-Member City Council. The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1: The Council of the City of Palo Alto finds and declares as follows: A. In November, 2014, the Charter of the City of Palo Alto was amended by the electorate to reduce the City Council to seven members (from the current nine member council) effective January 1, 2019. B. In order to prevent conflicts with the California Brown Act, relevant sections of the Palo Alto Municipal Code must also be amended to reflect the seven-member Council. SECTION 2. Section 2.04.190 of the Palo Alto Municipal Code is hereby amended as follows (deleted text is in strikethrough, new text is underlined): 2.04.190 Standing committees - Special committees. (a) Not later than the second regular council meeting in January, the mayor shall appoint two standing committees, consisting of four three members each from the members of the council. The mayor shall appoint each council member to only one standing committee and shall appoint the chairperson of each committee. The mayor, or the vice-mayor at the request of the mayor, may act as an ex officio, voting member of each committee when one or more regular committee members are absent. (b) The standing committees shall be designated, respectively, committee on finance and committee on policy and services, and shall meet at 7:00 p.m. in the city hall on the day established by Section 2.04.200. (c) Council members may attend meetings of committees of which they are not members, without participating in any manner, but only committee members or ex officio committee members shall vote in committee in accordance with subsection (a) of this section. (d) Council members who submit matters to the council which are referred to a standing committee may appear before the standing committee to which the referral has been made in order to speak as proponents of the matter. Standing committee meetings during which such referrals may be considered shall be noticed as council meetings for the purpose of enabling the standing committee to discuss and consider the matter with a quorum of the council present. Attachment A *NOT YET ADOPTED* th TS/ORD Amending 2.04 (e) In addition to standing committees the mayor may, subject to approval of the council, appoint such other special committees of council members, private citizens or both as deemed desirable and necessary to assist and advise the council in its work. SECTION 3. Section 12.10.060 of the Palo Alto Municipal Code is hereby amended as follows (deleted text is in strikethrough, new text is underlined): 12.10.060 Coordination with city. (a) Before a person, utility or public utility applies for an "Application and Permit for Construction in the Public Street" to construct in the public rights-of-way or any street, alley, sidewalk or other public place, the applicant shall notify the director of public works-city engineer, and the city engineer, or designee, shall review on behalf of the applicant the utility master plans and the city's five-year repaving plan on file with the department of public works. The applicant shall coordinate, to the fullest extent practicable, with the utility and street work shown on such plans to minimize damage to, and avoid undue disruption and interference with the public use of such public rights-of-way, streets, alleys, sidewalks or other public places. Such coordination shall include: (1) Whenever two or more parties have concurrently proposed a major excavation in the same block during a five-year period, they shall meet and confer with the director of utilities, or designee, regarding whether it is feasible to conduct a joint operation. If the director, or designee, determines that it is feasible to conduct a joint operation, a single contractor shall be selected and a single application fee charged. (2) Any person, utility or public utility aggrieved by the director's decision to require a joint operation may, within thirty days of receipt of the director's written notice, file an appeal with the city manager in written form in a manner prescribed by the director. Within thirty days of the filing of a timely appeal from the director's determination, the city manager shall review the appeal and issue a recommendation to the council to uphold or overturn the action or determination of the director. The recommendation of the city manager shall be placed on the consent calendar of the council within thirty days of the filing of the appeal. In determining such appeal, the council shall consider the impact of the proposed excavation on the neighborhood, the applicant's need to provide services to a property or area, facilitating the deployment of new technology as directed pursuant to official city policy, and the public health, safety, welfare and convenience. The council may adopt the recommendation of the city manager, or remove the appeal from the consent calendar, which shall require five votes a majority vote, and take action to uphold or overturn the recommendation of the city manager. The decision of the council is final. (b) To avoid future excavations and to reduce the number of street excavations, any person, utility or public utility providing utility or communications service shall be requested, when practicable, to install sufficient conduit to accommodate the reasonably foreseeable future business growth needs of that person, utility or public utility. Attachment A *NOT YET ADOPTED* th TS/ORD Amending 2.04 SECTION 4. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid, such invalidity shall not affect the other provisions of this ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this ordinance are hereby declared to be severable. SECTION 5. CEQA. The City Council finds and determines that this Ordinance is not a “project” within the meaning of section 15378 of the California Environmental Quality Act (CEQA) Guidelines because it has no potential for resulting in physical change in the environment, either directly or ultimately. SECTION 6. Effective Date. This ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: ______________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: ____________________________ City Manager ______________________________ Deputy City Attorney In November, 2014, the Charter of the City of Palo Alto was amended by the electorate to reduce the City Council to seven members (from the current nine member council) effective January 1, 2019. In order to prevent conflicts with the California Brown Act, relevant sections of the Palo Alto City Council Procedures and Protocols Handbook must also be amended to reflect the seven-member Council. Subsection (K) (Council Matters) of Subsection 2.4 (General Requirements) of Section 2 (Council Meeting & Agenda Guidelines) of the City Council Procedures and Protocols Handbook is hereby amended as follows (deleted text is in strikethrough, new text is underlined): K. Council Matters Any two Council Members may bring forward a colleague memo on any topic to be considered by the entire Council. Two Council Members are required to place such a memo on the agenda, reflective of the Council procedure requiring a motion and a second for consideration of a motion by the Council. Up to four three Council Members may sign a colleague memo. The City Attorney recommends that the colleague memo be limited to three two Council Members in order to avoid the potential of a Brown Act issue. Prior to preparing a colleague memo, Council Members will consult with the City Manager to determine whether he/she is or is willing and able to address the issues as part of his/her operational authority and within current budgeted resources. Colleague’s memos should have a section that identifies any potential staffing or fiscal impacts of the contemplated action. This section will be drafted by the City Manager. Council Members shall provide a copy of the proposed memo with the City Manager or appropriate senior staff prior to finalization. Completed Council colleagues memos shall be provided to the City Clerk’s staff by noon on the Tuesday prior to the Council meeting that the memo is intended to be agendized, to provide time for the City Clerk to process for the Council packet. The City Council will not take action on the night that a colleague memo is introduced if it has any implications for staff resources or current work priorities which are not addressed in the memo. The Council will discuss the colleague memo and then direct the City Manager to agendize the matter for Council action within two meetings, allowing City staff time to prepare a summary of staffing and resource impacts. Action may be taken immediately by the Council on colleague memos where there are no resource or staffing implications or where these are fully outlined in the colleagues memo. The Brown Act requires that the public be fully informed of the potential action by the Council via the Agenda 72 hours before a scheduled Council meeting. In order to satisfy the Brown Act requirements, the Council should consult with the City Attorney to ensure that the proposed title to the colleague memo contains all actions that the Council Members want completed on the night of the Council review. Subsection (3) (Appointment) of Subsection (Y) (Ad Hoc Committees) of Subsection 2.4 (General Requirements) of Section 2 (Council Meeting & Agenda Guidelines) of the City Council Procedures and Protocols Handbook is hereby amended as follows (deleted text is in strikethrough, new text is underlined): 3) Appointment The Mayor or the City Council may appoint four three or less members of the Council to serve on an Ad Hoc Committee. In contrast, only the Council and not the Mayor alone can create a Standing Committee. The Mayor will publicly announce any Ad Hoc Committee created by him or her, its membership and stated purpose and posted on the City Council website. The City Manager shall prepare a report to Council about the anticipated time commitment required for staff to assist the Ad Hoc Committee. CITY OF PALO ALTO TO: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL MOLLY STUMP, CITY ATTORNEY OCTOBER 29, 2018 ADOPTION OF AN ORDINANCE AMENDING THE MUNICIPAL CODE AND ADOPTION OF AMENDMENTS TO COUNCIL PROCEDURES AND PROTOCOLS TO CONFORM TO A SEVEN-MEMBER COUNCIL; DISCUSSION AND DIRECTION TO STAFF OR REFERRAL TO THE POLICY AND SERVICES COMMITTEE OF ADDITIONAL DISCRETIONARY CHANGES TO THE CODE AND/OR COUNCIL PROCEDURES AND PROTOCOLS The (1) ordinance and (2) amendment to the Council Procedures and Protocols Handbook included with this memo replaces those included with the original packet. Both now have an effective date of January 1, 2019, which conforms with the date of the Council becoming seven members. In addition, the Council Procedures and Protocols Handbook, in its entirety, can be found at this link: https://www.cityofpaloalto.org/civicax/filebank/documents/34330 /Z!<D2 I Molly Stump City Attorney 1 of 1 COUNCIL MEETING ~ 10/29/2018 11 IZJReceived Before Meeting Attachment A *NOT YET ADOPTED* Ordinance No. Ordinance of the Council of the City of Palo Alto Amending Section 2.04.190 (Standing Committees -Special Committees) of Chapter 2.04 (Council Organization and Procedure) of Title 2 (Administrative Code); and Amending Section 12.10.060 (Coordination with City) of Chapter 12.10 (Street Cut Fees) of Title 12 (Public Works and Utilities) of the P~lo Alto Municipal Code to Conform to a Seven-Member City Council. The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1: The Council of the City of Palo Alto finds and declares as follows: A. In November, 2014, the Charter of the City of Palo Alto was amended by the electorate to reduce the City Council to seven members (from the current nine member council) effective January 1, 2019. B. In order to prevent conflicts with the California Brown Act, relevant sections of the Palo Alto Municipal Code must also be amended to reflect the seven-member Council. SECTION 2. Section 2.04.190 of the Palo Alto Municipal Code is hereby amended as follows (deleted text is in striketl=trel::lgR, new text is underlined): 2.04.190 Standing committees -Special committees. (a) Not later than the second regular council meeting in January, the mayor shall appoint two standing committees, consisting of~ three members each from the members of.the council. The mayor shall appoint each council member to only one standing committee and shall appoint the chairperson of each committee-. The mayor, or the vice-mayor at the request of the mayor, may act as an ex officio, voting member of each committee when one or more regular committee members are absent. (b) The standing committees shall be designated, respectively, committee on finance and committee on policy and services, and shall meet at 7:00 p.m. in the city hall on the day established by Section 2.04.200. (c) Council members may attend meetings of committees of which they are not members, without participating in any manner, but only committee members or ex officio committee members shall vote in committee in accordance with subsection (a) of this section. (d) Council members who submit matters to the council which are referred to a standing committee may appear before the standing committee to which the referral has been made in order to speak as proponents of the matter. Standing committee meetings during which such th TS/ORD Amending 2.04 Attachment A *NOT YET ADOPTED* referrals may be considered shall be noticed as council meetings for the purpose of enabling the standing committee to discuss and consider the matter with a quorum of the council present. (e) In addition to standing committees the mayor may, subject to appro~al of the council, appoint such other special committees of council members, private citizens or both as deemed desirable and necessary to assist and advise the council in its. work. SECTION 3. Section 12.10.060 of the Palo Alto Municipal Code is hereby amended as follows (deleted text is in striketl=are1:1gl=a, new text is underlined): 12.10.060 Coordination with city. (a) Before a person, utility or public utility applies for an "Application and Permit for Construction in the Public Street" to construct in the public rights-of-way or any street, alley, sidewalk or other public place, the applicant shall notify the director of public works-city engineer, and the city engineer, or designee, shall review on behalf of the applicant the utility master plans and the city's five-year repaving plan on file with the department of public works. The applicant shall coordinate, to the fullest e~tent practicable, with the utility and street work shown on such plans to minimize damage to, and avoid undue disruption and interference with the public use of such public rights-of-way, streets, alleys, sidewalks or other public places. Such coordination shall include: (1) Whenever two or more parties have concurrently proposed a major excavation in the same block during a five-year period, they shall meet and confer with the director of utilities, or designee, regarding whether it is feasible to conduct a joint operation. If the director, or designee, determines that it is feasible to conduct a joint operation, a single contractor shall be selected and a single application fee charged. (2) Any person, utility or public utility aggrieved by the director's decision to require a joint operation may, within thirty days of receipt of the director's written notice, file an appeal with the city manager in written form in a manner prescribed by the director. Within thirty days of the filing of a timely appeal from the director's determination, the city manager shall review the appeal and issue a recommendation to the council to uphold or overturn the action or determination of the director. The recommendation of the city manager shall be placed on the consent calendar of the council within thirty days of the filing of the appeal. In determining such appeal, the council shall consider the impact of the proposed excavation on the neighborhood, the applicant's need to provide services to a property or area, facilitating the deployment of new technology as directed pursuant to official city policy, and the public health, safety, welfare and convenience. The council may adopt the recommendation of the city· manager, or remove the appeal from the consent calendar, which shall require five \'etes~ majority vote. and take action to uphold or overturn the recommendation of the city manager. The decision of the council is final. th TS/ORD Amending 2.04 .. .. .. Attachment A *NOT YET ADOPTED* (b) To avoid future excavations and to reduce the number of street excavations, any person, utility or public utility providing utility or communications service shall be requested, when practicable, to install sufficient conduit to accommodate the reasonably foreseeable future business growth needs of that person, utility or public utility. SECTION 4. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid, such invalidity shall not affect the other provisions of this ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this ordinance are hereby declared to be severable. SECTION 5. CEQA. The City Council finds and determines that this Ordinance is not a "project" within the meaning of section 15378 of the California Environmental Quality Act (CEQA) Guidelines because it has no potential for resulting in physical change in the environment, ~ither directly or ultimately. SECTION 6. Effective Date. This ordinance shall be effective on January 1, 2019. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: City Manager Deputy City Attorney th TS/ORD Amending 2.04 . , Amendment to Council Handbook COUNCIL MEETING §] __ 10 .... 12_.9/""'""2_01_a__ 11 121Recelved Before Meeting AMENDMENT TO THE CITY COUNCIL PROCEDURES AND PROTOCOLS HANDBOOK In November, 2014, the Charter of the City of Palo Alto was amended by the electorate to reduce the City Council to seven members (from the current nine member council) effective January 1, 2019. In order to prevent conflicts with the California Brown Act, relevant sections of the Palo Alto City Council Procedures and Protocols Handbook must also be amended to reflect the seven-member Council. Upon approval by the City Council, the following amendments shall become effective January 1, 2019: Subsection (K) (Council Matters) of Subsection 2.4 (General Requir:ements) of Section 2 (Council Meeting & Agenda Guidelines) of the City Council Procedures and Protocols Handbook is hereby amended as follows (deleted text is in stril<et~rol:ilg~, new text is underlined): K. Council Matters Any two Council Members may bring forward a colleague memo on any topic to be considered by the entire Council. Two Council Members are required to place such a memo on the agenda, reflective of the Council procedure requiring a motion and a second for consideration of a motion by the Council. Up to~ three Council Members may sign a colleague memo. The City Attorney recommends.that the colleague memo be limited to .tAf:ee. two Council Members in order to avoid the potential of a Brown Act issue. Prior to preparing a colleague memo, Council Members will consult with the City Manager to determine whether he/she is or is willing and able to address the issues as part of his/her operational authority and within cur~ent budgeted resources. Colleague's memos should have a section that identifies any potential staffing or fiscal impacts of the contemplated action. This section will be drafted by the City Manager. Council Members shall provide a copy of the proposed memo with the City Manager or appropriate senior staff prior to finalization. Completed Council colleagues memos shall be provided to the City Clerk's staff by noon on the Tuesday prior to the Council meeting that the memo is intended to be agendized, to provide time for the City Clerk to process for the Council packet. The City Council will not take action on the night that a colleague memo is introduced if it has any implications for staff resources or current work priorities which are not addressed in the memo. The Council will discuss the colleague memo and then direct the City Manager to agendize the matter for Council action within two meetings, allowing Amendment to Council Handbook City staff time to prepare a summary of staffing and resource impacts. Action may be taken immediately by the Council on colleague memos where there are no resource or staffing implications or where these are fully outlined in the colleagues memo. The Brown Act requires that the public be fully informed of the potential action by the Council via the Agenda 72 hours before a scheduled Council meeting. In order to satisfy the Brown Act requirements, the Council should consult with the City Attorney to ensure that the proposed title to the colleague memo contains all actions that the Council Members want completed on the night of the Council review. Subsection (3) (Appointment) of Subsection (Y) (Ad Hoc Committees) of Subsection 2.4 (General Requirements) of Section 2 .(Council Meeting & Agenda Guidelines) of the City Council Procedures and Protocols Handbook is hereby amended as follows (deleted text is in strilEetRret:1gR, new text is underlined): 3) Appointment The Mayor or the City Council may appoint~ three or less members of the Council to serve on an Ad Hoc Committee. In contrast, only the Council and not the Mayor alone can create a Standing Committee. The Mayor will publicly annoµnce any Ad Hoc Committee created by him or her, its membership and stated purpose and posted on the City Council website. The City Manager shall prepare a report to Council about the anticipated time commitment required for staff to assist the Ad Hoc Committee. City of Palo Alto (ID # 9708) City Council Staff Report Report Type: Informational Report Meeting Date: 10/29/2018 City of Palo Alto Page 1 Summary Title: CalPERS Annual Actuarial Reports and Pension Funding and Reporting Policy Guidelines Title: CalPERS Pension Annual Valuation Reports as of June 30, 2017 and Pension Funding and Reporting Policy Guidelines From: City Manager Lead Department: Administrative Services Recommendation This is an informational item and no City Council action is necessary. Executive Summary On September 18th, the Finance Committee unanimously voted to accept the transmission of the CalPERS Pension Annual Actuarial Valuations as of June 30, 2017 for both the Safety and Miscellaneous Plans as part of CMR #9604 ‘Accept CalPERS Pension Annual Valuation Reports as of June 30, 2017 and Review and Confirm Pension Funding and Reporting Policy Guidelines'. During the discussion regarding the development of a Pension Funding and Reporting Policy, the Finance Committee asked about the relative rates of return for the City’s Irrevocable Section 115 Pension Trust Fund with PARS as compared to CalPERs’ rate of return. That comparison is detailed in the table below with 1 year, 5 year, and 10 year timespans. It is important to note that the City of Palo Alto chose to invest in the ‘Moderately Conservati ve’ Index through PARS which is the second most conservative portfolio offered by PARS and maintains approximately 30 percent of its assets in equities, which can include domestic and international stocks. As such, compared to CalPERS’ asset mix, it has a different risk profile. PARS - Conservative PARS - Moderately Conservative PARS - Moderate PARS - Balanced PARS - Capital Appreciation CalPERS 1 Year 1.48% 3.23% 5.77% 6.93% 9.63% 11.2% 5 Year 3.18% 4.62% 6.36% 7.25% 8.99% 8.8% 10 Year 3.77% 4.70% 5.98% 6.41% 10.44%1 4.3% City of Palo Alto Page 2 1The Capital Appreciation portfolio has not yet existed for 10 years; this percentage represents Inception-to-Date performance, or 114 months. Accordingly, it does not have many of the losses that occurred during the Economic Downturn in 2008. The PARS portfolio that has the asset mix most like the CalPERS investment portfolio is the PARS – Capital Appreciation plan. As part of the formulation of a Pension Funding and Reporting Policy, Staff anticipates reviewing the PARS portfolios and providing further recommendations to ensure alignment between the City’s long-term strategic goals related to the pension liability and the PARS portfolio it uses to invest. Attachments: • Attachment A: CMR 9604 Accept CalPERS Pension Annual Valuation Reports as of June 30, 2017 and Review and Confirm Pension Funding and Reporting Policy Guidelines City of Palo Alto (ID # 9604) Finance Committee Staff Report Report Type: Action Items Meeting Date: 9/18/2018 City of Palo Alto Page 1 Summary Title: Accept CalPERS Pension Annual Valuation Reports & Review Pension Policy Guidelines Title: Accept CalPERS Pension Annual Valuation Reports as of June 30, 2017 and Review and Confirm Pension Funding and Reporting Policy Guidelines From: City Manager Lead Department: Administrative Services RECOMMENDATION Staff recommends that the Finance Committee: 1.Review and discuss the June 30, 2017 CalPERS Annual Valuation reports for the Miscellaneous and Safety Pension Plans; and 2.Review, comment, and confirm further direction to City Staff regarding the establishment of a Pension Funding and Reporting Policy. EXECUTIVE SUMMARY This report transmits the annual actuarial valuation reports for the City’s two pension plans with the California Public Employees’ Retirement System (CalPERS) for review and discussion. During the 2018 fiscal year, the City Council and Finance Committee spent significant time understanding and evaluating the City’s pension benefit plans and the financial outlook for them. As a result, staff is working to develop a Pension Funding and Reporting Policy and is seeking confirmation from the Finance Committee regarding the terms and outcomes to be included in that policy. BACKGROUND The City of Palo Alto offers its employees and retirees a defined pension benefit plan which is managed and administered by CalPERS, a State of California Pension Trust Program. Staff provides the CalPERS Annual Valuation reports, which are actuarial reports detailing the latest status of the City of Palo Alto pension trust plans for employees and retirees. These reports calculate the annual required contribution from the City to the pension plans. In addition, updates on the rate of return, funding status, and changes to the trust based on various impacts are detailed in each report. ATTACHMENT A City of Palo Alto Page 2 The CalPERS program maintains two pension plans, one for safety employees (sworn fire and police personnel) and another for miscellaneous employees (all other non-safety personnel employed by the City, including field personnel, administrative support, and managers). These Annual Valuation reports provide updated actuarial information for both pension plans as of June 30, 2017. There are three tiers of benefits within the two plans described above. Table 1 below details the current pension plans and the different benefit levels in each tier. It takes City employees five (5) years of service to vest in any tier of the pension program. Attachment A outlines the number of employees in each tier by pension plan and employee group as of September, 2018. Table 1: City of Palo Alto Pension Benefit Plans and Tiers Miscellaneous Safety: Fire Safety: Police Tier 1 2.7%/service year worked; eligibility starting at the age of 55 (2.7% @ 55) 3.0%/service year worked; eligibility starting at the age of 50 (3.0% @ 50) 3.0%/service year worked; eligibility starting at the age of 50 (3.0% @ 50) Tier 2 Effective July 16, 2010: 2.0%/service year worked, eligibility starting at age 60 (2.0% @ 60) Effective June 7, 2012: 3.0%/service year worked, eligibility starting at age 55 (3.0% @ 55) Effective December 6, 2012: 3.0%/service year worked, eligibility starting at age 55 (3.0% @ 55) Tier 3 “PEPRA”* Effective January 1, 2013: 2.0%/service year worked; eligibility starting at age 62 (2.0% at 62) Effective January 1, 2013: 2.7%/service year worked; eligibility starting at age 57 (2.7% at 57) Effective January 1, 2013: 2.7%/service year worked; eligibility starting at age 57 (2.7% at 57) * Under the California Public Employees’ Pension Reform Act (PEPRA), the benefit calculation is limited by a maximum salary of $145,666 for both the Miscellaneous and Safety plans, therefore it is calculated based on service years but cannot exceed $145,666. The final salary calculation is based on the average of the highest three years. DISCUSSION CalPERS prepares an Annual Valuation report, which is an actuarial analysis to determine the City’s pension liability and annual required contribution for each of the two pension plans (one for miscellaneous employees, one for safety employees). These reports provide an update on the funding status, the results of assumption changes such as rate of return (ROR) which impacts the discount rate assumption, the new fiscal year Actuarial Determined Contribution (ADC) and the projected future ADC as a percentage of payroll. The actuarial analysis is based on current employees’ accrued benefit, former employees who have vested but have not yet retired, and retired employees as of June 30, 2017. The CalPERS actuarial analysis is completed two years in arrears by practice. On December 21, 2016 the CalPERS Board of Administration lowered the discount rate (which is the anticipated rate of return) from 7.5 percent to 7.0 percent over a three -year phase-in City of Palo Alto Page 3 beginning in FY 2019. These reports include CalPERS’ accounting for the FY 2017 ROR of 11.2 percent, which is a significant improvement over the prior year’s ROR of 0.61 percent. These reports do not factor in the preliminary estimate of the FY 2018 ROR of 8.6 percent. Exceeding the assumed rate of return is a positive short-term result that improved the City’s funding status, offset by the decrease in the assumed rate of return as CalPERS transitions to the 7.0 percent discount rate. The City’s overall funded status is discussed later in this report and detailed in Table 5. CalPERS Projected Contribution Levels As of 2017, CalPERS has designated two components to the annual billing of the employer contributions to employee pension accounts. These two components are 1) the Normal Cost (NC) and 2) the Unfunded Accrued Liability (UAL). 1. The NC reflects the employer contribution for the plan retirement benefits provided to current employees based on the current set of assumptions. 2. The UAL represents the employer amortization of unfu nded accrued liability. It is an annual payment calculated by CalPERS that will pay down the City’s unfunded accrued pension liability over the amortization timeline. If every assumption in the actuarial valuation stayed valid through the amortization timeline, the City would eliminate its unfunded pension liability after making these annual payments for 30 years. The liability grows when assumption goals, such as ROR, are not met. The ADC for FY 2020 is $30.4 million for the Miscellaneous Plan and $15.2 million for the Safety Plan. These figures reflect the blended, or combined, cost of both the NC and the UAL and are within the estimates used during the development of the FY 2019 – FY 2029 Long Range Financial Forecast. The tables below summarize the projected percentage of payroll required for each plan to fund the ADC as well as the individual components that make up this rate. Future ADCs are estimated to grow from 30.2 percent of payroll in FY 2019 to 42.5 percent of payroll by FY 2025 for Miscellaneous and from 55.6 percent of payroll in FY 2019 to 73.7 percent of payroll by 2025 for Safety. This is based on the phased-in discount rate of a 7.375 ROR for FY 2019, 7.25 percent for FY 2020, and 7.00 percent for future years starting in FY 2021. − Table 2 reflects the estimated percentage of payroll that is necessary for the City of Palo Alto to fund the employer costs, including both the NC and the UAL. It should be noted that most employee labor groups have agreed to “pick-up” percentages of this employer contribution rate. − Table 3 reflects the projected percentage of payroll for the NC employer contribution. This rate increases as the phase-in of the lowered ROR is realized. − Table 4 reflects the estimated annual contribution necessary to pay down th e UAL. This cost also increases as the phase-in of the lowered ROR is realized. City of Palo Alto Page 4 TABLE 2: CalPERS Past and Projected Employer Contribution Rates (blended both UAL and Normal Cost)* FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Miscellaneous 28.9% 30.2% 35.6% 38.2% 40.0% 41.4% 41.9% 42.5% Safety 45.4% 55.6% 59.4% 64.1% 68.0% 71.1% 72.7% 73.7% * The City and the represented labor groups have agreed to Memoranda of Agreements (MOAs) that include provisions for employees to accept a greater share of pension costs to assist in curtailing the City’s growing pension expense – for all Miscellaneous employees, a 1% employee pick-up of the employer contribution (excluding the Utilities Management Professional Association of Palo Alto) and for all Safety employees a 3% employee pick-up of the employer contribution. TABLE 3: CalPERS Past and Projected Normal Cost Employer Rate* FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Miscellaneous 10.0% 10.2% 10.7% 11.5% 11.5% 11.5% 11.5% 11.5% Safety 18.9% 19.4% 20.2% 21.4% 21.4% 21.4% 21.4% 21.4% * In addition to the employer contributions, employees contribute the employee share of pension costs based on the plan and benefit tier. Miscellaneous employees in Tier 1 contribute 8 percent, Tier 2 contribute 7 percent and Tier 3 are 50 percent of the Normal Cost. Safety employees in Tiers 1 and 2 contribute 9 percent and Tier 3 contribute 50 percent of the Normal Cost. TABLE 4: CalPERS Past and Projected Annual Employer Amortization of Unfunded Accrued Liability ($’s in 000’s) FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 Miscellaneous 15,765 18,393 21,287 23,401 25,704 27,676 28,957 30,276 Safety 7,128 8,421 10,019 11,182 12,539 13,734 14,568 15,259 TOTAL $22,893 $26,814 $31,306 $34,583 $38,243 $41,410 $43,525 $45,535 % Change from Prior Yr 17.1% 16.8% 10.5% 10.6% 8.3% 5.1% 4.6% CalPERS Projected Unfunded Accrued Pension Liability Included in the Annual Valuation report is a status of both plans’ “funded status”. Overall, CalPERS has 68.3% of the funding it needs for its obligations. This is higher than the City’s funded status of 63.5% for Safety and 66.3% for Miscellaneous. Table 5 details the City’s funded status for the Miscellaneous and Safety p lans with an assumed ROR as of 7.375 effective June 30, 2017. The total unfunded pension liability increased from $404.7 million as of June 30, 2016 to $414.9 million as of June 30, 2017. This represents an increase of $10.2 million, or 2.5%. This much slower growth, reflected in Table 5 below, represents an improvement over prior years. TABLE 5: CalPERS Projected Unfunded Accrued Liability for the City of Palo Alto As of June 30, 2014 As of June 30, 2015 As of June 30, 2016 As of June 30, 2017 Miscellaneous 191,411,633 219,668,121 261,680,231 260,720,776 Miscellaneous Funded Status 71.3% 68.5% 64.2% 66.3% Safety 103,333,634 118,764,933 143,025,193 154,190,990 Safety Funded Status 71.9% 68.6% 63.6% 63.5% TOTAL UNFUNDED PENSION LIABILITY $249,745,267 $338,433,054 $404,705,424 $414,911,766 % Change from Prior Year 14.8% 19.6% 2.5% City of Palo Alto Page 5 CalPERS recognizes the impacts that varying assumptions may have on a plan’s unfunded accrued liability, and thereby the pension plan’s funding status, especially the implications of the discount rate assumption. Therefore, in addition to the actuarial assumptions used to develop this Annual Valuation, CalPERS includes an Analysis of Discount Rate Sensitivity section in their reports to provide some level of sensitivity analysis of the pension plans. This analysis can be found on page 22 of each respective plan report. Table 6 illustrates CalPERS’ analysis of the June 30, 2017 UAL’s discount rate sensitivity. For example, at 6.0 percent ROR, the total UAL would increase to $606.3 million, representing a 57.1% funded status for Miscellaneous and a 54.6% funded status for Safety. This analysis gives an indication of the potential impacts if CalPERS were to realize investment returns ranging from 3.0% to 8.0% over the long term. This type of analysis provides a sense of the potential long-term rise of the employer contribution rates. TABLE 6: CalPERS Sensitivity Analysis (as of June 30, 2017) 3% Discount Rate 6% Discount Rate 7% Discount Rate 8% Discount Rate Miscellaneous $756,645,591 $383,955,876 $281,317,374 $196,093,345 Miscellaneous Funded Status 40.3% 57.1% 64.5% 72.3% Safety $459,242,456 $222,320,471 $165,710,828 $119,024,819 Safety Funded Status 36.8% 54.6% 61.8% 69.2% TOTAL UNFUNDED PENSION LIABILITY $1.2 billion $606 million $447 million $315 million Potential Policy and Financial Impacts of Establishing a Pensions Funding and Reporting Policy and Amending the General Fund Reserves Policy Throughout FY 2018, the Finance Committee held several meetings to discuss the pension obligations for current employees and retirees. During those discussions, the Finance Committee expressed an interest in developing a pension funding and reporting policy with the goal of taking steps to safeguard employee retirement benefits by proactively saving for the future. The City has taken steps to proactively address the UAL and partially mitigate the potential impact of lower than anticipated CalPERS investment returns. The City took one such step in 2017 by establishing an irrevocable IRS Section 115 Pension Trust Fund (PARS Pension Trust). To date, the City has contributed approximately $7.5 million dollars to the trust, of which $4.6 million is from the General Fund. Several additional options are available to further address the City’s unfunded pension liability. Staff is seeking confirmation from the Finance Committee regarding policy options to be addressed as part of codifying a potential Pension Funding and Reporting Policy. At this stage, nothing precludes the City from pursuing any of these options, even without formal adoption. For example, even though there was not a formal policy, the City contributed $2.0 million in remaining FY 2017 funding that had been budgeted for pensions to the PARS Pension Fund as City of Palo Alto Page 6 part of the FY 2018 Mid-Year Report. However, feedback from the Finance Committee confirming the options to pursue would ensure further staff resources on the policy and financial implications associated with those options are used effectively and efficiently. Staff recommends following the guidelines listed below in the development of a policy. A brief explanation of each option, including the work necessary to fully explore the policy and financial implications, is included after the list. This list is not in order of priority. Recommended Pension Policy Guidelines: 1) Provide an alternative scenario for pension liabilities assuming a discount rate of 6.2% for reporting in the City’s annual financial reports, however, maintain formal reporting using the CalPERS provided rates. 2) Analyze the annual CalPERS actuarial valuations and evaluate opportunities to more efficiently amortize the City’s UAL compared to the default minimum contribution schedules proposed by CalPERS. 3) Amend the City Council’s General Fund Reserves Policy. 4) Transmit budgetary savings in employer contributions as an Additional Discretionary Payment (ADP) to either CalPERS or PARS. 5) Establish funding level guidelines for the PARS Section 115 Pension Trust. Descriptions of Pension Policy Guidelines: 1) Provide an alternative scenario for pension liabilities assuming a discount rate of 6.2% for reporting in the City’s annual financial reports, however, maintain formal reporting using the CalPERS provided rates. In November, 2016 CalPERS outside actuarial consultant, Wilshire Associates, stated that its estimated rate of return for CalPERS for the next ten years was 6.2 percent. The City can continue to work to model the impacts of a 6.2 percent discount rate compared to the 7.0 percent discount rate modeled by CalPERS consistent with last year. This alternative costing can be used to help inform financial planning and prioritization such as presenting it as an alternative scenario of the annual Long Range Financial Forecast. The City can continue reporting alternative scenarios in its annual financial documents such as the Comprehensive Annual Financial Report (CAFR) and the annual budget, providing context for its continued financial prudency and the potential liabilities it faces. While it is important to ensure the City addresses its unfunded pension liability, it is also important to remain consistent with the financial community and the reporting requirements of the financial community’s governing bodies. Staff recommends that formal financial reporting remain consistent with the CalPERS assumptions and costs City of Palo Alto Page 7 outlined in the annual actuarial valuation. This would be relatively minimal additional work if the City chooses to continue its alternative discount rate calculations. 2) Analyze the annual CalPERS actuarial valuations and evaluate opportunities to more efficiently amortize the City’s UAL compared to the default minimum contribution schedules proposed by CalPERS. As discussed earlier in this report, CalPERS provides an annual ADC calculation to the City of Palo Alto for both the Miscellaneous and Safety plans. This ADC provides sufficient funding for both the ‘pay-as-you-go’ portion (Normal Cost) as well as the cost for a single year’s payment of the UAL amortized over a 30 year base. However, there may be opportunities to proactively fund the City’s pension costs through Additional Discretionary Payments (ADPs). There are tradeoffs associated with transmitting payments directly to CalPERS or remitting ADPs to the PARS Pension Trust. To make a comprehensive recommendation regarding ADPs, staff would commit to evaluate the potential financial implications of making an ADP to CalPERS or the PARS Pension Trust. For example, this review may look at amortization schedules (pay off schedule) at varying lengths, 15 years, 20 years, and 30 years and the potential savings over the long term that the City may achieve. However, this analysis would also put in context of the implications on the annual budget and the potential constraints or benefits alternative amortization periods would provide. 3) Amend the City Council’s General Fund Reserves Policy. The Budget Stabilization Reserve (BSR) policy within the General Fund Reserves Policy could be amended to provide more options to proactively address the City’s pension liability. The policy currently states that any BSR balance above 18.5 percent may be transferred to the Infrastructure Reserve (IR) at the discretion of the City Manager. This language could be amended to split BSR balance above 18.5 percent between the Infrastructure Reserve and addressing the City’s pension obligations. Since the City pays its pension ADC in full on an annual basis, this additional funding would constitute an ADP that could be either to the PARS Pension Trust or a direct payment to CalPERS. This would allow greater flexibility when the BSR exceeds the targeted level of 18.5 percent. Alternatively, the City Council could also choose to lower the target for the BSR from 18.5 percent which could make more funding available for thi ngs like pension pre- funding. This would not require significant additional staff work to achieve. This may impact the City’s funding for the Infrastructure Reserve as the General Fund provided $36.9 million to the Infrastructure fund between 2012 and 2016. City of Palo Alto Page 8 4) Transmit budgetary savings in employer contributions as an Additional Discretionary Payment (ADP) to either CalPERS or PARS. Annually, the City’s budget plans for employer pension contributions at authorized staffing levels for both the normal cost and the annual UAL. Because of fluctuations in actual City employee pension demographics and vacancies throughout the organization, there may be years where the City experiences savings in budgeted pension costs compared to actual pension costs. Another option is to annually transmit any unspent funds at year-end as an ADP. The City performed this action as part of the Mid -Year 2018 Report, when it transmitted $2.0 million (all funds) in remaining funding from FY 2017 to PARS. The continued transmittal of any remaining funds intended for pension as an ADP to either the PARS Pension Trust or CalPERS would improve the City’s situation with minimal impact on service delivery or staff time. 5) Establish funding level guidelines for the PARS Section 115 Pension Trust. The City maintains two trust funds, one for pension that was established in 2017 and one for Other Post-Employment Benefits (OPEB) that was established in 2008. The PARS OPEB Trust was begun with funding of $33 million and has grown to $102 million as of April 2018. The City Council has continued to approve the full funding of the ADC for OPEB, helping to close the unfunded gap. As the City closes that unfunded gap, the PARS OPEB trust can be used to pay healthcare benefits from deposits and earnings f or current and future retirees. Although the PARS Pension Trust has a lower funding level, a clear policy regarding its desired funding level would help inform future decisions regarding how much to contribute to PARS and when to do so. Staff would further research appropriate funding levels for the PARS Pension Trust so a comprehensive recommendation can be made including a review of the City’s overall funded ratio with CalPERS. Next Steps Staff will use the feedback from the Finance Committee on the above options to inform the drafting of a formal Pension Funding and Reporting Policy and anticipates returning to the Finance Committee with that policy later in the fall. RESOURCE IMPACT The FY 2019 Adopted Operating Budget includes the annual contribution as calculated by CalPERS. As directed by the City Council, staff will return to the Finance Committee to discuss the implications of an additional $4.0 million reduction in the General Fund separately. City of Palo Alto Page 9 ENVIRONMENTAL IMPACT This report is not a project for the purposes of the California Environmental Quality Act. Environmental review is not required. Attachments: • Attachment A: Pension Tiers Table September 2018 • Attachment B: CalPERS Safety Annual Valuation Report June 30, 2017 • Attachment C: CalPERS Misc. Annual Valuation June 30. 2017 Attachment A: City of Palo Alto Pension Plan Benefit Levels Enrollment by Plan and Employee Group Sept. 2018 Mar. 2017 Sept. 2018 Mar. 2017 City Council & Council Appointees 10 10 IAFF 81 84 Tier 1 4 4 Tier 1 59 67 Tier 2 2 2 Tier 2 7 6 Tier 3 4 4 Tier 3 15 11 Management and Professional 202 195 Fire Chief's Association 3 5 Tier 1 100 102 Tier 1 3 5 Tier 2 46 48 Tier 2 0 0 Tier 3 56 45 Tier 3 0 0 Service Employees' International 549 557 Fire Management 4 4 Tier 1 283 321 Tier 1 4 4 Tier 2 65 66 Tier 2 0 0 Tier 3 201 170 Tier 3 0 0 Utilities Management 44 45 PAPOA*69 77 Tier 1 41 43 Tier 1 42 50 Tier 2 1 Tier 2 5 3 Tier 3 2 2 Tier 3 22 24 Police Management Association 7 8 Tier 1 6 7 Tier 2 0 1 Tier 3 1 0 Police Management 1 0 Tier 1 1 0 Tier 2 0 0 Tier 3 0 0 Grand Total Miscellaneous Plans 805 807 Grand Total Safety Plans 165 178 Tier 1 428 470 Tier 1 115 133 Tier 2 114 116 Tier 2 12 10 Tier 3 263 221 Tier 3 38 35 Tiered Percentage Miscellaneous Plans Tiered Percentage Safety Plans Tier 1 53.2% 58.2%Tier 1 69.7% 74.7% Tier 2 14.2% 14.4% Tier 2 7.3% 5.6% Tier 3 32.7% 27.4% Tier 3 23.0% 19.7% Tier Definitions Tier Definitions Tier 1 2.7% @ 55 Tier 1 3.0% @ 50 Tier 2 2% @ 60 Tier 2 3% @ 55 Tier 3 2% @ 62 Tier 3 2.7% @ 57 * Excludes Police Trainees Safety Plans Employee Group Employee CountEmployee CountEmployee Group Miscellaneous Plans California Public Employees’ Retirement System Actuarial Office P.O. Box 942701 Sacramento, CA 94229-2701 TTY: (916) 795-3240 (888) 225-7377 phone • (916) 795-2744 fax www.calpers.ca.gov July 2018 Safety Plan of the City of Palo Alto (CalPERS ID: 6373437857) Annual Valuation Report as of June 30, 2017 Dear Employer, As an attachment to this letter, you will find a copy of the June 30, 2017 actuarial valuation report of your pension plan. Your 2017 actuarial valuation report contains important actuarial information about your pension plan at CalPERS. Your CalPERS staff actuary, whose signature appears in the “Actuarial Certification” section on page 1, is available to discuss the report with you after August 1, 2018. Required Contributions The exhibit below displays the minimum required employer contributions and the Employee PEPRA Rate for Fiscal Year 2019-20 along with an estimate of the required contribution for Fiscal Year 2020-21. Member contributions other than cost sharing (whether paid by the employer or the employee) are in addition to the results shown below. The required employer contributions in this report do not reflect any cost sharing arrangement you may have with your employees. Fiscal Year Employer Normal Cost Rate Employer Amortization of Unfunded Accrued Liability Employee PEPRA Rate 2019-20 20.194% $10,019,332 10.75% Projected Results 2020-21 21.4% $11,182,000 TBD The actual investment return for Fiscal Year 2017-18 was not known at the time this report was prepared. The projections above assume the investment return for that year would be 7.25 percent. If the actual investment return for Fiscal Year 2017-18 differs from 7.25 percent, the actual contribution requirements for the projected years will differ from those shown above. Moreover, the projected results for Fiscal Year 2020-21 assume that there are no future Plan changes, no further changes in assumptions other than those recently approved and no liability gains or losses. Such changes can have a significant impact on required contributions. Since they cannot be predicted in advance, the projected employer results shown above are estimates. The actual required employer contributions for Fiscal Year 2020-21 will be provided in next year’s report. For additional details regarding the assumptions and methods used for these projections please refer to the “Projected Employer Contributions” in the “Highlights and Executive Summary” section. The required contributions shown above include a Normal Cost component expressed as a percentage of payroll and a payment toward Unfunded Accrued Liability expressed as a dollar amount. For illustrative total con tribution requirements expressed as percentages of payroll, please see pages 4 and 5 of the report. The “Risk Analysis” section of the valuation report starting on page 22 also contains estimated employer contributions in future years under a variety of investment return scenarios. ATTACHMENT B Safety Plan of the City of Palo Alto (CalPERS ID: 6373437857) Annual Valuation Report as of June 30, 2017 Page 2 Changes since the Prior Year’s Valuation At its December 2016 meeting, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June 30, 2016 actuarial valuation. The minimum employer contributions for Fiscal Year 2019-20 determined in this valuation were calculated using a discount rate of 7.25 percent. The projected employer contributions on Page 5 are calculated under the assumption that the discount rate will be lowered to 7.00 percent next year, as adopted by the Board. On December 19, 2017, the CalPERS Board of Administration adopted new actuarial assumptions based on the recommendations in the December 2017 CalPERS Experience Study and Review of Actuarial Assumptions. This study reviewed the retirement rates, termination rates, mortality rates, rates of salary increases and inflation assumption for Public Agencies. These new assumptions are incorporated in your actuarial valuations and will impact the required contribution for FY 2019-20. In addition, the Board adopted a new asset portfolio as part of its Asset Liability Management. The new asset mix supports a 7.00 percent discount rate. The reduction of the inflation assumption will be implemented in two steps in conjunction with the decreases in the discount rate. For the June 30, 2017 valuation an inflation rate of 2.625 percent will be used and a rate of 2.50 percent will be used in the following valuation. The CalPERS Board of Administration has adopted a new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5 -year ramp- up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These changes will apply only to new UAL bases established on or after June 30, 2019. For inactive employers the new amortization policy imposes a maximum amortization period of 15 years for all unfunded accrued liabilities effective June 30, 2017. Furthermore, the plan actuary has the ability to shorten the amortization period on any valuation date based on the life expectancy of plan members and projected cash flow needs to the plan. The impact of this has been reflected in the current valuation results. Beginning with Fiscal Year 2017-18 CalPERS began collecting employer contributions toward the plan’s unfunded liability as dollar amounts instead of the prior method of a contribution rate. This change addressed potential funding issues that could arise from a declining payroll or reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to the underfunding of the plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as a percentage of payroll, the reports include such results in the contribution projection on page 5. These results are provided for information purposes only. Contributions toward the unfunded liability will continue to be collected as dollar amounts. The CalPERS Board of Administration adopted a Risk Mitigation Policy which is designed to reduce funding risk over time. This Policy has been temporarily suspended during the period over which the discount rate is being lowered. More details on the Risk Mitigation Policy can be found on our website. Besides the above noted changes, there may also be changes specific to the plan such as contract amendments and funding changes. Further descriptions of general changes are included in the “Highlights and Executive Summary” section and in Appendix A, “Actuarial Methods and Assumptions.” The effects of the changes on the required contributions are included in the “Reconciliation of Required Employer Contributions” section. We understand that you might have some questions about these results. While we are very interested in discussing these results with your agency, in the interest of allowing us to give every public agency their results, we ask that you wait until after August 1, 2018 to contact us with actuarial questions. If you have other questions, you may call the Customer Contact Center at (888)-CalPERS or (888-225-7377). Sincerely, SCOTT TERANDO Chief Actuary Actuarial Valuation as of June 30, 2017 for the Safety Plan of the City of Palo Alto (CalPERS ID: 6373437857) (Rate Plan ID: 5080) Required Contributions for Fiscal Year July 1, 2019 – June 30, 2020 Table of Contents Actuarial Certification 1 Highlights and Executive Summary Introduction 3 Purpose of the Report 3 Required Contributions 4 Plan’s Funded Status 5 Projected Employer Contributions 5 Cost 6 Changes Since the Prior Year’s Valuation 7 Subsequent Events 7 Assets Reconciliation of the Market Value of Assets 10 Asset Allocation 11 CalPERS History of Investment Returns 12 Liabilities and Contributions Development of Accrued and Unfunded Liabilities 14 (Gain) / Loss Analysis 06/30/16 - 06/30/17 15 Schedule of Amortization Bases 16 Amortization Schedule and Alternatives 17 Reconciliation of Required Employer Contributions 19 Employer Contribution History 20 Funding History 20 Risk Analysis Analysis of Future Investment Return Scenarios 22 Analysis of Discount Rate Sensitivity 23 Volatility Ratios 24 Hypothetical Termination Liability 25 Plan’s Major Benefit Provisions Plan’s Major Benefit Options 27 Appendix A – Actuarial Methods and Assumptions Actuarial Data A-1 Actuarial Methods A-1 Actuarial Assumptions A-4 Miscellaneous A-22 Appendix B – Principal Plan Provisions B-1 Appendix C – Participant Data Summary of Valuation Data C-1 Active Members C-2 Transferred and Terminated Members C-3 Retired Members and Beneficiaries C-4 Appendix D – Normal Cost Information by Group Normal Cost by Benefit Group D-1 PEPRA Member Contribution Rates D-2 Appendix E – Glossary of Actuarial Terms E-1 (CY) FIN PROCESS CONTROL ID: 516104 (PY) FIN PROCESS CONTROL ID: 496858 REPORT ID: 111746 CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 1 Actuarial Certification To the best of our knowledge, this report is complete and accurate and contains sufficient information to disclose, fully and fairly, the funded condition of the Safety Plan of the City of Palo Alto. This valuation is based on the member and financial data as of June 30, 2017 provided by the various CalPERS databases and the benefits under this plan with CalPERS as of the date this report was produced. It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles, in accordance with standards of practice prescribed by the Actuarial Standards Board, and that the assumption s and methods are internally consistent and reasonable for this plan, as prescribed by the CalPERS Board of Administration according to provisions set forth in the California Public Employees’ Retirement Law. The undersigned is an actuary for CalPERS, a member of the American Academy of Actuaries and the Society of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. DAVID CLEMENT, ASA, MAAA, EA Senior Pension Actuary, CalPERS Highlights and Executive Summary • Introduction • Purpose of the Report • Required Contributions • Plan’s Funded Status • Projected Employer Contributions • Cost • Changes Since the Prior Year’s Valuation • Subsequent Events CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 3 Introduction This report presents the results of the June 30, 2017 actuarial valuation of the Safety Plan of the City of Palo Alto of the California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the minimum required employer contributions for Fiscal Year 2019-20. Purpose of the Report The actuarial valuation was prepared by the CalPERS Actuarial Office using data as of June 30, 2017. The purpose of the report is to: • Set forth the assets and accrued liabilities of this plan as of June 30, 2017; • Determine the minimum required employer contributions for the fiscal year July 1, 2019 through June 30, 2020; • Provide actuarial information as of June 30, 2017 to the CalPERS Board of Administration and other interested parties. The pension funding information presented in this report should not be used in financial reports subject to Governmental Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit Pension Plan. A separate accounting valuation report for such purposes is available from CalPERS and details for ordering are available on our website. The measurements shown in this actuarial valuation may not be applicable for other purposes. The employer should contact their actuary before disseminating any portion of this report for any reason that is not explicitly described above. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; changes in actuarial policies; and changes in plan provisions or applicable law. California Actuarial Advisory Panel Recommendations This report includes all the basic disclosure elements as described in the Model Disclosure Elements for Actuarial Valuation Reports recommended in 2011 by the California Actuarial Advisory Panel (CAAP), with the exception of including the original base amounts of the various components of the unfunded liability in the Schedule of Amortization Bases shown on page 16. Additionally, this report includes the following “Enhanced Risk Disclosures” also recommended by the CAAP in the Model Disclosure Elements document: • A “Deterministic Stress Test,” projecting future results under different investment income scenarios • A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 6.0 percent, 7.0 percent and 8.0 percent. CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 4 Required Contributions Fiscal Year Required Employer Contribution 2019-20 Employer Normal Cost Rate 20.194% Plus, Either 1) Monthly Employer Dollar UAL Payment $ 834,944 Or 2) Annual UAL Prepayment Option $ 9,674,758 Required PEPRA Member Contribution Rate 10.75% The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate (expressed as a percentage of payroll) plus the Employer Unfunded Accrued Liability (UAL) Contribution Amount (billed monthly in dollars). Only the UAL portion of the employer contribution can be prepaid (which must be received in full no later than July 31). Plan Normal Cost contributions will be made as part of the payroll reporting process. If there is contractual cost sharing or other change, this amount will change. In accordance with Sections 20537 and 20572 of the Public Employees’ Retirement Law, if a contracting agency fails to remit the required contributions when due, interest and penalties may apply. For additional detail regarding the determination of the required contribution for PEPRA members, see Appendix D. Required member contributions for Classic members can be found in Appendix B. Fiscal Year Fiscal Year 2018-19 2019-20 Normal Cost Contribution as a Percentage of Payroll Total Normal Cost 28.571% 29.465% Employee Contribution1 9.174% 9.271% Employer Normal Cost2 19.397% 20.194% Projected Annual Payroll for Contribution Year $ 23,240,148 $ 25,569,930 Estimated Employer Contributions Based On Projected Payroll Total Normal Cost $ 6,639,943 $ 7,534,179 Employee Contribution1 2,132,051 2,370,588 Employer Normal Cost2 4,507,892 5,163,591 Unfunded Liability Contribution 8,421,191 10,019,332 % of Projected Payroll (illustrative only) 36.236% 39.184% Estimated Total Employer Contribution $ 12,929,083 $ 15,182,923 % of Projected Payroll (illustrative only) 55.633% 59.378% 1 For classic members, this is the percentage specified in the Public Employees Retirement Law, net of any reduction from the use of a modified formula or other factors. For PEPRA members, the member contribution rate is based on 50 percent of the normal cost. A development of PEPRA member contribution rates can be found in Appendix D. Employee cost sharing is not shown in this report. 2 The Employer Normal Cost is a blended rate for all benefit groups in the plan. A breakout of normal cost by benefit group is shown in Appendix D. CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 5 Plan’s Funded Status This measure of funded status is an assessment of the need for future employer contributions based on the selected actuarial cost method used to fund the plan. The UAL is the present value of future employer contributions for service that has already been earned and is in addition to future normal cost contributions for active members. For a measure of funded status that is appropriate for assessing the sufficiency of plan assets to cover estimated termination liabilities, please see “Hypothetical Termination Liability” in the “Risk Analysis” section. Projected Employer Contributions The table below shows the required and projected employer contributions (before cost sharing) for the next six fiscal years. Projected results reflect the adopted changes to the discount rate described in Appendix A, “Actuarial Methods and Assumptions.” The projections also assume that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected normal cost percentages in the projections below do not reflect that the normal cost will decline over time as new employees are hired into PEPRA or other lower cost benefit tiers. Required Contribution Projected Future Employer Contributions (Assumes 7.25% Return for Fiscal Year 2017-18) Fiscal Year 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Normal Cost % 20.194% 21.4% 21.4% 21.4% 21.4% 21.4% UAL Payment 10,019,332 11,182,000 12,539,000 13,734,000 14,568,000 15,259,000 Total as a % of Payroll* 59.4% 64.1% 68.0% 71.1% 72.7% 73.7% Projected Payroll 25,569,930 26,209,294 26,930,050 27,670,626 28,431,568 29,213,437 *Illustrative only and based on the projected payroll shown. Changes in the UAL due to actuarial gains or losses as well as changes in actuarial assumptions or methods are amortized using a 5-year ramp up. For more information, please see “Amortization of the Unfunded Actuarial Accrued Liability” under “Actuarial Methods” in Appendix A. This method phases in the impact of changes in UAL over a 5-year period and attempts to minimize employer cost volatility from year to year. As a result of this methodology, dramatic changes in the required employer contributions in any one year are less likely. However, required contributions can change gradually and significantly over the next five years. In years where there is a large increase in UAL the relatively small amortization payments during the ramp up period could result in a funded ratio that is projected to decrease initially while the contribution impact of the increase in the UAL is phased in. Due to the adopted change in the discount rate for the next valuation in combination with the 5-year phase- in ramp, the increases in the required contributions are expected to continue for six years from Fiscal Year 2019-20 through Fiscal Year 2024-25. For projected contributions under alternate investment return scenarios, please see the “Analysis of Future Investment Return Scenarios” in the “Risk Analysis” section. June 30, 2016 June 30, 2017 1. Present Value of Projected Benefits $ 448,048,891 $ 483,613,941 2. Entry Age Normal Accrued Liability 392,911,774 422,062,152 3. Market Value of Assets (MVA) $ 249,886,581 $ 267,871,162 4. Unfunded Accrued Liability (UAL) [(2) – (3)] $ 143,025,193 $ 154,190,990 5. Funded Ratio [(3) / (2)] 63.6% 63.5% CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 6 Cost Actuarial Cost Estimates in General What is the cost of the pension plan? Contributions to fund the pension plan are comprised of two components: • The Normal Cost, expressed as a percentage of total active payroll. • The Amortization of the Unfunded Accrued Liability (UAL), expressed as a dollar amount. For fiscal years prior to FY 2017-18, the Amortizations of UAL component was expressed as percentage of total active payroll. Starting with FY 2017-18, the Amortization of UAL component was expressed as a dollar amount and invoiced on a monthly basis. There continues to be an option to prepay this amount during July of each fiscal year. The Normal Cost component will continue to be expressed as a percentage of active payroll with employer and employee contributions payable as part of the regular payroll reporting process. The determination of both components requires complex actuarial calculations. The calculations are based on a set of actuarial assumptions which can be divided into two categories: • Demographic assumptions (which includes mortality rates, retirement rates, employment termination rates and disability rates) • Economic assumptions (which includes future investment earnings, inflation, salary growth rates) These assumptions reflect CalPERS best estimate of the future experience of the plan an d are long term in nature. We recognize that all the assumptions will not be realized in any given year. For example, the investment earnings at CalPERS have averaged 6.6 percent over the 20 years ending June 30, 2017, yet individual fiscal year returns have ranged from -24.0 percent to +21.7 percent. In addition, CalPERS reviews all the actuarial assumptions on an ongoing basis by conducting in-depth experience studies every four years, with the most recent experience study completed in 2017. CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 7 Changes since the Prior Year’s Valuation Benefits The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation following the effective date of the legislation. Voluntary benefit changes by plan amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the valuation date is prior to the effective date of the amendment. This valuation generally reflects plan changes by amendments effective before the date of the report. Please refer to the “Plan’s Major Benefit Options” and Appendix B for a summary of the plan provisions used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in the “(Gain)/Loss Analysis” and the effect on the employer contribution is shown in the “Reconciliation of Required Employer Contributions.” It should be noted that no change in liability or contribution is shown for any plan changes which were already included in the prior year’s valuation. Actuarial Methods and Assumptions On December 21, 2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June 30, 2016 actuarial valuation. The minimum employer contribution for Fiscal Year 2019-20 determined in this valuation was calculated using a discount rate of 7.25 percent. The projected employer contributions on Page 5 are calculated assuming that the discount rate will be lowered to 7.00 percent next year as adopted by the Board. The decision to reduce the discount rate was primarily based on reduced capital market assumptions provided by external investment consultants and CalPERS investment staff. The specific decision adopted by the Board reflected recommendations from CalPERS staff and additional input from employer and employee stakeholder groups. Based on the investment allocation adopted by the Board and capital market assumptions, the reduced discount rate assumption provides a more realistic assumption for the long-term investment return of the fund. On December 19, 2017, the CalPERS Board of Administration adopted new actuarial assumptions based on the recommendations in the December 2017 CalPERS Experience Study and Review of Actuarial Assumptions. This study reviewed the retirement rates, termination rates, mortality rates, rates of salary increases and inflation assumption for Public Agencies. These new assumptions are incorporated in this actuarial valuation and will impact the required contribution for FY 2019-20. In addition, the Board adopted a new asset portfolio as part of its Asset Liability Management. The new asset mix supports a 7.00 percent discount rate. The reduction of the inflation assumption will be implemented in two steps in conjunction with the decreases in the discount rate. For the June 30, 2017 valuation an inflation rate of 2.625 percent will be used and a rate of 2.50 percent will be used in the following valuation. Notwithstanding the Board’s decision to phase into a 7.0 percent discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this discount rate schedule. Subsequent Events The CalPERS Board of Administration has adopted a new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which ac tuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These changes will apply only to new UAL bases established on or after June 30, 2019. For inactive employers the new amortization policy imposes a maximum amortization period of 15 years for all unfunded accrued liabilities effective June 30, 2017. Furthermore, the plan actuary has the ability to shorten the amortization period on any valuation date based on the life expectancy of plan members and projected cash flow needs to the plan. The impact of this has been reflected in the current valuation results. CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 8 The contribution requirements determined in this actuarial valuation report are based on demographic and financial information as of June 30, 2017. Changes in the value of assets subsequent to that date are not reflected. Investment returns below the assumed rate of return will increase the retired contribution, while investment returns above the assumed rate of return will decrease the retired contribution. This actuarial valuation report reflects statutory changes, regulatory changes and CalPERS Board actions through January 2018. Any subsequent changes or actions are not reflected. Assets • Reconciliation of the Market Value of Assets • Asset Allocation • CalPERS History of Investment Returns CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 10 Reconciliation of the Market Value of Assets 1. Market Value of Assets as of 6/30/16 including Receivables $ 249,886,581 2. Change in Receivables for Service Buybacks (77,354) 3. Employer Contributions 10,220,173 4. Employee Contributions 2,219,751 5. Benefit Payments to Retirees and Beneficiaries (22,412,609) 6. Refunds 0 7. Lump Sum Payments 0 8. Transfers and Miscellaneous Adjustments 302,380 9. Net Investment Return 27,732,240 10. Market Value of Assets as of 6/30/17 including Receivables $ 267,871,162 CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 11 Asset Allocation CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and ranges, and manages those asset class allocations within their policy ranges. CalPERS Investment Belief No. 6 recognizes that strategic asset allocation is the dominant determinant of portfolio risk and return. On December 19, 2017, the CalPERS Board of Administration adopted changes to the current asset allocation as shown in the Policy Target Allocation below expressed as a percentage of total assets. The asset allocation and market value of assets shown below reflect the values of the Public Employees’ Retirement Fund (PERF) in its entirety as of June 30, 2017. The assets for City of Palo Alto Safety Plan are part of the PERF and are invested accordingly. (A) Asset Class (B) Market Value ($ Billion) (C) Policy Target Allocation Public Equity 156.2 50.0% Private Equity 25.9 8.0% Global Fixed Income 62.9 28.0% Liquidity 15.5 1.0% Real Assets 36.3 13.0% Inflation Sensitive Assets 25.3 0.0% Other 1.6 0.0% Total Fund $323.7 100.0% Public Equity 48.3% Private Equity 8.0% Global Fixed Income 19.4% Liquidity 4.8% Real Assets 11.2% Inflation 7.8% Other 0.5% Actual Asset Allocation at 6/30/2017 CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 12 CalPERS History of Investment Returns The following is a chart with the 20-year historical annual returns of the Public Employees Retirement Fund for each fiscal year ending on June 30. Beginning in 2002, the figures are reported as gross of fees. The table below shows historical geometric mean annual returns of the Public Employees Retirement Fund for various time periods ending on June 30, 2017 (figures are reported as gross of fees). The geometric mean rate of return is the average rate per period compounded over multiple periods. It should be recognized that in any given year the rate of return is volatile. The portfolio has an expected volatility of 11.4 percent per year based on the most recent Asset Liability Modelling study. The volatility is a measure of the risk of the portfolio expressed in the standard deviation of the fund’s total return distribution, expressed as a percentage. Consequently, when looking at investment returns, it is more instructive to look at returns over longer time horizons. History of CalPERS Geometric Mean Rates of Return and Volatilities 1 year 5 year 10 year 20 year 30 year Geometric Return 11.2% 8.8% 4.3% 6.6% 8.2% Volatility – 7.3% 13.4% 11.5% 10.1% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 19 . 5 % 12 . 5 % 10 . 5 % -7.2 % -6.1 % 3.7 % 16 . 6 % 12 . 3 % 11 . 8 % 19 . 1 % -5.1 % -24 . 0 % 13 . 3 % 21 . 7 % 0.2 % 13 . 2 % 17 . 7 % 2.4 % 0.6 % 11 . 2 % Liabilities and Contributions • Development of Accrued and Unfunded Liabilities • (Gain) / Loss Analysis 06/30/16 - 06/30/17 • Schedule of Amortization Bases • Amortization Schedule and Alternatives • Reconciliation of Required Employer Contributions • Employer Contribution History • Funding History CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 14 Development of Accrued and Unfunded Liabilities June 30, 2016 June 30, 2017 1. Present Value of Projected Benefits a) Active Members $ 151,548,026 169,749,504 b) Transferred Members 7,805,314 7,449,818 c) Terminated Members 2,453,933 3,670,519 d) Members and Beneficiaries Receiving Payments 286,241,618 302,744,100 e) Total $ 448,048,891 483,613,941 2. Present Value of Future Employer Normal Costs $ 36,656,902 41,143,658 3. Present Value of Future Employee Contributions $ 18,480,215 20,408,131 4. Entry Age Normal Accrued Liability a) Active Members [(1a) - (2) - (3)] $ 96,410,909 108,197,715 b) Transferred Members (1b) 7,805,314 7,449,818 c) Terminated Members (1c) 2,453,933 3,670,519 d) Members and Beneficiaries Receiving Payments (1d) 286,241,618 302,744,100 e) Total $ 392,911,774 422,062,152 5. Market Value of Assets (MVA) $ 249,886,581 267,871,162 6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $ 143,025,193 154,190,990 7. Funded Ratio [(5) / (4e)] 63.6% 63.5% CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 15 (Gain)/Loss Analysis 6/30/16 – 6/30/17 To calculate the cost requirements of the plan, assumptions are made about future events that affect the amount and timing of benefits to be paid and assets to be accumulated. Each year, actual experience is compared to the expected experience based on the actuarial assumptions. This results in actuarial gains or losses, as shown below. 1. Total (Gain)/Loss for the Year a) Unfunded Accrued Liability (UAL) as of 6/30/16 $ 143,025,193 b) Expected Payment on the UAL during 2016-17 5,695,140 c) Interest through 6/30/17 [.07375 x (1a) - ((1.07375)½ - 1) x (1b)] 10,341,835 d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 147,671,888 e) Change due to plan changes 0 f) Change due to assumption change 7,445,607 g) Expected UAL after all other changes [(1d) + (1e) + (1f)] 155,117,495 h) Actual UAL as of 6/30/17 154,190,990 i) Total (Gain)/Loss for 2016-17 [(1h) - (1g)] $ (926,505) 2. Contribution (Gain)/Loss for the Year a) Expected Contribution (Employer and Employee) $ 11,960,714 b) Interest on Expected Contributions 433,206 c) Actual Contributions 12,439,924 d) Interest on Actual Contributions 450,563 e) Expected Contributions with Interest [(2a) + (2b)] 12,393,920 f) Actual Contributions with Interest [(2c) + (2d)] 12,890,487 g) Contribution (Gain)/Loss [(2e) - (2f)] $ (496,567) 3. Asset (Gain)/Loss for the Year a) Market Value of Assets as of 6/30/16 $ 249,886,581 b) Prior Fiscal Year Receivables (645,454) c) Current Fiscal Year Receivables 568,100 d) Contributions Received 12,439,924 e) Benefits and Refunds Paid (22,412,609) f) Transfers and Miscellaneous Adjustments 302,380 g) Expected Int. [.07375 x (3a + 3b) + ((1.07375)½ - 1) x ((3d) + (3e) + (3f))] 18,031,283 h) Expected Assets as of 6/30/17 [(3a) + (3b) + (3c) + (3d) + (3e) + (3f) + (3g)] 258,170,205 i) Market Value of Assets as of 6/30/17 267,871,162 j) Asset (Gain)/Loss [(3h) - (3i)] $ (9,700,957) 4. Liability (Gain)/Loss for the Year a) Total (Gain)/Loss (1i) $ (926,505) b) Contribution (Gain)/Loss (2g) (496,567) c) Asset (Gain)/Loss (3j) (9,700,957) d) Liability (Gain)/Loss [(4a) - (4b) - (4c)] $ 9,271,019 CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 16 Schedule of Amortization Bases There is a two-year lag between the valuation date and the start of the contribution fiscal year. • The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2017. • The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuation date: Fiscal Year 2019-20. This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their required employer contribution well in advance of the start of the fiscal year. The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first day of the fiscal year for which the contribution is being determined. The UAL is r olled forward each year by subtracting the expected payment on the UAL for the fiscal year and adjusting for interest. The expected payment on the UAL for a fiscal year is equal to the Expected Employer C ontribution for the fiscal year minus the Expected Normal Cost for the year. The Employer Contribution for the first fiscal year is determined by the actuarial valuation two yea rs ago and the contribution for the second year is from the actuarial valuation one year ago. Additional discretionary payments are reflected in the Expected Payments column in the fiscal year they were made by the agency. Reason for Base Date Established Ramp Up/Down 2019-20 Amorti- zation Period Balance 6/30/17 Expected Payment 2017-18 Balance 6/30/18 Expected Payment 2018-19 Balance 6/30/19 Scheduled Payment for 2019-20 FRESH START 06/30/04 No Ramp 17 $(924,403) $(72,216) $(916,634) $(73,518) $(906,954) $(75,515) BENEFIT CHANGE 06/30/05 No Ramp 7 $133,824 $18,204 $124,674 $18,618 $114,432 $19,116 ASSUMPTION CHANGE 06/30/09 No Ramp 12 $7,200,737 $694,645 $7,003,405 $708,757 $6,777,152 $727,891 SPECIAL (GAIN)/LOSS 06/30/09 No Ramp 22 $8,949,949 $606,099 $8,971,135 $615,760 $8,983,851 $632,560 SPECIAL (GAIN)/LOSS 06/30/10 No Ramp 23 $4,266,823 $282,353 $4,283,759 $286,741 $4,297,378 $294,570 ASSUMPTION CHANGE 06/30/11 No Ramp 14 $6,092,725 $534,322 $5,981,095 $544,679 $5,850,647 $559,422 SPECIAL (GAIN)/LOSS 06/30/11 No Ramp 24 $2,420,583 $156,749 $2,433,743 $159,124 $2,445,398 $163,472 PAYMENT (GAIN)/LOSS 06/30/12 No Ramp 25 $1,563,724 $99,225 $1,574,335 $100,690 $1,584,198 $103,444 (GAIN)/LOSS 06/30/12 No Ramp 25 $44,756,220 $2,839,977 $45,059,921 $2,881,919 $45,342,205 $2,960,732 (GAIN)/LOSS 06/30/13 100% 26 $43,383,429 $1,751,805 $44,714,530 $2,370,921 $45,500,971 $3,044,761 ASSUMPTION CHANGE 06/30/14 80% 17 $20,791,111 $774,001 $21,496,899 $1,182,639 $21,830,665 $1,619,749 (GAIN)/LOSS 06/30/14 80% 27 $(27,875,123) $(762,530) $(29,106,381) $(1,160,282) $(30,014,987) $(1,589,471) (GAIN)/LOSS 06/30/15 60% 28 $14,576,105 $205,251 $15,420,311 $416,097 $16,107,367 $641,301 ASSUMPTION CHANGE 06/30/16 40% 19 $6,190,769 $(177,347) $6,823,263 $128,758 $7,184,606 $264,566 (GAIN)/LOSS 06/30/16 40% 29 $16,145,414 $0 $17,315,957 $240,288 $18,322,517 $493,818 ASSUMPTION CHANGE 06/30/17 20% 20 $7,445,607 $(299,593) $8,295,677 $(308,206) $9,216,297 $173,688 (GAIN)/LOSS 06/30/17 20% 30 $(926,505) $0 $(993,677) $0 $(1,065,719) $(14,772) TOTAL $154,190,990 $6,650,945 $158,482,013 $8,112,985 $161,570,024 $10,019,332 CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 20 Page 17 Amortization Schedule and Alternatives The amortization schedule on the previous page shows the minimum contributions required according to CalPERS amortization policy. There has been considerable interest from many agencies in paying off these unfunded accrued liabilities sooner and the possible savings in doing so. As a result, we have provided alternate amortization schedules to help analyze the current amortization schedule and illustrate the advantages of accelerating unfunded liability payments. Shown on the following page are future year amortization payments based on 1) the current amortization schedule reflecting the individual bases and remaining periods shown on the previous page, and 2) alternate “fresh start” amortization schedules using two sample periods that would both result in interest savings relative to the current amortization schedule. Note that the payments under each alternate scenario increase by 2.875 percent per year. The schedules do not reflect the impact of adopted discount rate changes that will become effective beyond June 30, 2017. Therefore, future amortization payments displayed in the Current Amortization Schedule on the following page will not match projected amortization payments shown in connection with Projected Employer Contributions provided elsewhere in this report. The Current Amortization Schedule typically contains individual bases that are both positive and negative. Positive bases result from plan changes, assumption changes or plan experience that result in increases to unfunded liability. Negative bases result from plan changes, assumption changes or plan experience that result in decreases to unfunded liability. The combination of positive and negative bases within an amortization schedule can result in unusual or problematic circumstances in future years such as: • A positive total unfunded liability with a negative total payment, • A negative total unfunded liability with a positive total payment, or • Total payments that completely amortize the unfunded liability over a very short period of time In any year where one of the above scenarios occurs, the actuary will consider corrective action such as replacing the existing unfunded liability bases with a single “fresh start” base and amortizing it over a reasonable period. The Current Amortization Schedule on the following page may appear to show that, based on the current amortization bases, one of the above scenarios will occur at some point in the future. It is impossible to know today whether such a scenario will in fact arise since there will be additional bases added to the amortization schedule in each future year. Should such a scenario arise in any future year, the actuary will take appropriate action based on guidelines in the CalPERS amortization policy. CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 18 Amortization Schedule and Alternatives * This schedule does not reflect the impact of adopted discount rate changes that will become effective beyond June 30, 2017. For Projected Employer Contributions, please see Page 5. Alternate Schedules Current Amortization Schedule* 20 Year Amortization 15 Year Amortization Date Balance Payment Balance Payment Balance Payment 6/30/2019 161,570,024 10,019,332 161,570,024 12,075,590 161,570,024 14,691,710 6/30/2020 162,907,673 11,088,666 160,778,179 12,422,763 158,068,885 15,114,096 6/30/2021 163,234,882 12,203,194 159,569,388 12,779,918 153,876,483 15,548,627 6/30/2022 162,431,591 13,139,901 157,903,084 13,147,340 148,930,125 15,995,650 6/30/2023 160,599,993 13,695,669 155,735,465 13,525,326 143,162,212 16,455,524 6/30/2024 158,060,041 14,089,419 153,019,245 13,914,179 136,499,872 16,928,621 6/30/2025 154,928,168 14,494,489 149,703,397 14,314,212 128,864,567 17,415,319 6/30/2026 151,149,737 14,887,892 145,732,870 14,725,746 120,171,669 17,916,009 6/30/2027 146,689,957 15,315,921 141,048,288 15,149,111 110,330,014 18,431,094 6/30/2028 141,463,569 15,756,253 135,585,631 15,584,648 99,241,408 18,960,988 6/30/2029 135,402,252 16,209,247 129,275,883 16,032,707 86,800,112 19,506,117 6/30/2030 128,432,365 16,675,261 122,044,661 16,493,647 72,892,279 20,066,918 6/30/2031 120,474,545 16,131,889 113,811,818 16,967,839 57,395,353 20,643,841 6/30/2032 112,502,512 16,010,332 104,491,013 17,455,665 40,177,429 21,237,352 6/30/2033 104,078,393 15,036,537 93,989,250 17,957,515 21,096,556 21,847,926 6/30/2034 96,052,001 14,646,974 82,206,386 18,473,793 6/30/2035 87,847,135 13,949,223 69,034,597 19,004,915 6/30/2036 79,770,016 13,321,518 54,357,816 19,551,306 6/30/2037 71,757,371 13,194,880 38,051,116 20,113,406 6/30/2038 63,294,954 13,049,947 19,980,062 20,691,667 6/30/2039 54,369,107 13,118,961 6/30/2040 44,724,665 13,496,132 6/30/2041 33,990,397 11,567,990 6/30/2042 24,474,706 10,929,148 6/30/2043 14,930,726 10,080,785 6/30/2044 5,573,384 2,781,269 6/30/2045 3,097,129 1,487,366 6/30/2046 1,781,331 1,425,793 6/30/2047 433,904 449,358 6/30/2048 Totals 348,253,346 320,381,293 270,759,792 Interest Paid 186,683,322 158,811,269 109,189,768 Estimated Savings 27,872,053 77,493,554 CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 19 Reconciliation of Required Employer Contributions Normal Cost (% of Payroll) 1. For Period 7/1/18 – 6/30/19 a) Employer Normal Cost 19.397% b) Employee Contribution 9.174% c) Total Normal Cost 28.571% 2. Changes since the prior year annual valuation a) Effect of changes in demographics results (0.346%) b) Effect of plan changes 0.000% c) Effect of changes in assumptions 1.240% d) Net effect of the changes above [sum of (a) through (c)] 0.894% 3. For Period 7/1/19 – 6/30/20 a) Employer Normal Cost 20.194% b) Employee Contribution 9.271% c) Total Normal Cost 29.465% Employer Normal Cost Change [(3a) – (1a)] 0.797% Employee Contribution Change [(3b) – (1b)] 0.097% Unfunded Liability Contribution ($) 1. For Period 7/1/18 – 6/30/19 8,421,191 2. Changes since the prior year annual valuation a) Effect of (gain)/loss during prior year1 (14,772) b) Effect of plan changes 0 c) Effect of changes in assumptions2 173,688 d) Changes to prior year amortization payments3 1,439,225 e) Effect of changes due to Fresh Start 0 f) Effect of elimination of amortization base 0 g) Net effect of the changes above [sum of (a) through (f)] 1,598,141 3. For Period 7/1/19 – 6/30/20 [(1) + (2g)] 10,019,332 1 The unfunded liability contribution for the (gain)/loss during the year prior to the valuation date is 20 percent of the “full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be included in line d) in future years. 2 The unfunded liability contribution for the change in assumptions is 20 percent of the “full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be included in line d) in future years. 3 Includes changes due to 5-year ramp, payroll growth assumption, and re-amortization under new discount rate. The amounts shown for the period 7/1/18 – 6/30/19 may be different if a prepayment of unfunded actuarial liability is made or a plan change became effective after the prior year’s actuarial valuation was performed. CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 20 Employer Contribution History The table below provides a recent history of the required employer contributions for the plan, as determined by the annual actuarial valuation. It does not account for prepayments or benefit changes made during a fiscal year. Fiscal Year Employer Normal Cost Unfunded Rate Unfunded Liability Payment ($) 2013 - 14 18.658% 14.786% N/A 2014 - 15 18.874% 20.654% N/A 2015 - 16 18.627% 23.305% N/A 2016 - 17 18.977% 26.449% N/A 2017 - 18 18.900% N/A 7,127,885 2018 - 19 19.397% N/A 8,421,191 2019 - 20 20.194% N/A 10,019,332 Funding History The table below shows the recent history of the actuarial accrued liability, the market value of assets, the funded ratio and the annual covered payroll. Valuation Date Accrued Liability Market Value of Assets (MVA) Unfunded Liability Funded Ratio Annual Covered Payroll 06/30/11 $ 313,183,690 $ 225,015,089 $ 88,168,601 71.8% $ 22,774,462 06/30/12 327,608,300 215,605,457 112,002,843 65.8% 20,919,846 06/30/13 338,666,499 233,417,363 105,249,136 68.9% 21,258,082 06/30/14 367,478,634 264,145,000 103,333,634 71.9% 21,274,021 06/30/15 377,934,524 259,169,591 118,764,933 68.6% 21,186,275 06/30/16 392,911,774 249,886,581 143,025,193 63.6% 21,268,028 06/30/17 422,062,152 267,871,162 154,190,990 63.5% 23,485,510 Risk Analysis • Analysis of Future Investment Return Scenarios • Analysis of Discount Rate Sensitivity • Volatility Ratios • Hypothetical Termination Liability CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 22 Analysis of Future Investment Return Scenarios Analysis was performed to determine the effects of various future investment returns on required employer contributions. The projections below provide a range of results based on five investment return scenarios assumed to occur during the next four fiscal years (2017-18, 2018-19, 2019-20 and 2020-21). The projections also assume that all other actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur. Each of the five investment return scenarios assumes a return of 7.25 percent for fiscal year 2017-18. For fiscal years 2018-19, 2019-20, and 2020-21 each scenario assumes an alternate fixed annual return. The fixed return assumptions for the five scenarios are 1.0 percent, 4.0 percent, 7.0 percent, 9.0 percent and 12.0 percent. The alternate investment returns were chosen based on stochastic analysis of possible future investment returns over the four-year period ending June 30, 2021. Using the expected returns and volatility of the asset classes in which the funds are invested, we produced five thousand stochastic outcomes for this period based on the recently completed Asset Liability Management process. We then selected annual returns that approximate the 5th, 25th, 50th, 75th, and 95th percentiles for these outcomes. For example, of all the 4-year outcomes generated in the stochastic analysis, approximately 25 percent of them had an average annual return of 4.0 percent or less. Required contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns will average less than 1.0 percent or greater than 12.0 percent over this four -year period, the possibility of a single investment return less than 1.0 percent or greater than 12.0 percent in any given year is much greater. Assumed Annual Return From 2018-19 through 2020-21 Projected Employer Contributions 2020-21 2021-22 2022-23 2023-24 1.0% Normal Cost 21.4% 21.4% 21.4% 21.4% UAL Contribution $11,182,000 $12,796,000 $14,515,000 $16,152,000 4.0% Normal Cost 21.4% 21.4% 21.4% 21.4% UAL Contribution $11,182,000 $12,667,000 $14,128,000 $15,376,000 7.0% Normal Cost 21.4% 21.4% 21.4% 21.4% UAL Contribution $11,182,000 $12,539,000 $13,734,000 $14,568,000 9.0% Normal Cost 21.4% 21.8% 22.2% 22.6% UAL Contribution $11,182,000 $12,438,000 $13,476,000 $14,093,000 12.0% Normal Cost 21.4% 21.8% 22.2% 22.6% UAL Contribution $11,182,000 $12,311,000 $13,074,000 $13,247,000 Given the temporary suspension of the Risk Mitigation Policy during the period over which the discount rate assumption is being phased down to 7.0 percent, the projections above were performed without reflection of any possible impact of this Policy for Fiscal Year 2020-21. The projected normal cost percentages do not reflect that the normal cost will decline over time as new employees are hired into PEPRA or other lower cost benefit tiers. In addition, the projections above do not reflect the recent changes to the amortization policy effective with the June 30, 2019 valuation but the impact on the results above is expected to be minimal. CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 23 Analysis of Discount Rate Sensitivity Shown below are various valuation results as of June 30, 2017 assuming alternate discount rates. Results are shown using the current discount rate of 7.25 percent as well as alternate discount rates of 6.0 percent, 7.0 percent, and 8.0 percent. The alternate rate of 7.0 percent was selected since the Board has adopt ed this rate as the final discount rate at the end of the three-year phase-in of the reduction in this assumption. The rates of 6.0 percent and 8.0 percent were selected since they illustrate the impact of a 1 percent increase or decrease to the 7.0 percent assumption. This analysis shows the potential plan impacts if the PERF were to realize investment returns of 6.0 percent, 7.0 percent, or 8.0 percent over the long-term. This type of analysis gives the reader a sense of the long-term risk to required contributions. For a measure of funded status that is appropriate for assessing the sufficiency of plan assets to cover estimated termination liabilities, please see “Hypothetical Termination Liability” at the end of this section. Sensitivity Analysis As of June 30, 2017 Plan’s Normal Cost Accrued Liability Unfunded Accrued Liability Funded Status 7.25% (current discount rate) 29.465% $422,062,152 $154,190,990 63.5% 6.0% 38.614% $490,191,633 $222,320,471 54.6% 7.0% 30.718% $433,581,990 $165,710,828 61.8% 8.0% 24.673% $386,895,981 $119,024,819 69.2% CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 24 Volatility Ratios The actuarial calculations supplied in this communication are based on various assumptions about long-term demographic and economic behavior. Unless these assumptions (terminations, deaths, disabilities, retirements, salary growth, and investment return) are exactly realized each year, there will be differences on a year-to-year basis. The year-to-year differences between actual experience and the assumptions are called actuarial gains and losses and serve to lower or raise required employer contributions from one year to the next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and downs of investment returns. Asset Volatility Ratio (AVR) Plans that have higher asset-to-payroll ratios experience more volatile employer contributions (as a percentage of payroll) due to investment return. For example, a plan with an asset-to-payroll ratio of 8 may experience twice the contribution volatility due to investment return volatility than a plan with an asset-to- payroll ratio of 4. Shown below is the asset volatility ratio, a measure of the plan’s current volatility. It should be noted that this ratio is a measure of the current situation. It increases over time but generally tends to stabilize as the plan matures. Liability Volatility Ratio (LVR) Plans that have higher liability-to-payroll ratios experience more volatile employer contributions (as a percentage of payroll) due to investment return and changes in liability. For example, a plan with a liability- to-payroll ratio of 8 is expected to have twice the contribution volatility of a plan with a liability-to-payroll ratio of 4. The liability volatility ratio is also included in the table below. It should be noted that this ratio indicates a longer-term potential for contribution volatility. The asset volatility ratio, described above, will tend to move closer to the liability volatility ratio as the plan matures. Since the liability volatility ratio is a long-term measure, it is shown below at the current discount rate (7.25 percent) as well as the discount rate the Board has adopted to determine the contribution requirement in the June 30, 2018 actuarial valuation (7.00 percent). Contribution Volatility As of June 30, 2017 1. Market Value of Assets without Receivables $ 267,303,062 2. Payroll 23,485,510 3. Asset Volatility Ratio (AVR) [(1) / (2)] 11.4 4. Accrued Liability (7.25% discount rate) $ 422,062,152 5. Liability Volatility Ratio (LVR) [(4) / (2)] 18.0 6. Accrued Liability (7.00% discount rate) 433,581,990 7. Projected Liability Volatility Ratio [(6) / (2)] 18.5 CalPERS Actuarial Valuation - June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 25 Hypothetical Termination Liability The hypothetical termination liability is an estimate of the financial position of the plan had the contract with CalPERS been terminated as of June 30, 2017. The plan liability on a termination basis is calculated differently from the plan’s ongoing funding liability. For this hypothetical termination liability calculation, both compensation and service are frozen as of the valuation date and no future pay increases or service accruals are assumed. This measure of funded status is not appropriate for assessing the need for future employer contributions in the case of an ongoing plan, that is, for an employer that continues to provide CalPERS retirement benefits to active employees. A more conservative investment policy and asset allocation strategy was adopted by the CalPERS Board for the Terminated Agency Pool. The Terminated Agency Pool has limited funding sources since no future employer contributions will be made. Therefore, expected benefit payments are secured by risk-free assets and benefit security for members is increased while limiting the funding risk. However, this asset allocation has a lower expected rate of return than the PERF and consequently, a lower discount rate assumption. The lower discount rate for the Terminated Agency Pool results in higher liabilities for terminated plans. The effective termination discount rate will depend on actual market rates of return for risk -free securities on the date of termination. As market discount rates are variable the table below shows a range for the hypothetical termination liability based on the lowest and highest interest rates observed during an approximate 2-year period centered around the valuation date. Market Value of Assets (MVA) Hypothetical Termination Liability1,2 @ 1.75% Funded Status Unfunded Termination Liability @ 1.75% Hypothetical Termination Liability1,2 @ 3.00% Funded Status Unfunded Termination Liability @ 3.00% $267,871,162 $810,373,628 33.1% $542,502,466 $727,113,618 36.8% $459,242,456 1 The hypothetical liabilities calculated above include a 5 percent contingency load in accordance with Board policy. Other actuarial assumptions can be found in Appendix A. 2 The current discount rate assumption used for termination valuations is a weighted average of the 10-year and 30-year U.S. Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the table are based on 20-year Treasury bonds, rounded to the nearest quarter percentage point, which is a good proxy for most plans. The 20-year Treasury yield was 2.61 percent on June 30, 2017, and was 2.83 percent on January 31, 2018. In order to terminate the plan, you must first contact our Retirement Services Contract Unit to initiate a Resolution of Intent to Terminate. The completed Resolution will allow the plan actuary to give you a preliminary termination valuation with a more up-to-date estimate of the plan liabilities. CalPERS advises you to consult with the plan actuary before beginning this process. Plan’s Major Benefit Provisions CalPERS Actuarial Valuation – June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Plan’s Major Benefit Options Shown below is a summary of the major optional benefits for which your agency has contracted for this plan. A description of principal standard and optional plan provisions is in Appendix B of this report. Contract Package Active Police Active Fire Active Fire Active Police Active Fire Active Police Active Fire Benefit Provision Benefit Formula 3.0% @ 50 3.0% @ 50 3.0% @ 50 2.7% @ 57 3.0% @ 55 3.0% @ 55 2.7% @ 57 Social Security Coverage No No No No No No No Full/Modified Full Full Full Full Full Full Full Employee Contribution Rate 9.00% 9.00% 9.00% 10.75% 9.00% 9.00% 10.75% Final Average Compensation Period One Year One Year One Year Three Year Three Year Three Year Three Year Sick Leave Credit No No No No No No No Non-Industrial Disability Standard Standard Standard Standard Standard Standard Standard Industrial Disability Yes Yes Yes Yes Yes Yes Yes Pre-Retirement Death Benefits Optional Settlement 2 No Yes Yes No Yes No Yes 1959 Survivor Benefit Level Level 1 Level 1 Level 1 Level 1 Level 1 Level 1 Level 1 Special Yes Yes Yes Yes Yes Yes Yes Alternate (firefighters) No No No No No No No Post-Retirement Death Benefits Lump Sum $500 $500 $500 $500 $500 $500 $500 Survivor Allowance (PRSA) No No No No No No No COLA 2% 2% 2% 2% 2% 2% 2% Page 27 CalPERS Actuarial Valuation – June 30, 2017 Safety Plan of the City of Palo Alto CalPERS ID: 6373437857 Plan’s Major Benefit Options Shown below is a summary of the major optional benefits for which your agency has contracted. A description of principal standard and optional plan provisions is in the following section of this Appendix. Contract Package Receiving Fire Receiving Police Benefit Provision Benefit Formula Social Security Coverage Full/Modified Employee Contribution Rate Final Average Compensation Period Sick Leave Credit Non-Industrial Disability Industrial Disability Pre-Retirement Death Benefits Optional Settlement 2 1959 Survivor Benefit Level Special Alternate (firefighters) Post-Retirement Death Benefits Lump Sum $500 $500 Survivor Allowance (PRSA) No No COLA 2% 2% Page 28 Appendices • Appendix A – Actuarial Methods and Assumptions • Appendix B – Principal Plan Provisions • Appendix C – Participant Data • Appendix D – Normal Cost by Benefit Group and PEPRA Member Contribution Rates • Appendix E – Glossary of Actuarial Terms Appendix A Actuarial Methods and Assumptions • Actuarial Data • Actuarial Methods • Actuarial Assumptions • Miscellaneous CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-1 Actuarial Data As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from the various CalPERS databases. We have reviewed the valuation data and believe that it is reasonable and appropriate in aggregate. We are unaware of any potential data issues that would have a material effect on the results of this valuation, except that data does not always contain the latest salary information for former members now in reciprocal systems and does not recognize the potential for unusually large salary deviation in certain cases such as elected officials. Therefore, salary information in these cases may not be accurate. These situations are relatively infrequent, however, and when they do occur, they generally do not have a material impact on the required employer contributions. Actuarial Methods Actuarial Cost Method The actuarial cost method used is the Entry Age Normal Cost Method. Under this method, projected benefits are determined for all members and the associated liabilities are spread in a manner that produces level annual cost as a percentage of pay in each year from the member’s entry age to their assumed retirement age on the valuation date. The cost allocated to the current fiscal year is called the normal cost. The actuarial accrued liability for active members is then calculated as the portion of the total cost of the plan allocated to prior years. The actuarial accrued liability for members currently receiving benefits and for members entitled to deferred benefits is equal to the present value of the benefits expected to be paid. No normal costs are applicable for these participants. Amortization of Unfunded Actuarial Accrued Liability The excess of the total actuarial accrued liability over the market value of plan assets is called the unfunded actuarial accrued liability (UAL). Funding requirements are determined by adding the normal cost and an amortization payment toward the unfunded liability. The unfunded liability is amortized as a “level percent of pay”. Commencing with the June 30, 2013 valuation, all new gains or losses are amortized over a fixed 30-year period with a 5-year ramp up at the beginning and a 5-year ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden handshakes) are amortized over a 20-year period with no ramp. Changes in actuarial assumptions or changes in actuarial methodology are amortized over a 20-year period with a 5-year ramp up at the beginning and a 5-year ramp down at the end of the amortization period. Changes in unfunded accrued liability due to a Golden Handshake will be amortized over a period of five years. A summary of the current policy is provided in the table below: Driver Source (Gain)/Loss Assumption/Method Change Benefit Change Golden Handshake Investment Non- investment Amortization Period 30 Years 30 Years 20 Years 20 Years 5 Years Escalation Rate - Active Plans - Inactive Plans 2.875% 0% 2.875% 0% 2.875% 0% 2.875% 0% 2.875% 0% Ramp Up 5 5 5 0 0 Ramp Down 5 5 5 0 0 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-2 The 5-year ramp up means that the payments in the first four years of the amortization period are 20 percent, 40 percent, 60 percent and 80 percent of the “full” payment which begins in year five. The 5-year ramp down means that the reverse is true in the final four years of the amortization period. Exceptions for Inconsistencies: An exception to the amortization rules above is used whenever their application results in inconsistencies. In these cases, a “fresh start” approach is used. This means that the current unfunded actuarial liability is projected and amortized over a set number of years. For example, a fresh start is needed in the following situations: • When a positive payment would be required on a negative unfunded actuarial liability (or conversely a negative payment on a positive unfunded actuarial liability); or • When there are excess assets, rather than an unfunded liability. In this situation, a 30-year fresh start is used. It should be noted that the actuary may determine that a fresh start is necessary under other circumstances. In all cases of a fresh start, the period is set by the actuary at what is deemed appropriate; however, the period will not be greater than 30 years. Exceptions for Inactive Plans: The following exceptions apply to plans classified as Inactive. These plans have no active members and no expectation to have active members in the future. • Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay” basis. For amortization layers, which utilize a ramp up and ramp down, the “ultimate” payment is constant. • Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods that are deemed too long given the duration of the liability. The specific demographics of the plan will be used to determine if shorter periods may be more appropriate. Asset Valuation Method It is the policy of the CalPERS Board of Administration to use professionally accepted amortization methods to eliminate a surplus or an unfunded accrued liability in a manner that maintains benefit security for the members of the System while minimizing substantial variations in required employer contributions. On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the employer contribution for Fiscal Year 2015-16, CalPERS employs a policy that amortizes all gains and losses over a fixed 30-year period. The increase or decrease in the rate is then spread directly over a 5-year period. This method is referred to as “direct rate smoothing.” CalPERS no longer uses an actuarial value of assets and only uses the market value of assets. The direct rate smoothing method is equivalent to a method using a 5-year asset smoothing period with no actuarial value of asset corridor and a 25-year amortization period for gains and losses. PEPRA Normal Cost Rate Methodology Per Government Code Section 7522.30(b) the “normal cost rate” shall mean the annual actuarially determined normal cost for the plan of retirement benefits provided to the new member and shall be established based on actuarial assumptions used to determine the liabilities and costs as part of the annual actuarial valuation. The plan of retirement benefits shall include any elements that would impact the actuarial determination of the normal cost, including, but not limited to, the retirement formula, eligibility and vesting criteria, ancillary benefit provisions, and any automatic cost-of-living adjustments as determined by the public retirement system. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-3 Each non-pooled plan is stable with a sufficiently large demographic representation of active employees. It is preferable to determine normal cost using a large active population ongoing so that this rate remains relatively stable. The total PEPRA normal cost will be calculated using all active members within a non- pooled plan until the number of members covered under the PEPRA formula meets either: 1. 50 percent of the active population, or 2. 25 percent of the active population and 100 or more PEPRA members Once either of the conditions above is met for a non-pooled plan, the total PEPRA normal cost will be based on the active PEPRA population in the plan. Accordingly, the total normal cost will be funded equally between employer and employee based on the demographics of the employees of that employer. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-4 Actuarial Assumptions In 2017, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic asset allocation. In December 2017, the CalPERS Board of Administration adopted relatively modest changes to the asset allocation that reduced the expected volatility of returns. The adopted asset allocation was expected to have a long-term blended return that continued to support a discount rate assumption of 7.00 percent. The Board also approved several changes to the demographic assumptions that more closely aligned with actual experience. These new actuarial assumptions were first used in this, the June 30, 2017 valuation to set the Fiscal Year 2019-20 contribution for public agency employers. On December 21, 2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June 30, 2016 actuarial valuations. The minimum employer contributions for Fiscal Year 2019-20 determined in this valuation were calculated using a discount rate of 7.25 percent. The projected employer contributions on Page 5 are calculated assuming that the discount rate will be lowered to 7.00 percent next year as adopted by the Board. The decision to reduce the discount rate was primarily based on reduced capital market assumptions provided by external investment consultants and CalPERS investment staff. The specific decision adopted by the Board reflected recommendations from CalPERS staff and additional input from employer and employee stakeholder groups. Based on the investment allocation adopted by the Board and capital market assumptions, the reduced discount rate schedule provides a more realistic assumption for the long-term investment return of the fund. Notwithstanding the Board’s decision to phase into a 7.0 percent discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this discount rate schedule. For more details and additional rationale for the selection of the actuarial assumptions, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website under: “Forms and Publications”. Click on “View All” and search for Experience Study. All actuarial assumptions (except the discount rates used for the hypothetical termination liability) represent an estimate of future experience rather than observations of the estimates inherent in market data. Economic Assumptions Discount Rate The prescribed discount rate assumption adopted by the Board on December 21, 2016 is 7.25 percent compounded annually (net of investment and administrative expenses) as of 6/30/2017. The Board also prescribed that the assumed discount rate will reduce to 7.0 percent compounded annually (net of expenses) as of 6/30/2018. This change to the discount rate assumption is not reflected in the determination of required contributions determined in this report for Fiscal Year 2019-20. Termination Liability Discount Rate The current discount rate assumption used for termination valuations is a weighted average of the 10-year and 30-year U.S. Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The hypothetical termination liabilities in this report are calculated using an observed range of market interest rates. This range is based on the lowest and highest 20-year Treasury bond observed during an approximate 2-year period centered around the valuation date. The 20-year Treasury bond has a similar duration to most plan liabilities and serves as a good proxy for the termination discount rate. The 20-year Treasury yield was 2.61 percent on June 30, 2017. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-5 Salary Growth Annual increases vary by category, entry age, and duration of service. A sample of assumed increases are shown below. Wage inflation assumption in the valuation year (2.875% for 2017) is added to these factors for total salary growth. Public Agency Miscellaneous Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.0850 0.0775 0.0650 1 0.0690 0.0635 0.0525 2 0.0560 0.0510 0.0410 3 0.0470 0.0425 0.0335 4 0.0400 0.0355 0.0270 5 0.0340 0.0295 0.0215 10 0.0160 0.0135 0.0090 15 0.0120 0.0100 0.0060 20 0.0090 0.0075 0.0045 25 0.0080 0.0065 0.0040 30 0.0080 0.0065 0.0040 Public Agency Fire Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1700 0.1700 0.1700 1 0.1100 0.1100 0.1100 2 0.0700 0.0700 0.0700 3 0.0580 0.0580 0.0580 4 0.0473 0.0473 0.0473 5 0.0372 0.0372 0.0372 10 0.0165 0.0165 0.0165 15 0.0144 0.0144 0.0144 20 0.0126 0.0126 0.0126 25 0.0111 0.0111 0.0111 30 0.0097 0.0097 0.0097 Public Agency Police Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1027 0.1027 0.1027 1 0.0803 0.0803 0.0803 2 0.0628 0.0628 0.0628 3 0.0491 0.0491 0.0491 4 0.0384 0.0384 0.0384 5 0.0300 0.0300 0.0300 10 0.0145 0.0145 0.0145 15 0.0150 0.0150 0.0150 20 0.0155 0.0155 0.0155 25 0.0160 0.0160 0.0160 30 0.0165 0.0165 0.0165 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-6 Salary Growth (continued) Public Agency County Peace Officers Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1320 0.1320 0.1320 1 0.0960 0.0960 0.0960 2 0.0657 0.0657 0.0657 3 0.0525 0.0525 0.0525 4 0.0419 0.0419 0.0419 5 0.0335 0.0335 0.0335 10 0.0170 0.0170 0.0170 15 0.0150 0.0150 0.0150 20 0.0150 0.0150 0.0150 25 0.0175 0.0175 0.0175 30 0.0200 0.0200 0.0200 Schools Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.0428 0.0419 0.0380 1 0.0428 0.0419 0.0380 2 0.0428 0.0419 0.0380 3 0.0354 0.0332 0.0280 4 0.0305 0.0279 0.0224 5 0.0262 0.0234 0.0180 10 0.0171 0.0154 0.0112 15 0.0152 0.0134 0.0098 20 0.0135 0.0117 0.0086 25 0.0120 0.0103 0.0076 30 0.0087 0.0071 0.0048 • The Miscellaneous salary scale is used for Local Prosecutors. • The Police salary scale is used for Other Safety, Local Sheriff, and School Police. Overall Payroll Growth 2.875 percent compounded annually (used in projecting the payroll over which the unfunded liability is amortized). This assumption is used for all plans with active members. For the June 30, 2018 valuation the payroll growth assumption will be 2.75 percent. Inflation 2.625 percent compounded annually. For the June 30, 2018 valuation the inflation assumption will be 2.50 percent. Non-valued Potential Additional Liabilities The potential liability loss for a cost-of-living increase exceeding the 2.625 percent inflation assumption, and any potential liability loss from future member service purchases are not reflected in the valuation. Miscellaneous Loading Factors Credit for Unused Sick Leave Total years of service is increased by 1 percent for those plans that have adopted the provision of providing Credit for Unused Sick Leave. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-7 Conversion of Employer Paid Member Contributions (EPMC) Total years of service is increased by the Employee Contribution Rate for those plans with the provision providing for the Conversion of Employer Paid Member Contributions (EPMC) during the final compensation period. Norris Decision (Best Factors) Employees hired prior to July 1, 1982 have projected benefit amounts increased in order to reflec t the use of “Best Factors” in the calculation of optional benefit forms. This is due to a 1983 Supreme Court decision, known as the Norris decision, which required males and females to be treated equally in the determination of benefit amounts. Consequently, anyone already employed at that time is given the best possible conversion factor when optional benefits are determined. No loading is necessary for employees hired after July 1, 1982. Termination Liability The termination liabilities include a 5 percent contingency load. This load is for unforeseen negative experience. Demographic Assumptions Pre-Retirement Mortality Non-industrial death rates vary by age and gender. Industrial death rates vary by age. See sample rates in table below. The non-industrial death rates are used for all plans. The industrial death rates are used for safety plans (except for Local Prosecutor safety members where the corresponding miscellaneous plan does not have the Industrial Death Benefit). Non-Industrial Death Industrial Death (Not Job-Related) (Job-Related) Age Male Female Male and Female 20 0.00022 0.00007 0.00004 25 0.00029 0.00011 0.00006 30 0.00038 0.00015 0.00007 35 0.00049 0.00027 0.00009 40 0.00064 0.00037 0.00010 45 0.00080 0.00054 0.00012 50 0.00116 0.00079 0.00013 55 0.00172 0.00120 0.00015 60 0.00255 0.00166 0.00016 65 0.00363 0.00233 0.00018 70 0.00623 0.00388 0.00019 75 0.01057 0.00623 0.00021 80 0.01659 0.00939 0.00022 Miscellaneous plans usually have industrial death rates set to zero unless the agency has specifically contracted for industrial death benefits. If so, each non-industrial death rate shown above will be split into two components; 99 percent will become the non-industrial death rate and 1 percent will become the industrial death rate. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-8 Post-Retirement Mortality Rates vary by age, type of retirement, and gender. See sample rates in table below. These rates are used for all plans. Healthy Recipients Non-Industrially Disabled Industrially Disabled (Not Job-Related) (Job-Related) Age Male Female Male Female Male Female 50 0.00372 0.00346 0.01183 0.01083 0.00372 0.00346 55 0.00437 0.00410 0.01613 0.01178 0.00437 0.00410 60 0.00671 0.00476 0.02166 0.01404 0.00671 0.00476 65 0.00928 0.00637 0.02733 0.01757 0.01113 0.00765 70 0.01339 0.00926 0.03358 0.02183 0.01607 0.01111 75 0.02316 0.01635 0.04277 0.02969 0.02779 0.01962 80 0.03977 0.03007 0.06272 0.04641 0.04773 0.03609 85 0.07122 0.05418 0.09793 0.07847 0.08547 0.06501 90 0.13044 0.10089 0.14616 0.13220 0.14348 0.11098 95 0.21658 0.17698 0.21658 0.21015 0.21658 0.17698 100 0.32222 0.28151 0.32222 0.32226 0.32222 0.28151 105 0.46691 0.43491 0.46691 0.43491 0.46691 0.43491 110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 The post-retirement mortality rates above include 15 years of projected on-going mortality improvement using 90 percent of Scale MP 2016 published by the Society of Actuaries. Marital Status For active members, a percentage who are married upon retirement is assumed according to member category as shown in the following table. Member Category Percent Married Miscellaneous Member 70% Local Police 85% Local Fire 90% Other Local Safety 70% School Police 85% Local County Peace Officers 75% Age of Spouse It is assumed that female spouses are 3 years younger than male spouses. This assumption is used for all plans. Terminated Members It is assumed that terminated members refund immediately if non-vested. Terminated members who are vested are assumed to retire at age 59 for Miscellaneous members and age 54 for safety members. Termination with Refund Rates vary by entry age and service for miscellaneous plans. Rates vary by service for safety plans. See sample rates in tables below. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-9 Public Agency Miscellaneous Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45 0 0.1742 0.1674 0.1606 0.1537 0.1468 0.1400 1 0.1545 0.1477 0.1409 0.1339 0.1271 0.1203 2 0.1348 0.1280 0.1212 0.1142 0.1074 0.1006 3 0.1151 0.1083 0.1015 0.0945 0.0877 0.0809 4 0.0954 0.0886 0.0818 0.0748 0.0680 0.0612 5 0.0212 0.0193 0.0174 0.0155 0.0136 0.0116 10 0.0138 0.0121 0.0104 0.0088 0.0071 0.0055 15 0.0060 0.0051 0.0042 0.0032 0.0023 0.0014 20 0.0037 0.0029 0.0021 0.0013 0.0005 0.0001 25 0.0017 0.0011 0.0005 0.0001 0.0001 0.0001 30 0.0005 0.0001 0.0001 0.0001 0.0001 0.0001 35 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 Public Agency Safety Duration of Service Fire Police County Peace Officer 0 0.1298 0.1013 0.1188 1 0.0674 0.0636 0.0856 2 0.0320 0.0271 0.0617 3 0.0237 0.0258 0.0445 4 0.0087 0.0245 0.0321 5 0.0052 0.0086 0.0121 10 0.0005 0.0053 0.0053 15 0.0004 0.0027 0.0025 20 0.0003 0.0017 0.0012 25 0.0002 0.0012 0.0005 30 0.0002 0.0009 0.0003 35 0.0001 0.0009 0.0002 The police termination and refund rates are also used for Public Agency Local Prosecutors, Other Safety, Local Sheriff, and School Police. Schools Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45 0 0.2107 0.2107 0.1827 0.1546 0.1375 0.1203 1 0.1807 0.1807 0.1526 0.1246 0.1105 0.0963 2 0.1526 0.1526 0.1259 0.0992 0.0878 0.0765 3 0.1266 0.1266 0.1023 0.0780 0.0691 0.0603 4 0.1026 0.1026 0.0815 0.0605 0.0537 0.0469 5 0.0808 0.0808 0.0634 0.0461 0.0409 0.0358 10 0.0202 0.0202 0.0157 0.0112 0.0087 0.0063 15 0.0107 0.0107 0.0077 0.0048 0.0034 0.0021 20 0.0056 0.0056 0.0037 0.0017 0.0016 0.0016 25 0.0026 0.0026 0.0018 0.0009 0.0012 0.0015 30 0.0013 0.0013 0.0011 0.0009 0.0012 0.0015 35 0.0008 0.0008 0.0009 0.0009 0.0012 0.0015 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-10 Termination with Vested Benefits Rates vary by entry age and service for miscellaneous plans. Rates vary by service for safety plans. See sample rates in tables below. Public Agency Miscellaneous Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 5 0.0422 0.0422 0.0393 0.0364 0.0344 10 0.0278 0.0278 0.0271 0.0263 0.0215 15 0.0192 0.0192 0.0174 0.0156 0.0120 20 0.0139 0.0139 0.0109 0.0079 0.0047 25 0.0083 0.0083 0.0048 0.0014 0.0007 30 0.0015 0.0015 0.0007 0.0000 0.0000 35 0.0000 0.0000 0.0000 0.0000 0.0000 Public Agency Safety Duration of Service Fire Police County Peace Officer 5 0.0094 0.0163 0.0187 10 0.0064 0.0126 0.0134 15 0.0048 0.0082 0.0092 20 0.0038 0.0065 0.0064 25 0.0026 0.0058 0.0042 30 0.0014 0.0056 0.0022 35 0.0000 0.0000 0.0000 • After termination with vested benefits, a miscellaneous member is assumed to retire at age 59 and a safety member at age 54. • The Police termination with vested benefits rates are also used for Public Agency Local Prosecutors, Other Safety, Local Sheriff, and School Police. Schools Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 5 0.0405 0.0405 0.0346 0.0288 0.0264 10 0.0324 0.0324 0.0280 0.0235 0.0211 15 0.0202 0.0202 0.0179 0.0155 0.0126 20 0.0144 0.0144 0.0114 0.0083 0.0042 25 0.0091 0.0091 0.0046 0.0000 0.0000 30 0.0015 0.0015 0.0007 0.0000 0.0000 35 0.0000 0.0000 0.0000 0.0000 0.0000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-11 Non-Industrial (Not Job-Related) Disability Rates vary by age and gender for miscellaneous plans. Rates vary by age and category for safety plans. Miscellaneous Fire Police County Peace Officer Schools Age Male Female Male and Female Male and Female Male and Female Male Female 20 0.0002 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 25 0.0002 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 30 0.0002 0.0002 0.0001 0.0002 0.0001 0.0001 0.0002 35 0.0004 0.0007 0.0001 0.0003 0.0004 0.0005 0.0004 40 0.0010 0.0014 0.0001 0.0004 0.0007 0.0012 0.0008 45 0.0015 0.0019 0.0002 0.0005 0.0013 0.0020 0.0017 50 0.0016 0.0020 0.0005 0.0008 0.0018 0.0026 0.0022 55 0.0016 0.0015 0.0007 0.0013 0.0010 0.0025 0.0018 60 0.0015 0.0011 0.0007 0.0020 0.0006 0.0022 0.0011 • The miscellaneous non-industrial disability rates are used for Local Prosecutors. • The police non-industrial disability rates are also used for Other Safety, Local Sheriff, and School Police. Industrial (Job-Related) Disability Rates vary by age and category. Age Fire Police County Peace Officer 20 0.0001 0.0000 0.0004 25 0.0002 0.0017 0.0013 30 0.0006 0.0048 0.0025 35 0.0012 0.0079 0.0037 40 0.0023 0.0110 0.0051 45 0.0040 0.0141 0.0067 50 0.0208 0.0185 0.0092 55 0.0307 0.0479 0.0151 60 0.0438 0.0602 0.0174 • The police industrial disability rates are also used for Local Sheriff and Other Safety. • Fifty percent of the police industrial disability rates are used for School Police. • One percent of the police industrial disability rates are used for Local Prosecutors. • Normally, rates are zero for miscellaneous plans unless the agency has specifically contracted for industrial disability benefits. If so, each miscellaneous non-industrial disability rate will be split into two components: 50 percent will become the non-industrial disability rate and 50 percent will become the industrial disability rate. Service Retirement Retirement rates vary by age, service, and formula, except for the safety ½ @ 55 and 2% @ 55 formulas, where retirement rates vary by age only. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-12 Service Retirement Public Agency Miscellaneous 1.5% @ 65 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.008 0.011 0.013 0.015 0.017 0.019 51 0.007 0.010 0.012 0.013 0.015 0.017 52 0.010 0.014 0.017 0.019 0.021 0.024 53 0.008 0.012 0.015 0.017 0.019 0.022 54 0.012 0.016 0.019 0.022 0.025 0.028 55 0.018 0.025 0.031 0.035 0.038 0.043 56 0.015 0.021 0.025 0.029 0.032 0.036 57 0.020 0.028 0.033 0.038 0.043 0.048 58 0.024 0.033 0.040 0.046 0.052 0.058 59 0.028 0.039 0.048 0.054 0.060 0.067 60 0.049 0.069 0.083 0.094 0.105 0.118 61 0.062 0.087 0.106 0.120 0.133 0.150 62 0.104 0.146 0.177 0.200 0.223 0.251 63 0.099 0.139 0.169 0.191 0.213 0.239 64 0.097 0.136 0.165 0.186 0.209 0.233 65 0.140 0.197 0.240 0.271 0.302 0.339 66 0.092 0.130 0.157 0.177 0.198 0.222 67 0.129 0.181 0.220 0.249 0.277 0.311 68 0.092 0.129 0.156 0.177 0.197 0.221 69 0.092 0.130 0.158 0.178 0.199 0.224 70 0.103 0.144 0.175 0.198 0.221 0.248 Public Agency Miscellaneous 2% @ 60 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.020 0.020 0.020 0.020 0.020 0.150 51 0.006 0.019 0.027 0.031 0.035 0.038 52 0.011 0.024 0.031 0.034 0.037 0.040 53 0.010 0.015 0.021 0.027 0.033 0.040 54 0.025 0.025 0.029 0.035 0.041 0.048 55 0.019 0.026 0.033 0.092 0.136 0.146 56 0.030 0.034 0.038 0.060 0.093 0.127 57 0.030 0.046 0.061 0.076 0.090 0.104 58 0.040 0.044 0.059 0.080 0.101 0.122 59 0.024 0.044 0.063 0.083 0.103 0.122 60 0.070 0.074 0.089 0.113 0.137 0.161 61 0.080 0.086 0.093 0.118 0.156 0.195 62 0.100 0.117 0.133 0.190 0.273 0.357 63 0.140 0.157 0.173 0.208 0.255 0.301 64 0.140 0.153 0.165 0.196 0.239 0.283 65 0.140 0.178 0.215 0.264 0.321 0.377 66 0.140 0.178 0.215 0.264 0.321 0.377 67 0.140 0.178 0.215 0.264 0.321 0.377 68 0.112 0.142 0.172 0.211 0.257 0.302 69 0.112 0.142 0.172 0.211 0.257 0.302 70 0.140 0.178 0.215 0.264 0.321 0.377 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-13 Service Retirement Public Agency Miscellaneous 2% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.008 0.013 0.018 0.021 0.022 0.033 51 0.009 0.016 0.020 0.023 0.026 0.036 52 0.015 0.018 0.020 0.021 0.025 0.030 53 0.016 0.020 0.024 0.028 0.031 0.035 54 0.018 0.022 0.026 0.030 0.034 0.038 55 0.040 0.040 0.056 0.093 0.109 0.154 56 0.034 0.050 0.066 0.092 0.107 0.138 57 0.042 0.048 0.058 0.082 0.096 0.127 58 0.046 0.054 0.062 0.090 0.106 0.131 59 0.045 0.055 0.066 0.097 0.115 0.144 60 0.058 0.075 0.093 0.126 0.143 0.169 61 0.065 0.088 0.111 0.146 0.163 0.189 62 0.136 0.118 0.148 0.190 0.213 0.247 63 0.130 0.133 0.174 0.212 0.249 0.285 64 0.113 0.129 0.165 0.196 0.223 0.249 65 0.145 0.173 0.201 0.233 0.266 0.289 66 0.170 0.199 0.229 0.258 0.284 0.306 67 0.250 0.204 0.233 0.250 0.257 0.287 68 0.227 0.175 0.193 0.215 0.240 0.262 69 0.200 0.180 0.180 0.198 0.228 0.246 70 0.150 0.171 0.192 0.239 0.304 0.330 Public Agency Miscellaneous 2.5% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.008 0.014 0.020 0.026 0.033 0.050 51 0.008 0.015 0.023 0.030 0.037 0.059 52 0.009 0.016 0.023 0.030 0.037 0.061 53 0.014 0.021 0.028 0.035 0.042 0.063 54 0.014 0.022 0.030 0.039 0.047 0.068 55 0.020 0.038 0.055 0.073 0.122 0.192 56 0.025 0.047 0.069 0.091 0.136 0.196 57 0.030 0.048 0.065 0.083 0.123 0.178 58 0.035 0.054 0.073 0.093 0.112 0.153 59 0.035 0.054 0.073 0.092 0.131 0.183 60 0.044 0.072 0.101 0.130 0.158 0.197 61 0.050 0.078 0.105 0.133 0.161 0.223 62 0.055 0.093 0.130 0.168 0.205 0.268 63 0.090 0.124 0.158 0.192 0.226 0.279 64 0.080 0.112 0.144 0.175 0.207 0.268 65 0.120 0.156 0.193 0.229 0.265 0.333 66 0.132 0.172 0.212 0.252 0.292 0.366 67 0.132 0.172 0.212 0.252 0.292 0.366 68 0.120 0.156 0.193 0.229 0.265 0.333 69 0.120 0.156 0.193 0.229 0.265 0.333 70 0.120 0.156 0.193 0.229 0.265 0.333 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-14 Service Retirement Public Agency Miscellaneous 2.7% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.003 0.010 0.016 0.034 0.033 0.045 51 0.009 0.016 0.023 0.042 0.038 0.047 52 0.015 0.019 0.024 0.040 0.036 0.046 53 0.012 0.020 0.028 0.047 0.046 0.060 54 0.020 0.027 0.035 0.054 0.056 0.073 55 0.033 0.055 0.078 0.113 0.156 0.234 56 0.039 0.067 0.095 0.135 0.169 0.227 57 0.050 0.067 0.084 0.113 0.142 0.198 58 0.043 0.066 0.089 0.124 0.151 0.201 59 0.050 0.070 0.090 0.122 0.158 0.224 60 0.060 0.086 0.112 0.150 0.182 0.238 61 0.071 0.094 0.117 0.153 0.184 0.241 62 0.091 0.122 0.152 0.194 0.226 0.279 63 0.143 0.161 0.179 0.209 0.222 0.250 64 0.116 0.147 0.178 0.221 0.254 0.308 65 0.140 0.174 0.208 0.254 0.306 0.389 66 0.170 0.209 0.247 0.298 0.310 0.324 67 0.170 0.199 0.228 0.269 0.296 0.342 68 0.150 0.181 0.212 0.255 0.287 0.339 69 0.150 0.181 0.212 0.255 0.287 0.339 70 0.150 0.181 0.212 0.243 0.291 0.350 Public Agency Miscellaneous 3% @ 60 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.013 0.019 0.026 0.042 0.038 0.064 51 0.035 0.037 0.039 0.052 0.047 0.062 52 0.023 0.030 0.038 0.055 0.051 0.056 53 0.025 0.032 0.040 0.057 0.056 0.066 54 0.035 0.042 0.050 0.067 0.066 0.076 55 0.040 0.052 0.064 0.085 0.095 0.120 56 0.043 0.056 0.070 0.094 0.102 0.150 57 0.045 0.060 0.074 0.099 0.109 0.131 58 0.053 0.056 0.059 0.099 0.126 0.185 59 0.050 0.068 0.085 0.113 0.144 0.202 60 0.089 0.106 0.123 0.180 0.226 0.316 61 0.100 0.117 0.133 0.212 0.230 0.298 62 0.130 0.155 0.180 0.248 0.282 0.335 63 0.120 0.163 0.206 0.270 0.268 0.352 64 0.150 0.150 0.150 0.215 0.277 0.300 65 0.200 0.242 0.283 0.330 0.300 0.342 66 0.220 0.264 0.308 0.352 0.379 0.394 67 0.250 0.279 0.309 0.338 0.371 0.406 68 0.170 0.196 0.223 0.249 0.290 0.340 69 0.220 0.261 0.302 0.344 0.378 0.408 70 0.220 0.255 0.291 0.326 0.358 0.388 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-15 Service Retirement Public Agency Miscellaneous 2% @ 62 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.000 0.000 0.000 0.000 0.000 0.000 51 0.000 0.000 0.000 0.000 0.000 0.000 52 0.005 0.008 0.012 0.015 0.019 0.031 53 0.007 0.011 0.014 0.018 0.021 0.032 54 0.007 0.011 0.015 0.019 0.023 0.034 55 0.010 0.019 0.028 0.036 0.061 0.096 56 0.014 0.026 0.038 0.050 0.075 0.108 57 0.018 0.029 0.039 0.050 0.074 0.107 58 0.023 0.035 0.048 0.060 0.073 0.099 59 0.025 0.038 0.051 0.065 0.092 0.128 60 0.031 0.051 0.071 0.091 0.111 0.138 61 0.038 0.058 0.079 0.100 0.121 0.167 62 0.044 0.074 0.104 0.134 0.164 0.214 63 0.077 0.105 0.134 0.163 0.192 0.237 64 0.072 0.101 0.129 0.158 0.187 0.242 65 0.108 0.141 0.173 0.206 0.239 0.300 66 0.132 0.172 0.212 0.252 0.292 0.366 67 0.132 0.172 0.212 0.252 0.292 0.366 68 0.120 0.156 0.193 0.229 0.265 0.333 69 0.120 0.156 0.193 0.229 0.265 0.333 70 0.120 0.156 0.193 0.229 0.265 0.333 Service Retirement Public Agency Fire ½ @ 55 and 2% @ 55 Age Rate Age Rate 50 0.0159 56 0.1108 51 0.0000 57 0.0000 52 0.0344 58 0.0950 53 0.0199 59 0.0441 54 0.0413 60 1.00000 55 0.0751 Public Agency Police ½ @ 55 and 2% @ 55 Age Rate Age Rate 50 0.0255 56 0.0692 51 0.0000 57 0.0511 52 0.0164 58 0.0724 53 0.0272 59 0.0704 54 0.0095 60 0.3000 55 0.1667 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-16 Service Retirement Public Agency Police 2% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100 51 0.040 0.040 0.040 0.040 0.058 0.094 52 0.040 0.040 0.040 0.040 0.061 0.087 53 0.040 0.040 0.040 0.040 0.082 0.123 54 0.040 0.040 0.040 0.046 0.098 0.158 55 0.072 0.072 0.072 0.096 0.141 0.255 56 0.066 0.066 0.066 0.088 0.129 0.228 57 0.060 0.060 0.060 0.080 0.118 0.213 58 0.080 0.080 0.080 0.088 0.138 0.228 59 0.080 0.080 0.080 0.092 0.140 0.228 60 0.150 0.150 0.150 0.150 0.150 0.228 61 0.144 0.144 0.144 0.144 0.144 0.170 62 0.150 0.150 0.150 0.150 0.150 0.213 63 0.150 0.150 0.150 0.150 0.150 0.213 64 0.150 0.150 0.150 0.150 0.150 0.319 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.009 0.009 0.009 0.009 0.013 0.020 51 0.013 0.013 0.013 0.013 0.020 0.029 52 0.018 0.018 0.018 0.018 0.028 0.042 53 0.052 0.052 0.052 0.052 0.079 0.119 54 0.067 0.067 0.067 0.067 0.103 0.154 55 0.089 0.089 0.089 0.089 0.136 0.204 56 0.083 0.083 0.083 0.083 0.127 0.190 57 0.082 0.082 0.082 0.082 0.126 0.189 58 0.088 0.088 0.088 0.088 0.136 0.204 59 0.074 0.074 0.074 0.074 0.113 0.170 60 0.100 0.100 0.100 0.100 0.154 0.230 61 0.072 0.072 0.072 0.072 0.110 0.165 62 0.099 0.099 0.099 0.099 0.152 0.228 63 0.114 0.114 0.114 0.114 0.175 0.262 64 0.114 0.114 0.114 0.114 0.175 0.262 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-17 Service Retirement Public Agency Police 3% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.035 0.035 0.035 0.035 0.070 0.090 51 0.028 0.028 0.028 0.029 0.065 0.101 52 0.032 0.032 0.032 0.039 0.066 0.109 53 0.028 0.028 0.028 0.043 0.075 0.132 54 0.038 0.038 0.038 0.074 0.118 0.333 55 0.070 0.070 0.070 0.120 0.175 0.340 56 0.060 0.060 0.060 0.110 0.165 0.330 57 0.060 0.060 0.060 0.110 0.165 0.320 58 0.080 0.080 0.080 0.100 0.185 0.350 59 0.090 0.090 0.095 0.130 0.185 0.350 60 0.150 0.150 0.150 0.150 0.185 0.350 61 0.120 0.120 0.120 0.120 0.160 0.350 62 0.150 0.150 0.150 0.150 0.200 0.350 63 0.150 0.150 0.150 0.150 0.200 0.400 64 0.150 0.150 0.150 0.150 0.175 0.350 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 3% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.001 0.001 0.001 0.006 0.016 0.069 51 0.002 0.002 0.002 0.006 0.018 0.071 52 0.012 0.012 0.012 0.021 0.040 0.098 53 0.032 0.032 0.032 0.049 0.085 0.149 54 0.057 0.057 0.057 0.087 0.144 0.217 55 0.073 0.073 0.073 0.109 0.179 0.259 56 0.064 0.064 0.064 0.097 0.161 0.238 57 0.063 0.063 0.063 0.095 0.157 0.233 58 0.065 0.065 0.065 0.099 0.163 0.241 59 0.088 0.088 0.088 0.131 0.213 0.299 60 0.105 0.105 0.105 0.155 0.251 0.344 61 0.118 0.118 0.118 0.175 0.282 0.380 62 0.087 0.087 0.087 0.128 0.210 0.295 63 0.067 0.067 0.067 0.100 0.165 0.243 64 0.067 0.067 0.067 0.100 0.165 0.243 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-18 Service Retirement Public Agency Police 3% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.100 0.155 0.400 51 0.040 0.040 0.040 0.090 0.140 0.380 52 0.040 0.040 0.040 0.070 0.115 0.350 53 0.040 0.040 0.040 0.080 0.135 0.350 54 0.040 0.040 0.040 0.090 0.145 0.350 55 0.070 0.070 0.070 0.120 0.175 0.340 56 0.060 0.060 0.060 0.110 0.165 0.330 57 0.060 0.060 0.060 0.110 0.165 0.320 58 0.080 0.080 0.080 0.100 0.185 0.350 59 0.090 0.090 0.095 0.130 0.185 0.350 60 0.150 0.150 0.150 0.150 0.185 0.350 61 0.120 0.120 0.120 0.120 0.160 0.350 62 0.150 0.150 0.150 0.150 0.200 0.350 63 0.150 0.150 0.150 0.150 0.200 0.400 64 0.150 0.150 0.150 0.150 0.175 0.350 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 3% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.020 0.020 0.020 0.040 0.130 0.192 51 0.008 0.008 0.008 0.023 0.107 0.164 52 0.023 0.023 0.023 0.043 0.136 0.198 53 0.023 0.023 0.023 0.043 0.135 0.198 54 0.027 0.027 0.027 0.048 0.143 0.207 55 0.043 0.043 0.043 0.070 0.174 0.244 56 0.053 0.053 0.053 0.085 0.196 0.269 57 0.054 0.054 0.054 0.086 0.197 0.271 58 0.052 0.052 0.052 0.084 0.193 0.268 59 0.075 0.075 0.075 0.116 0.239 0.321 60 0.065 0.065 0.065 0.102 0.219 0.298 61 0.076 0.076 0.076 0.117 0.241 0.324 62 0.068 0.068 0.068 0.106 0.224 0.304 63 0.027 0.027 0.027 0.049 0.143 0.208 64 0.094 0.094 0.094 0.143 0.277 0.366 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-19 Service Retirement Public Agency Police 2% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.040 0.040 0.040 0.040 0.040 0.080 51 0.028 0.028 0.028 0.028 0.040 0.066 52 0.028 0.028 0.028 0.028 0.043 0.061 53 0.028 0.028 0.028 0.028 0.057 0.086 54 0.028 0.028 0.028 0.032 0.069 0.110 55 0.050 0.050 0.050 0.067 0.099 0.179 56 0.046 0.046 0.046 0.062 0.090 0.160 57 0.054 0.054 0.054 0.072 0.106 0.191 58 0.060 0.060 0.060 0.066 0.103 0.171 59 0.060 0.060 0.060 0.069 0.105 0.171 60 0.113 0.113 0.113 0.113 0.113 0.171 61 0.108 0.108 0.108 0.108 0.108 0.128 62 0.113 0.113 0.113 0.113 0.113 0.159 63 0.113 0.113 0.113 0.113 0.113 0.159 64 0.113 0.113 0.113 0.113 0.113 0.239 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.005 0.005 0.005 0.005 0.008 0.012 51 0.006 0.006 0.006 0.006 0.009 0.013 52 0.012 0.012 0.012 0.012 0.019 0.028 53 0.033 0.033 0.033 0.033 0.050 0.075 54 0.045 0.045 0.045 0.045 0.069 0.103 55 0.061 0.061 0.061 0.061 0.094 0.140 56 0.055 0.055 0.055 0.055 0.084 0.126 57 0.081 0.081 0.081 0.081 0.125 0.187 58 0.059 0.059 0.059 0.059 0.091 0.137 59 0.055 0.055 0.055 0.055 0.084 0.126 60 0.085 0.085 0.085 0.085 0.131 0.196 61 0.085 0.085 0.085 0.085 0.131 0.196 62 0.085 0.085 0.085 0.085 0.131 0.196 63 0.085 0.085 0.085 0.085 0.131 0.196 64 0.085 0.085 0.085 0.085 0.131 0.196 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-20 Service Retirement Public Agency Police 2.5% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100 51 0.038 0.038 0.038 0.038 0.055 0.089 52 0.038 0.038 0.038 0.038 0.058 0.082 53 0.036 0.036 0.036 0.036 0.073 0.111 54 0.036 0.036 0.036 0.041 0.088 0.142 55 0.061 0.061 0.061 0.082 0.120 0.217 56 0.056 0.056 0.056 0.075 0.110 0.194 57 0.060 0.060 0.060 0.080 0.118 0.213 58 0.072 0.072 0.072 0.079 0.124 0.205 59 0.072 0.072 0.072 0.083 0.126 0.205 60 0.135 0.135 0.135 0.135 0.135 0.205 61 0.130 0.130 0.130 0.130 0.130 0.153 62 0.135 0.135 0.135 0.135 0.135 0.191 63 0.135 0.135 0.135 0.135 0.135 0.191 64 0.135 0.135 0.135 0.135 0.135 0.287 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2.5% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.007 0.007 0.007 0.007 0.010 0.015 51 0.008 0.008 0.008 0.008 0.012 0.018 52 0.016 0.016 0.016 0.016 0.025 0.038 53 0.042 0.042 0.042 0.042 0.064 0.096 54 0.057 0.057 0.057 0.057 0.088 0.132 55 0.074 0.074 0.074 0.074 0.114 0.170 56 0.066 0.066 0.066 0.066 0.102 0.153 57 0.090 0.090 0.090 0.090 0.139 0.208 58 0.071 0.071 0.071 0.071 0.110 0.164 59 0.066 0.066 0.066 0.066 0.101 0.151 60 0.102 0.102 0.102 0.102 0.157 0.235 61 0.102 0.102 0.102 0.102 0.157 0.236 62 0.102 0.102 0.102 0.102 0.157 0.236 63 0.102 0.102 0.102 0.102 0.157 0.236 64 0.102 0.102 0.102 0.102 0.157 0.236 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-21 Service Retirement Public Agency Police 2.7% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.0500 0.0500 0.0500 0.0500 0.0500 0.1000 51 0.0400 0.0400 0.0400 0.0400 0.0575 0.0942 52 0.0380 0.0380 0.0380 0.0380 0.0580 0.0825 53 0.0380 0.0380 0.0380 0.0380 0.0774 0.1169 54 0.0380 0.0380 0.0380 0.0437 0.0931 0.1497 55 0.0684 0.0684 0.0684 0.0912 0.1340 0.2423 56 0.0627 0.0627 0.0627 0.0836 0.1228 0.2168 57 0.0600 0.0600 0.0600 0.0800 0.1175 0.2125 58 0.0800 0.0800 0.0800 0.0880 0.1375 0.2275 59 0.0800 0.0800 0.0800 0.0920 0.1400 0.2275 60 0.1500 0.1500 0.1500 0.1500 0.1500 0.2275 61 0.1440 0.1440 0.1440 0.1440 0.1440 0.1700 62 0.1500 0.1500 0.1500 0.1500 0.1500 0.2125 63 0.1500 0.1500 0.1500 0.1500 0.1500 0.2125 64 0.1500 0.1500 0.1500 0.1500 0.1500 0.3188 65 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2.7% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.0065 0.0065 0.0065 0.0065 0.0101 0.0151 51 0.0081 0.0081 0.0081 0.0081 0.0125 0.0187 52 0.0164 0.0164 0.0164 0.0164 0.0254 0.0380 53 0.0442 0.0442 0.0442 0.0442 0.0680 0.1018 54 0.0606 0.0606 0.0606 0.0606 0.0934 0.1397 55 0.0825 0.0825 0.0825 0.0825 0.1269 0.1900 56 0.0740 0.0740 0.0740 0.0740 0.1140 0.1706 57 0.0901 0.0901 0.0901 0.0901 0.1387 0.2077 58 0.0790 0.0790 0.0790 0.0790 0.1217 0.1821 59 0.0729 0.0729 0.0729 0.0729 0.1123 0.1681 60 0.1135 0.1135 0.1135 0.1135 0.1747 0.2615 61 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 62 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 63 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 64 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 65 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-22 Service Retirement Schools 2% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.004 0.007 0.011 0.012 0.013 0.015 51 0.004 0.008 0.011 0.014 0.016 0.017 52 0.005 0.010 0.014 0.016 0.018 0.021 53 0.006 0.012 0.016 0.020 0.022 0.025 54 0.008 0.017 0.023 0.027 0.031 0.034 55 0.021 0.042 0.058 0.069 0.077 0.086 56 0.019 0.037 0.053 0.062 0.069 0.078 57 0.019 0.038 0.054 0.064 0.071 0.079 58 0.022 0.045 0.062 0.074 0.082 0.092 59 0.025 0.049 0.069 0.082 0.090 0.101 60 0.033 0.066 0.092 0.109 0.121 0.135 61 0.037 0.072 0.101 0.119 0.133 0.149 62 0.066 0.131 0.184 0.218 0.242 0.271 63 0.064 0.126 0.178 0.209 0.233 0.261 64 0.059 0.117 0.163 0.193 0.215 0.240 65 0.080 0.158 0.221 0.261 0.291 0.326 66 0.081 0.160 0.224 0.265 0.296 0.330 67 0.070 0.139 0.194 0.229 0.255 0.286 68 0.063 0.124 0.173 0.205 0.228 0.255 69 0.066 0.130 0.183 0.216 0.241 0.270 70 0.071 0.140 0.196 0.231 0.258 0.289 Miscellaneous Internal Revenue Code Section 415 The limitations on benefits imposed by Internal Revenue Code Section 415 are taken into account in this valuation. Each year the impact of any changes in this limitation since the prior valuation is included and amortized as part of the actuarial gain or loss base. This results in lower contributions for those employers contributing to the Replacement Benefit Fund and protects CalPERS from prefunding expected benefits in excess of limits imposed by federal tax law. Internal Revenue Code Section 401(a) (17) The limitations on compensation imposed by Internal Revenue Code Section 401(a) (17) are taken into account in this valuation. Each year, the impact of any changes in the compensation limitation since the prior valuation is included and amortized as part of the actuarial gain or loss base. The compensation limit for classic members for the 2017 calendar year is $270,000. Appendix B Principal Plan Provisions CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-1 The following is a description of the principal plan provisions used in calculating costs and liabilities. We have indicated whether a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits vary among employers. Optional benefits that apply to a single period of time, such as Golden Handshakes, have not been included. Many of the statements in this summary are general in nature, and are intended to provide an easily understood summary of the Public Employees’ Retirement Law. The law itself governs in all situations. Service Retirement Eligibility A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of age 50 with at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). For employees hired into a plan with the 1.5 percent at 65 formula, eligibility for service retirement is age 55 with at least 5 years of service. PEPRA mi scellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service. Benefit The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final compensation. • The benefit factor depends on the benefit formula specified in your agency’s contract. The table below shows the factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors for retirement at whole year ages: Miscellaneous Plan Formulas Retirement Age 1.5% at 65 2% at 60 2% at 55 2.5% at 55 2.7% at 55 3% at 60 PEPRA 2% at 62 50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A 51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A 52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000% 53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100% 54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200% 55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300% 56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400% 57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500% 58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600% 59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700% 60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800% 61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900% 62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000% 63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100% 64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200% 65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300% 66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400% 67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500% CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-2 Safety Plan Formulas Retirement Age ½ at 55 * 2% at 55 2% at 50 3% at 55 3% at 50 50 1.783% 1.426% 2.000% 2.400% 3.000% 51 1.903% 1.522% 2.140% 2.520% 3.000% 52 2.035% 1.628% 2.280% 2.640% 3.000% 53 2.178% 1.742% 2.420% 2.760% 3.000% 54 2.333% 1.866% 2.560% 2.880% 3.000% 55 & Up 2.500% 2.000% 2.700% 3.000% 3.000% * For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of 35 or greater. If entry age is less than 35, then the age 55 benefit factor is 50 percent divided by the difference between age 55 and entry age. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in the above table. PEPRA Safety Plan Formulas Retirement Age 2% at 57 2.5% at 57 2.7% at 57 50 1.426% 2.000% 2.000% 51 1.508% 2.071% 2.100% 52 1.590% 2.143% 2.200% 53 1.672% 2.214% 2.300% 54 1.754% 2.286% 2.400% 55 1.836% 2.357% 2.500% 56 1.918% 2.429% 2.600% 57 & Up 2.000% 2.500% 2.700% • The years of service is the amount credited by CalPERS to a member while he or she is employed in this group (or for other periods that are recognized under the employer’s contract with CalPERS). For a member who has earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s contract, and then added together for the total allowance. An agency may contract for an optional benefit where any unused sick leave accumulated at the time of retirement will be converted to credited service at a rate of 0.004 years of service for each day of sick leave. • The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full-time equivalent monthly pay (no matter which CalPERS employer paid this compensation). The standard benefit is 36 months. Employers had the option of providing a final compensation equal to the highest 12 consecutive months for classic plans only. Final compensation must be defined by the highest 36 consecutive months’ pay under the 1.5% at 65 formula. PEPRA members have a cap on the annual salary that can be used to calculate final compensation for all new members based on the Social Security contribution and benefit base. For employees that participate in Social Security this cap is $118,775 for 2017 and for those employees that do not participate in Social Security the cap for 2017 is $142,530. Adjustments to the caps are permitted annually based on changes to the CPI for all urban consumers. • Employees must be covered by Social Security with the 1.5% at 65 formula. Social Security is optional for all other benefit formulas. For employees covered by Social Security, the modified formula is the standard benefit. Under this type of formula, the final compensation is offset by $133.33 (or by one third if the final compensation is less than $400). Employers may contract for the full benefit with Social Security that will eliminate the offset applicable to the final compensation. For employees not covered by Social Security, the full benefit is paid with CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-3 no offsets. Auxiliary organizations of the CSUC system may elect reduced contribution rates, in which case the offset is $317 if members are not covered by Social Security or $513 if members are covered by Social Security. • The miscellaneous and PEPRA safety service retirement benefit is not capped. The classic Safety service retirement benefit is capped at 90 percent of final compensation. Vested Deferred Retirement Eligibility for Deferred Status A CalPERS member becomes eligible for a deferred vested retirement benefit when he or she leaves employment, keeps his or her contribution account balance on deposit with CalPERS, and has earned at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). Eligibility to Start Receiving Benefits The CalPERS classic members and PEPRA safety members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired into a 1.5% @ 65 plan). PEPRA miscellaneous members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 52. Benefit The vested deferred retirement benefit is the same as the service retirement benefit, where the benefit factor is based on the member’s age at allowance commencement. For members who have earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s co ntract, and then added together for the total allowance. Non-Industrial (Non-Job Related) Disability Retirement Eligibility A CalPERS member is eligible for Non-Industrial Disability Retirement if he or she becomes disabled and has at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to perform his or her job because of an illness or injury, which is expected to be perm anent or to last indefinitely. The illness or injury does not have to be job related. A CalPERS member must be actively employed by any CalPERS employer at the time of disability in order to be eligible for this benefit. Standard Benefit The standard Non-Industrial Disability Retirement benefit is a monthly allowance equal to 1.8 percent of final compensation, multiplied by service, which is determined as follows: • Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years of service; or • Service is CalPERS credited service plus the additional number of years that the member would have worked until age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in this case is 33 1/3 percent of final compensation. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-4 Improved Benefit Employers have the option of providing the improved Non-Industrial Disability Retirement benefit. This benefit provides a monthly allowance equal to 30 percent of final compensation for the first 5 years of service, plus 1 percent for each additional year of service to a maximum of 50 percent of final compensation. Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability benefit. Members eligible to retire, and who have attained the normal retirement age determined by their service retirement benefit formula, will receive the same dollar amount for disability retirement as that payable for service retirement. For members who have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a particular employer to the total CalPERS service. Industrial (Job Related) Disability Retirement All safety members have this benefit. For miscellaneous members, employers have the option of providing this benefit. An employer may choose to provide the increased benefit option or the improved benefit option. Eligibility An employee is eligible for Industrial Disability Retirement if he or she becomes disabled while working, where disabled means the member is unable to perform the duties of the job because of a work-related illness or injury, which is expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group is not eligible for this benefit, except to the extent described below. Standard Benefit The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50 percent of final compensation. Increased Benefit (75 percent of Final Compensation) The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75 percent final compensation for total disability. Improved Benefit (50 percent to 90 percent of Final Compensation) The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Compensation Appeals Board permanent disability rate percentage (if 50 percent or greater, with a maximum of 90 percent) times the final compensation. For a CalPERS member not actively employed in this group who became disabled while employed by some other CalPERS employer, the benefit is a return of accumulated member contributions with respec t to employment in this group. With the standard or increased benefit, a member may also choose to receive the annuitization of the accumulated member contributions. If a member is eligible for service retirement and if the service retirement benefit is more than the industrial disability retirement benefit, the member may choose to receive the larger benefit. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-5 Post-Retirement Death Benefit Standard Lump Sum Payment Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated survivor(s), or to the retiree’s estate. Improved Lump Sum Payment Employers have the option of providing an improved lump sum death benefit of $600, $2,000, $3,000, $4,000 or $5,000. Form of Payment for Retirement Allowance Standard Form of Payment Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The retiree may choose to provide for a portion of his or her allowance to be paid to any designated beneficiary after the retiree’s death. CalPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction in his or her retirement allowance. Such reduction takes into account the amount to be provided to the beneficiary and the probable duration of payments (based on the ages of the member and beneficiary) made subsequent to the member’s death. Improved Form of Payment (Post-Retirement Survivor Allowance) Employers have the option to contract for the post-retirement survivor allowance. For retirement allowances with respect to service subject to the modified formula, 25 percent of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. For retirement allowances with respect to service subject to the full or supplemental formula, 50 percent of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. This additional benefit is referred to as post-retirement survivor allowance (PRSA) or simply as survivor continuance. In other words, 25 percent or 50 percent of the allowance, the continuance portion, is paid to the retiree for as long as he or she is alive, and that same amount is continued to the retiree’s spouse (or if no eligible spou se, to unmarried child(ren) until they attain age 18; or, if no eligible child(ren), to a qualifying dependent parent) for the rest of his or her lifetime. This benefit will not be discontinued in the event the spouse remarries. The remaining 75 percent or 50 percent of the retirement allowance, which may be referred to as the option portion of the benefit, is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for some of this option portion to be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the same as those offered with the standard form. The reduction is calculated in the same manner but is applied only to the option portion. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-6 Pre-Retirement Death Benefits Basic Death Benefit This is a standard benefit. Eligibility An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed. A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit. Benefit The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where inter est is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death. 1957 Survivor Benefit This is a standard benefit. Eligibility An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed, has attained at least age 50 for classic and safety PEPRA members and age 52 for miscellaneous PEPRA members, and has at least 5 years of credited service (total service across all CalPERS em ployers and with certain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death or, if there is no eligible spouse, to the member's unmarried child(ren) under age 18. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this 1957 Survivor benefit. Benefit The 1957 Survivor benefit is a monthly allowance equal to one-half of the unmodified service retirement benefit that the member would have been entitled to receive if the member had retired on the date of his or her death. If the benefit is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent child(ren), the benefit will be discontinued upon death or attainment of age 18, unless the child(ren) is disabled. The total amount paid will be at least equal to the basic death benefit. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-7 Optional Settlement 2 Death Benefit This is an optional benefit. Eligibility An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively employed, has attained at least age 50 for classic and safety PEPRA members and age 52 for miscellaneous PEPRA members, and has at least 5 years of credited service (total service across all CalPERS em ployers and with certain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this Optional Settlement 2 Death benefit. Benefit The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member would have received had the member retired on the date of his or her death and elected 100 percent to continue to the eligible survivor after the member’s death. The allowance is payable as long as the surviving spouse lives, at which time it is continued to any unmarried child(ren) under age 18, if applicable. The total amount paid will be at least equal to the basic death benefit. Special Death Benefit This is a standard benefit for safety members. An employer may elect to provide this benefit for miscellaneous members. Eligibility An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed and the death is job-related. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 22. An eligible survivor who chooses to receive this benefit will not receive any other death benefit. Benefit The special death benefit is a monthly allowance equal to 50 percent of final compensation, and will be increased whenever the compensation paid to active employees is increased but ceasing to increase when the member would have attained age 50. The allowance is payable to the surviving spouse until death at which time the allowance is continued to any unmarried child(ren) under age 22. There is a guarantee that the total amount paid will at least equal the basic death benefit. If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried child(ren) under age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following: • if 1 eligible child: 12.5 percent of final compensation • if 2 eligible children: 20.0 percent of final compensation • if 3 or more eligible children: 25.0 percent of final compensation CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-8 Alternate Death Benefit for Local Fire Members This is an optional benefit available only to local fire members. Eligibility An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957 Survivor benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 18. Benefit The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have received had the member retired on the date of his or her death and elected Optional Settlement 2. (A retiree who elects Optional Settlement 2 receives an allowance that has been reduced so that it will continue to be paid after his or her death to a surviving beneficiary.) If the member has not yet attained age 50, the benefit is equal to that which would be payable if the member had retired at age 50, based on service credited at the time of death. The allowance is payable as long as the surviving spouse lives, at which time it is continued to any unmarried child(ren) under age 18, if applicable. The total amount paid will be at least equal to the basic death benefit. Cost-of-Living Adjustments (COLA) Standard Benefit Retirement and survivor allowances are adjusted each year in May for cost of living, beginning the second calendar year after the year of retirement. The standard cost-of-living adjustment (COLA) is 2 percent. Annual adjustments are calculated by first determining the lesser of 1) 2 percent compounded from the end of the year of retirement or 2) actual rate of inflation. The resulting increase is divided by the total increase provided in prior years. For any given year, the COLA adjustment may be less than 2 percent (when the rate of inflation is low), may be greater than the rate of inflation (when the rate of inflation is low after several years of hi gh inflation) or may even be greater than 2 percent (when inflation is high after several years of low inflation). Improved Benefit Employers have the option of providing a COLA of 3 percent, 4 percent, or 5 percent, determined in the same manner as described above for the standard 2 percent COLA. An improved COLA is not available with the 1.5% at 65 formula. Purchasing Power Protection Allowance (PPPA) Retirement and survivor allowances are protected against inflation by PPPA. PPPA benefits are cost-of-living adjustments that are intended to maintain an individual’s allowance at 80 percent of the initial allowance at retirement adjusted for inflation since retirement. The PPPA benefit will be coordinated with other cost-of-living adjustments provided under the plan. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-9 Employee Contributions Each employee contributes toward his or her retirement based upon the retirement formula. The standard employee contribution is as described below. • The percent contributed below the monthly compensation breakpoint is 0 percent. • The monthly compensation breakpoint is $0 for full and supplemental formula members and $133.33 for employees covered by the modified formula. • The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as shown in the table below. Benefit Formula Percent Contributed above the Breakpoint Miscellaneous, 1.5% at 65 2% Miscellaneous, 2% at 60 7% Miscellaneous, 2% at 55 7% Miscellaneous, 2.5% at 55 8% Miscellaneous, 2.7% at 55 8% Miscellaneous, 3% at 60 8% Miscellaneous, 2% at 62 50% of the Total Normal Cost Miscellaneous, 1.5% at 65 50% of the Total Normal Cost Safety, 1/2 at 55 Varies by entry age Safety, 2% at 55 7% Safety, 2% at 50 9% Safety, 3% at 55 9% Safety, 3% at 50 9% Safety, 2% at 57 50% of the Total Normal Cost Safety, 2.5% at 57 50% of the Total Normal Cost Safety, 2.7% at 57 50% of the Total Normal Cost The employer may choose to “pick-up” these contributions for classic members (Employer Paid Member Contributions or EPMC). EPMC is prohibited for new PEPRA members. An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the employer contribution. These contributions are paid in addition to the member contribution. Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and the contribution rate is 6 percent if members are not covered by Social Security. If members are covered by Social Security, the offset is $513 and the contribution rate is 5 percent. Refund of Employee Contributions If the member’s service with the employer ends, and if the member does not satisfy the eligibility conditions for any of the retirement benefits above, the member may elect to receive a refund of his or her employee contributions, which are credited with 6 percent interest compounded annually. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Safety Plan of the City of Palo Alto Principal Plan Provisions B-10 1959 Survivor Benefit This is a pre-retirement death benefit available only to members not covered by Social Security. Any agency joining CalPERS subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The benefit is optional for agencies joining CalPERS prior to 1994. Levels 1, 2 and 3 are now closed. Any new agency or any agency wishing to add this benefit or increase the current level may only choose the 4th or Indexed Level. This benefit is not included in the results presented in this valuation. More information on this benefit is available on the CalPERS website at www.calpers.ca.gov. Appendix C Participant Data • Summary of Valuation Data • Active Members • Transferred and Terminated Members • Retired Members and Beneficiaries CalPERS Actuarial Valuation – June 30, 2017 Appendix C Safety Plan of the City of Palo Alto Participant Data C-1 Summary of Valuation Data June 30, 2016 June 30, 2017 1. Active Members a) Counts 174 172 b) Average Attained Age 41.61 42.00 c) Average Entry Age to Rate Plan 29.31 29.81 d) Average Years of Service 12.30 12.19 e) Average Annual Covered Pay $ 122,230 $ 136,544 f) Annual Covered Payroll 21,268,028 23,485,510 g) Projected Annual Payroll for Contribution Year 23,240,148 25,569,930 h) Present Value of Future Payroll 199,470,322 218,036,500 2. Transferred Members a) Counts 63 60 b) Average Attained Age 42.96 42.71 c) Average Years of Service 3.34 3.35 d) Average Annual Covered Pay $ 114,053 $ 117,113 3. Terminated Members a) Counts 38 43 b) Average Attained Age 43.22 43.17 c) Average Years of Service 3.61 3.53 d) Average Annual Covered Pay $ 87,206 $ 90,476 4. Retired Members and Beneficiaries a) Counts 417 427 b) Average Attained Age 68.24 68.42 c) Average Annual Benefits $ 52,760 $ 54,215 5. Active to Retired Ratio [(1a) / (4a)] 0.42 0.40 Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities. Average Annual Benefits represents benefit amounts payable by this plan only. Some members may have service with another agency and would therefore have a larger total benefit than would be included as part of the average shown here. CalPERS Actuarial Valuation – June 30, 2017 Appendix C Safety Plan of the City of Palo Alto Participant Data C-2 Active Members Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities. Distribution of Active Members by Age and Service Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Total 15-24 0 0 0 0 0 0 0 25-29 13 2 0 0 0 0 15 30-34 16 8 4 0 0 0 28 35-39 8 12 12 3 0 0 35 40-44 5 4 3 17 1 0 30 45-49 2 1 6 12 6 1 28 50-54 1 0 4 8 6 7 26 55-59 1 1 1 2 0 3 8 60-64 0 0 0 0 0 1 1 65 and over 0 0 0 0 0 1 1 All Ages 46 28 30 42 13 13 172 Distribution of Average Annual Salaries by Age and Service Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Average 15-24 $0 $0 $0 $0 $0 $0 $0 25-29 112,706 128,132 0 0 0 0 114,763 30-34 108,738 131,340 136,014 0 0 0 119,092 35-39 116,122 134,080 148,458 158,968 0 0 137,038 40-44 133,784 136,178 157,037 157,219 176,592 0 151,135 45-49 130,816 110,864 134,346 138,037 143,050 215,779 139,611 50-54 237,889 0 131,103 130,185 144,717 153,996 144,233 55-59 107,259 130,890 117,225 148,685 0 166,175 143,909 60-64 0 0 0 0 0 142,443 142,443 65 and over 0 0 0 0 0 146,215 146,215 All Ages $117,602 $132,229 $141,479 $146,308 $146,399 $160,072 $136,544 CalPERS Actuarial Valuation – June 30, 2017 Appendix C Safety Plan of the City of Palo Alto Participant Data C-3 Transferred and Terminated Members Distribution of Transfers to Other CalPERS Plans by Age, Service, and average Salary Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Total Average Salary 15-24 0 0 0 0 0 0 0 $0 25-29 3 0 0 0 0 0 3 119,948 30-34 5 0 0 0 0 0 5 111,399 35-39 14 4 0 0 0 0 18 108,323 40-44 7 1 0 0 0 0 8 107,672 45-49 10 4 2 0 0 0 16 129,525 50-54 6 1 1 0 0 0 8 125,491 55-59 0 1 0 0 0 0 1 115,452 60-64 0 1 0 0 0 0 1 106,968 65 and over 0 0 0 0 0 0 0 0 All Ages 45 12 3 0 0 0 60 117,113 Distribution of Terminated Participants with Funds on Deposit by Age, Service, and average Salary Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Total Average Salary 15-24 0 0 0 0 0 0 0 $0 25-29 1 0 0 0 0 0 1 94,933 30-34 3 1 0 0 0 0 4 105,192 35-39 13 2 1 0 0 0 16 88,882 40-44 1 4 1 1 0 0 7 116,726 45-49 5 1 1 0 0 0 7 83,303 50-54 4 0 0 0 0 0 4 55,820 55-59 2 1 0 0 0 0 3 74,227 60-64 0 1 0 0 0 0 1 106,475 65 and over 0 0 0 0 0 0 0 0 All Ages 29 10 3 1 0 0 43 90,476 CalPERS Actuarial Valuation – June 30, 2017 Appendix C Safety Plan of the City of Palo Alto Participant Data C-4 Retired Members and Beneficiaries Distribution of Retirees and Beneficiaries by Age and Retirement Type* Attained Age Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Total Under 30 0 0 0 0 0 0 0 30-34 0 0 0 0 0 0 0 35-39 0 0 3 0 0 0 3 40-44 0 0 5 0 0 0 5 45-49 0 1 8 0 0 0 9 50-54 21 1 8 0 0 0 30 55-59 45 1 23 0 2 0 71 60-64 37 1 20 0 1 3 62 65-69 26 1 19 0 0 7 53 70-74 31 0 14 0 0 6 51 75-79 31 1 26 0 0 10 68 80-84 20 0 15 0 0 8 43 85 and Over 15 0 9 0 0 8 32 All Ages 226 6 150 0 3 42 427 Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type* Attained Age Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Average Under 30 $0 $0 $0 $0 $0 $0 $0 30-34 0 0 0 0 0 0 0 35-39 0 0 55,217 0 0 0 55,217 40-44 0 0 59,737 0 0 0 59,737 45-49 0 84 42,485 0 0 0 37,774 50-54 73,247 107,530 62,478 0 0 0 71,518 55-59 86,676 33,586 68,453 0 50,614 0 79,009 60-64 65,260 2,076 70,488 0 26,741 53,055 64,715 65-69 76,021 17,698 43,431 0 0 24,763 56,467 70-74 57,570 0 34,420 0 0 36,090 48,688 75-79 48,216 14,380 38,340 0 0 34,926 41,988 80-84 40,891 0 33,010 0 0 20,674 34,381 85 and Over 28,332 0 18,164 0 0 22,493 24,013 All Ages $63,504 $29,226 $48,338 $0 $42,656 $29,611 $54,215 CalPERS Actuarial Valuation – June 30, 2017 Appendix C Safety Plan of the City of Palo Alto Participant Data C-5 Retired Members and Beneficiaries (continued) Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type* Years Retired Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Total Under 5 Yrs 40 2 15 0 0 12 69 5-9 55 1 25 0 0 5 86 10-14 37 0 15 0 1 7 60 15-19 31 0 16 0 1 11 59 20-24 29 1 18 0 0 2 50 25-29 19 1 16 0 0 3 39 30 and Over 15 1 45 0 1 2 64 All Years 226 6 150 0 3 42 427 Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement Type* Years Retired Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Average Under 5 Yrs $66,840 $54,803 $59,929 $0 $0 $17,782 $56,457 5-9 86,536 84 82,280 0 0 25,771 80,761 10-14 66,148 0 63,988 0 53,694 46,532 63,112 15-19 57,909 0 48,640 0 47,534 38,969 51,688 20-24 47,041 33,586 49,701 0 0 13,235 46,377 25-29 44,288 17,698 34,862 0 0 32,703 38,848 30 and Over 31,367 14,380 24,541 0 26,741 11,222 25,600 All Years $63,504 $29,226 $48,338 $0 $42,656 $29,611 $54,215 * Counts of members do not include alternate payees receiving benefits whil e the member is still working. Therefore, the total counts may not match information on C-1 of the report. Multiple records may exist for those who have service in more than one coverage group. This does not result in double counting of liabilities. Appendix D Normal Cost Information by Group • Normal Cost by Benefit Group • PEPRA Member Contribution Rates CalPERS Actuarial Valuation – June 30, 2017 Appendix D Safety Plan of the City of Palo Alto Participant Data D-1 Normal Cost by Benefit Group The table below displays the Total Normal Cost broken out by benefit group for Fiscal Year 2019-20. The Total Normal Cost is the annual cost of service accrual for the fiscal year for active employees and can be viewed as the long-term contribution rate for the benefits contracted. Generally, the normal cost for a benefit group subject to more generous benefit provisions will exceed the normal cost for a group with less generous benefits. However, based on the characteristics of the members (particularly when the number of actives is small), this may not be the case. Future measurements of the Total Normal Cost for each group may differ significantly from the current values due to such factors as: changes in the demographics of the group, changes in economic and demographic assumptions, changes in plan benefits or applicable law. Rate Plan Identifier Benefit Group Name Total Normal Cost FY 2019-20 Number of Actives Payroll on 6/30/2017 5080 Safety Police First Tier 33.678% 55 8,253,984 25006 Safety Fire PEPRA 18.327% 11 1,226,561 25007 Safety Police PEPRA 25.562% 21 2,241,219 30705 Safety Fire First Tier 27.917% 73 9,989,634 30706 Safety Fire Second Tier 27.198% 1 208,988 30707 Safety Fire Third Tier 31.233% 7 993,311 30708 Safety Police Second Tier 34.429% 4 571,814 Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benefits such as Employer Paid Member Contributions, then the Normal Cost split does not reflect those differences. Additionally, if a 2nd Tier Benefit Group amended to the same benefit formula as a 1 st Tier Benefit Group their Normal Costs may be dissimilar due to demographic or other population differences. In these situations you should consult with your plan actuary. CalPERS Actuarial Valuation – June 30, 2017 Appendix D Safety Plan of the City of Palo Alto Participant Data D-2 PEPRA Member Contribution Rates The table below shows the determination of the PEPRA Member contribution rates based on 50 percent of the Total Normal Cost for each respective plan on June 30, 2017. Assembly Bill (AB) 340 created PEPRA that implemented new benefit formulas and a final compensation period as well as new contribution requirements for new employees. In accordance with Section Code 7522.30(b), “new members … shall have an initial contribution rate of at least 50 percent of the normal cost rate.” The normal cost for the plan is dependent on the benefit levels, actuarial assumptions and demographics of the plan particularly the entry age into the plan. Should the total normal cost of the plan change by one percent or more from the base total normal cost established for the plan, the new member rate shall be 50 percent of the new normal cost rounded to the nearest quarter percent. Basis for Current Rate Rates Effective July 1, 2019 Rate Plan Identifier Benefit Group Name Total Normal Cost Member Rate Total Normal Cost Change Change Needed Member Rate 25007 Safety Police PEPRA 21.276% 10.750% 22.114% 0.838% No 10.750% 25006 Safety Fire PEPRA 21.276% 10.750% 22.114% 0.838% No 10.750% The PEPRA employee contribution rate determined in the table above may not necessarily be 50 percent of the Total Normal Cost by Group based on the PEPRA Normal Cost calculation methodology. Each non-pooled plan is stable with a sufficiently large demographic representation of active employees. It is preferable to determine normal cost using a large active population ongoing so that this rate remains relatively stable. The total PEPRA normal cost will be calculated using all active members within a non-pooled plan until the number of members covered under the PEPRA formula meets either: 1. 50 percent of the active population, or 2. 25 percent of the active population and 100 or more PEPRA members Once either of the conditions above is met for a non-pooled plan, the total PEPRA normal cost will be based on the active PEPRA population in the plan. Accordingly, the total normal cost will be funded equally between employer and employee based on the demographics of the employees of that employer. Appendix E Glossary of Actuarial Terms CalPERS Actuarial Valuation – June 30, 2017 Appendix E Safety Plan of the City of Palo Alto Glossary of Actuarial Terms E-1 Glossary of Actuarial Terms Accrued Liability (also called Actuarial Accrued Liability or Entry Age Normal Accrued Liability) The total dollars needed as of the valuation date to fund all benefits earned in the past for current members. Actuarial Assumptions Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down into two categories: demographic and economic. Demographic assumptions include such things as mortality, disability and retirement rates. Economic assumptions include discount rate, salary growth and inflation. Actuarial Methods Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods include funding method, setting the length of time to fund the Accrued Liability and determining the Value of Assets. Actuarial Valuation The determination, as of a valuation date of the Normal Cost, Accrued liability, and related actuarial present values for a pension plan. These valuations are performed annually or when an employer is contemplating a change to their plan provisions. Amortization Bases Separate payment schedules for different portions of the Unfunded Liability. The total Unfunded Liability of a Risk Pool or non-pooled plan can be segregated by "cause,” creating “bases” and each such base will be separately amortized and paid for over a specific period of time. However, all bases are amortized using investment and payroll assumptions from the current valuation. This can be likened to a home having a first mortgage of 24 years remaining payments and a second mortgage that has 10 years remaining payments. Each base or each mortgage note has its own terms (payment period, principal, etc.) Generally, in an actuarial valuation, the separate bases consist of changes in unfunded liability due to contract amendments, actuarial assumption changes, actuarial methodology changes, and/or gains and losses. Payment periods are determined by Board policy and vary based on the cause of the change. Amortization Period The number of years required to pay off an Amortization Base. Classic Member (under PEPRA) A classic member is a member who joined CalPERS prior to January 1, 2013 and who is not defined as a new member under PEPRA. (See definition of new member below) Discount Rate Assumption The actuarial assumption that was called “investment return” in earlier CalPERS reports or “actuarial interest rate” in Section 20014 of the California Public Employees’ Retirement Law (PERL). Entry Age The earliest age at which a plan member begins to accrue benefits under a defined benefit pension plan. In most cases, this is the age of the member on their date of hire. Entry Age Normal Cost Method An actuarial cost method designed to fund a member's total plan benefit over the course of his or her career. This method is designed to yield a rate expressed as a level percentage of payroll. (The assumed retirement age less the entry age is the amount of time required to fund a member’s total benefit. Generally, the older a member on the date of hire, the greater the entry age normal cost. This is mainly because there is less time to earn investment income to fund the future benefits.) CalPERS Actuarial Valuation – June 30, 2017 Appendix E Safety Plan of the City of Palo Alto Glossary of Actuarial Terms E-2 Fresh Start A Fresh Start is when multiple amortization bases are collapsed to one base and amortized together over a new funding period. Funded Status A measure of how well funded, or how "on track" a plan or risk pool is with respect to assets versus accrued liabilities. A ratio greater than 100 percent means the plan or risk pool has more assets than liabilities and a ratio less than 100 percent means liabilities are greater than assets. GASB 68 Statement No. 68 of the Governmental Accounting Standards Board. The accounting standard governing a state or local governmental employer’s accounting and financial reporting for pensions. GASB 68 replaces GASB 27 effective the first fiscal year beginning after June 15, 2014. New Member (under PEPRA) A new member includes an individual who becomes a member of a public retirement system for the first time on or after January 1, 2013, and who was not a member of another public retirement system prior to that date, and who is not subject to reciprocity with another public retirement system. Normal Cost The annual cost of service accrual for the upcoming fiscal year for active employees. The normal cost should be viewed as the long-term contribution rate. Pension Actuary A business professional that is authorized by the Society of Actuaries, and the American Academy of Actuaries to perform the calculations necessary to properly fund a pension plan. PEPRA The California Public Employees’ Pension Reform Act of 2013 Prepayment Contribution A payment made by the employer to reduce or eliminate the year’s required employer contribution towards the UAL. Present Value of Benefits (PVB) The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to be earned in the future for current members. Unfunded Accrued Liability (UAL) When a plan or pool’s Value of Assets is less than its Accrued Liability, the difference is the plan or pool’s Unfunded Accrued Liability (or unfunded liability). If the unfunded liability is positive, the plan or pool will have to pay contributions exceeding the Normal Cost. California Public Employees’ Retirement System Actuarial Office P.O. Box 942701 Sacramento, CA 94229-2701 TTY: (916) 795-3240 (888) 225-7377 phone • (916) 795-2744 fax www.calpers.ca.gov July 2018 Miscellaneous Plan of the City of Palo Alto (CalPERS ID: 6373437857) Annual Valuation Report as of June 30, 2017 Dear Employer, As an attachment to this letter, you will find a copy of the June 30, 2017 actuarial valuation report of your pension plan. Your 2017 actuarial valuation report contains important actuarial information about your pension plan at CalPERS. Your CalPERS staff actuary, whose signature appears in the “Actuarial Certification” section on page 1, is available to discuss the report with you after August 1, 2018. Required Contributions The exhibit below displays the minimum required employer contributions and the Employee PEPRA Rate for Fiscal Year 2019-20 along with an estimate of the required contribution for Fiscal Year 2020-21. Member contributions other than cost sharing (whether paid by the employer or the employee) are in addition to the results shown below. The required employer contributions in this report do not reflect any cost sharing arrangement you may have with your employees. Fiscal Year Employer Normal Cost Rate Employer Amortization of Unfunded Accrued Liability Employee PEPRA Rate 2019-20 10.716% $21,287,260 6.25% Projected Results 2020-21 11.5% $23,401,000 TBD The actual investment return for Fiscal Year 2017-18 was not known at the time this report was prepared. The projections above assume the investment return for that year would be 7.25 percent. If the actual investment return for Fiscal Year 2017-18 differs from 7.25 percent, the actual contribution requirements for the projected years will differ from those shown above. Moreover, the projected results for Fiscal Year 2020-21 assume that there are no future Plan changes, no further changes in assumptions other than those recently approved and no liability gains or losses. Such changes can have a significant impact on required contributions. Since they cannot be predicted in advance, the projected employer results shown above are estimates. The actual required employer contributions for Fiscal Year 2020-21 will be provided in next year’s report. For additional details regarding the assumptions and methods used for these projections please refer to the “Projected Employer Contributions” in the “Highlights and Executive Summary” section. The required contributions shown above include a Normal Cost component expressed as a percentage of payroll and a payment toward Unfunded Accrued Liability expressed as a dollar amount. For illustrative total con tribution requirements expressed as percentages of payroll, please see pages 4 and 5 of the report. The “Risk Analysis” section of the valuation report starting on page 22 also contains estimated employer contributions in future years under a variety of investment return scenarios. ATTACHMENT C Miscellaneous Plan of the City of Palo Alto (CalPERS ID: 6373437857) Annual Valuation Report as of June 30, 2017 Page 2 Changes since the Prior Year’s Valuation At its December 2016 meeting, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June 30, 2016 actuarial valuation. The minimum employer contributions for Fiscal Year 2019-20 determined in this valuation were calculated using a discount rate of 7.25 percent. The projected employer contributions on Page 5 are calculated under the assumption that the discount rate will be lowered to 7.00 percent next year, as adopted by the Board. On December 19, 2017, the CalPERS Board of Administration adopted new actuarial assumptions based on the recommendations in the December 2017 CalPERS Experience Study and Review of Actuarial Assumptions. This study reviewed the retirement rates, termination rates, mortality rates, rates of salary increases and inflation assumption for Public Agencies. These new assumptions are incorporated in your actuarial valuations and will impact the required contribution for FY 2019-20. In addition, the Board adopted a new asset portfolio as part of its Asset Liability Management. The new asset mix supports a 7.00 percent discount rate. The reduction of the inflation assumption will be implemented in two steps in conjunction with the decreases in the discount rate. For the June 30, 2017 valuation an inflation rate of 2.625 percent will be used and a rate of 2.50 percent will be used in the following valuation. The CalPERS Board of Administration has adopted a new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which actuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5 -year ramp- up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These changes will apply only to new UAL bases established on or after June 30, 2019. For inactive employers the new amortization policy imposes a maximum amortization period of 15 years for all unfunded accrued liabilities effective June 30, 2017. Furthermore, the plan actuary has the ability to shorten the amortization period on any valuation date based on the life expectancy of plan members and projected cash flow needs to the plan. The impact of this has been reflected in the current valuation results. Beginning with Fiscal Year 2017-18 CalPERS began collecting employer contributions toward the plan’s unfunded liability as dollar amounts instead of the prior method of a contribution rate. This change addressed potential funding issues that could arise from a declining payroll or reduction in the number of active members in the plan. Funding the unfunded liability as a percentage of payroll could lead to the underfunding of the plans. Due to stakeholder feedback regarding internal needs for total contributions expressed as a percentage of payroll, the reports include such results in the contribution projection on page 5. These results are provided for information purposes only. Contributions toward the unfunded liability will continue to be collected as dollar amounts. The CalPERS Board of Administration adopted a Risk Mitigation Policy which is designed to reduce funding risk over time. This Policy has been temporarily suspended during the period over which the discount rate is being lowered. More details on the Risk Mitigation Policy can be found on our website. Besides the above noted changes, there may also be changes specific to the plan such as contract amendments and funding changes. Further descriptions of general changes are included in the “Highlights and Executive Summary” section and in Appendix A, “Actuarial Methods and Assumptions.” The effects of the changes on the required contributions are included in the “Reconciliation of Required Employer Contributions” section. We understand that you might have some questions about these results. While we are very interested in discussing these results with your agency, in the interest of allowing us to give every public agency their results, we ask that you wait until after August 1, 2018 to contact us with actuarial questions. If you have other questions, you may call the Customer Contact Center at (888)-CalPERS or (888-225-7377). Sincerely, SCOTT TERANDO Chief Actuary Actuarial Valuation as of June 30, 2017 for the Miscellaneous Plan of the City of Palo Alto (CalPERS ID: 6373437857) (Rate Plan ID: 8) Required Contributions for Fiscal Year July 1, 2019 – June 30, 2020 Table of Contents Actuarial Certification 1 Highlights and Executive Summary Introduction 3 Purpose of the Report 3 Required Contributions 4 Plan’s Funded Status 5 Projected Employer Contributions 5 Cost 6 Changes Since the Prior Year’s Valuation 7 Subsequent Events 7 Assets Reconciliation of the Market Value of Assets 10 Asset Allocation 11 CalPERS History of Investment Returns 12 Liabilities and Contributions Development of Accrued and Unfunded Liabilities 14 (Gain) / Loss Analysis 06/30/16 - 06/30/17 15 Schedule of Amortization Bases 16 Amortization Schedule and Alternatives 17 Reconciliation of Required Employer Contributions 19 Employer Contribution History 20 Funding History 20 Risk Analysis Analysis of Future Investment Return Scenarios 22 Analysis of Discount Rate Sensitivity 23 Volatility Ratios 24 Hypothetical Termination Liability 25 Plan’s Major Benefit Provisions Plan’s Major Benefit Options 27 Appendix A – Actuarial Methods and Assumptions Actuarial Data A-1 Actuarial Methods A-1 Actuarial Assumptions A-4 Miscellaneous A-22 Appendix B – Principal Plan Provisions B-1 Appendix C – Participant Data Summary of Valuation Data C-1 Active Members C-2 Transferred and Terminated Members C-3 Retired Members and Beneficiaries C-4 Appendix D – Normal Cost Information by Group Normal Cost by Benefit Group D-1 PEPRA Member Contribution Rates D-2 Appendix E – Glossary of Actuarial Terms E-1 (CY) FIN PROCESS CONTROL ID: 514708 (PY) FIN PROCESS CONTROL ID: 494678 REPORT ID: 111573 CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 1 Actuarial Certification To the best of our knowledge, this report is complete and accurate and contains sufficient information to disclose, fully and fairly, the funded condition of the Miscellaneous Plan of the City of Palo Alto. This valuation is based on the member and financial data as of June 30, 2017 provided by the various CalPERS databases and the benefits under this plan with CalPERS as of the date this report was produced. It is our opinion that the valuation has been performed in accordance with generally accepted actuarial principles, in accordance with standards of practice prescribed by the Actuarial Standards Board, and that the assumptions and methods are internally consistent and reasonable for this plan, as prescribed by the CalPERS Board of Administration according to provisions set forth in the California Public Employees’ Retirement Law. The undersigned is an actuary for CalPERS, a member of the American Academy of Actuaries and the Society of Actuaries and meets the Qualification Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. DAVID CLEMENT, ASA, MAAA, EA Senior Pension Actuary, CalPERS Highlights and Executive Summary • Introduction • Purpose of the Report • Required Contributions • Plan’s Funded Status • Projected Employer Contributions • Cost • Changes Since the Prior Year’s Valuation • Subsequent Events CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 3 Introduction This report presents the results of the June 30, 2017 actuarial valuation of the Miscellaneous Plan of the City of Palo Alto of the California Public Employees’ Retirement System (CalPERS). This actuarial valuation sets the minimum required employer contributions for Fiscal Year 2019-20. Purpose of the Report The actuarial valuation was prepared by the CalPERS Actuarial Office using data as of June 30, 2017. The purpose of the report is to: • Set forth the assets and accrued liabilities of this plan as of June 30, 2017; • Determine the minimum required employer contributions for the fiscal year July 1, 2019 through June 30, 2020; • Provide actuarial information as of June 30, 2017 to the CalPERS Board of Administration and other interested parties. The pension funding information presented in this report should not be used in financial reports subject to Governmental Accounting Standards Board (GASB) Statement No. 68 for an Agent Employer Defined Benefit Pension Plan. A separate accounting valuation report for such purposes is available from CalPERS and details for ordering are available on our website. The measurements shown in this actuarial valuation may not be applicable for other purposes. The employer should contact their actuary before disseminating any portion of this report for any reason that is not explicitly described above. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; changes in actuarial policies; and changes in plan provisions or applicable law. California Actuarial Advisory Panel Recommendations This report includes all the basic disclosure elements as described in the Model Disclosure Elements for Actuarial Valuation Reports recommended in 2011 by the California Actuarial Advisory Panel (CAAP), with the exception of including the original base amounts of the various components of the unfunded liability in the Schedule of Amortization Bases shown on page 16. Additionally, this report includes the following “Enhanced Risk Disclosures” also recommended by the CAAP in the Model Disclosure Elements document: • A “Deterministic Stress Test,” projecting future results under different investment income scenarios • A “Sensitivity Analysis,” showing the impact on current valuation results using alternative discount rates of 6.0 percent, 7.0 percent and 8.0 percent. CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 4 Required Contributions Fiscal Year Required Employer Contribution 2019-20 Employer Normal Cost Rate 10.716% Plus, Either 1) Monthly Employer Dollar UAL Payment $ 1,773,938 Or 2) Annual UAL Prepayment Option $ 20,555,172 Required PEPRA Member Contribution Rate 6.25% The total minimum required employer contribution is the sum of the Plan’s Employer Normal Cost Rate (expressed as a percentage of payroll) plus the Employer Unfunded Accrued Liability (UAL) Contribution Amount (billed monthly in dollars). Only the UAL portion of the employer contribution can be prepaid (which must be received in full no later than July 31). Plan Normal Cost contributions will be made as part of the payroll reporting process. If there is contractual cost sharing or other change, this amount will change. In accordance with Sections 20537 and 20572 of the Public Employees’ Retirement Law, if a contracting agency fails to remit the required contributions when due, interest and penalties may apply. For additional detail regarding the determination of the required contribution for PEPRA members, see Appendix D. Required member contributions for Classic members can be found in Appendix B. Fiscal Year Fiscal Year 2018-19 2019-20 Normal Cost Contribution as a Percentage of Payroll Total Normal Cost 17.697% 18.122% Employee Contribution1 7.480% 7.406% Employer Normal Cost2 10.217% 10.716% Projected Annual Payroll for Contribution Year $ 82,332,567 $ 85,441,123 Estimated Employer Contributions Based On Projected Payroll Total Normal Cost $ 14,570,395 $ 15,483,641 Employee Contribution1 6,158,476 6,327,770 Employer Normal Cost2 8,411,919 9,155,871 Unfunded Liability Contribution 18,392,618 21,287,260 % of Projected Payroll (illustrative only) 22.339% 24.915% Estimated Total Employer Contribution $ 26,804,537 $ 30,443,131 % of Projected Payroll (illustrative only) 32.556% 35.631% 1 For classic members, this is the percentage specified in the Public Employees Retirement Law, net of any reduction from the use of a modified formula or other factors. For PEPRA members, the member contribution rate is based on 50 percent of the normal cost. A development of PEPRA member contribution rates can be found in Appendix D. Employee cost sharing is not shown in this report. 2 The Employer Normal Cost is a blended rate for all benefit groups in the plan. A breakout of normal cost by benefit group is shown in Appendix D. CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 5 Plan’s Funded Status This measure of funded status is an assessment of the need for future employer contributions based on the selected actuarial cost method used to fund the plan. The UAL is the present value of future employer contributions for service that has already been earned and is in addition to future normal cost contributions for active members. For a measure of funded status that is appropriate for assessing the sufficiency of plan assets to cover estimated termination liabilities, please see “Hypothetical Termination Liability” in the “Risk Analysis” section. Projected Employer Contributions The table below shows the required and projected employer contributions (before cost sharing) for the next six fiscal years. Projected results reflect the adopted changes to the discount rate described in Appendix A, “Actuarial Methods and Assumptions.” The projections also assume that all actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. The projected normal cost percentages in the projections below do not reflect that the normal cost will decline over time as new employees are hired into PEPRA or other lower cost benefit tiers. Required Contribution Projected Future Employer Contributions (Assumes 7.25% Return for Fiscal Year 2017-18) Fiscal Year 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 Normal Cost % 10.716% 11.5% 11.5% 11.5% 11.5% 11.5% UAL Payment 21,287,260 23,401,000 25,704,000 27,676,000 28,957,000 30,276,000 Total as a % of Payroll* 35.6% 38.2% 40.0% 41.4% 41.9% 42.5% Projected Payroll 85,441,123 87,577,540 89,985,922 92,460,536 95,003,200 97,615,788 *Illustrative only and based on the projected payroll shown. Changes in the UAL due to actuarial gains or losses as well as changes in actuarial assumptions or methods are amortized using a 5-year ramp up. For more information, please see “Amortization of the Unfunded Actuarial Accrued Liability” under “Actuarial Methods” in Appendix A. This method phases in the impact of changes in UAL over a 5-year period and attempts to minimize employer cost volatility from year to year. As a result of this methodology, dramatic changes in the required employer contributions in any one year are less likely. However, required contributions can change gradually and significantly over the next five years. In years where there is a large increase in UAL the relatively small amortization payments during the ramp up period could result in a funded ratio that is projected to decrease initially while the contribution impact of the increase in the UAL is phased in. Due to the adopted change in the discount rate for the next valuation in combination with the 5-year phase- in ramp, the increases in the required contributions are expected to continue for six years from Fiscal Year 2019-20 through Fiscal Year 2024-25. For projected contributions under alternate investment return scenarios, please see the “Analysis of Future Investment Return Scenarios” in the “Risk Analysis” section. June 30, 2016 June 30, 2017 1. Present Value of Projected Benefits $ 827,688,407 $ 877,802,454 2. Entry Age Normal Accrued Liability 730,382,476 772,526,669 3. Market Value of Assets (MVA) $ 468,702,245 $ 511,805,893 4. Unfunded Accrued Liability (UAL) [(2) – (3)] $ 261,680,231 $ 260,720,776 5. Funded Ratio [(3) / (2)] 64.2% 66.3% CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 6 Cost Actuarial Cost Estimates in General What is the cost of the pension plan? Contributions to fund the pension plan are comprised of two components: • The Normal Cost, expressed as a percentage of total active payroll. • The Amortization of the Unfunded Accrued Liability (UAL), expressed as a dollar amount. For fiscal years prior to FY 2017-18, the Amortizations of UAL component was expressed as percentage of total active payroll. Starting with FY 2017-18, the Amortization of UAL component was expressed as a dollar amount and invoiced on a monthly basis. There continues to be an option to prepay this amount during July of each fiscal year. The Normal Cost component will continue to be expressed as a percentage of active payroll with employer and employee contributions payable as part of the regular payroll reporting process. The determination of both components requires complex actuarial calculations. The calculations are based on a set of actuarial assumptions which can be divided into two categories: • Demographic assumptions (which includes mortality rates, retirement rates, employment termination rates and disability rates) • Economic assumptions (which includes future investment earnings, inflation, salary growth rates) These assumptions reflect CalPERS best estimate of the future experience of the plan an d are long term in nature. We recognize that all the assumptions will not be realized in any given year. For example, the investment earnings at CalPERS have averaged 6.6 percent over the 20 years ending June 30, 2017, yet individual fiscal year returns have ranged from -24.0 percent to +21.7 percent. In addition, CalPERS reviews all the actuarial assumptions on an ongoing basis by conducting in-depth experience studies every four years, with the most recent experience study completed in 2017. CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 7 Changes since the Prior Year’s Valuation Benefits The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation following the effective date of the legislation. Voluntary benefit changes by plan amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the valuation date is prior to the effective date of the amendment. This valuation generally reflects plan changes by amendments effective before the date of the report. Please refer to the “Plan’s Major Benefit Options” and Appendix B for a summary of the plan provisions used in this valuation. The effect of any mandated benefit changes or plan amendments on the unfunded liability is shown in the “(Gain)/Loss Analysis” and the effect on the employer contribution is shown in the “Reconciliation of Required Employer Contributions.” It should be noted that no change in liability or contribution is shown for any plan changes which were already included in the prior year’s valuation. Actuarial Methods and Assumptions On December 21, 2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June 30, 2016 actuarial valuation. The minimum employer contribution for Fiscal Year 2019-20 determined in this valuation was calculated using a discount rate of 7.25 percent. The projected employer contributions on Page 5 are calculated assuming that the discount rate will be lowered to 7.00 percent next year as adopted by the Board. The decision to reduce the discount rate was primarily based on reduced capital market assumptions provided by external investment consultants and CalPERS investment staff. The specific decision adopted by the Board reflected recommendations from CalPERS staff and additional input from employer and employee stakeholder groups. Based on the investment allocation adopted by the Board and capital market assumptions, the reduced discount rate assumption provides a more realistic assumption for the long-term investment return of the fund. On December 19, 2017, the CalPERS Board of Administration adopted new actuarial assumptions based on the recommendations in the December 2017 CalPERS Experience Study and Review of Actuarial Assumptions. This study reviewed the retirement rates, termination rates, mortality rates, rates of salary increases and inflation assumption for Public Agencies. These new assumptions are incorporated in this actuarial valuation and will impact the required contribution for FY 2019-20. In addition, the Board adopted a new asset portfolio as part of its Asset Liability Management. The new asset mix supports a 7.00 percent discount rate. The reduction of the inflation assumption will be implemented in two steps in conjunction with the decreases in the discount rate. For the June 30, 2017 valuation an inflation rate of 2.625 percent will be used and a rate of 2.50 percent will be used in the following valuation. Notwithstanding the Board’s decision to phase into a 7.0 percent discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this discount rate schedule. Subsequent Events The CalPERS Board of Administration has adopted a new amortization policy effective with the June 30, 2019 actuarial valuation. The new policy shortens the period over which ac tuarial gains and losses are amortized from 30 years to 20 years with the payments computed using a level dollar amount. In addition, the new policy removes the 5-year ramp-up and ramp-down on UAL bases attributable to assumption changes and non-investment gains/losses. The new policy removes the 5-year ramp-down on investment gains/losses. These changes will apply only to new UAL bases established on or after June 30, 2019. For inactive employers the new amortization policy imposes a maximum amortization period of 15 years for all unfunded accrued liabilities effective June 30, 2017. Furthermore, the plan actuary has the ability to shorten the amortization period on any valuation date based on the life expectancy of plan members and projected cash flow needs to the plan. The impact of this has been reflected in the current valuation results. CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 8 The contribution requirements determined in this actuarial valuation report are based on demographic and financial information as of June 30, 2017. Changes in the value of assets subsequent to that date are not reflected. Investment returns below the assumed rate of return will increase the retired contribution, while investment returns above the assumed rate of return will decrease the retired contribution. This actuarial valuation report reflects statutory changes, regulatory changes and CalPERS Board actions through January 2018. Any subsequent changes or actions are not reflected. Assets • Reconciliation of the Market Value of Assets • Asset Allocation • CalPERS History of Investment Returns CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 10 Reconciliation of the Market Value of Assets 1. Market Value of Assets as of 6/30/16 including Receivables $ 468,702,245 2. Change in Receivables for Service Buybacks (256,137) 3. Employer Contributions 20,638,307 4. Employee Contributions 5,894,067 5. Benefit Payments to Retirees and Beneficiaries (35,856,582) 6. Refunds (548,737) 7. Lump Sum Payments 0 8. Transfers and Miscellaneous Adjustments 706,647 9. Net Investment Return 52,526,083 10. Market Value of Assets as of 6/30/17 including Receivables $ 511,805,893 CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 11 Asset Allocation CalPERS adheres to an Asset Allocation Strategy which establishes asset class allocation policy targets and ranges, and manages those asset class allocations within their policy ranges. CalPERS Investment Belief No. 6 recognizes that strategic asset allocation is the dominant determinant of portfolio risk and return. On December 19, 2017, the CalPERS Board of Administration adopted changes to the current asset allocation as shown in the Policy Target Allocation below expressed as a percentage of total assets. The asset allocation and market value of assets shown below reflect the values of the Public Employees’ Retirement Fund (PERF) in its entirety as of June 30, 2017. The assets for City of Palo Alto Miscellaneous Plan are part of the PERF and are invested accordingly. (A) Asset Class (B) Market Value ($ Billion) (C) Policy Target Allocation Public Equity 156.2 50.0% Private Equity 25.9 8.0% Global Fixed Income 62.9 28.0% Liquidity 15.5 1.0% Real Assets 36.3 13.0% Inflation Sensitive Assets 25.3 0.0% Other 1.6 0.0% Total Fund $323.7 100.0% Public Equity 48.3% Private Equity 8.0% Global Fixed Income 19.4% Liquidity 4.8% Real Assets 11.2% Inflation 7.8% Other 0.5% Actual Asset Allocation at 6/30/2017 CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 12 CalPERS History of Investment Returns The following is a chart with the 20-year historical annual returns of the Public Employees Retirement Fund for each fiscal year ending on June 30. Beginning in 2002, the figures are reported as gross of fees. The table below shows historical geometric mean annual returns of the Public Employees Retirement Fund for various time periods ending on June 30, 2017 (figures are reported as gross of fees). The geometric mean rate of return is the average rate per period compounded over multiple periods. It should be recognized that in any given year the rate of return is volatile. The portfolio has an expected volatility of 11.4 percent per year based on the most recent Asset Liability Modelling study. The volatility is a measure of the risk of the portfolio expressed in the standard deviation of the fund’s total return distribution, expressed as a percentage. Consequently, when looking at investment returns, it is more instructive to look at returns over longer time horizons. History of CalPERS Geometric Mean Rates of Return and Volatilities 1 year 5 year 10 year 20 year 30 year Geometric Return 11.2% 8.8% 4.3% 6.6% 8.2% Volatility – 7.3% 13.4% 11.5% 10.1% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 19 . 5 % 12 . 5 % 10 . 5 % -7.2 % -6.1 % 3.7 % 16 . 6 % 12 . 3 % 11 . 8 % 19 . 1 % -5.1 % -24 . 0 % 13 . 3 % 21 . 7 % 0.2 % 13 . 2 % 17 . 7 % 2.4 % 0.6 % 11 . 2 % Liabilities and Contributions • Development of Accrued and Unfunded Liabilities • (Gain) / Loss Analysis 06/30/16 - 06/30/17 • Schedule of Amortization Bases • Amortization Schedule and Alternatives • Reconciliation of Required Employer Contributions • Employer Contribution History • Funding History CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 14 Development of Accrued and Unfunded Liabilities June 30, 2016 June 30, 2017 1. Present Value of Projected Benefits a) Active Members $ 362,450,800 384,280,294 b) Transferred Members 33,583,165 35,391,763 c) Terminated Members 13,595,787 16,428,525 d) Members and Beneficiaries Receiving Payments 418,058,655 441,701,872 e) Total $ 827,688,407 877,802,454 2. Present Value of Future Employer Normal Costs $ 54,419,083 59,995,441 3. Present Value of Future Employee Contributions $ 42,886,848 45,280,344 4. Entry Age Normal Accrued Liability a) Active Members [(1a) - (2) - (3)] $ 265,144,869 279,004,509 b) Transferred Members (1b) 33,583,165 35,391,763 c) Terminated Members (1c) 13,595,787 16,428,525 d) Members and Beneficiaries Receiving Payments (1d) 418,058,655 441,701,872 e) Total $ 730,382,476 772,526,669 5. Market Value of Assets (MVA) $ 468,702,245 511,805,893 6. Unfunded Accrued Liability (UAL) [(4e) - (5)] $ 261,680,231 260,720,776 7. Funded Ratio [(5) / (4e)] 64.2% 66.3% CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 15 (Gain)/Loss Analysis 6/30/16 – 6/30/17 To calculate the cost requirements of the plan, assumptions are made about future events that affect the amount and timing of benefits to be paid and assets to be accumulated. Each year, actual experience is compared to the expected experience based on the actuarial assumptions. This results in actuarial gains or losses, as shown below. 1. Total (Gain)/Loss for the Year a) Unfunded Accrued Liability (UAL) as of 6/30/16 $ 261,680,231 b) Expected Payment on the UAL during 2016-17 14,646,645 c) Interest through 6/30/17 [.07375 x (1a) - ((1.07375)½ - 1) x (1b)] 18,768,429 d) Expected UAL before all other changes [(1a) - (1b) + (1c)] 265,802,015 e) Change due to plan changes 0 f) Change due to assumption change 10,865,865 g) Expected UAL after all other changes [(1d) + (1e) + (1f)] 276,667,880 h) Actual UAL as of 6/30/17 260,720,776 i) Total (Gain)/Loss for 2016-17 [(1h) - (1g)] $ (15,947,104) 2. Contribution (Gain)/Loss for the Year a) Expected Contribution (Employer and Employee) $ 28,225,426 b) Interest on Expected Contributions 1,022,299 c) Actual Contributions 26,532,374 d) Interest on Actual Contributions 960,978 e) Expected Contributions with Interest [(2a) + (2b)] 29,247,725 f) Actual Contributions with Interest [(2c) + (2d)] 27,493,352 g) Contribution (Gain)/Loss [(2e) - (2f)] $ 1,754,373 3. Asset (Gain)/Loss for the Year a) Market Value of Assets as of 6/30/16 $ 468,702,245 b) Prior Fiscal Year Receivables (2,169,719) c) Current Fiscal Year Receivables 1,913,582 d) Contributions Received 26,532,374 e) Benefits and Refunds Paid (36,405,319) f) Transfers and Miscellaneous Adjustments 706,647 g) Expected Int. [.07375 x (3a + 3b) + ((1.07375)½ - 1) x ((3d) + (3e) + (3f))] 34,074,779 h) Expected Assets as of 6/30/17 [(3a) + (3b) + (3c) + (3d) + (3e) + (3f) + (3g)] 493,354,589 i) Market Value of Assets as of 6/30/17 511,805,893 j) Asset (Gain)/Loss [(3h) - (3i)] $ (18,451,304) 4. Liability (Gain)/Loss for the Year a) Total (Gain)/Loss (1i) $ (15,947,104) b) Contribution (Gain)/Loss (2g) 1,754,373 c) Asset (Gain)/Loss (3j) (18,451,304) d) Liability (Gain)/Loss [(4a) - (4b) - (4c)] $ 749,827 CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 16 Schedule of Amortization Bases There is a two-year lag between the valuation date and the start of the contribution fiscal year. • The assets, liabilities, and funded status of the plan are measured as of the valuation date: June 30, 2017. • The required employer contributions determined by the valuation are for the fiscal year beginning two years after the valuation date: Fiscal Year 2019-20. This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and the need to provide public agencies with their required employer contribution well in advance of the start of the fiscal year. The Unfunded Accrued Liability (UAL) is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first day of the fiscal year for which the contribution is being determined. The UAL is r olled forward each year by subtracting the expected payment on the UAL for the fiscal year and adjusting for interest. The expected payment on the UAL for a fiscal year is equal to the Expected Employer C ontribution for the fiscal year minus the Expected Normal Cost for the year. The Employer Contribution for the first fiscal year is determined by the actuarial valuation two yea rs ago and the contribution for the second year is from the actuarial valuation one year ago. Additional discretionary payments are reflected in the Expected Payments column in the fiscal year they were made by the agency. Reason for Base Date Established Ramp Up/Down 2019-20 Amorti- zation Period Balance 6/30/17 Expected Payment 2017-18 Balance 6/30/18 Expected Payment 2018-19 Balance 6/30/19 Scheduled Payment for 2019-20 ASSUMPTION CHANGE 06/30/03 No Ramp 6 $14,441,120 $2,166,084 $13,244,870 $2,216,388 $11,909,797 $2,275,477 METHOD CHANGE 06/30/04 No Ramp 7 $(1,120,747) $(152,458) $(1,044,113) $(155,924) $(958,334) $(160,094) BENEFIT CHANGE 06/30/05 No Ramp 7 $24,829,679 $3,377,643 $23,131,891 $3,454,433 $21,231,487 $3,546,810 ASSUMPTION CHANGE 06/30/09 No Ramp 12 $25,077,701 $2,419,210 $24,390,462 $2,468,358 $23,602,500 $2,534,996 SPECIAL (GAIN)/LOSS 06/30/09 No Ramp 22 $16,741,358 $1,133,741 $16,780,986 $1,151,812 $16,804,773 $1,183,236 SPECIAL (GAIN)/LOSS 06/30/10 No Ramp 23 $1,384,096 $91,591 $1,389,590 $93,015 $1,394,007 $95,554 ASSUMPTION CHANGE 06/30/11 No Ramp 14 $11,871,256 $1,041,089 $11,653,754 $1,061,270 $11,399,583 $1,089,996 SPECIAL (GAIN)/LOSS 06/30/11 No Ramp 24 $(58,268) $(3,773) $(58,585) $(3,830) $(58,866) $(3,935) PAYMENT (GAIN)/LOSS 06/30/12 No Ramp 25 $3,050,094 $193,542 $3,070,791 $196,400 $3,090,028 $201,771 (GAIN)/LOSS 06/30/12 No Ramp 25 $25,712,846 $1,631,592 $25,887,324 $1,655,688 $26,049,499 $1,700,967 (GAIN)/LOSS 06/30/13 100% 26 $78,206,101 $3,157,930 $80,605,642 $4,273,993 $82,023,336 $5,488,706 ASSUMPTION CHANGE 06/30/14 80% 17 $43,470,217 $1,618,287 $44,945,884 $2,472,670 $45,643,725 $3,386,584 (GAIN)/LOSS 06/30/14 80% 27 $(47,684,760) $(1,304,427) $(49,791,019) $(1,984,845) $(51,345,332) $(2,719,039) (GAIN)/LOSS 06/30/15 60% 28 $28,066,528 $395,222 $29,692,054 $801,201 $31,014,991 $1,234,835 ASSUMPTION CHANGE 06/30/16 40% 19 $11,637,805 $(375,692) $12,870,618 $242,873 $13,552,215 $499,046 (GAIN)/LOSS 06/30/16 40% 29 $30,176,989 $0 $32,364,821 $449,116 $34,246,159 $922,983 ASSUMPTION CHANGE 06/30/17 20% 20 $10,865,865 $(684,610) $12,362,633 $(704,292) $13,988,300 $263,619 (GAIN)/LOSS 06/30/17 20% 30 $(15,947,104) $0 $(17,103,269) $0 $(18,343,256) $(254,252) TOTAL $260,720,776 $14,704,971 $264,394,333 $17,688,326 $265,244,612 $21,287,260 CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 20 Page 17 Amortization Schedule and Alternatives The amortization schedule on the previous page shows the minimum contributions required according to CalPERS amortization policy. There has been considerable interest from many agencies in paying off these unfunded accrued liabilities sooner and the possible savings in doing so. As a result, we have provided alternate amortization schedules to help analyze the current amortization schedule and illustrate the advantages of accelerating unfunded liability payments. Shown on the following page are future year amortization payments based on 1) the current amortization schedule reflecting the individual bases and remaining periods shown on the previous page, and 2) alternate “fresh start” amortization schedules using two sample periods that would both result in interest savings relative to the current amortization schedule. Note that the payments under each alternate scenario increase by 2.875 percent per year. The schedules do not reflect the impact of adopted discount rate changes that will become effective beyond June 30, 2017. Therefore, future amortization payments displayed in the Current Amortization Schedule on the following page will not match projected amortization payments shown in connection with Projected Employer Contributions provided elsewhere in this report. The Current Amortization Schedule typically contains individual bases that are both positive and negative. Positive bases result from plan changes, assumption changes or plan experience that result in increases to unfunded liability. Negative bases result from plan changes, assumption changes or plan experience that result in decreases to unfunded liability. The combination of positive and negative bases within an amortization schedule can result in unusual or problematic circumstances in future years such as: • A positive total unfunded liability with a negative total payment, • A negative total unfunded liability with a positive total payment, or • Total payments that completely amortize the unfunded liability over a very short period of time In any year where one of the above scenarios occurs, the actuary will consider corrective action such as replacing the existing unfunded liability bases with a single “fresh start” base and amortizing it over a reasonable period. The Current Amortization Schedule on the following page may appear to show that, based on the current amortization bases, one of the above scenarios will occur at some point in the future. It is impossible to know today whether such a scenario will in fact arise since there will be additional bases added to the amortization schedule in each future year. Should such a scenario arise in any future year, the actuary will take appropriate action based on guidelines in the CalPERS amortization policy. CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 18 Amortization Schedule and Alternatives * This schedule does not reflect the impact of adopted discount rate changes that will become effective beyond June 30, 2017. For Projected Employer Contributions, please see Page 5. Alternate Schedules Current Amortization Schedule* 15 Year Amortization 10 Year Amortization Date Balance Payment Balance Payment Balance Payment 6/30/2019 265,244,612 21,287,260 265,244,612 24,118,934 265,244,612 32,895,455 6/30/2020 262,429,422 23,235,491 259,496,898 24,812,354 250,407,794 33,841,200 6/30/2021 257,392,516 25,101,532 252,614,358 25,525,709 233,515,880 34,814,134 6/30/2022 250,057,928 26,607,519 244,494,073 26,259,573 214,391,715 35,815,040 6/30/2023 240,631,961 27,382,976 235,025,066 27,014,536 192,844,494 36,844,723 6/30/2024 229,719,538 28,170,240 224,087,704 27,791,204 168,668,745 37,904,009 6/30/2025 217,200,660 26,282,818 211,553,054 28,590,201 141,643,240 38,993,749 6/30/2026 205,728,806 22,908,470 197,282,188 29,412,169 111,529,834 40,114,819 6/30/2027 196,919,769 23,567,088 181,125,441 30,257,769 78,072,208 41,268,120 6/30/2028 186,790,004 24,244,643 162,921,613 31,127,680 40,994,527 42,454,579 6/30/2029 175,224,146 24,941,678 142,497,114 32,022,601 6/30/2030 162,097,903 25,658,752 119,665,045 32,943,250 6/30/2031 147,277,394 22,834,429 94,224,211 33,890,369 6/30/2032 134,307,310 22,267,062 65,958,067 34,864,717 6/30/2033 120,984,469 20,027,274 34,633,576 35,867,077 6/30/2034 109,015,283 18,926,090 6/30/2035 97,318,734 17,330,139 6/30/2036 86,426,976 15,626,780 6/30/2037 76,509,594 15,221,348 6/30/2038 66,293,072 14,779,688 6/30/2039 55,793,243 14,739,901 6/30/2040 44,573,379 15,163,672 6/30/2041 32,101,210 11,344,252 6/30/2042 22,680,263 10,684,810 6/30/2043 13,259,225 9,361,814 6/30/2044 4,525,277 3,143,773 6/30/2045 1,597,619 1,067,625 6/30/2046 607,797 629,444 6/30/2047 6/30/2048 Totals 512,536,568 444,498,143 374,945,828 Interest Paid 247,291,956 179,253,531 109,701,216 Estimated Savings 68,038,425 137,590,740 CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 19 Reconciliation of Required Employer Contributions Normal Cost (% of Payroll) 1. For Period 7/1/18 – 6/30/19 a) Employer Normal Cost 10.217% b) Employee Contribution 7.480% c) Total Normal Cost 17.697% 2. Changes since the prior year annual valuation a) Effect of changes in demographics results (0.423%) b) Effect of plan changes 0.000% c) Effect of changes in assumptions 0.848% d) Net effect of the changes above [sum of (a) through (c)] 0.425% 3. For Period 7/1/19 – 6/30/20 a) Employer Normal Cost 10.716% b) Employee Contribution 7.406% c) Total Normal Cost 18.122% Employer Normal Cost Change [(3a) – (1a)] 0.499% Employee Contribution Change [(3b) – (1b)] (0.074%) Unfunded Liability Contribution ($) 1. For Period 7/1/18 – 6/30/19 18,392,618 2. Changes since the prior year annual valuation a) Effect of (gain)/loss during prior year1 (254,252) b) Effect of plan changes 0 c) Effect of changes in assumptions2 263,619 d) Changes to prior year amortization payments3 2,885,275 e) Effect of changes due to Fresh Start 0 f) Effect of elimination of amortization base 0 g) Net effect of the changes above [sum of (a) through (f)] 2,894,642 3. For Period 7/1/19 – 6/30/20 [(1) + (2g)] 21,287,260 1 The unfunded liability contribution for the (gain)/loss during the year prior to the valuation date is 20 percent of the “full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be included in line d) in future years. 2 The unfunded liability contribution for the change in assumptions is 20 percent of the “full” annual requirement due to the 5-year ramp. Increases to this amount that occur during the ramp period will be included in line d) in future years. 3 Includes changes due to 5-year ramp, payroll growth assumption, and re-amortization under new discount rate. The amounts shown for the period 7/1/18 – 6/30/19 may be different if a prepayment of unfunded actuarial liability is made or a plan change became effective after the prior year’s actuarial valuation was performed. CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 20 Employer Contribution History The table below provides a recent history of the required employer contributions for the plan, as determined by the annual actuarial valuation. It does not account for prepayments or benefit changes made during a fiscal year. Fiscal Year Employer Normal Cost Unfunded Rate Unfunded Liability Payment ($) 2013 - 14 10.360% 14.240% N/A 2014 - 15 10.283% 15.839% N/A 2015 - 16 10.358% 17.336% N/A 2016 - 17 10.334% 18.556% N/A 2017 - 18 10.039% N/A 15,765,273 2018 - 19 10.217% N/A 18,392,618 2019 - 20 10.716% N/A 21,287,260 Funding History The table below shows the recent history of the actuarial accrued liability, the market value of assets, the funded ratio and the annual covered payroll. Valuation Date Accrued Liability Market Value of Assets (MVA) Unfunded Liability Funded Ratio Annual Covered Payroll 06/30/11 $ 552,715,631 $ 384,056,704 $ 168,658,927 69.5% $ 60,297,783 06/30/12 576,182,013 373,592,926 202,589,087 64.8% 62,910,810 06/30/13 602,540,178 412,227,784 190,312,394 68.4% 64,439,680 06/30/14 666,978,627 475,566,994 191,411,633 71.3% 67,802,942 06/30/15 696,699,220 477,031,099 219,668,121 68.5% 71,574,823 06/30/16 730,382,476 468,702,245 261,680,231 64.2% 75,345,962 06/30/17 772,526,669 511,805,893 260,720,776 66.3% 78,476,098 Risk Analysis • Analysis of Future Investment Return Scenarios • Analysis of Discount Rate Sensitivity • Volatility Ratios • Hypothetical Termination Liability CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 22 Analysis of Future Investment Return Scenarios Analysis was performed to determine the effects of various future investment returns on required employer contributions. The projections below provide a range of results based on five investment return scenarios assumed to occur during the next four fiscal years (2017-18, 2018-19, 2019-20 and 2020-21). The projections also assume that all other actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur. Each of the five investment return scenarios assumes a return of 7.25 percent for fiscal year 2017-18. For fiscal years 2018-19, 2019-20, and 2020-21 each scenario assumes an alternate fixed annual return. The fixed return assumptions for the five scenarios are 1.0 percent, 4.0 percent, 7.0 percent, 9.0 percent and 12.0 percent. The alternate investment returns were chosen based on stochastic analysis of possible future investment returns over the four-year period ending June 30, 2021. Using the expected returns and volatility of the asset classes in which the funds are invested, we produced five thousand stochastic outcomes for this period based on the recently completed Asset Liability Management process. We then selected annual returns that approximate the 5th, 25th, 50th, 75th, and 95th percentiles for these outcomes. For example, of all the 4-year outcomes generated in the stochastic analysis, approximately 25 percent of them had an average annual return of 4.0 percent or less. Required contributions outside of this range are also possible. In particular, whereas it is unlikely that investment returns will average less than 1.0 percent or greater than 12.0 percent over this four -year period, the possibility of a single investment return less than 1.0 percent or greater than 12.0 percent in any given year is much greater. Assumed Annual Return From 2018-19 through 2020-21 Projected Employer Contributions 2020-21 2021-22 2022-23 2023-24 1.0% Normal Cost 11.5% 11.5% 11.5% 11.5% UAL Contribution $23,401,000 $26,208,000 $29,217,000 $32,100,000 4.0% Normal Cost 11.5% 11.5% 11.5% 11.5% UAL Contribution $23,401,000 $25,956,000 $28,454,000 $30,560,000 7.0% Normal Cost 11.5% 11.5% 11.5% 11.5% UAL Contribution $23,401,000 $25,704,000 $27,676,000 $28,957,000 9.0% Normal Cost 11.5% 11.7% 11.9% 12.2% UAL Contribution $23,401,000 $25,518,000 $27,188,000 $28,038,000 12.0% Normal Cost 11.5% 11.7% 11.9% 12.2% UAL Contribution $23,401,000 $25,268,000 $26,395,000 $26,362,000 Given the temporary suspension of the Risk Mitigation Policy during the period over which the discount rate assumption is being phased down to 7.0 percent, the projections above were performed without reflection of any possible impact of this Policy for Fiscal Year 2020-21. The projected normal cost percentages do not reflect that the normal cost will decline over time as new employees are hired into PEPRA or other lower cost benefit tiers. In addition, the projections above do not reflect the recent changes to the amortization policy effective with the June 30, 2019 valuation but the impact on the results above is expected to be minimal. CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 23 Analysis of Discount Rate Sensitivity Shown below are various valuation results as of June 30, 2017 assuming alternate discount rates. Results are shown using the current discount rate of 7.25 percent as well as alternate discount rates of 6.0 percent, 7.0 percent, and 8.0 percent. The alternate rate of 7.0 percent was selected since the Board has adopt ed this rate as the final discount rate at the end of the three-year phase-in of the reduction in this assumption. The rates of 6.0 percent and 8.0 percent were selected since they illustrate the impact of a 1 percent increase or decrease to the 7.0 percent assumption. This analysis shows the potential plan impacts if the PERF were to realize investment returns of 6.0 percent, 7.0 percent, or 8.0 percent over the long-term. This type of analysis gives the reader a sense of the long-term risk to required contributions. For a measure of funded status that is appropriate for assessing the sufficiency of plan assets to cover estimated termination liabilities, please see “Hypothetical Termination Liability” at the end of this section. Sensitivity Analysis As of June 30, 2017 Plan’s Normal Cost Accrued Liability Unfunded Accrued Liability Funded Status 7.25% (current discount rate) 18.122% $772,526,669 $260,720,776 66.3% 6.0% 23.680% $895,761,769 $383,955,876 57.1% 7.0% 18.874% $793,123,267 $281,317,374 64.5% 8.0% 15.216% $707,899,238 $196,093,345 72.3% CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 24 Volatility Ratios The actuarial calculations supplied in this communication are based on various assumptions about long-term demographic and economic behavior. Unless these assumptions (terminations, deaths, disabilities, retirements, salary growth, and investment return) are exactly realized each year, there will be differences on a year-to-year basis. The year-to-year differences between actual experience and the assumptions are called actuarial gains and losses and serve to lower or raise required employer contributions from one year to the next. Therefore, employer contributions will inevitably fluctuate, especially due to the ups and downs of investment returns. Asset Volatility Ratio (AVR) Plans that have higher asset-to-payroll ratios experience more volatile employer contributions (as a percentage of payroll) due to investment return. For example, a plan with an asset-to-payroll ratio of 8 may experience twice the contribution volatility due to investment return volatility than a plan with an asset-to- payroll ratio of 4. Shown below is the asset volatility ratio, a measure of the plan’s current volatility. It should be noted that this ratio is a measure of the current situation. It increases over time but generally tends to stabilize as the plan matures. Liability Volatility Ratio (LVR) Plans that have higher liability-to-payroll ratios experience more volatile employer contributions (as a percentage of payroll) due to investment return and changes in liability. For example, a plan with a liability- to-payroll ratio of 8 is expected to have twice the contribution volatility of a plan with a liability-to-payroll ratio of 4. The liability volatility ratio is also included in the table below. It should be noted that this ratio indicates a longer-term potential for contribution volatility. The asset volatility ratio, described above, will tend to move closer to the liability volatility ratio as the plan matures. Since the liability volatility ratio is a long-term measure, it is shown below at the current discount rate (7.25 percent) as well as the discount rate the Board has adopted to determine the contribution requirement in the June 30, 2018 actuarial valuation (7.00 percent). Contribution Volatility As of June 30, 2017 1. Market Value of Assets without Receivables $ 509,892,311 2. Payroll 78,476,098 3. Asset Volatility Ratio (AVR) [(1) / (2)] 6.5 4. Accrued Liability (7.25% discount rate) $ 772,526,669 5. Liability Volatility Ratio (LVR) [(4) / (2)] 9.8 6. Accrued Liability (7.00% discount rate) 793,123,267 7. Projected Liability Volatility Ratio [(6) / (2)] 10.1 CalPERS Actuarial Valuation - June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Page 25 Hypothetical Termination Liability The hypothetical termination liability is an estimate of the financial position of the plan had the contract with CalPERS been terminated as of June 30, 2017. The plan liability on a termination basis is calculated differently from the plan’s ongoing funding liability. For this hypothetical termination liability calculation, both compensation and service are frozen as of the valuation date and no future pay increases or service accruals are assumed. This measure of funded status is not appropriate for assessing the need for future employer contributions in the case of an ongoing plan, that is, for an employer that continues to provide CalPERS retirement benefits to active employees. A more conservative investment policy and asset allocation strategy was adopted by the CalPERS Board for the Terminated Agency Pool. The Terminated Agency Pool has limited funding sources since no future employer contributions will be made. Therefore, expected benefit payments are secured by risk-free assets and benefit security for members is increased while limiting the funding risk. However, this asset allocation has a lower expected rate of return than the PERF and consequently, a lower discount rate assumption. The lower discount rate for the Terminated Agency Pool results in higher liabilities for terminated plans. The effective termination discount rate will depend on actual market rates of return for risk -free securities on the date of termination. As market discount rates are variable the table below shows a range for the hypothetical termination liability based on the lowest and highest interest rates observed during an approximate 2-year period centered around the valuation date. Market Value of Assets (MVA) Hypothetical Termination Liability1,2 @ 1.75% Funded Status Unfunded Termination Liability @ 1.75% Hypothetical Termination Liability1,2 @ 3.00% Funded Status Unfunded Termination Liability @ 3.00% $511,805,893 $1,421,359,655 36.0% $909,553,762 $1,268,451,484 40.3% $756,645,591 1 The hypothetical liabilities calculated above include a 5 percent contingency load in accordance with Board policy. Other actuarial assumptions can be found in Appendix A. 2 The current discount rate assumption used for termination valuations is a weighted average of the 10-year and 30-year U.S. Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The discount rates used in the table are based on 20-year Treasury bonds, rounded to the nearest quarter percentage point, which is a good proxy for most plans. The 20-year Treasury yield was 2.61 percent on June 30, 2017, and was 2.83 percent on January 31, 2018. In order to terminate the plan, you must first contact our Retirement Services Contract Unit to initiate a Resolution of Intent to Terminate. The completed Resolution will allow the plan actuary to give you a preliminary termination valuation with a more up-to-date estimate of the plan liabilities. CalPERS advises you to consult with the plan actuary before beginning this process. Plan’s Major Benefit Provisions CalPERS Actuarial Valuation – June 30, 2017 Miscellaneous Plan of the City of Palo Alto CalPERS ID: 6373437857 Plan’s Major Benefit Options Shown below is a summary of the major optional benefits for which your agency has contracted for this plan. A description of principal standard and optional plan provisions is in Appendix B of this report. Contract Package Active Misc Active Misc Active Misc Inactive Misc Receiving Misc Benefit Provision Benefit Formula 2.7% @ 55 2.0% @ 60 2.0% @ 62 2.0% @ 55 Social Security Coverage No No No No Full/Modified Full Full Full Full Employee Contribution Rate 8.00% 7.00% 6.25% Final Average Compensation Period One Year One Year Three Year One Year Sick Leave Credit No No No No Non-Industrial Disability Standard Standard Standard Standard Industrial Disability No No No No Pre-Retirement Death Benefits Optional Settlement 2 No No No No 1959 Survivor Benefit Level Level 1 Level 1 Level 1 Level 1 Special No No No No Alternate (firefighters) No No No No Post-Retirement Death Benefits Lump Sum $500 $500 $500 $500 $500 Survivor Allowance (PRSA) No No No No No COLA 2% 2% 2% 2% 2% Page 27 Appendices • Appendix A – Actuarial Methods and Assumptions • Appendix B – Principal Plan Provisions • Appendix C – Participant Data • Appendix D – Normal Cost by Benefit Group and PEPRA Member Contribution Rates • Appendix E – Glossary of Actuarial Terms Appendix A Actuarial Methods and Assumptions • Actuarial Data • Actuarial Methods • Actuarial Assumptions • Miscellaneous CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-1 Actuarial Data As stated in the Actuarial Certification, the data which serves as the basis of this valuation has been obtained from the various CalPERS databases. We have reviewed the valuation data and believe that it is reasonable and appropriate in aggregate. We are unaware of any potential data issues that would have a material effect on the results of this valuation, except that data does not always contain the latest salary information for former members now in reciprocal systems and does not recognize the potential for unusually large salary deviation in certain cases such as elected officials. Therefore, salary information in these cases may not be accurate. These situations are relatively infrequent, however, and when they do occur, they generally do not have a material impact on the required employer contributions. Actuarial Methods Actuarial Cost Method The actuarial cost method used is the Entry Age Normal Cost Method. Under this method, projected benefits are determined for all members and the associated liabilities are spread in a manner that produces level annual cost as a percentage of pay in each year from the member’s entry age to their assumed retirement age on the valuation date. The cost allocated to the current fiscal year is called the normal cost. The actuarial accrued liability for active members is then calculated as the portion of the total cost of the plan allocated to prior years. The actuarial accrued liability for members currently receiving benefits and for members entitled to deferred benefits is equal to the present value of the benefits expected to be paid. No normal costs are applicable for these participants. Amortization of Unfunded Actuarial Accrued Liability The excess of the total actuarial accrued liability over the market value of plan assets is called the unfunded actuarial accrued liability (UAL). Funding requirements are determined by adding the normal cost and an amortization payment toward the unfunded liability. The unfunded liability is amortized as a “level percent of pay”. Commencing with the June 30, 2013 valuation, all new gains or losses are amortized over a fixed 30-year period with a 5-year ramp up at the beginning and a 5-year ramp down at the end of the amortization period. All changes in liability due to plan amendments (other than golden handshakes) are amortized over a 20-year period with no ramp. Changes in actuarial assumptions or changes in actuarial methodology are amortized over a 20-year period with a 5-year ramp up at the beginning and a 5-year ramp down at the end of the amortization period. Changes in unfunded accrued liability due to a Golden Handshake will be amortized over a period of five years. A summary of the current policy is provided in the table below: Driver Source (Gain)/Loss Assumption/Method Change Benefit Change Golden Handshake Investment Non- investment Amortization Period 30 Years 30 Years 20 Years 20 Years 5 Years Escalation Rate - Active Plans - Inactive Plans 2.875% 0% 2.875% 0% 2.875% 0% 2.875% 0% 2.875% 0% Ramp Up 5 5 5 0 0 Ramp Down 5 5 5 0 0 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-2 The 5-year ramp up means that the payments in the first four years of the amortization period are 20 percent, 40 percent, 60 percent and 80 percent of the “full” payment which begins in year five. The 5-year ramp down means that the reverse is true in the final four years of the amortization period. Exceptions for Inconsistencies: An exception to the amortization rules above is used whenever their application results in inconsistencies. In these cases, a “fresh start” approach is used. This means that the current unfunded actuarial liability is projected and amortized over a set number of years. For example, a fresh start is needed in the following situations: • When a positive payment would be required on a negative unfunded actuarial liability (or conversely a negative payment on a positive unfunded actuarial liability); or • When there are excess assets, rather than an unfunded liability. In this situation, a 30-year fresh start is used. It should be noted that the actuary may determine that a fresh start is necessary under other circumstances. In all cases of a fresh start, the period is set by the actuary at what is deemed appropriate; however, the period will not be greater than 30 years. Exceptions for Inactive Plans: The following exceptions apply to plans classified as Inactive. These plans have no active members and no expectation to have active members in the future. • Amortization of the unfunded liability is on a “level dollar” basis rather than a “level percent of pay” basis. For amortization layers, which utilize a ramp up and ramp down, the “ultimate” payment is constant. • Actuarial judgment will be used to shorten amortization periods for Inactive plans with existing periods that are deemed too long given the duration of the liability. The specific demographics of the plan will be used to determine if shorter periods may be more appropriate. Asset Valuation Method It is the policy of the CalPERS Board of Administration to use professionally accepted amortization methods to eliminate a surplus or an unfunded accrued liability in a manner that maintains benefit security for the members of the System while minimizing substantial variations in required employer contributions. On April 17, 2013, the CalPERS Board of Administration approved a recommendation to change the CalPERS amortization and rate smoothing policies. Beginning with the June 30, 2013 valuations that set the employer contribution for Fiscal Year 2015-16, CalPERS employs a policy that amortizes all gains and losses over a fixed 30-year period. The increase or decrease in the rate is then spread directly over a 5-year period. This method is referred to as “direct rate smoothing.” CalPERS no longer uses an actuarial value of assets and only uses the market value of assets. The direct rate smoothing method is equivalent to a method using a 5-year asset smoothing period with no actuarial value of asset corridor and a 25-year amortization period for gains and losses. PEPRA Normal Cost Rate Methodology Per Government Code Section 7522.30(b) the “normal cost rate” shall mean the annual actuarially determined normal cost for the plan of retirement benefits provided to the new member and shall be established based on actuarial assumptions used to determine the liabilities and costs as part of the annual actuarial valuation. The plan of retirement benefits shall include any elements that would impact the actuarial determination of the normal cost, including, but not limited to, the retirement formula, eligibility and vesting criteria, ancillary benefit provisions, and any automatic cost-of-living adjustments as determined by the public retirement system. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-3 Each non-pooled plan is stable with a sufficiently large demographic representation of active employees. It is preferable to determine normal cost using a large active population ongoing so that this rate remains relatively stable. The total PEPRA normal cost will be calculated using all active members within a non- pooled plan until the number of members covered under the PEPRA formula meets either: 1. 50 percent of the active population, or 2. 25 percent of the active population and 100 or more PEPRA members Once either of the conditions above is met for a non-pooled plan, the total PEPRA normal cost will be based on the active PEPRA population in the plan. Accordingly, the total normal cost will be funded equally between employer and employee based on the demographics of the employees of that employer. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-4 Actuarial Assumptions In 2017, CalPERS completed its most recent asset liability management study incorporating actuarial assumptions and strategic asset allocation. In December 2017, the CalPERS Board of Administration adopted relatively modest changes to the asset allocation that reduced the expected volatility of returns. The adopted asset allocation was expected to have a long-term blended return that continued to support a discount rate assumption of 7.00 percent. The Board also approved several changes to the demographic assumptions that more closely aligned with actual experience. These new actuarial assumptions were first used in this, the June 30, 2017 valuation to set the Fiscal Year 2019-20 contribution for public agency employers. On December 21, 2016, the CalPERS Board of Administration lowered the discount rate from 7.50 percent to 7.00 percent using a three-year phase-in beginning with the June 30, 2016 actuarial valuations. The minimum employer contributions for Fiscal Year 2019-20 determined in this valuation were calculated using a discount rate of 7.25 percent. The projected employer contributions on Page 5 are calculated assuming that the discount rate will be lowered to 7.00 percent next year as adopted by the Board. The decision to reduce the discount rate was primarily based on reduced capital market assumptions provided by external investment consultants and CalPERS investment staff. The specific decision adopted by the Board reflected recommendations from CalPERS staff and additional input from employer and employee stakeholder groups. Based on the investment allocation adopted by the Board and capital market assumptions, the reduced discount rate schedule provides a more realistic assumption for the long-term investment return of the fund. Notwithstanding the Board’s decision to phase into a 7.0 percent discount rate, subsequent analysis of the expected investment return of CalPERS assets or changes to the investment allocation may result in a change to this discount rate schedule. For more details and additional rationale for the selection of the actuarial assumptions, please refer to the CalPERS Experience Study and Review of Actuarial Assumptions report from December 2017 that can be found on the CalPERS website under: “Forms and Publications”. Click on “View All” and search for Experience Study. All actuarial assumptions (except the discount rates used for the hypothetical termination liability) represent an estimate of future experience rather than observations of the estimates inherent in market data. Economic Assumptions Discount Rate The prescribed discount rate assumption adopted by the Board on December 21, 2016 is 7.25 percent compounded annually (net of investment and administrative expenses) as of 6/30/2017. The Board also prescribed that the assumed discount rate will reduce to 7.0 percent compounded annually (net of expenses) as of 6/30/2018. This change to the discount rate assumption is not reflected in the determination of required contributions determined in this report for Fiscal Year 2019-20. Termination Liability Discount Rate The current discount rate assumption used for termination valuations is a weighted average of the 10-year and 30-year U.S. Treasury yields where the weights are based on matching asset and liability durations as of the termination date. The hypothetical termination liabilities in this report are calculated using an observed range of market interest rates. This range is based on the lowest and highest 20-year Treasury bond observed during an approximate 2-year period centered around the valuation date. The 20-year Treasury bond has a similar duration to most plan liabilities and serves as a good proxy for the termination discount rate. The 20-year Treasury yield was 2.61 percent on June 30, 2017. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-5 Salary Growth Annual increases vary by category, entry age, and duration of service. A sample of assumed increases are shown below. Wage inflation assumption in the valuation year (2.875% for 2017) is added to these factors for total salary growth. Public Agency Miscellaneous Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.0850 0.0775 0.0650 1 0.0690 0.0635 0.0525 2 0.0560 0.0510 0.0410 3 0.0470 0.0425 0.0335 4 0.0400 0.0355 0.0270 5 0.0340 0.0295 0.0215 10 0.0160 0.0135 0.0090 15 0.0120 0.0100 0.0060 20 0.0090 0.0075 0.0045 25 0.0080 0.0065 0.0040 30 0.0080 0.0065 0.0040 Public Agency Fire Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1700 0.1700 0.1700 1 0.1100 0.1100 0.1100 2 0.0700 0.0700 0.0700 3 0.0580 0.0580 0.0580 4 0.0473 0.0473 0.0473 5 0.0372 0.0372 0.0372 10 0.0165 0.0165 0.0165 15 0.0144 0.0144 0.0144 20 0.0126 0.0126 0.0126 25 0.0111 0.0111 0.0111 30 0.0097 0.0097 0.0097 Public Agency Police Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1027 0.1027 0.1027 1 0.0803 0.0803 0.0803 2 0.0628 0.0628 0.0628 3 0.0491 0.0491 0.0491 4 0.0384 0.0384 0.0384 5 0.0300 0.0300 0.0300 10 0.0145 0.0145 0.0145 15 0.0150 0.0150 0.0150 20 0.0155 0.0155 0.0155 25 0.0160 0.0160 0.0160 30 0.0165 0.0165 0.0165 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-6 Salary Growth (continued) Public Agency County Peace Officers Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.1320 0.1320 0.1320 1 0.0960 0.0960 0.0960 2 0.0657 0.0657 0.0657 3 0.0525 0.0525 0.0525 4 0.0419 0.0419 0.0419 5 0.0335 0.0335 0.0335 10 0.0170 0.0170 0.0170 15 0.0150 0.0150 0.0150 20 0.0150 0.0150 0.0150 25 0.0175 0.0175 0.0175 30 0.0200 0.0200 0.0200 Schools Duration of Service (Entry Age 20) (Entry Age 30) (Entry Age 40) 0 0.0428 0.0419 0.0380 1 0.0428 0.0419 0.0380 2 0.0428 0.0419 0.0380 3 0.0354 0.0332 0.0280 4 0.0305 0.0279 0.0224 5 0.0262 0.0234 0.0180 10 0.0171 0.0154 0.0112 15 0.0152 0.0134 0.0098 20 0.0135 0.0117 0.0086 25 0.0120 0.0103 0.0076 30 0.0087 0.0071 0.0048 • The Miscellaneous salary scale is used for Local Prosecutors. • The Police salary scale is used for Other Safety, Local Sheriff, and School Police. Overall Payroll Growth 2.875 percent compounded annually (used in projecting the payroll over which the unfunded liability is amortized). This assumption is used for all plans with active members. For the June 30, 2018 valuation the payroll growth assumption will be 2.75 percent. Inflation 2.625 percent compounded annually. For the June 30, 2018 valuation the inflation assumption will be 2.50 percent. Non-valued Potential Additional Liabilities The potential liability loss for a cost-of-living increase exceeding the 2.625 percent inflation assumption, and any potential liability loss from future member service purchases are not reflected in the valuation. Miscellaneous Loading Factors Credit for Unused Sick Leave Total years of service is increased by 1 percent for those plans that have adopted the provision of providing Credit for Unused Sick Leave. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-7 Conversion of Employer Paid Member Contributions (EPMC) Total years of service is increased by the Employee Contribution Rate for those plans with the provision providing for the Conversion of Employer Paid Member Contributions (EPMC) during the final compensation period. Norris Decision (Best Factors) Employees hired prior to July 1, 1982 have projected benefit amounts increased in order to reflect the use of “Best Factors” in the calculation of optional benefit forms. This is due to a 1983 Supreme Court decision, known as the Norris decision, which required males and females to be treated equally in the determination of benefit amounts. Consequently, anyone already employed at that time is given the best possible conversion factor when optional benefits are determined. No loading is necessary for employees hired after July 1, 1982. Termination Liability The termination liabilities include a 5 percent contingency load. This load is for unforeseen negative experience. Demographic Assumptions Pre-Retirement Mortality Non-industrial death rates vary by age and gender. Industrial death rates vary by age. See sample rates in table below. The non-industrial death rates are used for all plans. The industrial death rates are used for safety plans (except for Local Prosecutor safety members where the corresponding miscellaneous plan does not have the Industrial Death Benefit). Non-Industrial Death Industrial Death (Not Job-Related) (Job-Related) Age Male Female Male and Female 20 0.00022 0.00007 0.00004 25 0.00029 0.00011 0.00006 30 0.00038 0.00015 0.00007 35 0.00049 0.00027 0.00009 40 0.00064 0.00037 0.00010 45 0.00080 0.00054 0.00012 50 0.00116 0.00079 0.00013 55 0.00172 0.00120 0.00015 60 0.00255 0.00166 0.00016 65 0.00363 0.00233 0.00018 70 0.00623 0.00388 0.00019 75 0.01057 0.00623 0.00021 80 0.01659 0.00939 0.00022 Miscellaneous plans usually have industrial death rates set to zero unless the agency has specifically contracted for industrial death benefits. If so, each non-industrial death rate shown above will be split into two components; 99 percent will become the non-industrial death rate and 1 percent will become the industrial death rate. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-8 Post-Retirement Mortality Rates vary by age, type of retirement, and gender. See sample rates in table below. These rates are used for all plans. Healthy Recipients Non-Industrially Disabled Industrially Disabled (Not Job-Related) (Job-Related) Age Male Female Male Female Male Female 50 0.00372 0.00346 0.01183 0.01083 0.00372 0.00346 55 0.00437 0.00410 0.01613 0.01178 0.00437 0.00410 60 0.00671 0.00476 0.02166 0.01404 0.00671 0.00476 65 0.00928 0.00637 0.02733 0.01757 0.01113 0.00765 70 0.01339 0.00926 0.03358 0.02183 0.01607 0.01111 75 0.02316 0.01635 0.04277 0.02969 0.02779 0.01962 80 0.03977 0.03007 0.06272 0.04641 0.04773 0.03609 85 0.07122 0.05418 0.09793 0.07847 0.08547 0.06501 90 0.13044 0.10089 0.14616 0.13220 0.14348 0.11098 95 0.21658 0.17698 0.21658 0.21015 0.21658 0.17698 100 0.32222 0.28151 0.32222 0.32226 0.32222 0.28151 105 0.46691 0.43491 0.46691 0.43491 0.46691 0.43491 110 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 The post-retirement mortality rates above include 15 years of projected on-going mortality improvement using 90 percent of Scale MP 2016 published by the Society of Actuaries. Marital Status For active members, a percentage who are married upon retirement is assumed according to member category as shown in the following table. Member Category Percent Married Miscellaneous Member 70% Local Police 85% Local Fire 90% Other Local Safety 70% School Police 85% Local County Peace Officers 75% Age of Spouse It is assumed that female spouses are 3 years younger than male spouses. This assumption is used for all plans. Terminated Members It is assumed that terminated members refund immediately if non-vested. Terminated members who are vested are assumed to retire at age 59 for Miscellaneous members and age 54 for safety members. Termination with Refund Rates vary by entry age and service for miscellaneous plans. Rates vary by service for safety plans. See sample rates in tables below. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-9 Public Agency Miscellaneous Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45 0 0.1742 0.1674 0.1606 0.1537 0.1468 0.1400 1 0.1545 0.1477 0.1409 0.1339 0.1271 0.1203 2 0.1348 0.1280 0.1212 0.1142 0.1074 0.1006 3 0.1151 0.1083 0.1015 0.0945 0.0877 0.0809 4 0.0954 0.0886 0.0818 0.0748 0.0680 0.0612 5 0.0212 0.0193 0.0174 0.0155 0.0136 0.0116 10 0.0138 0.0121 0.0104 0.0088 0.0071 0.0055 15 0.0060 0.0051 0.0042 0.0032 0.0023 0.0014 20 0.0037 0.0029 0.0021 0.0013 0.0005 0.0001 25 0.0017 0.0011 0.0005 0.0001 0.0001 0.0001 30 0.0005 0.0001 0.0001 0.0001 0.0001 0.0001 35 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 Public Agency Safety Duration of Service Fire Police County Peace Officer 0 0.1298 0.1013 0.1188 1 0.0674 0.0636 0.0856 2 0.0320 0.0271 0.0617 3 0.0237 0.0258 0.0445 4 0.0087 0.0245 0.0321 5 0.0052 0.0086 0.0121 10 0.0005 0.0053 0.0053 15 0.0004 0.0027 0.0025 20 0.0003 0.0017 0.0012 25 0.0002 0.0012 0.0005 30 0.0002 0.0009 0.0003 35 0.0001 0.0009 0.0002 The police termination and refund rates are also used for Public Agency Local Prosecutors, Other Safety, Local Sheriff, and School Police. Schools Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 Entry Age 45 0 0.2107 0.2107 0.1827 0.1546 0.1375 0.1203 1 0.1807 0.1807 0.1526 0.1246 0.1105 0.0963 2 0.1526 0.1526 0.1259 0.0992 0.0878 0.0765 3 0.1266 0.1266 0.1023 0.0780 0.0691 0.0603 4 0.1026 0.1026 0.0815 0.0605 0.0537 0.0469 5 0.0808 0.0808 0.0634 0.0461 0.0409 0.0358 10 0.0202 0.0202 0.0157 0.0112 0.0087 0.0063 15 0.0107 0.0107 0.0077 0.0048 0.0034 0.0021 20 0.0056 0.0056 0.0037 0.0017 0.0016 0.0016 25 0.0026 0.0026 0.0018 0.0009 0.0012 0.0015 30 0.0013 0.0013 0.0011 0.0009 0.0012 0.0015 35 0.0008 0.0008 0.0009 0.0009 0.0012 0.0015 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-10 Termination with Vested Benefits Rates vary by entry age and service for miscellaneous plans. Rates vary by service for safety plans. See sample rates in tables below. Public Agency Miscellaneous Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 5 0.0422 0.0422 0.0393 0.0364 0.0344 10 0.0278 0.0278 0.0271 0.0263 0.0215 15 0.0192 0.0192 0.0174 0.0156 0.0120 20 0.0139 0.0139 0.0109 0.0079 0.0047 25 0.0083 0.0083 0.0048 0.0014 0.0007 30 0.0015 0.0015 0.0007 0.0000 0.0000 35 0.0000 0.0000 0.0000 0.0000 0.0000 Public Agency Safety Duration of Service Fire Police County Peace Officer 5 0.0094 0.0163 0.0187 10 0.0064 0.0126 0.0134 15 0.0048 0.0082 0.0092 20 0.0038 0.0065 0.0064 25 0.0026 0.0058 0.0042 30 0.0014 0.0056 0.0022 35 0.0000 0.0000 0.0000 • After termination with vested benefits, a miscellaneous member is assumed to retire at age 59 and a safety member at age 54. • The Police termination with vested benefits rates are also used for Public Agency Local Prosecutors, Other Safety, Local Sheriff, and School Police. Schools Duration of Service Entry Age 20 Entry Age 25 Entry Age 30 Entry Age 35 Entry Age 40 5 0.0405 0.0405 0.0346 0.0288 0.0264 10 0.0324 0.0324 0.0280 0.0235 0.0211 15 0.0202 0.0202 0.0179 0.0155 0.0126 20 0.0144 0.0144 0.0114 0.0083 0.0042 25 0.0091 0.0091 0.0046 0.0000 0.0000 30 0.0015 0.0015 0.0007 0.0000 0.0000 35 0.0000 0.0000 0.0000 0.0000 0.0000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-11 Non-Industrial (Not Job-Related) Disability Rates vary by age and gender for miscellaneous plans. Rates vary by age and category for safety plans. Miscellaneous Fire Police County Peace Officer Schools Age Male Female Male and Female Male and Female Male and Female Male Female 20 0.0002 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 25 0.0002 0.0001 0.0001 0.0001 0.0001 0.0001 0.0001 30 0.0002 0.0002 0.0001 0.0002 0.0001 0.0001 0.0002 35 0.0004 0.0007 0.0001 0.0003 0.0004 0.0005 0.0004 40 0.0010 0.0014 0.0001 0.0004 0.0007 0.0012 0.0008 45 0.0015 0.0019 0.0002 0.0005 0.0013 0.0020 0.0017 50 0.0016 0.0020 0.0005 0.0008 0.0018 0.0026 0.0022 55 0.0016 0.0015 0.0007 0.0013 0.0010 0.0025 0.0018 60 0.0015 0.0011 0.0007 0.0020 0.0006 0.0022 0.0011 • The miscellaneous non-industrial disability rates are used for Local Prosecutors. • The police non-industrial disability rates are also used for Other Safety, Local Sheriff, and School Police. Industrial (Job-Related) Disability Rates vary by age and category. Age Fire Police County Peace Officer 20 0.0001 0.0000 0.0004 25 0.0002 0.0017 0.0013 30 0.0006 0.0048 0.0025 35 0.0012 0.0079 0.0037 40 0.0023 0.0110 0.0051 45 0.0040 0.0141 0.0067 50 0.0208 0.0185 0.0092 55 0.0307 0.0479 0.0151 60 0.0438 0.0602 0.0174 • The police industrial disability rates are also used for Local Sheriff and Other Safety. • Fifty percent of the police industrial disability rates are used for School Police. • One percent of the police industrial disability rates are used for Local Prosecutors. • Normally, rates are zero for miscellaneous plans unless the agency has specifically contracted for industrial disability benefits. If so, each miscellaneous non-industrial disability rate will be split into two components: 50 percent will become the non-industrial disability rate and 50 percent will become the industrial disability rate. Service Retirement Retirement rates vary by age, service, and formula, except for the safety ½ @ 55 and 2% @ 55 formulas, where retirement rates vary by age only. CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-12 Service Retirement Public Agency Miscellaneous 1.5% @ 65 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.008 0.011 0.013 0.015 0.017 0.019 51 0.007 0.010 0.012 0.013 0.015 0.017 52 0.010 0.014 0.017 0.019 0.021 0.024 53 0.008 0.012 0.015 0.017 0.019 0.022 54 0.012 0.016 0.019 0.022 0.025 0.028 55 0.018 0.025 0.031 0.035 0.038 0.043 56 0.015 0.021 0.025 0.029 0.032 0.036 57 0.020 0.028 0.033 0.038 0.043 0.048 58 0.024 0.033 0.040 0.046 0.052 0.058 59 0.028 0.039 0.048 0.054 0.060 0.067 60 0.049 0.069 0.083 0.094 0.105 0.118 61 0.062 0.087 0.106 0.120 0.133 0.150 62 0.104 0.146 0.177 0.200 0.223 0.251 63 0.099 0.139 0.169 0.191 0.213 0.239 64 0.097 0.136 0.165 0.186 0.209 0.233 65 0.140 0.197 0.240 0.271 0.302 0.339 66 0.092 0.130 0.157 0.177 0.198 0.222 67 0.129 0.181 0.220 0.249 0.277 0.311 68 0.092 0.129 0.156 0.177 0.197 0.221 69 0.092 0.130 0.158 0.178 0.199 0.224 70 0.103 0.144 0.175 0.198 0.221 0.248 Public Agency Miscellaneous 2% @ 60 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.020 0.020 0.020 0.020 0.020 0.150 51 0.006 0.019 0.027 0.031 0.035 0.038 52 0.011 0.024 0.031 0.034 0.037 0.040 53 0.010 0.015 0.021 0.027 0.033 0.040 54 0.025 0.025 0.029 0.035 0.041 0.048 55 0.019 0.026 0.033 0.092 0.136 0.146 56 0.030 0.034 0.038 0.060 0.093 0.127 57 0.030 0.046 0.061 0.076 0.090 0.104 58 0.040 0.044 0.059 0.080 0.101 0.122 59 0.024 0.044 0.063 0.083 0.103 0.122 60 0.070 0.074 0.089 0.113 0.137 0.161 61 0.080 0.086 0.093 0.118 0.156 0.195 62 0.100 0.117 0.133 0.190 0.273 0.357 63 0.140 0.157 0.173 0.208 0.255 0.301 64 0.140 0.153 0.165 0.196 0.239 0.283 65 0.140 0.178 0.215 0.264 0.321 0.377 66 0.140 0.178 0.215 0.264 0.321 0.377 67 0.140 0.178 0.215 0.264 0.321 0.377 68 0.112 0.142 0.172 0.211 0.257 0.302 69 0.112 0.142 0.172 0.211 0.257 0.302 70 0.140 0.178 0.215 0.264 0.321 0.377 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-13 Service Retirement Public Agency Miscellaneous 2% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.008 0.013 0.018 0.021 0.022 0.033 51 0.009 0.016 0.020 0.023 0.026 0.036 52 0.015 0.018 0.020 0.021 0.025 0.030 53 0.016 0.020 0.024 0.028 0.031 0.035 54 0.018 0.022 0.026 0.030 0.034 0.038 55 0.040 0.040 0.056 0.093 0.109 0.154 56 0.034 0.050 0.066 0.092 0.107 0.138 57 0.042 0.048 0.058 0.082 0.096 0.127 58 0.046 0.054 0.062 0.090 0.106 0.131 59 0.045 0.055 0.066 0.097 0.115 0.144 60 0.058 0.075 0.093 0.126 0.143 0.169 61 0.065 0.088 0.111 0.146 0.163 0.189 62 0.136 0.118 0.148 0.190 0.213 0.247 63 0.130 0.133 0.174 0.212 0.249 0.285 64 0.113 0.129 0.165 0.196 0.223 0.249 65 0.145 0.173 0.201 0.233 0.266 0.289 66 0.170 0.199 0.229 0.258 0.284 0.306 67 0.250 0.204 0.233 0.250 0.257 0.287 68 0.227 0.175 0.193 0.215 0.240 0.262 69 0.200 0.180 0.180 0.198 0.228 0.246 70 0.150 0.171 0.192 0.239 0.304 0.330 Public Agency Miscellaneous 2.5% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.008 0.014 0.020 0.026 0.033 0.050 51 0.008 0.015 0.023 0.030 0.037 0.059 52 0.009 0.016 0.023 0.030 0.037 0.061 53 0.014 0.021 0.028 0.035 0.042 0.063 54 0.014 0.022 0.030 0.039 0.047 0.068 55 0.020 0.038 0.055 0.073 0.122 0.192 56 0.025 0.047 0.069 0.091 0.136 0.196 57 0.030 0.048 0.065 0.083 0.123 0.178 58 0.035 0.054 0.073 0.093 0.112 0.153 59 0.035 0.054 0.073 0.092 0.131 0.183 60 0.044 0.072 0.101 0.130 0.158 0.197 61 0.050 0.078 0.105 0.133 0.161 0.223 62 0.055 0.093 0.130 0.168 0.205 0.268 63 0.090 0.124 0.158 0.192 0.226 0.279 64 0.080 0.112 0.144 0.175 0.207 0.268 65 0.120 0.156 0.193 0.229 0.265 0.333 66 0.132 0.172 0.212 0.252 0.292 0.366 67 0.132 0.172 0.212 0.252 0.292 0.366 68 0.120 0.156 0.193 0.229 0.265 0.333 69 0.120 0.156 0.193 0.229 0.265 0.333 70 0.120 0.156 0.193 0.229 0.265 0.333 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-14 Service Retirement Public Agency Miscellaneous 2.7% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.003 0.010 0.016 0.034 0.033 0.045 51 0.009 0.016 0.023 0.042 0.038 0.047 52 0.015 0.019 0.024 0.040 0.036 0.046 53 0.012 0.020 0.028 0.047 0.046 0.060 54 0.020 0.027 0.035 0.054 0.056 0.073 55 0.033 0.055 0.078 0.113 0.156 0.234 56 0.039 0.067 0.095 0.135 0.169 0.227 57 0.050 0.067 0.084 0.113 0.142 0.198 58 0.043 0.066 0.089 0.124 0.151 0.201 59 0.050 0.070 0.090 0.122 0.158 0.224 60 0.060 0.086 0.112 0.150 0.182 0.238 61 0.071 0.094 0.117 0.153 0.184 0.241 62 0.091 0.122 0.152 0.194 0.226 0.279 63 0.143 0.161 0.179 0.209 0.222 0.250 64 0.116 0.147 0.178 0.221 0.254 0.308 65 0.140 0.174 0.208 0.254 0.306 0.389 66 0.170 0.209 0.247 0.298 0.310 0.324 67 0.170 0.199 0.228 0.269 0.296 0.342 68 0.150 0.181 0.212 0.255 0.287 0.339 69 0.150 0.181 0.212 0.255 0.287 0.339 70 0.150 0.181 0.212 0.243 0.291 0.350 Public Agency Miscellaneous 3% @ 60 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.013 0.019 0.026 0.042 0.038 0.064 51 0.035 0.037 0.039 0.052 0.047 0.062 52 0.023 0.030 0.038 0.055 0.051 0.056 53 0.025 0.032 0.040 0.057 0.056 0.066 54 0.035 0.042 0.050 0.067 0.066 0.076 55 0.040 0.052 0.064 0.085 0.095 0.120 56 0.043 0.056 0.070 0.094 0.102 0.150 57 0.045 0.060 0.074 0.099 0.109 0.131 58 0.053 0.056 0.059 0.099 0.126 0.185 59 0.050 0.068 0.085 0.113 0.144 0.202 60 0.089 0.106 0.123 0.180 0.226 0.316 61 0.100 0.117 0.133 0.212 0.230 0.298 62 0.130 0.155 0.180 0.248 0.282 0.335 63 0.120 0.163 0.206 0.270 0.268 0.352 64 0.150 0.150 0.150 0.215 0.277 0.300 65 0.200 0.242 0.283 0.330 0.300 0.342 66 0.220 0.264 0.308 0.352 0.379 0.394 67 0.250 0.279 0.309 0.338 0.371 0.406 68 0.170 0.196 0.223 0.249 0.290 0.340 69 0.220 0.261 0.302 0.344 0.378 0.408 70 0.220 0.255 0.291 0.326 0.358 0.388 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-15 Service Retirement Public Agency Miscellaneous 2% @ 62 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.000 0.000 0.000 0.000 0.000 0.000 51 0.000 0.000 0.000 0.000 0.000 0.000 52 0.005 0.008 0.012 0.015 0.019 0.031 53 0.007 0.011 0.014 0.018 0.021 0.032 54 0.007 0.011 0.015 0.019 0.023 0.034 55 0.010 0.019 0.028 0.036 0.061 0.096 56 0.014 0.026 0.038 0.050 0.075 0.108 57 0.018 0.029 0.039 0.050 0.074 0.107 58 0.023 0.035 0.048 0.060 0.073 0.099 59 0.025 0.038 0.051 0.065 0.092 0.128 60 0.031 0.051 0.071 0.091 0.111 0.138 61 0.038 0.058 0.079 0.100 0.121 0.167 62 0.044 0.074 0.104 0.134 0.164 0.214 63 0.077 0.105 0.134 0.163 0.192 0.237 64 0.072 0.101 0.129 0.158 0.187 0.242 65 0.108 0.141 0.173 0.206 0.239 0.300 66 0.132 0.172 0.212 0.252 0.292 0.366 67 0.132 0.172 0.212 0.252 0.292 0.366 68 0.120 0.156 0.193 0.229 0.265 0.333 69 0.120 0.156 0.193 0.229 0.265 0.333 70 0.120 0.156 0.193 0.229 0.265 0.333 Service Retirement Public Agency Fire ½ @ 55 and 2% @ 55 Age Rate Age Rate 50 0.0159 56 0.1108 51 0.0000 57 0.0000 52 0.0344 58 0.0950 53 0.0199 59 0.0441 54 0.0413 60 1.00000 55 0.0751 Public Agency Police ½ @ 55 and 2% @ 55 Age Rate Age Rate 50 0.0255 56 0.0692 51 0.0000 57 0.0511 52 0.0164 58 0.0724 53 0.0272 59 0.0704 54 0.0095 60 0.3000 55 0.1667 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-16 Service Retirement Public Agency Police 2% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100 51 0.040 0.040 0.040 0.040 0.058 0.094 52 0.040 0.040 0.040 0.040 0.061 0.087 53 0.040 0.040 0.040 0.040 0.082 0.123 54 0.040 0.040 0.040 0.046 0.098 0.158 55 0.072 0.072 0.072 0.096 0.141 0.255 56 0.066 0.066 0.066 0.088 0.129 0.228 57 0.060 0.060 0.060 0.080 0.118 0.213 58 0.080 0.080 0.080 0.088 0.138 0.228 59 0.080 0.080 0.080 0.092 0.140 0.228 60 0.150 0.150 0.150 0.150 0.150 0.228 61 0.144 0.144 0.144 0.144 0.144 0.170 62 0.150 0.150 0.150 0.150 0.150 0.213 63 0.150 0.150 0.150 0.150 0.150 0.213 64 0.150 0.150 0.150 0.150 0.150 0.319 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.009 0.009 0.009 0.009 0.013 0.020 51 0.013 0.013 0.013 0.013 0.020 0.029 52 0.018 0.018 0.018 0.018 0.028 0.042 53 0.052 0.052 0.052 0.052 0.079 0.119 54 0.067 0.067 0.067 0.067 0.103 0.154 55 0.089 0.089 0.089 0.089 0.136 0.204 56 0.083 0.083 0.083 0.083 0.127 0.190 57 0.082 0.082 0.082 0.082 0.126 0.189 58 0.088 0.088 0.088 0.088 0.136 0.204 59 0.074 0.074 0.074 0.074 0.113 0.170 60 0.100 0.100 0.100 0.100 0.154 0.230 61 0.072 0.072 0.072 0.072 0.110 0.165 62 0.099 0.099 0.099 0.099 0.152 0.228 63 0.114 0.114 0.114 0.114 0.175 0.262 64 0.114 0.114 0.114 0.114 0.175 0.262 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-17 Service Retirement Public Agency Police 3% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.035 0.035 0.035 0.035 0.070 0.090 51 0.028 0.028 0.028 0.029 0.065 0.101 52 0.032 0.032 0.032 0.039 0.066 0.109 53 0.028 0.028 0.028 0.043 0.075 0.132 54 0.038 0.038 0.038 0.074 0.118 0.333 55 0.070 0.070 0.070 0.120 0.175 0.340 56 0.060 0.060 0.060 0.110 0.165 0.330 57 0.060 0.060 0.060 0.110 0.165 0.320 58 0.080 0.080 0.080 0.100 0.185 0.350 59 0.090 0.090 0.095 0.130 0.185 0.350 60 0.150 0.150 0.150 0.150 0.185 0.350 61 0.120 0.120 0.120 0.120 0.160 0.350 62 0.150 0.150 0.150 0.150 0.200 0.350 63 0.150 0.150 0.150 0.150 0.200 0.400 64 0.150 0.150 0.150 0.150 0.175 0.350 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 3% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.001 0.001 0.001 0.006 0.016 0.069 51 0.002 0.002 0.002 0.006 0.018 0.071 52 0.012 0.012 0.012 0.021 0.040 0.098 53 0.032 0.032 0.032 0.049 0.085 0.149 54 0.057 0.057 0.057 0.087 0.144 0.217 55 0.073 0.073 0.073 0.109 0.179 0.259 56 0.064 0.064 0.064 0.097 0.161 0.238 57 0.063 0.063 0.063 0.095 0.157 0.233 58 0.065 0.065 0.065 0.099 0.163 0.241 59 0.088 0.088 0.088 0.131 0.213 0.299 60 0.105 0.105 0.105 0.155 0.251 0.344 61 0.118 0.118 0.118 0.175 0.282 0.380 62 0.087 0.087 0.087 0.128 0.210 0.295 63 0.067 0.067 0.067 0.100 0.165 0.243 64 0.067 0.067 0.067 0.100 0.165 0.243 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-18 Service Retirement Public Agency Police 3% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.100 0.155 0.400 51 0.040 0.040 0.040 0.090 0.140 0.380 52 0.040 0.040 0.040 0.070 0.115 0.350 53 0.040 0.040 0.040 0.080 0.135 0.350 54 0.040 0.040 0.040 0.090 0.145 0.350 55 0.070 0.070 0.070 0.120 0.175 0.340 56 0.060 0.060 0.060 0.110 0.165 0.330 57 0.060 0.060 0.060 0.110 0.165 0.320 58 0.080 0.080 0.080 0.100 0.185 0.350 59 0.090 0.090 0.095 0.130 0.185 0.350 60 0.150 0.150 0.150 0.150 0.185 0.350 61 0.120 0.120 0.120 0.120 0.160 0.350 62 0.150 0.150 0.150 0.150 0.200 0.350 63 0.150 0.150 0.150 0.150 0.200 0.400 64 0.150 0.150 0.150 0.150 0.175 0.350 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 3% @ 50 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.020 0.020 0.020 0.040 0.130 0.192 51 0.008 0.008 0.008 0.023 0.107 0.164 52 0.023 0.023 0.023 0.043 0.136 0.198 53 0.023 0.023 0.023 0.043 0.135 0.198 54 0.027 0.027 0.027 0.048 0.143 0.207 55 0.043 0.043 0.043 0.070 0.174 0.244 56 0.053 0.053 0.053 0.085 0.196 0.269 57 0.054 0.054 0.054 0.086 0.197 0.271 58 0.052 0.052 0.052 0.084 0.193 0.268 59 0.075 0.075 0.075 0.116 0.239 0.321 60 0.065 0.065 0.065 0.102 0.219 0.298 61 0.076 0.076 0.076 0.117 0.241 0.324 62 0.068 0.068 0.068 0.106 0.224 0.304 63 0.027 0.027 0.027 0.049 0.143 0.208 64 0.094 0.094 0.094 0.143 0.277 0.366 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-19 Service Retirement Public Agency Police 2% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.040 0.040 0.040 0.040 0.040 0.080 51 0.028 0.028 0.028 0.028 0.040 0.066 52 0.028 0.028 0.028 0.028 0.043 0.061 53 0.028 0.028 0.028 0.028 0.057 0.086 54 0.028 0.028 0.028 0.032 0.069 0.110 55 0.050 0.050 0.050 0.067 0.099 0.179 56 0.046 0.046 0.046 0.062 0.090 0.160 57 0.054 0.054 0.054 0.072 0.106 0.191 58 0.060 0.060 0.060 0.066 0.103 0.171 59 0.060 0.060 0.060 0.069 0.105 0.171 60 0.113 0.113 0.113 0.113 0.113 0.171 61 0.108 0.108 0.108 0.108 0.108 0.128 62 0.113 0.113 0.113 0.113 0.113 0.159 63 0.113 0.113 0.113 0.113 0.113 0.159 64 0.113 0.113 0.113 0.113 0.113 0.239 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.005 0.005 0.005 0.005 0.008 0.012 51 0.006 0.006 0.006 0.006 0.009 0.013 52 0.012 0.012 0.012 0.012 0.019 0.028 53 0.033 0.033 0.033 0.033 0.050 0.075 54 0.045 0.045 0.045 0.045 0.069 0.103 55 0.061 0.061 0.061 0.061 0.094 0.140 56 0.055 0.055 0.055 0.055 0.084 0.126 57 0.081 0.081 0.081 0.081 0.125 0.187 58 0.059 0.059 0.059 0.059 0.091 0.137 59 0.055 0.055 0.055 0.055 0.084 0.126 60 0.085 0.085 0.085 0.085 0.131 0.196 61 0.085 0.085 0.085 0.085 0.131 0.196 62 0.085 0.085 0.085 0.085 0.131 0.196 63 0.085 0.085 0.085 0.085 0.131 0.196 64 0.085 0.085 0.085 0.085 0.131 0.196 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-20 Service Retirement Public Agency Police 2.5% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.050 0.050 0.050 0.050 0.050 0.100 51 0.038 0.038 0.038 0.038 0.055 0.089 52 0.038 0.038 0.038 0.038 0.058 0.082 53 0.036 0.036 0.036 0.036 0.073 0.111 54 0.036 0.036 0.036 0.041 0.088 0.142 55 0.061 0.061 0.061 0.082 0.120 0.217 56 0.056 0.056 0.056 0.075 0.110 0.194 57 0.060 0.060 0.060 0.080 0.118 0.213 58 0.072 0.072 0.072 0.079 0.124 0.205 59 0.072 0.072 0.072 0.083 0.126 0.205 60 0.135 0.135 0.135 0.135 0.135 0.205 61 0.130 0.130 0.130 0.130 0.130 0.153 62 0.135 0.135 0.135 0.135 0.135 0.191 63 0.135 0.135 0.135 0.135 0.135 0.191 64 0.135 0.135 0.135 0.135 0.135 0.287 65 1.000 1.000 1.000 1.000 1.000 1.000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2.5% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.007 0.007 0.007 0.007 0.010 0.015 51 0.008 0.008 0.008 0.008 0.012 0.018 52 0.016 0.016 0.016 0.016 0.025 0.038 53 0.042 0.042 0.042 0.042 0.064 0.096 54 0.057 0.057 0.057 0.057 0.088 0.132 55 0.074 0.074 0.074 0.074 0.114 0.170 56 0.066 0.066 0.066 0.066 0.102 0.153 57 0.090 0.090 0.090 0.090 0.139 0.208 58 0.071 0.071 0.071 0.071 0.110 0.164 59 0.066 0.066 0.066 0.066 0.101 0.151 60 0.102 0.102 0.102 0.102 0.157 0.235 61 0.102 0.102 0.102 0.102 0.157 0.236 62 0.102 0.102 0.102 0.102 0.157 0.236 63 0.102 0.102 0.102 0.102 0.157 0.236 64 0.102 0.102 0.102 0.102 0.157 0.236 65 1.000 1.000 1.000 1.000 1.000 1.000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-21 Service Retirement Public Agency Police 2.7% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.0500 0.0500 0.0500 0.0500 0.0500 0.1000 51 0.0400 0.0400 0.0400 0.0400 0.0575 0.0942 52 0.0380 0.0380 0.0380 0.0380 0.0580 0.0825 53 0.0380 0.0380 0.0380 0.0380 0.0774 0.1169 54 0.0380 0.0380 0.0380 0.0437 0.0931 0.1497 55 0.0684 0.0684 0.0684 0.0912 0.1340 0.2423 56 0.0627 0.0627 0.0627 0.0836 0.1228 0.2168 57 0.0600 0.0600 0.0600 0.0800 0.1175 0.2125 58 0.0800 0.0800 0.0800 0.0880 0.1375 0.2275 59 0.0800 0.0800 0.0800 0.0920 0.1400 0.2275 60 0.1500 0.1500 0.1500 0.1500 0.1500 0.2275 61 0.1440 0.1440 0.1440 0.1440 0.1440 0.1700 62 0.1500 0.1500 0.1500 0.1500 0.1500 0.2125 63 0.1500 0.1500 0.1500 0.1500 0.1500 0.2125 64 0.1500 0.1500 0.1500 0.1500 0.1500 0.3188 65 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 • These rates also apply to County Peace officers, Local Prosecutors, Local Sheriff, School Police, and Other Safety. Service Retirement Public Agency Fire 2.7% @ 57 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.0065 0.0065 0.0065 0.0065 0.0101 0.0151 51 0.0081 0.0081 0.0081 0.0081 0.0125 0.0187 52 0.0164 0.0164 0.0164 0.0164 0.0254 0.0380 53 0.0442 0.0442 0.0442 0.0442 0.0680 0.1018 54 0.0606 0.0606 0.0606 0.0606 0.0934 0.1397 55 0.0825 0.0825 0.0825 0.0825 0.1269 0.1900 56 0.0740 0.0740 0.0740 0.0740 0.1140 0.1706 57 0.0901 0.0901 0.0901 0.0901 0.1387 0.2077 58 0.0790 0.0790 0.0790 0.0790 0.1217 0.1821 59 0.0729 0.0729 0.0729 0.0729 0.1123 0.1681 60 0.1135 0.1135 0.1135 0.1135 0.1747 0.2615 61 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 62 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 63 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 64 0.1136 0.1136 0.1136 0.1136 0.1749 0.2618 65 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 CalPERS Actuarial Valuation – June 30, 2017 Appendix A Actuarial Methods and Assumptions A-22 Service Retirement Schools 2% @ 55 Duration of Service Age 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years 50 0.004 0.007 0.011 0.012 0.013 0.015 51 0.004 0.008 0.011 0.014 0.016 0.017 52 0.005 0.010 0.014 0.016 0.018 0.021 53 0.006 0.012 0.016 0.020 0.022 0.025 54 0.008 0.017 0.023 0.027 0.031 0.034 55 0.021 0.042 0.058 0.069 0.077 0.086 56 0.019 0.037 0.053 0.062 0.069 0.078 57 0.019 0.038 0.054 0.064 0.071 0.079 58 0.022 0.045 0.062 0.074 0.082 0.092 59 0.025 0.049 0.069 0.082 0.090 0.101 60 0.033 0.066 0.092 0.109 0.121 0.135 61 0.037 0.072 0.101 0.119 0.133 0.149 62 0.066 0.131 0.184 0.218 0.242 0.271 63 0.064 0.126 0.178 0.209 0.233 0.261 64 0.059 0.117 0.163 0.193 0.215 0.240 65 0.080 0.158 0.221 0.261 0.291 0.326 66 0.081 0.160 0.224 0.265 0.296 0.330 67 0.070 0.139 0.194 0.229 0.255 0.286 68 0.063 0.124 0.173 0.205 0.228 0.255 69 0.066 0.130 0.183 0.216 0.241 0.270 70 0.071 0.140 0.196 0.231 0.258 0.289 Miscellaneous Internal Revenue Code Section 415 The limitations on benefits imposed by Internal Revenue Code Section 415 are taken into account in this valuation. Each year the impact of any changes in this limitation since the prior valuation is included and amortized as part of the actuarial gain or loss base. This results in lower contributions for those employers contributing to the Replacement Benefit Fund and protects CalPERS from prefunding expected benefits in excess of limits imposed by federal tax law. Internal Revenue Code Section 401(a) (17) The limitations on compensation imposed by Internal Revenue Code Section 401(a) (17) are taken into account in this valuation. Each year, the impact of any changes in the compensation limitation since the prior valuation is included and amortized as part of the actuarial gain or loss base. The compensation limit for classic members for the 2017 calendar year is $270,000. Appendix B Principal Plan Provisions CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-1 The following is a description of the principal plan provisions used in calculating costs and liabilities. We have indicated whether a plan provision is standard or optional. Standard benefits are applicable to all members while optional benefits vary among employers. Optional benefits that apply to a single period of time, such as Golden Handshakes, have not been included. Many of the statements in this summary are general in nature, and are intended to provide an easily understood summary of the Public Employees’ Retirement Law. The law itself governs in all situations. Service Retirement Eligibility A classic CalPERS member or PEPRA Safety member becomes eligible for Service Retirement upon attainment of age 50 with at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). For employees hired into a plan with the 1.5 percent at 65 formula, eligibility for service retirement is age 55 with at least 5 years of service. PEPRA mi scellaneous members become eligible for service retirement upon attainment of age 52 with at least 5 years of service. Benefit The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final compensation. • The benefit factor depends on the benefit formula specified in your agency’s contract. The table below shows the factors for each of the available formulas. Factors vary by the member’s age at retirement. Listed are the factors for retirement at whole year ages: Miscellaneous Plan Formulas Retirement Age 1.5% at 65 2% at 60 2% at 55 2.5% at 55 2.7% at 55 3% at 60 PEPRA 2% at 62 50 0.5000% 1.092% 1.426% 2.000% 2.000% 2.000% N/A 51 0.5667% 1.156% 1.522% 2.100% 2.140% 2.100% N/A 52 0.6334% 1.224% 1.628% 2.200% 2.280% 2.200% 1.000% 53 0.7000% 1.296% 1.742% 2.300% 2.420% 2.300% 1.100% 54 0.7667% 1.376% 1.866% 2.400% 2.560% 2.400% 1.200% 55 0.8334% 1.460% 2.000% 2.500% 2.700% 2.500% 1.300% 56 0.9000% 1.552% 2.052% 2.500% 2.700% 2.600% 1.400% 57 0.9667% 1.650% 2.104% 2.500% 2.700% 2.700% 1.500% 58 1.0334% 1.758% 2.156% 2.500% 2.700% 2.800% 1.600% 59 1.1000% 1.874% 2.210% 2.500% 2.700% 2.900% 1.700% 60 1.1667% 2.000% 2.262% 2.500% 2.700% 3.000% 1.800% 61 1.2334% 2.134% 2.314% 2.500% 2.700% 3.000% 1.900% 62 1.3000% 2.272% 2.366% 2.500% 2.700% 3.000% 2.000% 63 1.3667% 2.418% 2.418% 2.500% 2.700% 3.000% 2.100% 64 1.4334% 2.418% 2.418% 2.500% 2.700% 3.000% 2.200% 65 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.300% 66 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.400% 67 & up 1.5000% 2.418% 2.418% 2.500% 2.700% 3.000% 2.500% CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-2 Safety Plan Formulas Retirement Age ½ at 55 * 2% at 55 2% at 50 3% at 55 3% at 50 50 1.783% 1.426% 2.000% 2.400% 3.000% 51 1.903% 1.522% 2.140% 2.520% 3.000% 52 2.035% 1.628% 2.280% 2.640% 3.000% 53 2.178% 1.742% 2.420% 2.760% 3.000% 54 2.333% 1.866% 2.560% 2.880% 3.000% 55 & Up 2.500% 2.000% 2.700% 3.000% 3.000% * For this formula, the benefit factor also varies by entry age. The factors shown are for members with an entry age of 35 or greater. If entry age is less than 35, then the age 55 benefit factor is 50 percent divided by the difference between age 55 and entry age. The benefit factor for ages prior to age 55 is the same proportion of the age 55 benefit factor as in the above table. PEPRA Safety Plan Formulas Retirement Age 2% at 57 2.5% at 57 2.7% at 57 50 1.426% 2.000% 2.000% 51 1.508% 2.071% 2.100% 52 1.590% 2.143% 2.200% 53 1.672% 2.214% 2.300% 54 1.754% 2.286% 2.400% 55 1.836% 2.357% 2.500% 56 1.918% 2.429% 2.600% 57 & Up 2.000% 2.500% 2.700% • The years of service is the amount credited by CalPERS to a member while he or she is employed in this group (or for other periods that are recognized under the employer’s contract with CalPERS). For a member who has earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s contract, and then added together for the total allowance. An agency may contract for an optional benefit where any unused sick leave accumulated at the time of retirement will be converted to credited service at a rate of 0.004 years of service for each day of sick leave. • The final compensation is the monthly average of the member’s highest 36 or 12 consecutive months’ full-time equivalent monthly pay (no matter which CalPERS employer paid this compensation). The standard benefit is 36 months. Employers had the option of providing a final compensation equal to the highest 12 consecutive months for classic plans only. Final compensation must be defined by the highest 36 consecutive months’ pay under the 1.5% at 65 formula. PEPRA members have a cap on the annual salary that can be used to calculate final compensation for all new members based on the Social Security contribution and benefit base. For employees that participate in Social Security this cap is $118,775 for 2017 and for those employees that do not participate in Social Security the cap for 2017 is $142,530. Adjustments to the caps are permitted annually based on changes to the CPI for all urban consumers. • Employees must be covered by Social Security with the 1.5% at 65 formula. Social Security is optional for all other benefit formulas. For employees covered by Social Security, the modified formula is the standard benefit. Under this type of formula, the final compensation is offset by $133.33 (or by one third if the final compensation is less than $400). Employers may contract for the full benefit with Social Security that will eliminate the offset applicable to the final compensation. For employees not covered by Social Security, the full benefit is paid with CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-3 no offsets. Auxiliary organizations of the CSUC system may elect reduced contribution rates, in which case the offset is $317 if members are not covered by Social Security or $513 if members are covered by Social Security. • The miscellaneous and PEPRA safety service retirement benefit is not capped. The classic Safety service retirement benefit is capped at 90 percent of final compensation. Vested Deferred Retirement Eligibility for Deferred Status A CalPERS member becomes eligible for a deferred vested retirement benefit when he or she leaves employment, keeps his or her contribution account balance on deposit with CalPERS, and has earned at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). Eligibility to Start Receiving Benefits The CalPERS classic members and PEPRA safety members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 50 (55 for employees hired into a 1.5% @ 65 plan). PEPRA miscellaneous members become eligible to receive the deferred retirement benefit upon satisfying the eligibility requirements for deferred status and upon attainment of age 52. Benefit The vested deferred retirement benefit is the same as the service retirement benefit, where the benefit factor is based on the member’s age at allowance commencement. For members who have earned service with multiple CalPERS employers, the benefit from each employer is calculated separately according to each employer’s co ntract, and then added together for the total allowance. Non-Industrial (Non-Job Related) Disability Retirement Eligibility A CalPERS member is eligible for Non-Industrial Disability Retirement if he or she becomes disabled and has at least 5 years of credited service (total service across all CalPERS employers, and with certain other retirement systems with which CalPERS has reciprocity agreements). There is no special age requirement. Disabled means the member is unable to perform his or her job because of an illness or injury, which is expected to be perm anent or to last indefinitely. The illness or injury does not have to be job related. A CalPERS member must be actively employed by any CalPERS employer at the time of disability in order to be eligible for this benefit. Standard Benefit The standard Non-Industrial Disability Retirement benefit is a monthly allowance equal to 1.8 percent of final compensation, multiplied by service, which is determined as follows: • Service is CalPERS credited service, for members with less than 10 years of service or greater than 18.518 years of service; or • Service is CalPERS credited service plus the additional number of years that the member would have worked until age 60, for members with at least 10 years but not more than 18.518 years of service. The maximum benefit in this case is 33 1/3 percent of final compensation. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-4 Improved Benefit Employers have the option of providing the improved Non-Industrial Disability Retirement benefit. This benefit provides a monthly allowance equal to 30 percent of final compensation for the first 5 years of service, plus 1 percent for each additional year of service to a maximum of 50 percent of final compensation. Members who are eligible for a larger service retirement benefit may choose to receive that benefit in lieu of a disability benefit. Members eligible to retire, and who have attained the normal retirement age determined by their service retirement benefit formula, will receive the same dollar amount for disability retirement as that payable for service retirement. For members who have earned service with multiple CalPERS employers, the benefit attributed to each employer is the total disability allowance multiplied by the ratio of service with a particular employer to the total CalPERS service. Industrial (Job Related) Disability Retirement All safety members have this benefit. For miscellaneous members, employers have the option of providing this benefit. An employer may choose to provide the increased benefit option or the improved benefit option. Eligibility An employee is eligible for Industrial Disability Retirement if he or she becomes disabled while working, where disabled means the member is unable to perform the duties of the job because of a work-related illness or injury, which is expected to be permanent or to last indefinitely. A CalPERS member who has left active employment within this group is not eligible for this benefit, except to the extent described below. Standard Benefit The standard Industrial Disability Retirement benefit is a monthly allowance equal to 50 percent of final compensation. Increased Benefit (75 percent of Final Compensation) The increased Industrial Disability Retirement benefit is a monthly allowance equal to 75 percent final compensation for total disability. Improved Benefit (50 percent to 90 percent of Final Compensation) The improved Industrial Disability Retirement benefit is a monthly allowance equal to the Workman’s Compensation Appeals Board permanent disability rate percentage (if 50 percent or greater, with a maximum of 90 percent) times the final compensation. For a CalPERS member not actively employed in this group who became disabled while employed by some other CalPERS employer, the benefit is a return of accumulated member contributions with respec t to employment in this group. With the standard or increased benefit, a member may also choose to receive the annuitization of the accumulated member contributions. If a member is eligible for service retirement and if the service retirement benefit is more than the industrial disability retirement benefit, the member may choose to receive the larger benefit. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-5 Post-Retirement Death Benefit Standard Lump Sum Payment Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree’s designated survivor(s), or to the retiree’s estate. Improved Lump Sum Payment Employers have the option of providing an improved lump sum death benefit of $600, $2,000, $3,000, $4,000 or $5,000. Form of Payment for Retirement Allowance Standard Form of Payment Generally, the retirement allowance is paid to the retiree in the form of an annuity for as long as he or she is alive. The retiree may choose to provide for a portion of his or her allowance to be paid to any designated beneficiary after the retiree’s death. CalPERS provides for a variety of such benefit options, which the retiree pays for by taking a reduction in his or her retirement allowance. Such reduction takes into account the amount to be provided to the beneficiary and the probable duration of payments (based on the ages of the member and beneficiary) made subsequent to the member’s death. Improved Form of Payment (Post-Retirement Survivor Allowance) Employers have the option to contract for the post-retirement survivor allowance. For retirement allowances with respect to service subject to the modified formula, 25 percent of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. For retirement allowances with respect to service subject to the full or supplemental formula, 50 percent of the retirement allowance will automatically be continued to certain statutory beneficiaries upon the death of the retiree, without a reduction in the retiree’s allowance. This additional benefit is referred to as post-retirement survivor allowance (PRSA) or simply as survivor continuance. In other words, 25 percent or 50 percent of the allowance, the continuance portion, is paid to the retiree for as long as he or she is alive, and that same amount is continued to the retiree’s spouse (or if no eligible spou se, to unmarried child(ren) until they attain age 18; or, if no eligible child(ren), to a qualifying dependent parent) for the rest of his or her lifetime. This benefit will not be discontinued in the event the spouse remarries. The remaining 75 percent or 50 percent of the retirement allowance, which may be referred to as the option portion of the benefit, is paid to the retiree as an annuity for as long as he or she is alive. Or, the retiree may choose to provide for some of this option portion to be paid to any designated beneficiary after the retiree’s death. Benefit options applicable to the option portion are the same as those offered with the standard form. The reduction is calculated in the same manner but is applied only to the option portion. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-6 Pre-Retirement Death Benefits Basic Death Benefit This is a standard benefit. Eligibility An employee’s beneficiary (or estate) may receive the basic death benefit if the member dies while actively employed. A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit. Benefit The basic death benefit is a lump sum in the amount of the member’s accumulated contributions, where inter est is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death. 1957 Survivor Benefit This is a standard benefit. Eligibility An employee’s eligible survivor(s) may receive the 1957 Survivor benefit if the member dies while actively employed, has attained at least age 50 for classic and safety PEPRA members and age 52 for miscellaneous PEPRA members, and has at least 5 years of credited service (total service across all CalPERS em ployers and with certain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member must be actively employed with the CalPERS employer providing this benefit to be eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death or, if there is no eligible spouse, to the member's unmarried child(ren) under age 18. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this 1957 Survivor benefit. Benefit The 1957 Survivor benefit is a monthly allowance equal to one-half of the unmodified service retirement benefit that the member would have been entitled to receive if the member had retired on the date of his or her death. If the benefit is payable to the spouse, the benefit is discontinued upon the death of the spouse. If the benefit is payable to dependent child(ren), the benefit will be discontinued upon death or attainment of age 18, unless the child(ren) is disabled. The total amount paid will be at least equal to the basic death benefit. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-7 Optional Settlement 2 Death Benefit This is an optional benefit. Eligibility An employee’s eligible survivor may receive the Optional Settlement 2 Death benefit if the member dies while actively employed, has attained at least age 50 for classic and safety PEPRA members and age 52 for miscellaneous PEPRA members, and has at least 5 years of credited service (total service across all CalPERS em ployers and with certain other retirement systems with which CalPERS has reciprocity agreements). A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married at least one year before death. A member’s survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this Optional Settlement 2 Death benefit. Benefit The Optional Settlement 2 Death benefit is a monthly allowance equal to the service retirement benefit that the member would have received had the member retired on the date of his or her death and elected 100 percent to continue to the eligible survivor after the member’s death. The allowance is payable as long as the surviving spouse lives, at which time it is continued to any unmarried child(ren) under age 18, if applicable. The total amount paid will be at least equal to the basic death benefit. Special Death Benefit This is a standard benefit for safety members. An employer may elect to provide this benefit for miscellaneous members. Eligibility An employee’s eligible survivor(s) may receive the special death benefit if the member dies while actively employed and the death is job-related. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 22. An eligible survivor who chooses to receive this benefit will not receive any other death benefit. Benefit The special death benefit is a monthly allowance equal to 50 percent of final compensation, and will be increased whenever the compensation paid to active employees is increased but ceasing to increase when the member would have attained age 50. The allowance is payable to the surviving spouse until death at which time the allowance is continued to any unmarried child(ren) under age 22. There is a guarantee that the total amount paid will at least equal the basic death benefit. If the member’s death is the result of an accident or injury caused by external violence or physical force incurred in the performance of the member’s duty, and there are eligible surviving child(ren) (eligible means unmarried child(ren) under age 22) in addition to an eligible spouse, then an additional monthly allowance is paid equal to the following: • if 1 eligible child: 12.5 percent of final compensation • if 2 eligible children: 20.0 percent of final compensation • if 3 or more eligible children: 25.0 percent of final compensation CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-8 Alternate Death Benefit for Local Fire Members This is an optional benefit available only to local fire members. Eligibility An employee’s eligible survivor(s) may receive the alternate death benefit in lieu of the basic death benefit or the 1957 Survivor benefit if the member dies while actively employed and has at least 20 years of total CalPERS service. A CalPERS member who is no longer actively employed with any CalPERS employer is not eligible for this benefit. An eligible survivor means the surviving spouse to whom the member was married prior to the onset of the injury or illness that resulted in death. If there is no eligible spouse, an eligible survivor means the member's unmarried child(ren) under age 18. Benefit The Alternate Death benefit is a monthly allowance equal to the service retirement benefit that the member would have received had the member retired on the date of his or her death and elected Optional Settlement 2. (A retiree who elects Optional Settlement 2 receives an allowance that has been reduced so that it will continue to be paid after his or her death to a surviving beneficiary.) If the member has not yet attained age 50, the benefit is equal to that which would be payable if the member had retired at age 50, based on service credited at the time of death. The allowance is payable as long as the surviving spouse lives, at which time it is continued to any unmarried child(ren) under age 18, if applicable. The total amount paid will be at least equal to the basic death benefit. Cost-of-Living Adjustments (COLA) Standard Benefit Retirement and survivor allowances are adjusted each year in May for cost of living, beginning the second calendar year after the year of retirement. The standard cost-of-living adjustment (COLA) is 2 percent. Annual adjustments are calculated by first determining the lesser of 1) 2 percent compounded from the end of the year of retirement or 2) actual rate of inflation. The resulting increase is divided by the total increase provided in prior years. For any given year, the COLA adjustment may be less than 2 percent (when the rate of inflation is low), may be greater than the rate of inflation (when the rate of inflation is low after several years of hi gh inflation) or may even be greater than 2 percent (when inflation is high after several years of low inflation). Improved Benefit Employers have the option of providing a COLA of 3 percent, 4 percent, or 5 percent, determined in the same manner as described above for the standard 2 percent COLA. An improved COLA is not available with the 1.5% at 65 formula. Purchasing Power Protection Allowance (PPPA) Retirement and survivor allowances are protected against inflation by PPPA. PPPA benefits are cost-of-living adjustments that are intended to maintain an individual’s allowance at 80 percent of the initial allowance at retirement adjusted for inflation since retirement. The PPPA benefit will be coordinated with other cost-of-living adjustments provided under the plan. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-9 Employee Contributions Each employee contributes toward his or her retirement based upon the retirement formula. The standard employee contribution is as described below. • The percent contributed below the monthly compensation breakpoint is 0 percent. • The monthly compensation breakpoint is $0 for full and supplemental formula members and $133.33 for employees covered by the modified formula. • The percent contributed above the monthly compensation breakpoint depends upon the benefit formula, as shown in the table below. Benefit Formula Percent Contributed above the Breakpoint Miscellaneous, 1.5% at 65 2% Miscellaneous, 2% at 60 7% Miscellaneous, 2% at 55 7% Miscellaneous, 2.5% at 55 8% Miscellaneous, 2.7% at 55 8% Miscellaneous, 3% at 60 8% Miscellaneous, 2% at 62 50% of the Total Normal Cost Miscellaneous, 1.5% at 65 50% of the Total Normal Cost Safety, 1/2 at 55 Varies by entry age Safety, 2% at 55 7% Safety, 2% at 50 9% Safety, 3% at 55 9% Safety, 3% at 50 9% Safety, 2% at 57 50% of the Total Normal Cost Safety, 2.5% at 57 50% of the Total Normal Cost Safety, 2.7% at 57 50% of the Total Normal Cost The employer may choose to “pick-up” these contributions for classic members (Employer Paid Member Contributions or EPMC). EPMC is prohibited for new PEPRA members. An employer may also include Employee Cost Sharing in the contract, where employees agree to share the cost of the employer contribution. These contributions are paid in addition to the member contribution. Auxiliary organizations of the CSU system may elect reduced contribution rates, in which case the offset is $317 and the contribution rate is 6 percent if members are not covered by Social Security. If members are covered by Social Security, the offset is $513 and the contribution rate is 5 percent. Refund of Employee Contributions If the member’s service with the employer ends, and if the member does not satisfy the eligibility conditions for any of the retirement benefits above, the member may elect to receive a refund of his or her employee contributions, which are credited with 6 percent interest compounded annually. CalPERS Actuarial Valuation – June 30, 2017 Appendix B Miscellaneous Plan of the City of Palo Alto Principal Plan Provisions B-10 1959 Survivor Benefit This is a pre-retirement death benefit available only to members not covered by Social Security. Any agency joining CalPERS subsequent to 1993 is required to provide this benefit if the members are not covered by Social Security. The benefit is optional for agencies joining CalPERS prior to 1994. Levels 1, 2 and 3 are now closed. Any new agency or any agency wishing to add this benefit or increase the current level may only choose the 4th or Indexed Level. This benefit is not included in the results presented in this valuation. More information on this benefit is available on the CalPERS website at www.calpers.ca.gov. Appendix C Participant Data • Summary of Valuation Data • Active Members • Transferred and Terminated Members • Retired Members and Beneficiaries CalPERS Actuarial Valuation – June 30, 2017 Appendix C Miscellaneous Plan of the City of Palo Alto Participant Data C-1 Summary of Valuation Data June 30, 2016 June 30, 2017 1. Active Members a) Counts 821 818 b) Average Attained Age 46.17 46.30 c) Average Entry Age to Rate Plan 35.05 35.05 d) Average Years of Service 11.12 11.25 e) Average Annual Covered Pay $ 91,773 $ 95,937 f) Annual Covered Payroll 75,345,962 78,476,098 g) Projected Annual Payroll for Contribution Year 82,332,567 85,441,123 h) Present Value of Future Payroll 583,437,155 624,164,899 2. Transferred Members a) Counts 361 375 b) Average Attained Age 45.98 45.70 c) Average Years of Service 3.46 3.38 d) Average Annual Covered Pay $ 113,704 $ 115,882 3. Terminated Members a) Counts 383 399 b) Average Attained Age 48.05 47.86 c) Average Years of Service 3.19 3.24 d) Average Annual Covered Pay $ 66,844 $ 69,073 4. Retired Members and Beneficiaries a) Counts 1,061 1,098 b) Average Attained Age 69.64 69.78 c) Average Annual Benefits $ 32,763 $ 33,253 5. Active to Retired Ratio [(1a) / (4a)] 0.77 0.74 Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities. Average Annual Benefits represents benefit amounts payable by this plan only. Some members may have service with another agency and would therefore have a larger total benefit than would be included as part of the average shown here. CalPERS Actuarial Valuation – June 30, 2017 Appendix C Miscellaneous Plan of the City of Palo Alto Participant Data C-2 Active Members Counts of members included in the valuation are counts of the records processed by the valuation. Multiple records may exist for those who have service in more than one valuation group. This does not result in double counting of liabilities. Distribution of Active Members by Age and Service Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Total 15-24 9 0 0 0 0 0 9 25-29 58 4 0 0 0 0 62 30-34 52 22 1 2 0 0 77 35-39 46 31 23 10 4 0 114 40-44 39 25 14 20 6 1 105 45-49 34 20 16 28 10 6 114 50-54 22 25 15 20 24 28 134 55-59 13 20 16 24 16 25 114 60-64 8 13 10 6 13 10 60 65 and over 2 4 3 8 4 8 29 All Ages 283 164 98 118 77 78 818 Distribution of Average Annual Salaries by Age and Service Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Average 15-24 $59,374 $0 $0 $0 $0 $0 $59,374 25-29 70,259 82,842 0 0 0 0 71,071 30-34 82,695 90,115 105,580 71,881 0 0 84,831 35-39 89,707 95,653 90,267 100,441 101,814 0 92,803 40-44 91,477 97,164 92,365 93,993 109,500 90,379 94,448 45-49 98,440 115,693 107,774 108,124 117,278 110,679 107,452 50-54 114,607 103,282 98,406 98,602 102,099 109,543 104,993 55-59 105,592 105,057 107,202 94,829 92,957 108,957 102,423 60-64 99,567 99,197 75,779 78,898 98,171 97,306 92,776 65 and over 116,442 122,729 102,704 100,211 94,773 91,578 101,563 All Ages $87,894 $100,523 $96,494 $98,123 $101,689 $105,785 $95,937 CalPERS Actuarial Valuation – June 30, 2017 Appendix C Miscellaneous Plan of the City of Palo Alto Participant Data C-3 Transferred and Terminated Members Distribution of Transfers to Other CalPERS Plans by Age, Service, and average Salary Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Total Average Salary 15-24 0 0 0 0 0 0 0 $0 25-29 19 0 0 0 0 0 19 93,056 30-34 39 2 0 0 0 0 41 105,400 35-39 52 10 3 0 0 0 65 109,965 40-44 38 8 0 1 0 0 47 115,246 45-49 52 12 1 4 0 0 69 117,288 50-54 40 16 2 2 1 0 61 121,311 55-59 34 5 5 2 1 0 47 132,458 60-64 14 2 1 1 1 0 19 129,830 65 and over 4 2 1 0 0 0 7 88,141 All Ages 292 57 13 10 3 0 375 115,882 Distribution of Terminated Participants with Funds on Deposit by Age, Service, and average Salary Years of Service at Valuation Date Attained Age 0-4 5-9 10-14 15-19 20-25 25+ Total Average Salary 15-24 0 0 0 0 0 0 0 $0 25-29 16 0 0 0 0 0 16 74,150 30-34 34 5 0 0 0 0 39 75,442 35-39 46 4 0 0 0 0 50 64,369 40-44 50 5 5 0 0 0 60 77,051 45-49 45 13 1 2 1 0 62 76,576 50-54 45 13 4 1 1 0 64 62,173 55-59 33 10 5 4 0 0 52 69,407 60-64 25 5 1 0 0 0 31 61,086 65 and over 18 6 1 0 0 0 25 54,416 All Ages 312 61 17 7 2 0 399 69,073 CalPERS Actuarial Valuation – June 30, 2017 Appendix C Miscellaneous Plan of the City of Palo Alto Participant Data C-4 Retired Members and Beneficiaries Distribution of Retirees and Beneficiaries by Age and Retirement Type* Attained Age Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Total Under 30 0 0 0 0 0 1 1 30-34 0 0 0 0 0 2 2 35-39 0 0 2 0 0 1 3 40-44 0 0 2 0 0 0 2 45-49 0 2 1 0 0 0 3 50-54 26 8 2 1 0 2 39 55-59 102 10 2 0 0 3 117 60-64 176 9 1 0 0 7 193 65-69 189 10 1 0 0 21 221 70-74 199 10 2 0 0 15 226 75-79 106 7 2 0 0 13 128 80-84 54 2 0 0 0 12 68 85 and Over 58 4 0 0 0 33 95 All Ages 910 62 15 1 0 110 1,098 Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Age and Retirement Type* Attained Age Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Average Under 30 $0 $0 $0 $0 $0 $13,273 $13,273 30-34 0 0 0 0 0 12,537 12,537 35-39 0 0 277 0 0 11,801 4,118 40-44 0 0 258 0 0 0 258 45-49 0 12,010 250 0 0 0 8,090 50-54 21,744 15,266 658 16,541 0 22,198 19,224 55-59 37,487 13,208 954 0 0 20,074 34,341 60-64 44,029 12,383 11,655 0 0 16,019 41,370 65-69 40,518 17,601 2,198 0 0 26,533 37,979 70-74 34,078 18,145 9,429 0 0 23,274 32,438 75-79 32,407 19,345 1,904 0 0 25,892 30,555 80-84 31,417 32,963 0 0 0 17,612 29,026 85 and Over 22,652 16,796 0 0 0 21,023 21,839 All Ages $36,289 $16,382 $2,737 $16,541 $0 $21,953 $33,253 CalPERS Actuarial Valuation – June 30, 2017 Appendix C Miscellaneous Plan of the City of Palo Alto Participant Data C-5 Retired Members and Beneficiaries (continued) Distribution of Retirees and Beneficiaries by Years Retired and Retirement Type* Years Retired Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Total Under 5 Yrs 205 3 2 1 0 33 244 5-9 288 11 5 0 0 27 331 10-14 184 12 3 0 0 21 220 15-19 120 10 3 0 0 13 146 20-24 59 13 2 0 0 8 82 25-29 35 9 0 0 0 6 50 30 and Over 19 4 0 0 0 2 25 All Years 910 62 15 1 0 110 1,098 Distribution of Average Annual Disbursements to Retirees and Beneficiaries by Years Retired and Retirement Type* Years Retired Service Retirement Non- Industrial Disability Industrial Disability Non- Industrial Death Industrial Death Death After Retirement Average Under 5 Yrs $33,475 $15,607 $266 $16,541 $0 $17,277 $30,723 5-9 47,521 11,320 271 0 0 31,319 44,282 10-14 35,731 17,691 10,164 0 0 22,289 33,116 15-19 31,320 20,784 1,508 0 0 22,627 29,212 20-24 19,379 22,124 2,079 0 0 12,520 18,723 25-29 19,125 10,263 0 0 0 20,235 17,663 30 and Over 17,327 11,053 0 0 0 7,673 15,551 All Years $36,289 $16,382 $2,737 $16,541 $0 $21,953 $33,253 * Counts of members do not include alternate payees receiving benefits while the member is still working. Therefore, the total counts may not match information on C-1 of the report. Multiple records may exist for those who have service in more than one coverage group. This does not result in double counting of liabilities. Appendix D Normal Cost Information by Group • Normal Cost by Benefit Group • PEPRA Member Contribution Rates CalPERS Actuarial Valuation – June 30, 2017 Appendix D Miscellaneous Plan of the City of Palo Alto Participant Data D-1 Normal Cost by Benefit Group The table below displays the Total Normal Cost broken out by benefit group for Fiscal Year 2019-20. The Total Normal Cost is the annual cost of service accrual for the fiscal year for active employees and can be viewed as the long-term contribution rate for the benefits contracted. Generally, the normal cost for a benefit group subject to more generous benefit provisions will exceed the normal cost for a group with less generous benefits. However, based on the characteristics of the members (particularly when the number of actives is small), this may not be the case. Future measurements of the Total Normal Cost for each group may differ significant ly from the current values due to such factors as: changes in the demographics of the group, changes in economic and demographic assumptions, changes in plan benefits or applicable law. Rate Plan Identifier Benefit Group Name Total Normal Cost FY 2019-20 Number of Actives Payroll on 6/30/2017 8 Miscellaneous First Tier 20.338% 472 46,968,287 26004 Miscellaneous PEPRA 13.154% 232 18,696,016 30157 Miscellaneous Second Tier 17.477% 114 12,811,795 Note that if a Benefit Group above has multiple bargaining units, each of which has separately contracted for different benefits such as Employer Paid Member Contributions, then the Normal Cost split does not reflect those differences. Additionally, if a 2nd Tier Benefit Group amended to the same benefit formula as a 1st Tier Benefit Group their Normal Costs may be dissimilar due to demographic or other population differences. In these situations you should consult with your plan actuary. CalPERS Actuarial Valuation – June 30, 2017 Appendix D Miscellaneous Plan of the City of Palo Alto Participant Data D-2 PEPRA Member Contribution Rates The table below shows the determination of the PEPRA Member contribution rates based on 50 percent of the Total Normal Cost for each respective plan on June 30, 2017. Assembly Bill (AB) 340 created PEPRA that implemented new benefit formulas and a final compensation period as well as new contribution requirements for new employees. In accordance with Section Code 7522.30(b), “new members … shall have an initial contribution rate of at least 50 percent of the normal cost rate.” The normal cost for the plan is dependent on the benefit levels, actuarial assumptions and demographics of the plan particularly the entry age into the plan. Should the total normal cost of the plan change by one percent or more from the base total normal cost established for the plan, the new member rate shall be 50 percent of the new normal cost rounded to the nearest quarter percent. Basis for Current Rate Rates Effective July 1, 2019 Rate Plan Identifier Benefit Group Name Total Normal Cost Member Rate Total Normal Cost Change Change Needed Member Rate 26004 Miscellaneous PEPRA 12.500% 6.250% 13.154% 0.654% No 6.250% The PEPRA employee contribution rate determined in the table above may not necessarily be 50 percent of the Total Normal Cost by Group based on the PEPRA Normal Cost calculation methodology. Each non-pooled plan is stable with a sufficiently large demographic representation of active employees. It is preferable to determine normal cost using a large active population ongoing so that this rate remains relatively stable. The total PEPRA normal cost will be calculated using all active members within a non-pooled plan until the number of members covered under the PEPRA formula meets either: 1. 50 percent of the active population, or 2. 25 percent of the active population and 100 or more PEPRA members Once either of the conditions above is met for a non-pooled plan, the total PEPRA normal cost will be based on the active PEPRA population in the plan. Accordingly, the total normal cost will be funded equally between employer and employee based on the demographics of the employees of that employer. Appendix E Glossary of Actuarial Terms CalPERS Actuarial Valuation – June 30, 2017 Appendix E Miscellaneous Plan of the City of Palo Alto Glossary of Actuarial Terms E-1 Glossary of Actuarial Terms Accrued Liability (also called Actuarial Accrued Liability or Entry Age Normal Accrued Liability) The total dollars needed as of the valuation date to fund all benefits earned in the past for current members. Actuarial Assumptions Assumptions made about certain events that will affect pension costs. Assumptions generally can be broken down into two categories: demographic and economic. Demographic assumptions include such things as mortality, disability and retirement rates. Economic assumptions include discount rate, salary growth and inflation. Actuarial Methods Procedures employed by actuaries to achieve certain funding goals of a pension plan. Actuarial methods include funding method, setting the length of time to fund the Accrued Liability and determining the Value of Assets. Actuarial Valuation The determination, as of a valuation date of the Normal Cost, Accrued liability, and related actuarial present values for a pension plan. These valuations are performed annually or when an employer is contemplating a change to their plan provisions. Amortization Bases Separate payment schedules for different portions of the Unfunded Liability. The total Unfunded Liability of a Risk Pool or non-pooled plan can be segregated by "cause,” creating “bases” and each such base will be separately amortized and paid for over a specific period of time. However, all bases are amortized using investment and payroll assumptions from the current valuation. This can be likened to a home having a first mortgage of 24 years remaining payments and a second mortgage that has 10 years remaining payments. Each base or each mortgage note has its own terms (payment period, principal, etc.) Generally, in an actuarial valuation, the separate bases consist of changes in unfunded liability due to contract amendments, actuarial assumption changes, actuarial methodology changes, and/or gains and losses. Payment periods are determined by Board policy and vary based on the cause of the change. Amortization Period The number of years required to pay off an Amortization Base. Classic Member (under PEPRA) A classic member is a member who joined CalPERS prior to January 1, 2013 and who is not defined as a new member under PEPRA. (See definition of new member below) Discount Rate Assumption The actuarial assumption that was called “investment return” in earlier CalPERS reports or “actuarial interest rate” in Section 20014 of the California Public Employees’ Retirement Law (PERL). Entry Age The earliest age at which a plan member begins to accrue benefits under a defined benefit pension plan. In most cases, this is the age of the member on their date of hire. Entry Age Normal Cost Method An actuarial cost method designed to fund a member's total plan benefit over the course of his or her career. This method is designed to yield a rate expressed as a level percentage of payroll. (The assumed retirement age less the entry age is the amount of time required to fund a member’s total benefit. Generally, the older a member on the date of hire, the greater the entry age normal cost. This is ma inly because there is less time to earn investment income to fund the future benefits.) CalPERS Actuarial Valuation – June 30, 2017 Appendix E Miscellaneous Plan of the City of Palo Alto Glossary of Actuarial Terms E-2 Fresh Start A Fresh Start is when multiple amortization bases are collapsed to one base and amortized together over a new funding period. Funded Status A measure of how well funded, or how "on track" a plan or risk pool is with respect to assets versus accrued liabilities. A ratio greater than 100 percent means the plan or risk pool has more assets than liabilities and a ratio less than 100 percent means liabilities are greater than assets. GASB 68 Statement No. 68 of the Governmental Accounting Standards Board. The accounting standard governing a state or local governmental employer’s accounting and financial reporting for pensions. GASB 68 replaces GASB 27 effective the first fiscal year beginning after June 15, 2014. New Member (under PEPRA) A new member includes an individual who becomes a member of a public retirement system for the first time on or after January 1, 2013, and who was not a member of another public retirement system prior to that date, and who is not subject to reciprocity with another public retirement system. Normal Cost The annual cost of service accrual for the upcoming fiscal year for active employees. The normal cost should be viewed as the long-term contribution rate. Pension Actuary A business professional that is authorized by the Society of Actuaries, and the American Academy of Actuaries to perform the calculations necessary to properly fund a pension plan. PEPRA The California Public Employees’ Pension Reform Act of 2013 Prepayment Contribution A payment made by the employer to reduce or eliminate the year’s required employer contribution towards the UAL. Present Value of Benefits (PVB) The total dollars needed as of the valuation date to fund all benefits earned in the past or expected to be earned in the future for current members. Unfunded Accrued Liability (UAL) When a plan or pool’s Value of Assets is less than its Accrued Liability, the difference is the plan or pool’s Unfunded Accrued Liability (or unfunded liability). If the unfunded liability is positive, the plan or pool will have to pay contributions exceeding the Normal Cost.