HomeMy WebLinkAbout2017-05-04 Finance Committee Summary Minutes
Special Meeting
Thursday, May 4, 2017
Chairperson Filseth called the meeting to order at 7:03 P.M. in the Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California.
Present: Filseth (Chair), Fine, Holman, Tanaka
Absent:
Oral Communications
Chair Filseth: So, welcome to the May 4th Finance Committee meeting on Budget hearings, and thank everybody for coming at this late hour and it may go a little bit later. First off,
we’ll have Oral Communications and we have one member of the public to speak and that is Ms. Vrhel. Thank you for joining us and Rita, you have three minutes.
Rita Vrhel: Good evening. I just wanted to say a couple of things; one, I’m really concerned about the tree trimming Budget this year. Over the last several years, because of the drought
and possibly dewatering, trees have really taken a hit and I don’t know if someone from canopy is going to be coming and speaking to that directly. But there are dead trees all over
Palo Alto, and I know when I trimmed my eucalyptus in front of the house it was $450, and I’ll be doing that again this year. And it was $250 each year to fertilize it. Luckily the tree
is coming back and I’m dedicated to keeping that tree alive. But, I think if you decrease the tree trimming Budget, you’re going to end up with a city that is no longer going to be declared
one of the tree cities of the world, whatever Jim King mentioned was the award the other day. The other thing is, I’m really glad to see that the City Council may be moving away from
assuming 100 percent of the Track Watch expenses. I think that the schools should pay at least a few percent of this. I know the schools have a Budget problem, but honestly, I think
they have been negligent in managing their money and because of that, the City Council shouldn’t pick up more than their fair share. Also, I think the schools could be asked to pay for
more than what they’re paying now for playgrounds and such as that. Finally, I just wanted to say that I know in my personal life I have never dug into my reserves. I have an Emergency
Fund. I have money stashed and if I don’t have enough money for something, then I just don’t get it. I think the old way of doing things was that if you couldn’t pay for it, you didn’t
get it, and I think there are probably other ways to fund the City rather than going into the General Fund. I may be mistaken, but I think this will be the second year that the General
Fund is being dipped into, at a time of pretty good economic growth and development, and I just wonder why that is occurring, rather than making some hard choices and saying, you know,
“Everybody can’t have everything.” The last, I guess it’s the last thing that I want to mention was, I think the pensions have really got to be addressed in a better way. This is a huge
debt that the City has that I assume they want to pay for their employees. I will send you all an article that was in the paper the other day, or on line, about San Diego. Actually,
their court case regarding not having defined benefits, but having 401k’s for new employees was upheld and I think that might be something the City could look into. Thank you.
Chair Filseth: We have no more speakers for Oral Communications, so with that we will move to the Action Items.
Action Items
1. May 2nd Budget Hearing Continuation.
Chair Filseth: The first Action Item is recap of the May 2nd, continuation of the May 2nd session, and welcome Finance. You have the floor.
Steve Guagliardo, Senior Management Analyst: Good evening Chair Filseth, Members of the Council. My name is Steve Guagliardo with the Office of Management and Budget. I’ll be doing my
best impression of Kiely tonight. So, before we get into the recap of Tuesday night’s meeting, you have before you a few At-Places Memos. One was the previously transmitted storm drain
At-Places Memo, and that’s to be discussed later tonight. You were distributed it on Tuesday as well, but just in case, there’s another copy for you. Newly transmitted to you tonight
is an Airport Fund loan repayment At-Places Memorandum that will, again, be discussed in greater detail later tonight as part of the Public Works Department. Finally, you have a transmittal
letter for Human Services resource allocation Staff Report that went through the Human Relations Commission at the end of last month. That will be discussed on Tuesday, but we want to
make sure you had access to the information tonight. Finally, there was a question raised from Council Member Tanaka regarding Parking Lots 4 and 9 in the California Avenue parking district,
and whether any of those lots were scheduled to be part of the scheduled garages that are going to be built there. To answer that question, no, neither of those lots involved there.
Lots 4 and 9 are located at Birch and Cambridge and they run west along Cambridge. With that, we’ll get to the recap of where we ended the night on Tuesday. So, when we started the meeting
on Tuesday night, we were projecting a fund balance of $273,000 at the end of Fiscal Year 2018. Through the actions approved by this Finance Committee, $20,000 of that was approved to
be spent in the Auditor’s Office, leaving a remaining balance of $253,000. The City Council contingency has $225,000 remaining in it, and in the parking lot for the final wrap up meeting,
is the CMO’s Budget for discussion, as well as the non-departmental discussion.
James Keene, City Manager: If I just might add a couple of thoughts and observations from the other night, and some suggestions, Mr. Chairman. First of all, I think if we, maybe we could
get more, if we could get clearer about questions that come up in these sessions in such that if we’re able to answer them right on the spot, we’ll go ahead and do that. If we can’t
we’ll take down the question, you know, and we’ll regroup and we’ll report back to the Committee, assuming, we’re going to assume that these are, these meet essentially kind of the one-hour
role. There could be questions that we don’t kind of get to until wrap up. On the other hand, if we’re able to get answers to questions, you know, expeditiously enough, we’ll just feed
them back to the Committee, all sort of through the process. Secondly, and a particular one, we may actually have follow-up questions for the Committee, and so I did have one as it relates
to us being better prepared on the economic development role, I’m trying to think of a fulltime position focused on, say, primarily retail, if there, one, was any estimate of approximately
how many square feet in any given year we might be thinking of. Because I’m trying to get a size sense of the scale of the marketplace that we would be supporting. And then secondly,
I know that there were comments made that there were other jurisdictions that have a position that might be similar to what, you know, some of you were thinking about. It would be very
helpful if you could get that to us, so that we could do some research so we’re sort of better prepared to match up maybe what the expectations are with what our understanding of the
sort of facts on the ground are. We’d be better prepared.
Council Member Holman: Clarification, that when you said square feet, I’m not quite sure what you’re referring to.
Mr. Keene: I’m saying that, for the most part we’re a built-out City, so we’re looking at, if there are vacancies in existing buildings in any given year, my thought was, what I was
hearing was, let’s have a focus to help attract and bring in the kind of retail we would like to have, and then work with property owners. So, I mean, we’re clearly not a brand-new City
that has shopping malls popping up all over the place. I mean, if we really had 50,000 square feet in a year, my initial reaction is, that’s hardly enough work for one person to be working
on fulltime. So, I just really want to get a sense that we’re clear about the magnitude of the tasks that you’re – and to make sure that we look at it right. I’m drawing on some of my
past experience and we’re at a little bit of a loss to make sure that we can respond adequately. So, if we could ask back to the Council at times, you don’t have to do it right now,
but even if you could get us some information that would be helpful.
Council Member Holman: So, there was, I went out to get some water, and there was a conversation, unfortunately, that happened with me out of the room about that position, so if somebody
could update me on what that conversation was, that would be helpful. I don’t mean, also, right now.
Mr. Keene: Okay, I think it ended up with the idea of putting, in particular, at least one of the Assistant to the City Manager positions in the parking lot for more discussion about
the relationship of at least that position to economic development particularly, and there was talk about retail.
Chair Filseth: I mean, I don’t want to shut down discussion on any of this kind of stuff. That said, I think we need to be careful about sort of getting into brainstorming territory
about, what about this, what about that, in this session, where we’re really talking about sort of numbers and so forth. So, I think we ought to be cognizant of making sure we don’t
do that.
Mr. Keene: I think that’s helpful for us, particularly since we’re going to be getting into meatier and meatier and bigger impact discussions, and so I would, of course, you know, half
of our Committee is brand new, even on the Council, and we’ve got a $660 million Budget.
Chair Filseth: That’s true, but not an excuse.
Mr. Keene: With lots of departments. But if I could offer some perspective. Really, first of all, this Committee, I think, serves as a surrogate for the Council on the Budget process.
It’s a little bit of a different role than even Committees typically have, with periodic things being referred to it or whatever. You really do the heavy lifting for the Council and
it’s pretty much expected when the items get to the Council, of course, that the Council isn’t going to redo all of the work. And so, I would just sort of ask that you guys think about
this in the sense of, you’re also representing the whole Council, not just your own perspective, and that’s one thing. The second thing is that the way we develop and present the Budget,
for the most part, I don’t mean to say that it’s sort of a status quo Budget, but unless we’re in a year where we’ve either had like some crazy windfall, like out of cargo cult windfall,
and we’d have to bring a whole bunch of, what should we do with this; or we’re in a really very particular kind of crisis mode of cutback, where we have some really clear targets about
just what we have to reduce, I would ask that you really think that in many ways the focus of what we’re doing is at the margins of change from one year to the next. That’s what we’re
doing. What are the new initiatives or new positions or funding that we’re asking for, not status quo funding, or what are new demands that are being placed on us. So, again, the fact
that we’ve got to absorb on an ongoing basis the cost of electricity for our street lights, it was previously in the Electric Fund. So, the Committee really needs to make recommendations
on those sorts of things. To the extent that we want to get into reengineering in any way, or restructuring government, what we do, I would respectfully say, that’s not really the charge
of the Committee. It’s to review the proposed City Manager’s Budget and made amended suggestions, but also to maybe get a better understanding what the Staff is planning to be doing
in this upcoming year roughly in their areas, so that you get to be informed about what we’re going to do. If we stay on a track where there’s a desire to really get into rethinking
what we do, now I suggest that is something that ought to come out of recommendations from the Committee to the whole Council, and we ought to ultimately get direction from the Council
to the Finance Committee in going forward, that they want the Finance Committee to really spend some time really working on that. Because that is very significantly different than reviewing
the Proposed Budget, making sure that you have some understanding about what’s different from what we’re doing. That doesn’t mean you don’t want to get a better understanding of what
we do, but I can tell you right now, I don’t reengineer the Budget through our Budget process every year. We often do like what the Auditor does, and that’s one of the roles you guys
have for the Auditor, is to spot look at issue areas that need a deeper dive investigation in the course of the year, and it’s impossible for us to transform everything, particularly
since, and I’ll be done here in a second, we do have a sunk cost of the employees we have. I mean, that’s the main resource we have to get work accomplished. Sometimes consultant assistance.
And then just the supplies, or on the capital side, how much money we have on the capital side to invest in estimated costs on projects and that sort of thing. So, I just would put that
out there, and I think it will be helpful, and to be honest with you, we haven’t gone to our employees and talked about a dramatic restructuring of City Government. I would just ask
that the Council realize that we are also talking about the work people do, the jobs that they have, the importance of what they do, and we could ask worthwhile and kind of interesting
questions that could be, one, they’re not going to necessarily go anywhere right here this year, and actually can be a little unnerving to ordinary employees who might be wondering,
geez, what’s going to happen or are they going to cut my program. Is that what’s really going on? I mean, unless I’m really mistaken, I don’t see us in some cutback mode for the City
in some big way. I think you have enough big decisions you’ve got to make and recommendations just on the known issues that are out there, and going back to where we ended up the meeting,
even if we had no other demand, gosh, if we were just going to have to deal with, what are we going to do long-term on pension and OPEB’s, that’s more than enough to gobble up every
resource we’re going to have for the future. Just some thoughts and requests to the Committee. Lastly, again, just restating, I’d like to get in a position where we would kind of go,
we don’t have the answer to that, let’s make sure we’ve captured the question and then we’ll work on responding to the Council. And one other thing, I would open, and we’ve done this
in the past Lalo, I thought we would invite questions from Committee Members in advance of a meeting that you could submit to us in writing, and if we’re able to, we would be happy to
then to submit that in writing as much as possible in advance of the upcoming meeting to you all. That could, one, avoid having to use some of the time we have here, but it would also
mean that you could, we would have a better chance of you having an advance of when we’re going to have a discussion on the item, to have tried to answer some of your questions. So,
I would offer that up.
Chair Filseth: I think that’s a sensible taxonomy of how we ought to approach questions here. I think the suggestion that complicated questions come in advance, I think that is a good
one to the extent possible. So, I think all that’s correct. I agree with you that it’s not the role of this Committee to request specific major process changes in government. I mean,
I think that’s an operation issue that’s the City Staff’s job, and to the extent that a discussion is necessary, you know, there’s more involved than this Committee, if we want to have
that. The one thing I would say is, I don’t think we should be rigidly sacrosanct about only looking at things at the margins. I think in theory that’s a good idea, but one of the gritty
practicalities is, this review, I mean, it’s kind of the only chance that we all, both the Staff and the Council, sort of get together and really look at this stuff carefully. There
are sort of not a lot of other opportunities during the year to have sort of the level of detailed discussion about this. So, to the extent that we as government can address the challenge
that, I mean, basically the challenge is, our revenues are going up at a certain rate and our expenses are going up at a certain rate accordingly, as the population of the City is going
up at a certain rate, and it’s our job as government to make sure those rates sort of have the right proportions, and not like that. And I think this is the time we have got to look
at it. Now, we have a particular challenge, as do all States and California, about the whole pension thing and OPEB and as you said, you know, we could devote the whole month to just
looking at that. But, I think, to the extent that we have this opportunity, I think we should not rigidly shy away from anything that’s not strictly marginal. What we shouldn’t do is
spend a lot of time trying to solve some problem. I think, to the extent that we can identify stuff for future discussion on a broader basis, I think that’s the limit of what we ought
to do in this session, if you agree.
Mr. Keene: I do, but I think, again, for the Council what you add that’s critical is what, and particularly in your role as both as trustees and as representatives, is what are quality-of-life
matters or outcomes or problems you’re aware of in the community that you want to have addressed. And an easier way to think about it, we’ve had it in the past, which is saying, you
know, “Gosh, we’re getting a lot of complaints about not much traffic enforcement by the Police Department, and why aren’t we, why can’t we do more traffic enforcement?” And then we
sort of, our cops will ultimately explain, “Well, gosh, we’re down seven people. We’ve had to redeploy. We’ve got a problem recruiting people.” That’s a whole different issue than saying,
“Why do we have ten Police?” And I would ask that you need to leave it to your Staff, and I don’t mean just me. I mean, the people who are on the ground doing these jobs, to say, “Here’s
a problem or here’s a deficit or here’s an issue, or here’s something I think we’re even doing that I think we shouldn’t be doing. Tell us what the implications are if we were to make
that change.” Let us do that and come back to you. Otherwise, you’re just shooting blind, and to be honest with you, we’d have really unintended consequences if we weren’t really focused
on what you want to do.
Chair Filseth: Well, I thought last year’s process actually was the right one, where we sort of started off, for a couple of people who are new here, the way this went last year was,
there was, the initial Proposed Budget was, there was an idea that we might dry down the reserves last year, which we shy away from because, I think all of us, if you have a one-time
thing maybe it makes sense to dry down the reserves, but if it’s a structural issue you probably don’t want to address that with reserves, and at the time we weren’t sure what the structural
issues, we weren’t sure where the line was going to be, so we were uncomfortable drawing down the reserves to do that. So, the process we did last year was, we had sort of a process
of, you know, for the first couple of sessions we started putting stuff in the parking lot and saying, “Well, do we really need this, do we really need that?” Finally, the City Manager
said, “Look, why don’t you give me a target.” Call me if I misstate your words. “Why don’t you give me a target and let us go figure it out.” And I think that is the right way to do
it. So, if we hit a point like that during this process, I think we could learn from that. I think the point about us, part of our role representing the community is, the community values,
is correct. We’re the proxy, right? Is code enforcement more important than some other thing, right? Finally, our role as Council is vision, policy and oversight, and I think that’s
what our job here is to do, and not, I mean, oversight is not the same as sort of figuring out the operational solution of something. That’s not our job.
Mr. Keene: I just had one other thing in this regard. I mean, I do think there is an opportunity here to be able to speak directly with departments and people who are providing services
and get a better understanding of what is done, and there may be particular areas, like the question of, where are we with the ERP, which is the Council, I mean in a lot of ways you
really don’t need to have an interest in the day-to-day details and issues of it, but you certainly do have an issue in the fact that; one, it’s potentially tremendously expensive; two,
what are we buying with that, and it’s also potentially incredibly disruptive and has a potential to also kind of drew up a whole lot of stuff all over the place. And you have an obligation
to be sort of aware of what that is, so, I’m not just sticking it on John.
Chair Filseth: This gentleman and I sort of worked that world before. We are duly scared.
Mr. Keene: No, it’s one of the great, it’s not hoax, but it’s a miracle cure that has been sold for a long time by a few doctors. In any case, that doesn’t preclude the fact, let’s say
someone like Jonathan is here and you want to get a sense, how’s that going, where is it, what are the issues you sort of see and those sorts of things, I think that’s useful.
Chair Filseth: Council Member Holman.
Council Member Holman: Two quick things. One is, I just wanted to concur with the comments about, yeah, we’re not going to hash out and resolve all the questions, answer all the questions
during our meetings, but I agree and just want to reinforce that it is the opportunity we have to go through this, and there is really not another opportunity throughout the year to
raise some of the questions that will come up undoubtedly during this process. The other thing is, and I know you’ll get to this, but sitting down here I realize I thought there would
be At-Places the org charts that we talked about the other night, but I don’t find them, and we’re doing Public Works tonight?
Chair Filseth: My recollection is we decided that the material inside the Budgets was – I may have misunderstood that. I thought it was adequate.
Council Member Holman: There were five or six departments that I had asked for org charts that would show like where there were open positions or…
Mr. Keene: That wasn’t so much an org chart. You had asked where we were on vacancies and to what extent we were doing backfills.
Council Member Holman: Well, and if we were eliminating positons was there somebody else in that position and the way I had asked for that to be presented was an org chart, and I though
the response was, that would be simple enough to provide.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: We understood it was the vacancies, so that’s what we have tonight for you, the Utility Department’s tonight.
Mr. Keene: We have the org charts with the numbers of positions grouped in subdivisions if it’s a large enough department or enterprise, that tells you how we’re roughly allocating the
Staff, but I think we’ve got, don’t we have a table of org chart in the back on the whole that shows changes from one year to the next?
Mr. Guagliardo: Yes, we do have a table of org in the back as well as in each department section and to Council Member Holman’s question, each department tonight is prepared to speak
to the vacancies in their department. We are still working on compiling the information that you had asked for of a holistic look at every department.
Council Member Holman: Okay. An example was that we’re looking to, when we get to it, eliminate a Community Services Police Officer. I think that’s the title, something like that. It’s
like, are there any others, what’s that person do? So, stuff like that would be really helpful as opposed to just looking at a number and a cost reduction and that sort of stuff. So,
that’s what I’m trying to get at.
Mr. Keene: But rather than us doing everything the organization, sorry, in detail, I mean, those are the kinds of questions I would expect in particular, when we have the department
here. You say, “Hey, what’s happening?” Because in this case we are eliminating one Community Service Officer (CSO). They can talk to what that position would do and wouldn’t do to you
all. They can talk about why they are recommending doing it in place of bringing, civilianizing this other position in Communications, and they could explain to you, I mean, that seems
like that would be more effective. And I’m only saying that because I understand your question there, but I don’t understand what you’re asking for on this org chart either that we don’t
have or that we won’t answer when we’re telling you what the vacancies in each department by position. We can even do that.
Council Member Holman: It’s maybe a different way of looking at it. I’m a visual person, so that’s why I asked for org charts, so that way I can clearly digest, but we’ll do it as we
do it.
Mr. Keene: Let me just give you one rough overall, because the Staff did do this. We have about a 10 percent vacancy factor right now in the whole organization. So, 10 percent of our
positions are vacant and there is a small portion that are backfilled in one way. That doesn’t mean that they are 100 percent backfilled, it may be partly backfilled. You need to also
be aware, and we will go over it before, we actually expect a certain amount of turnover in every one of our Budgets and those of you who have been on the Council before, know we actually
Budget a vacancy savings credit against the Budget to reduce it. So, the fact of the matter is, it would not be in our interest to immediately fill every positon whenever we have a vacancy.
Council Member Holman: I understand that. It’s a piece of the whole puzzle.
Chair Filseth: I think we should try to zero in on answering the question we want to understand and most of that is going to revolve around, what are the impacts going to be? I think,
to see an org chart of how many direct reports does Peter have and how many direct reports do they have and so forth, that seems like more detail than we’re normally going to want from
this, and I’m not sure we’re really answering the questions that we need to get answered. So, I would sort of, I mean, maybe there are circumstances where that’s going to be useful,
and we should look at those, but in general I think that’s probably not a level of granularity we would like to go to, and I hope that we’ll figure out how to coalesce on the question
we really want answered without doing a lot of sort of peripheral stuff around that.
Council Member Holman: I recall that I had limited it to, I think, five departments.
Mr. Keene: I’m just telling you, I’m City Manager, I don’t understand the question and I can’t direct the Staff to be sure that we’re fulfilling it. I think it would be really good for
us to get just in any case, what is the very specific outcome that you want to achieve as opposed to what information you want? That would be really helpful, because it could very well
be that what you want, what we’re going to provide, is not going to answer what it was that you wanted, and I’m going to have these guys, and I’ll be honest, these Budget people work
like round the clock for six months. I don’t want to send them on any unnecessary errand, and I think the Committee has a responsibility to help us make sure that we deploy people to
achieve what it is that you’re asking for, not have us do it false. So, I need to ask you to just say, in my case if I say, “I don’t understand what the question is,” you have to help
us understand it, and then we will get it. I mean, I promise you we will get it if we understand what it is, and will it achieve what you’re wanting to achieve. That’s all.
Chair Filseth: Usually that kind of stuff is the recruiting chart for your competitor, too. Okay. Questions? Council Member Tanaka. We are now five minutes behind schedule.
Council Member Tanaka: Not because of me. So, I just want to clarify something. I actually agree with the Chair, what the Chair said in terms of, I guess a comment you made, City Manager.
Because my feeling here is, we’re spending other people’s money, right. We’re spending our constituents’ money and what I see very different, because, well, public sector experience,
the public sector, but what I see from the private sector point of view is, in the private sector, right, management a lot of times has incentives stock wise or bonus wise, to make sure
that he company performs, right? In City Government it’s actually quite different, because you guys get paid no matter what, so I kind of view, I think it’s kind of important that we,
I kind of view that it’s actually very important for us to go beyond just the margins, because I’m not sure if you’ve ever heard the term, “the principal agent problem,” but basically,
let’s say if you had a lot of stock options in the City or your bonus was tied to some performance metrics in the City, you, we know because you want to hit your Key Performance Indicators
(KPI’s) or you want to hit whatever it is, to get your earn out, you would be very aligned to what we want. But I think, because of the way we’re structured right now as a City, that
doesn’t happen. In fact, for us, because if we’re elected, if we don’t do the right thing, we will not get elected again, we don’t have that issue; we don’t have the “principal agent
problem.” So, I think in some ways it’s actually very important for us to look at the Budget carefully and if there are things that are direly wrong that do cause massive restructures,
we have to do it, whether it’s – I think, in fact, it would be negligent for us not to. So, I kind of see it differently than us just rubberstamping whatever is put in front of us. And
I don’t think it would be right for us to do that for our constituents. I think it’s important for us to treat it like our own money versus somebody else’s money.
Mr. Keene: I agree. Well, I don’t think there’s any question that we don’t see that this is the public’s money and I certainly don’t think if we don’t have a Budget by July 1, we’re
going to be like the U.S. Congress, and having continually appropriations, which everyone would agree we do not have the time to potentially do what you want to do in this timeframe.
If you want to do that, I think we go back when we get to Council and say, let’s make where we are right now versus where we were in February. We have the same amount of funding for
the most part, to do the same things generally. This opportunity is to appropriate funds for the next year. If the Council wants to really look at everything or identify, it’s going
to take a majority of the Council to identify these key performance indicators, to identify the stock targets that you want us to achieve, the surrogate stock targets, not one Council
Member. And, there is no way you’re going to get that done by July 1. I guarantee it, not with the schedule that you have. We need you to make the decisions that are going to make sure
whether we’re balanced or not balanced at a minimum, so if we have extra time…
Council Member Tanaka: Just to be clear, are you saying that our only option here is to rubberstamp this Budget?
Mr. Keene: No, I’m saying (crosstalk) focused on what’s most important.
Chair Filseth: I actually think that’s unfair. I think, you know. Nobody wants to do that, but the process of, and I think somewhere in there you have a point which is valid, which is,
I think the City Manager is absolutely right, we’re not going to – I mean, government works one way, the private sector works another. You know, we’re not going to use this to re-architect
how government works. It is fair for us to look through this and spade up things that maybe are worth a longer discussion outside of this timeframe. That is absolutely legitimate; in
fact, it is a responsibility of this group. But we’re not going to fix it here, and we have limited time and we need to focus on the steps that are going to add the most value here as
we go through this, right? And I think there is probably general agreement on that, right? To me, I don’t think anybody is going to rubberstamp this stuff. If so, we could all go home,
right?
Council Member Tanaka: That’s right. That’s why I’m saying, if that’s what we want, then why are we here, right?
Chair Filseth: We have a lot of people from the other side (inaudible, no mic) Okay?
Council Member Tanaka: So, we have this deadline of July and that means that even if there is a major problem with the Budget, we ignore it?
Mr. Keene: Why don’t you wait and see if there is a major problem?
Council Member Tanaka: I’m not saying there is. I’m not saying we’re going to have to restructure it. What I’m saying that, I guess for me though, is to say that we have to hit the July
target no matter what, even if there is a major structural problem, that’s just too bad. I think that’s not the right attitude.
Mr. Keene: That’s not what I said. Come on.
Chair Filseth: I don’t think anybody is saying that.
Council Member Holman: I think the example that Chair Filseth gave earlier about how we reconciled last year. You know, we put things we were concerned about into the parking lot and
gave the City Manager a goal to hit. Things can be addressed in that manner.
Chair Filseth: I think, last year, so I think that’s actually a good case in point, and this is not a rubberstamp, okay? You know, last year the numbers we were talking about were, geez,
we don’t want – I think the original Budget said that we were going to dip into the reserves by $4 or 5 million. We said we don’t want to do that. And that’s the magnitude that was of
such a scale that the City Manager could go figure out how to do that. If the answer is, if the magnitude of what we see that needs to change is not $4 million, but $75 million or $120
million, the City Manager is not going to be able to go say, “I can find that in the Budget.” That’s going to take a much larger process. So, I think the nature of what we deal with
and what we defer and the process to deal with it changes as what you described as, you know, what we want to do expands. Some things we will be able to do in this timeframe. Other things,
it’s going to take a much longer process. That doesn’t mean we shouldn’t identify them. It just means we’re not going to fix everything this month. Adrian.
Council Member Fine: One, just to get started. A couple of quick points. Council Member Tanaka, I do believe we have influence here actually. I’m looking up at the board there and I’m
seeing $20,000 to the City Auditor, as Council Member Holman brought up an issue. You know, it may stick there, it may not. So, I do think we do have influence. I think we actually have
broader influence to the entire process, but as the Chair and City Manager mentioned, that actually comes from the whole Council. So, if the whole Council tells us to go look at the
pension problem and figure it out and spend six months, Staff will do that. Finally, one thing are there are a lot of sunk costs and things that just have inertia and are going, and
so we do have to just, to some degree, honor those and look to past Councils and the continuity of the City as an enterprise that some of these things are sunk, they a go and we work
with them and, given the timeframe we have, I don’t think we rubberstamp things, but if we find problems, we work on them. There are some bigger issues we are going to identify. We already
did on Tuesday night at our first meeting. I think we have the responsibility to bring those to our Colleagues, and I agree with you on most of them, actually, but I think we bring them
to our Colleagues rather than through this process. Beyond that, I mean, no one wants to be here until 11:00 A.M. every other day for the next month.
Chair Filseth: I personally am willing to be here till 11:00 A.M. every other day, but we have work to do and it won’t get done. With that, let’s proceed to Item 2.
2. Information Technology.
Operating Budget
Capital Budget
Chair Filseth: Welcome Jonathan.
Steve Guagliardo, Management Analyst: Item 2 is the Information Technology Department. Jonathan is coming up now. The Operating Budget starts on Page 269 of your books. And we will be
doing capital as part of this discussion as well, which is on Page 599 of the capital book.
Jonathan Reichental, Chief Information Officer: I’m delighted, Committee, for the opportunity to present our Budget proposal for FY ‘18. I’m going to just cover some of our accomplishments
in FY ‘17. A couple to point out here, one of the major goals when I joined the City was to modernize the technology of the City and we had a major milestone last year of getting the
City onto Microsoft Office 365, the most contemporary version. Everything is in the Cloud now. And we introduced many, many new capabilities to the City for storage, for collaboration,
for video conferencing, for instant messaging. We also improved our security profile yet again. We never lose sight of this important quality in our City, and the quality to make sure
that what we do is secure and we protect our community’s information as appropriate and continue to function as a City. Currently we are running some major initiatives. At this time,
we are getting into some of the things that we had on our road map finally. Well under way with the ERP initiative. We are in phase two, which is planning and product selection, planning
for the next ten to twenty years, probably around this. We’re very excited to finally get a geographic information system in place that will support the City of Palo Alto for the 21st
Century, not the 20th Century. We’re making some progress on that. If we go to the next slide that would be great. I really have some light items today, just one large one and then just
a couple of lighter items. There are no staffing requests from IT this evening. We’re remaining as is. This item, the first item, which can probably be explained better by the Budget
team in terms of the accounting of it was approved last year, and we’re in the process of recruiting it now. The major asks this evening for this cycle is going to be for money to begin
the process of replacing our GIS system for the City, which really is foundational to any City government. So, that going to be a one-time ask for the actual procurement and consulting,
and then we’ll just resort to normal maintenance in the years ahead. The other items are quite small. We are making an investment in some contemporary collaboration, so for the City
with share point. It’s one thing to actually have the technology, it’s another thing to know how to use it. So, we are committed to ensuring that the City Staff can take advantage of
some of these new investments we’re making, particularly here with Microsoft Share Point. Again, I want to reiterate the cyber security is our Nation’s number one risk and threat and
cities are on the front line, so it’s one of my most important responsibilities to make sure that we are secure and our systems operate every single day. Then, we are funding, finally,
one of the Council’s priorities around being able to ensure coordination around notifications, what happening in the right-of-way. Peter Pirnejad from Development Services might be able
to talk further about that if there are questions about it. And then, that’s the end of the formal presentation. Thank you.
Chair Filseth: What’s the ten-second overview of the Geographic Information System (GIS)?
Mr. Reichental: Certainly. So, first of all, what it is, it is basically complex maps of everything in the City. If you’re in Public Safety, you need to know where stuff is. If you’re
in Utilities, you need to know where pipes are. We have an award-winning system today, actually over the last 15 years, 20 years, in terms of the detail that we capture for the City.
It is quite impressive, but it got old, and is not serving the City well. And, it’s not even in alignment with the region. We are on a system that’s proprietary and it’s been a long
time coming. We have to prepare. We have to have a GIS system that serves the City for the 21st Century. It’s got to integrate with our new 9-1-1 system. It has to serve Development
Services better. So, we did an assessment, actually, this past year and there were no surprises in it in terms of we are not cutting edge in GIS anymore. We used to be 10, 15 years ago.
We need to be appropriately staffed in terms of the skill set more so than the – I’m not making the point we need to hire lots and lots of people, but more so we need the right contemporary
talent for it. And, we should take more advantage of it frankly. The only reason we don’s is the technology is not where we would like it. It’s not through any lack of determination.
Chair Filseth: And the old one is 15 years old, you said?
Mr. Reichental: Yes. Approximately, yeah, maybe a little older.
James Keene, City Manager: If I might just sort of add, those of you who may be more involved than others, so most GIS systems develop as a series of layers of maps with data that can
be built or designed to go on top of each other. So, typically, there will be a base map of the City, then there will be a topo map that can give you that. You can have street, center
line maps that tell you where all of the streets are. We can overlay with that environmental information, Public Safety, layers and layers that have to be able to sort of talk to each
other and connect. It’s really very interesting. We sort of had, I don’t know whether it was kind of a unique, home-grown system, but really the marketplace has been won and dominated
by ESRI out of Redlands, California, and as I understand it, the conclusion here is to engage with ESRI on the next generation of what we do.
Chair Filseth: Thanks. Questions. Council Member Fine. Council Member Holman.
Council Member Holman: Just a couple. I can refresh my memory here. One is I really like how you organized the information you put in this. It’s really very helpful in helping it. One
quick comment based on the presentation, too, is because GIS does do a lot of things and it is many, many layers, not tonight, don’t flip out Jim, but I think it would be really helpful
and interesting for the Council to have some brief presentation from you about what GIS does and what the capabilities are and what you’re striving to be able to accomplish with the
new GIS. Because it interfaces with, I think, even more departments than you mentioned. So, that’s a bit of a request. And then, I don’t know if other departments could do this as well
or not, but you had identified IT expenditure per work station, and I don’t know if it’s possible for other departments to do that, but why did you decide to do this?
Mr. Reichental: So, I’d love to take the credit for that, but that actually is one of the metrics that is used in the IT industry, to measure how much IT costs deliver to an organization.
It’s a very common metric, and that full cost, laptop, operating system, solution, support. So, if you want a benchmark against other organizations, it’s a good number.
Council Member Holman: Okay, yeah, that makes sense. And, so you’re asking for one more Staff person.
Mr. Reichental: No.
Council Member Holman: I thought I saw.
Mr. Guagliardo: To clarify, I’ll take this one, Jonathan. So, funding was approved in Fiscal Year 2016 for a Senior Technologist, but at the time there was a question of whether it should
be in-house Staff or it should be outsourced contract Staff. We were awaiting the conclusion of an assessment by Gartner, and consensus to be reached between IT and the Police Department,
and the Fire Department. Now that we’ve reached that consensus, what we’re doing is taking the funding that was previously approved and we are adding a position. So, to Council Member
Holman’s point, yes there is an FTE add, but as the slide indicates, and as Jonathan mentioned earlier, it’s a cost-neutral add.
Council Member Holman: Okay, I think those are my only questions.
Chair Filseth: Council Member Fine.
Council Member Fine: Thank you. So, Karen, I’d be happy to show you a GIS and what it’s capable of. I work with this every day. Please update it, please keep it all publicly available.
Thank you so much.
Chair Filseth: You can’t use the next door one?
Council Member Holman: I’m not information neutral on the topic, but I’m sure I could learn more.
Council Member Fine: It’s really cool. It’s fun stuff. So, two questions. One, the transfers out are increasing, so previously it was about $16,000, now it’s about $150. I’m just wondering
if we can account for that. And then, two, just more of a comment. There were a lot of Budget adjustments in this fund and so I was a little, I don’t have anything specific, but it just
makes it a little more complicated to understand.
Mr. Reichental: So, I’m the computer science guy. I’m going to refer to the accounting guy.
Mr. Guagliardo: Sure. Steve Guagliardo, again, from the Office of Management and Budget. So, to answer your question about transfers, as discussed, a little bit in our pension conversation,
we are establishing that PERS Section 115 trust, so the big increase you see is about $138,000 going to the General Benefits Fund to cover the IT Fund’s 10 percent of pension costs there.
Council Member Fine: And is that going to be the same on these transfers out for all?
Mr. Guagliardo: Precisely. So, you’ll see this across all special funds, you’ll see a significant increase and it’s going to be 10 percent of the pension line that you see.
Council Member Fine: If it’s mainly for that, we should think about relabeling that line.
Mr. Guagliardo: Sure. It’s called out in the Budget reconciliation. You can see it detailed on Page 280, but certainly we can explore how we are going to capture that on an ongoing basis.
Additionally, to answer your question about significant Budget adjustments, so on an annual basis, because it’s an Internal Service Fund, the IT Department does a very good job of looking
at what their expenses are, what systems are no longer used, what contracts are no longer necessary, and so there are minor incremental changes to that. In addition, they look at what
ongoing services there are that need to be added. So, you’re seeing a lot of those margins being adjusted here.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Let me just add a quick comment to make sure that everybody understands what an Internal Service Fund is.
It’s basically an area where you capture the cost, because you want to understand what your operational costs for a particular type of business activity you have with the local government.
So, in this case it’s technology. So, the idea is that you should recapture all of your costs and set aside some level of funding in there to have replacement of other items. So, you’ll
see it again in the vehicle fleet for example. We do the same thing and in the print and mail shop that we talked about the other night. So, that’s what an Internal Service Fund is.
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: So, let me ask you, do you think, when you look at your Budget and you look at it, I’m not done with this one, that’s why I’m still working on this. But if you
look at your Budget and you look at it as a percentage of revenue and a percentage of the General Fund, what’s your thoughts about that compared to other cities?
Mr. Reichental: I don’t know that I know the Budgets of other cities for IT to be able to talk intelligently about it. I can say, though…
Mr. Perez: Let me start it and then maybe you can – you can’t compare it to the General Fund, only because Jonathan’s team services the Enterprise Funds as well, so it would not be a
fair comparison for us to do that, if you wanted to benchmark it to other cities, because he has the expenditures for the electric, the gas, the water, the refuse, the wastewater treatment
as well, and the systems that he supports in there and the staffing, so I think we would not mark well because of that.
Mr. Reichental: That’s fair. That’s a better answer than I could give.
Chair Filseth: I’d comment that I think the answer that you’re really looking for would probably take an audit, and we could schedule that. I mean, we have a department that does that,
but that would be my guess.
Council Member Tanaka: Well, I just did a quickie comparison here. So, you’re actually, I’m using Mountain View just because I have it in front of my computer, so you’re actually lower.
You’re at 3 percent versus 4 percent of the General Fund. So, now of revenue, and I think I made a mistake here because it can’t be, but of revenue, actually of revenue you’re actually
higher. You’re at 2 percent versus 1.62 percent of revenue, of the revenue from the City. So, from your experience, you’ve been in technology for a long time, what’s the right way of
thinking of this? If you would try to think of a comparison?
Mr. Reichental: I know a little bit about it in terms of, you know, organizations are typically around the 3 to 4 percent in terms of revenue overall and in terms of IT spent across
industries. The more the business relies on digitization and technology, of course, that goes up. The numbers are higher, for example, in banking than they are in other industries. Higher
in insurance. So, I don’t know that I’ve put a lot of thought into, you know, the percentage relative to public sector, or even local government. I love the question, though, in terms
of thinking about that.
Chair Filseth: I do too, actually.
Council Member Tanaka: I mean, you’re higher on revenue but lower on General Fund. At least compared to Mountain View, which is just one data point.
Chair Filseth: Well, the question which I think I heard, which I think is an excellent one is, how do you know if you’re doing better than other cities, delivering services, the whole
nine years. What is your advice?
Mr. Keene: I mean, obviously, it does get complicated, because it has at least two components, which is what are we doing in comparison to other cities, and then, what is the cost for,
or the unit cost, I’ll just call it unit cost, but it’s not really that, for what we’re doing compared to another city, right? So, one is the size of the basket, the market basket, of
what it is that we do, and then within each one of those, comparing benchmarking to what we do, whatever it is, what’s our Utility billing costs versus somebody else’s. Utility bill
and costs. Or, you know, comparing how efficient and effective, ultimately, we want to be measuring to are we in the service areas we’re providing, and then what’s the range of services.
Mr. Reichental: All I would be able to share in terms of just what we’re delivering relative to other cities would be anecdotal today. I do keep a very close eye on metrics. The kinds
of things you’re interested in, IT is (inaudible) projects that are coming towards IT from the different departments, and so we are far and away higher and higher velocity than any other
city of our size that I’m aware of, both regionally and across the U.S. Currently, we have 33 technology projects in flight to the City. That would be impressive for a very large city.
We have 22 planned. So, we have a big appetite for IT at the City. We have over 300 computer systems. Cities bigger than ours have about 150. I inherited a lot of that. I’m rationalizing
it and some of it is important for our Utilities. It’s very diverse, very complex. Our service desk takes over 10,000 calls a year. That’s just internal, and what was the other thing
I was going to say, 300 systems, our satisfaction rate is over 90 percent in terms of the people that our Staff, when we survey them, in terms of very good or excellent. And, I think
the last metric, which is the most important, (inaudible) is, how stable are the 300 systems we provide every day. Everybody in this room comes to work and every system works every morning.
You can’t say that for most of these.
Council Member Tanaka: So, I guess for me, when I think about this, because most of the other Budgets, I was looking at HR and there was like, in terms of ratio it’s just amazing, in
terms of compared to other cities. But in IT you are actually doing really well here, and what I do wonder is, and IT tends to be an area where if you invest more you get a lot of leverage,
so what I wonder is, if you had the same percentage as Mountain View in terms of IT Budget, what do you think you could actually improve?
Mr. Reichental: I don’t know if either of you want to say something. It’s funny, every year I’m challenged with, why didn’t I ask for more. It’s such a luxury. I don’t, I haven’t (inaudible)
that adding more money or buying more technology as being the solution, because there is a capacity in any organization to actually execute on tech. We have 22 projects planned. If we
threw more into the mix right now, it would be hard for Utilities to do their day job. It would be hard for ASD to do some of the stuff if we asked them to start testing more and more
technology. So, there is sort of a natural threshold to what we can do. So, I don’t think, and I say the same thing every year, is, any other CAO would think I’m crazy for saying, I
don’t need more money. We are extremely fortunate, I think, in the IT space and the Budget we have and the reserves we have, to be able to do most of the things we want. What I, what’s
hard for me in my position is to know basically the cadence by which we introduce new functionality. Ensuring that our people are trained sufficiently. Getting people from their day
job to get training is hard. So, they probably aren’t necessarily hard dollars and volume. I think money for training is something that I hope we are focusing on, because that’s an area
of the City that we could, that I’ve seen in terms of technology, that could actually have some real benefit over the medium to long term.
Mr. Perez: Council Member Tanaka, just curious. Did you do it for all source of funds, or just revenues themselves. Did you include transfers?
Council Member Tanaka: No, I just did really simplistically. I went to our slide here, that you gave us yesterday, or a couple of days ago, and I went to what his spending was, what
Mountain View’s spending was. I went to their website and I tried to do like – I might have messed up.
Mr. Perez: Because, I think, if you look at the total sources of funds, then that includes significant transfers that we make from Utilities that Mountain View doesn’t have, so our revenues
are going to be higher too. Just trying to help you as you look at it.
Council Member Tanaka: So, what would you subtract from then, or add from? What numbers should really be there?
Mr. Perez: I would say, just look at the revenue sources, meaning fees, taxes that do not include transfers.
Council Member Tanaka: So, I used $1058 as the revenue number for Palo Alto. And that’s what I pulled from the slide.
Mr. Perez: Oh, you’re talking about full time equivalent?
Council Member Tanaka: No, oh, sorry, actually that’s a mistake. Yes. That’s my mistake. I should use a lower number then. I should use, what, that’s a mistake. Okay, I’ll have to do
my math again, but anyways, of the General Fund it looks like…
Mr. Perez: I understand your point. We’ll take a look. I was just trying to make sure that I understood how you were looking at it.
Council Member Tanaka: No, I messed it up, actually. You’re right. So, I need to fix that.
Chair Filseth: I was going to say, you’ve got to do this before you get here, Greg. Not on the fly. Anything else?
Council Member Tanaka: Yeah, I do, actually.
Chair Filseth: Please proceed.
Council Member Tanaka: So, I guess, are you trying to fill one head right now?
Mr. Reichental: We have three openings right now.
Council Member Tanaka: Three openings. Okay. And are these going to be employees or are you looking to use an outsource or consulting firm, or what’s the idea?
Mr. Reichental: We do both. For these three openings, they are all going to be fulltime positions. And we do use augmented staffing periodically as part of our business.
Council Member Tanaka: I just was thinking because technology changes so fast, it’s hard to find someone that’s so flexible to change with the different technologies, it might make a
lot more sense to have that person, or these heads to be outsourced versus trying to hire fulltime. So, that’s one recommendation I have.
Mr. Reichental: So, we do that where we can. That’s a really good IT strategy. So, we have money set aside in the Budget for bringing in talent where it’s temporary. Even if it’s for
six months, we’ll bring it in for a specific need. For example, one of the openings is for a business intelligence analyst. This is a product that will be around for the next probably
15 years minimum. We need somebody to care and feed for that. It’s SAPBI. It’s not going to change, other than the fact that the person has to go to training to get up to speed on the
upgrades and things. But, ultimately, we need a single talent for that. That’s an example. That wouldn’t be flexible.
Mr. Perez: Remind me, you did that strategy that Council Member Tanaka is recommending for the SAP technical team, and you changed from an in-house Staff into about seven contracts?
Mr. Reichental: Seven contracting firms that we can use if we need special talent.
Mr. Perez: Special talent, right.
Mr. Reichental: So, maybe to kind of contrast where we need a fulltime person for our business intelligence solution for the City, we currently have some items around our CRM solution
customer relationship, management solution for Utilities. That’s not a need we need 24/7/365, so we are bringing somebody in for I think it’s three months to take care of some very specific
needs. So, they come with a special talent and then they’re gone.
Mr. Keene: I might just also suggest, I mean, this is an important question, and even ultimately outside of this Budget process, but in the regular work of the Council for us to have,
we could have a more in-depth discussion about our own Staff versus contracting out, because there are also restrictions that are placed upon local governments in this State related
to State law, that hamper our ability to effectively contract out, and I think it’s important for us to understand some of those limitations, because we’ve attempted to pursue, at times,
doing that sort of thing and find that we potentially run afoul of State law. So, there’s, and some of that is designed to keep feeding the pension needs of CalPERS to be bringing in
Staff who make those contributions. So, we don’t necessarily subscribe to that, but I think it’s important for us to have a better understanding of how much flexibility we have, where
we can be more opportunistic and where we’re restricted and whether or not there is ultimately legislative changes we need to pursue.
Chair Filseth: You’re talking about things like the use of City facilities and equipment?
Mr. Keene: Yeah, but there are time limits for the amount of time that you can actually put somebody in a contract position, and not, in a sense, being sort of fulltime employee, but
using a contract to avoid having to make those costs and stuff, pay those costs. So, I think it would be good to understand even better what the limitation is and is frustrating. That
doesn’t mean we can’t do it, but not as easy as it would be in a business.
Chair Filseth: Thanks very much. I had one question, which is, so you folks are a flat head count from 2017 to 2018, but salary line 7.4 percent increase? First of all, is that accurate?
Mr. Guagliardo: Yes, that is accurate, and it is because that one position is added that wasn’t previously in the salary line. It was previously in the contract services line, so when
you see that salary convert, you see a significant uptick in the salary line.
Chair Filseth: So then, did I not read this carefully? Since the total FTE’s is flat, was there one position that went away when that contractor was?
Mr. Guagliardo: So, the contract was in place last year and the head count was 36.08. The contract is being converted to a fulltime in-house Staff this year.
Chair Filseth: But it wouldn’t have appeared in the salary line last year?
Mr. Guagliardo: Correct.
Chair Filseth: So, there must have been that went away.
Mr. Guagliardo: No, sorry, it would not have appeared in the salary line last year. It was in the contract services line last year.
Mr. Perez: If you look at Page 279, that’s where you’ll see the change.
Chair Filseth: Got it. Aha, right, yes there is one. Okay, thanks. I believe I misread that the first time. I don’t mean to ask about this particular department, but one of the things
that we keep an eye on, that I’ve personally kept an eye on is sort of, because we estimate the future Unfunded Liability at average wage growth for the City, I’m interested in sort
of what the overall trend in all of the departments is. Because we estimated it at 3 or 3½ percent or something like that, and I wonder, I keep wondering if that’s accurate. And as we
move to sort of being more conservative about how we recognize our liabilities, does our assumption of that need to change? That’s the reason I ask. Thanks.
Council Member Fine: Just, it would be helpful to see that across departments too.
Chair Filseth: Well, yeah, we sort of do that in the General Fund. On Page, I saw it a minute ago, sorry, back in the overview. Page 71. I think this is actually part of the discussion
we might have in the fall, Page 72 actually. We lump salary and benefits in one line as a rollup, which is good, but there are multiple components of that, and the cost dynamics of those
different components can vary quite a bit from each other.
Mr. Perez: Yeah, we can break them out.
Chair Filseth: With that, I’ll move that we tentatively approve the IT.
Council Member Fine: I’ll second.
MOTION: Chair Filseth moved, seconded by Council Member Fine to tentatively approve the Information Technology Operating and Capital Budgets.
Chair Filseth: Any further discussion? All in favor? Unanimously.
MOTION PASSED: 4-0
Chair Filseth: Thank you Jonathan. And I hope everybody else comes and says we need less money.
Mr. Perez: Sorry, Chair Filseth. I was multitasking. I just want to make sure Jessica, that the Motion included both the capital and Operating Budget of IT. Thank you very much.
3. Library.
Chair Filseth: Okay, Library, Page 285. Hey, Monique. Welcome.
Monique leConge Ziesenhenne, Library Services Director: Hi, how are you doing tonight? My name is Monique leConge Ziesenhenne. I’m the Library Director and we’re here to talk about the
Library’s Budget proposals for Fiscal Year ’18. So, before we go into next year, let’s look at what we accomplished this current Fiscal Year. This is only a sampling of what we’ve done,
but we do, I do want to make the point that we do seek out grants wherever possible, especially those that can leverage our own fiscal availability, and that we do have the Friends of
the Palo Alto Library, who are tremendous contributors to programs and services and, in fact, Summer Reading Program wouldn’t happen without them. So, I do always want to recognize that
we do have outside contributors helping us provide our very popular programs. So, Bike Pals was a project last year that included not only the two bicycles that you see there in the
illustration to do outreach at farmer’s markets, schools. We were just at the Baylands. But it also included a walk ‘n roll map to libraries and two bicycle repair stations. This was
funded through the Pacific Library Partnership. We visited all of the PAUSD kindergarten classes to issue library cards to those children who did not have them. This created a spike
in terms of new cardholders, and we did have a party in two locations, because the demand was so overwhelming, for kindergartners to bring their families to the library. And we’ve added
new on-line resources this year, including Kono, which is an online magazine in Chinese and Japanese. The 3-D printers have come on line and have been in-service at two locations. We
have a seed lending library at Rinconada and we’ve added Story Player, which is an online children’s illustrated book in French and English. Both Kono and Story Player were one of the,
we are the first public library, if not one of the first to try these out. So, coming up this current year transferring into Fiscal Year 2018, we’re partnering with 11 other libraries
in the State to pilot a project where every student ID card will become a library card essentially, so that when a student registers in public school, they will automatically have access
to library resources. We needed new total business solution for our copy system, for our PC management system, and printing. Ours has been in place for longer than we have even been
in the new buildings. And we will complete the E-branch implementation. You recently approved the contract with Biblio Commons and that will allow us to finalize that and then move into
some richer content availability for the community. Next slide. Alright, so the significant Budget proposals include reducing our data bases, not in terms of breadth, but more in terms
of depth. We’ve gone through, one of the things that happened while we were under construction is that the Library Foundation had given us a million dollars to add print materials as
well as on-line materials, and we have been evaluating them, seeing how the community is using them, responding to them, and so where we found duplication and overlap, we’re going to
reduce some of those. So, we’ll reduce that Budget by about not quite $59,000. And the other proposal is really a cost-neutral reorganization for two positions. They are both being reclassified
in their existing bargaining units and aligned better with the roles and responsibilities that they have in the division. We currently have four vacancies, four fulltime vacancies, which
are librarian level positons. We’ve had a number of retirements and we are looking forward to probably five to six more in the next year or two years. We have some Staff, we had one
who retired this year after nearly 35 years of service. So, we expect that we will continue to fill those positions and these four are in varying stages of recruitment at the moment.
So, I think that’s the presentation. I’m happy to answer any questions that you might have about the Library Budget or explain anything that was in there in more detail if you like.
Chair Filseth: Council Member Holman.
Council Member Holman: So, yeah, thank you and it’s always a joy to visit any of the libraries, so it’s really terrific. You mentioned Friends of Palo Alto Library (FOPAL) and I had
made a note to myself under other revenue. Is that FOPAL? The number doesn’t look right at all.
Ms. Ziesenhenne: No, that’s not FOPAL. FOPAL pays, we apply for grants to them, and they pay those directly to whatever organization it is where we’re working with or they pay, they
reimburse for programs or they pay the program performer directly. So, that doesn’t come through the City as a revenue.
Council Member Holman: Okay, I was thinking in the past, sometimes like the presentations of checks to the libraries and so, that’s not exactly how it happens though?
Ms. Ziesenhenne: No, that was more the Foundation in my time. So, it may have been towards the capital projects, but in my time that has not been anything that FOPAL has done.
Council Member Holman: And maybe I’m misremembering too. So, okay, that’s that. The number of teens who participate in the Library’s reading programs for teens, that number is estimated
to go up, but not as high as it was anticipated to be. So, is there a reason for that?
Ms. Ziesenhenne: We changed how the teens plan their programs. Rather than having them all be driven by the adults, last year we started a teen library advisory board, and so T-Lab has
been very active, but they have really been also very clear about that they would rather have quality programs rather than huge programs where there are 600 people attending and it might
not be the same kind of thing. They’re looking for a balance. So, we’re really trying to listen to them and offer what they’re interested in.
Council Member Holman: Okay, so one other question related to that is, if you happen to know it, of the visits to the Library branches and virtual visits to the libraries, is there any
way of gauging how many of those are teens?
Ms. Ziesenhenne: No.
Council Member Holman: Do you keep a record of that?
Ms. Ziesenhenne: No, because if you walk into the library, then you’re counted as a visitor, and it’s done with a door count, so it’s not something where we can say that it’s a teen
or that it’s a teen accessing a newspaper data base for example. We wouldn’t necessarily know that. We don’t track what people use or who it is looking at something, so no.
Council Member Holman: You don’t do like for one week you’d have people like, you know, fill out something like a mini survey sort of thing?
Ms. Ziesenhenne: We could do that. We could certainly try that.
Council Member Holman: I think it would be helpful for the public and help inform us in our programming for projects, you know, libraries or whatever other buildings and such as we plan
some development, like whether it’s Cubberley or Fry’s or whatever. I think that could be helpful.
Ms. Ziesenhenne: One of the things we’ve looked at is if there was a way to swipe library cards when people come to programs, or even like you said, on a sample thing, have somebody
swipe it and then, perhaps, at least get an age range for who that person is. Yeah, we could look into that.
Council Member Holman: Okay, and the four positions that you have open, because your staffing is flat this, the four positions that you have open, did those just become open, or is this?
Ms. Ziesenhenne: During this year.
Council Member Holman: During this year, okay.
Ms. Ziesenhenne: Yeah, like I said, we had several retirements, we had a couple people move away, so it’s just a normal in and out.
Council Member Holman: Normal attrition. Yeah, okay.
Ms. Ziesenhenne: At one point, I think we had the highest percentage of eligible retirees of any department, so.
Council Member Holman: Should I say congratulations?
Ms. Ziesenhenne: It is significant because you do lose a lot of local knowledge and experience, so yeah.
Council Member Holman: Yeah, absolutely. I think that’s my questions. Thank you.
Chair Filseth: Council Member Fine.
Council Member Fine: Thank you. Two really quick ones. One, the seed library, it’s a lending library. How do you lend seeds?
Ms. Ziesenhenne: You would come and say, check out zucchini seeds. You don’t want a whole Packet because that would be a ton of zucchini. You’ll take a few seeds, you’ll plant them and
harvest them, and then we can show you how to save those seeds and bring them back.
Council Member Fine: Excellent, very nice. The second thing is, this isn’t a question so much as a comment. There seem to be a lot of job classifications in Library, and just noticing
across different departments, that sometimes there’s many, sometimes there’s fewer and I question my Colleagues. Is that efficient, is, that right? I don’t know. But it just stood out
for me.
Ms. Ziesenhenne: We’ve actually collapsed a couple in the time that I’ve been here to streamline it a little bit more. But we’re typical of most libraries.
Council Member Fine: Okay, thank you.
James Keene, City Manager: I would just say in general that the culture of this organization evolved to having about the largest, widest range in number of positions. I think we went
through agonizing work when I first got here to start to try to consolidate them and collapse them.
Council Member Holman: I have a suggestion on how to get more volunteers. Let them pick their own title.
Chair Filseth: Library Ninja.
Ms. Ziesenhenne: Alright, I’ll get you a t-shirt.
Chair Filseth: Let’s see, Council Member Tanaka.
Council Member Tanaka: So, I wanted to ask you, on the revenue side, do you, does the Library have a policy about making the library available to, let’s say the neighborhoods around
there?
Ms. Ziesenhenne: We do.
Council Member Tanaka: And if so, do you guys charge for that?
Ms. Ziesenhenne: We don’t.
Council Member Tanaka: Okay. Do other cities, do you know?
Ms. Ziesenhenne: Some do, some don’t.
Council Member Tanaka: Is that a very popular request?
Ms. Ziesenhenne: Yes, as you can see in the meeting room reservations, we’re estimating we’ll have about 10,000 reservations. That includes meeting rooms as well as the group study rooms.
Council Member Tanaka: Do you charge non-Palo Alto people for it?
Ms. Ziesenhenne: No, we don’t.
Council Member Tanaka: And is it over capacity?
Ms. Ziesenhenne: The meeting rooms?
Council Member Tanaka: Or, like you have more requests than you have space?
Ms. Ziesenhenne: It’s close, but we, the group study rooms, the reservations are made on line, so any individual can go and we, they are time stamped, so we see that at 12:01 A.M. there
are quite a few reservations with people ready to get in, but we have not had complaints, or at least I have not, they have not risen to my level where people have said, “I can never
get a meeting room.”
Council Member Tanaka: Okay. That’s all I had. Thank you.
Chair Filseth: Just real briefly, the two positions adjusted to better align with roles and responsibilities, those were classifications to, basically promotions, is that right? Classifications
to a higher pay scales?
Ms. Ziesenhenne: One is and one is not, and one is currently vacant.
Steve Guagliardo, Senior Management Analyst: And the way we achieved cost neutrality with that proposal was, one was essentially an up class and the other was down, so that’s how you’re
getting that offset.
Chair Filseth: Okay. Thank you very much.
Council Member Holman: I move we tentatively approve the Library Budget.
Chair Filseth: Second.
MOTION: Council Member Holman moved, seconded by Chair Filseth to tentatively approve the Library Department Operating Budget.
Chair Filseth: No further discussion. All in favor? Motion passed unanimously. Thank you very much.
MOTION PASSED: 4-0
4. Development Services.
Chair Filseth: It looks to me like we’re back on schedule. Okay, with us regrouped here, welcome and please proceed.
Peter Pirnejad, Development Services Director: Thank you very much. Happy to be here. Thank you, members. Just a quick overview of Development Services. We are a department that essentially
manages the building code, issues all the building permits, does all the building inspections. But we’re so much more. We also are a matrix of other departments. We are one-stop-shop
over at 285 Hamilton, where we have representatives from Public Works, Fire, Planning, Utilities, as well as building experts to answer questions right over the counter, and oftentimes
50 percent of the time, are able to issue permits right there when we have customers come in. We get about 20+ thousand people come in per year to do different types of transactions.
We issue about 3,000+ permits a year, and we do over 30,000 inspections every single year. That number typically hovers around that number, but slowly creeps up and down, depending on
the economy and building industry. So, if I may run through some quick accomplishments over this last year. The first is, we received three awards in trendsetting, one in energy and
one in inspection education. We are really proud of that. The Staff worked very hard and we have been recognized through different professional industries in the work that we have been
able to achieve. Secondly, we’ve updated all the building codes and Ordinances to comply with the tri-annual building cycle. We did that on time. This is the second time since I’ve been
here we have been able to do it on time. In the past it’s been late, which results in other problems. We are a Class I ISO Certified Building Department, which means that insurance providers
cut Palo Alto residents and property owners a discount. There are only nine of us in the nation, 18,000 agencies have tried to get ISO I. We are the one of nine. There are only four
in California. This next year we hope to renew that ISO I. We will be one of very few that is able to get it two years in a row. And that comes with investments in our inspectors’ training,
education and other credentials that they have to maintain and get. So, we also completed an Electrification Study in collaboration with the Utility Department. We made those findings
and presentations to the Utility Commission, and we continue to work on innovative projects with Utilities towards energy efficiency. We recently passed our energy reach code, which
exceeds the State’s energy code, which means that we have the most energy-efficient new building stock in the nation, because California’s energy code is the most aggressive in the County,
and we’re the most aggressive in California. So, in this last year also, our initiative, if I can, just a few other accomplishments. We just created and continued to run a real-time
dashboard that runs all of our performance metrics. That’s really important because we manage a lot of allocations from a lot of different departments, and we had a lot of transactions,
so we have a real-time dashboard that we created from scratch with some technology partners, that helps us track all the permits, all the inspections, all the plant checks, how many
are on time, which ones are running late, so that year-over-year we tend to improve our timeliness, our readiness, so that the Department can run efficiently and effectively. In addition
to managing the building codes, ensure that we enforce the building codes to the highest caliber possible. We also like to do it in a way that is customer friendly, predictable and efficient.
So, we also launched a new Smart Phone app, so this app actually helps contractors schedule inspections. We have been pushing the word out to different contractors and homeowners. This
has been a huge benefit to the community of customers that we service. We have been able to reduce the number of calls that we get in, which is helping us manage more with our existing
admin Staff. We’re always trying to leverage our administrative personnel as best we can and having them two deep on the phones is not the best use of their time, so this app is proving
to be very effective in trying to curb those calls. And finally, the Green Building web-based series of training videos. As you know, Palo Alto prides itself on its sustainability efforts,
ensuring that our buildings are some of the most energy efficient. Green buildings in California requires a lot of training and outreach of our Staff to the range of architects, engineers,
contractors, homeowners, so we’ve created a series of web-based trainings that have been well received. Over 2,500 views of those training videos over this last year, and we continue
to see an increase every year. So, that’s going really well. Initiatives for this next year, so Jonathan mentioned the right-of-way manager. We’re really excited. We’ve taken on that
project which is essentially going to help broadcast all the work in the right-of-way, so hopefully, in time as we build this solution out, when you see a plate on the road, that’s closed
a lane of a specific time, we’ll be able to identify who that belongs to, how long it will be there, etc. If the work is closing the lane down or a road down, with specific caveats,
which I won’t get into now. But essentially, we’ll have a better log than we have today of the work that’s disrupting the right-of-way. So, we’re excited to be working on that. And finally,
we are completing our Fee Study. We finished phase 1, we’re finishing phase 2, which means we’re trying to align our fees with our revenues, our expenditures rather. So, with that, if
I can jump to the next Page for our Budget. Essentially, our operating, we only really have one request. It’s that we would add a, we would renew the contract for our permitting system
technical support through a company we, that’s known as True Point Solutions. The ongoing net cost would be $130,000. The total cost is $250,000. Up until now we have been using our
CIP IT Budget, so we were allocated some years ago a million+ dollar IT Capital Budget. We’ve been using that slowly to build out a lot of the technologies that I mentioned. Now many
of those technologies are up and running. They are in support mode and so we are now transitioning from using the capital improvement dollars over to using operating monies, so we had
to increase our technology spend, if you will, and as a result we are adding the technology surcharge of roughly 2 percent on all Development Services fees. So, that is going forward
with our Muni Fee Schedule and we intend to impose that fee on all permit activity once it’s adopted and the appeal period passes. So, that’s essentially in a nut shell what we have
before you today, but I’m happy to get into any depth you want me go get into.
Chair Filseth: Council Member Holman.
Council Member Holman: I had, when I was reading through this, I had not so much the dollars’ questions, but some, if you could respond to it here, if not if we could have a follow up.
We had an email exchange some time ago and we haven’t found the time to have a further discussion, and it’s probably not a discussion just you and I should have, but I notice on Description,
under Green Building and Building both, talking about being in compliance with all State and local code requirements and such, and you might recall we had an exchange about State historic
building code, and I don’t see it reference anywhere, and it is one of the building codes of the State, so it was never clear to me, and again, it’s just, I’m bringing it up here, we’re
not going to resolve this here, but I’m just bringing it up again because it wasn’t clear to me that there is coordinated training for that. And an experience I had was, like, somebody
that I know well was trying to remodel their house, rather than tearing it down, and they said they were just having to fight with the Development Center to keep from having to tear
down their house rather than remodel it. So, again, it’s not a discussion that we’re going to complete tonight, but I’m just putting it out there again because I haven’t received Resolution
on that topic.
Mr. Pirnejad: Well, I want to thank you for that because it justified me inviting my chief building official tonight, so with that, I’m going to give it over to George.
George Hoyt, Chief Building Official: Yes, to address your question, the State Historical Building Code is found in what they call the building regulations, which is Title 24, which
is a tri-annual codes that we do adopt and modify, which we just did this recent past year. So, it’s located in Volume 2, which is the California Building Code, it’s in one of those
chapters.
Council Member Holman: Title 24 isn’t the only place where the State Historic Building Code applies though. It’s only one of the areas.
Mr. Hoyt: When I say Title 24, a lot of people think of the energy code as Title 24, and the energy code is just one part of Title 24. Title 24 is the actual State regulation that is
all of the building regulations.
Council Member Holman: Is it offered to people when they come in, if they have a building that is 50 years old or older?
Mr. Hoyt: The State Historical Code applies to buildings that are on historical registries, both State and local registries.
Council Member Holman: It used to be buildings that were 50 years old or older, unless something has changed. Anyway, I’m not trying to get into a long discussion now, I’m just trying
to get it out there because I think it’s a discussion at some venue at some time we should have because there’s not clarity.
Mr. Hoyt: Sure, I’d be more than happy to be part of that discussion.
Council Member Holman: Okay.
Mr. Pirnejad: And just for introduction purposes, George Hoyt is our Chief Building Official. He has been with us for three years?
Mr. Hoyt: Three years now, yes. Thank you.
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: So, I love these workload measures that you guys have here. Do you guys also have measures like on-time responses and turnaround for submittals? These are some
of the performance metrics I see that other cities have and have you guys started looking at some of those yourselves.
Mr. Pirnejad: It just so happens we do, and that’s exactly what the dashboard was created to measure. So, we have many more key performance indicators than the ones that are just in
the Budget book, and we don’t publish those, because they’re really more for operating purposes, but we keep track of them on a regular basis. So, if you’re ever interested and you’d
like to geek out on data, I’m your guy, so we keep this handy at all times so we can manage all of our performance. So, you asked a question about on-time reviews. That number we’re
really proud to admit has improved dramatically over the last four years. Currently, we’re…
Council Member Tanaka: What is the rate right now?
Mr. Pirnejad: Right now, there’s a lot of ways to measure that rate, but it’s right around 92 percent.
Council Member Tanaka: Okay.
James Keene, City Manager: What was it four years ago?
Mr. Pirnejad: Closer to 64 percent. It used to be over 121 days on average to get a solar panel approval. Now it’s same day.
Council Member Tanaka: So, you roughly know from Mountain View how many building permits they process?
Mr. Pirnejad: I don’t off the top of my head, but just structurally, Mountain View has a Community Development Department, it’s Planning and Community Development. So, their planning,
building, code enforcement, other departments are all consolidated, which is a little different than ours. As a Development Services Department, we have pieced of Planning, Public Works,
Utilities, Fire, as well as Building, so we get charged their time to answer questions specifically targeted towards nondiscretionary permit activity. So, it’s not really a one-for-one.
So, we are completely cost recoverable, whereas most Community Development Departments aren’t because they have non-cost recoverable functions.
Council Member Tanaka: Yeah. I’m just thinking that for Mountain View they spend about $5 million on building inspections. But it’s hard because you guys aren’t set up the same way,
so it’s really hard to do a comparison here. That’s why I’m just trying to get a feel as to how does it compare.
Mr. Pirnejad: So, just in terms of, to maybe provide some more light on that, we have a very tight structure. We have to operate on a zero balance at the end of the year, so that our
revenues match our expenditures. We do that a couple of ways. First of all, we manage our expenses by having a significant contract contingency, so we augment Staff with contract Staff
and we manage that contract staffing level, depending on the number of permits, inspections, plant checks that were coming in. So, we’re able to adjust that pretty quickly and easily.
Then we also get allocations from other departments and in collaboration with those departments, we decided year-over-year what that number should be to manage the workload based on
previous years. And we also manage our fees to make sure that our fees are aligned with those expenses. So, every year we fine tune our fees to make sure that the revenues and expenditures
match. So, we’re constantly, more so than most, are looking at our revenues and expenditures to make sure that we’re not over spending or under spending. So, it takes a lot of performance
metrics and whatnot to manage that.
Council Member Tanaka: Do you guys have, as part of your Budget, do you have some sort of feedback mechanism that applicants can give the Development Center in terms of how well things
have gone. Something like a motor score?
Mr. Pirnejad: We have a variety of ways that we get that feedback. We have a variety of different stakeholder groups that we reach out to. When we first formed the Development Services
Department some four, five years ago, we formed a Development Center advisory group, the DCAG, and the DCAG met on a regular basis to identify where things could improve, and we continue
to work on that and over time that group has kind of dwindled down, because the feedback we have been getting, the work is done or is predominantly done, and so we’ve been basing a lot
of that, the work that we’ve been doing on the feedback we’ve been getting, and every quarter we have an all-hands meeting where we display all the feedback we’re getting from constituents,
and all of it so have has been positive. So, anytime there is a negative comment, I ask that I get notified, that I talk to the constituents or customers about that, and we get to the
bottom of it.
Council Member Tanaka: So, for every applicant, do you guys email them and ask them?
Mr. Pirnejad: We give them a survey. We give them an opportunity to take a survey, and we respond back to them if they have any problems.
Council Member Tanaka: Thank you.
Chair Filseth: Thank you. Just a couple of things. I’m curious. So, the app, how many people use it?
Mr. Pirnejad: I think over 1,000 downloads so far.
Chair Filseth: Cool. And then one question, I should know this, but code enforcement, is that part of your department?
Mr. Pirnejad: So, that’s a great question. It’s actually under Planning and Community Environment as a function, but we do a lot of code enforcement support. Now, the number of code
enforcement requests building related are very minimal, as you should know. Most of the code enforcement requests are graffiti, leaf blowers, that sort of thing. A very small number
of building-related code enforcement. There were about 60 that I counted in the last year and a half, and of those, maybe a dozen turned into building permits, because the rest were
unfounded.
Chair Filseth: Good. So, your slice of that is strictly building?
Mr. Pirnejad: Exactly. And we only are there as a supporting mechanism for Planning.
Chair Filseth: Very good. Thank you for doing this. Adrian.
Council Member Fine: I’ll move that we tentatively approve this Budget.
Chair Filseth: Second.
MOTION: Council Member Fine moved, seconded by Chair Filseth to tentatively approve the Development Services Operating Budget.
Chair Filseth: No further discussion. All in favor?
MOTION PASSED: 4-0
Mr. Keene: Thank you Peter and George and team. Thank you, guys. I think Karen’s the only one who was on Council at the time, four or five years ago. It’s pretty safe to say that Development
Services was the poster child for bureaucracy and bad service. I can’t tell you how many calls you would even get of, I mean literally moms crying at the Development Center, over there,
trying to get their kitchen permit and all sorts of things. So, there has been a, not only an extremely significant turnaround, but a real effort on continuous improvement and getting
better and better.
Council Member Holman: Not to say that businesses have any more importance than moms crying, but we also even, since you’re giving a little bit of background history, so we’ve even had
businesses that weren’t able to take up space here in Palo Alto because they could get better service getting permit approvals in other cities.
5. Public Works.
General Fund, Operating Budget
Paul Harper, Principal Management Analyst: Paul Harper with the Office of Management and Budget. Before we get started, so Public Works has five different funds. We’re going to go basically
fund by fund. We’ll start with the General Fund and this is the only one where we’re not going to be talking about the capital section, because we’re going to talk about the General
Fund capital two Thursdays from now, on the 18th. Things in that fund are the Infrastructure Plan, streets and sidewalk improvements, building and structures, things like that. So, if
you want to save your questions for those types of projects, that’s when we’ll handle those next Thursday. With the other funds we’ll be doing similar to IT, the operating and the capital
side of those funds.
James Keene, City Manager: Mr. Chairman. I notice we do have some of our citizens who showed up for this item. I don’t know if they filled out cards or not, but it looks like people
are going to do that. You may keep that in mind.
Chair Filseth: I have no speaker cards here, so anybody that wants to speak, please submit a card. And we have one speaker from the public, which is Susan Rosenberg. And, I think what
we should do is do all these now, right, as opposed to fund by fund. So, Ms. Rosenberg, welcome, and you have three minutes.
Susan Rosenberg: Okay, I’ll be shorter than that, I guarantee it. So, first I want to thank the four of you very much for your, the tremendous amount of time that you put into these
meetings. I don’t know how you do it, but thank you very much for doing it. Good. I’m happy to hear that. Having been here since 7:00 tonight, it’s clear you’ve seen a lot of big numbers.
What I’d like to bring to your attention, and ask you to reconsider, is the portion of the Public Works Budget that eliminates $338,000 for tree pruning, and another $160,000 for the
Urban Forest Masterplan. The City Council, last year, was specific and unanimous in asking that the Cities trees be pruned on a seven-year cycle. With this Budget cut, it would extend
the cycle to ten years. And I’m really baffled why Staff could consider cutting the entire Budget for the Urban Forest Masterplan. It took nine years to complete the plan with hundreds
of hours of input from Staff, residents and a number of local nonprofits. It was created with a long-term and inclusive vision for Palo Alto’s environment. The creation of the Urban
Forest Masterplan speaks volumes about a City that sees itself as a leader in the Green City movement. The irony of all this is that the truly greenest aspect of the City of Palo Alto
are trees, is so readily pruned by Staff. Thank you.
Chair Filseth: If there are no more speakers to this item, please proceed.
Mike Sartor, Public Works Director: Good evening members of the Finance Committee, Chair Filseth. I’m Mike Sartor, the Public Works Director. As Paul Harper mentioned there we are a
department of many funds. Actually, we have six separate funds that we will be going through with you tonight, starting with the General Fund, and as Paul also mentioned, please remember
that the five other funds we will be talking about tonight will include the capital component of those funds. The General Fund will be coming back to you on May 18th. Capital Fund, including
updates on the Capital Infrastructure Plan that the Council has approved. So, we are a department of four different divisions. We have an engineering division that manages basically
our capital program and also provides supports to the Development Services Center. We have a public services division, which is our basic maintenance and operations group. They do our
tree trimming, maintain the City fleet, maintain City buildings, do sidewalk repairs, storm drain maintenance. Those kinds of things, operate our pump stations, all those activities.
We also have an environmental services division, which is our Refuse Fund, our Wastewater Treatment Plant and our watershed protection activities for the department. And lastly, we have
an airport, the Palo Alto airport out in the Baylands. So, real quickly, accomplishments over the past year, we continue to improve our pavement condition index scores, getting towards
our goal of an 85 average by 2019. We are implementing the Council’s Infrastructure Plan. We’ve brought to you design contracts for the Public Safety Building, the California Avenue
parking structure, the Downtown parking structure. We’re about to go out to bid for construction for Fire Station 3 replacement. We have, also, our work with the transportation group
in the Bicycle and Pedestrian Plan, and of course, the highway 101 bike/pedestrian bridge, which is moving forward. We’ve completed the basic upgrades to Bixby Park. You saw that on
Monday night, a little presentation on that. And then we are also moving, we moved forward on some no dewatering requirements for basement constructions in residential homes. Coming
up this next year, we’ll be doing the completion of or Matadero Creek pump station as part of the storm drain program. We'll be continuing to implement the Urban Forest Masterplan. We
are two years into that plan already, and we’re making strides into that area. We have designed an advanced water purification facility out at the treatment plant for recycled water
and we’re also working on organizational efficiencies in the Facility Masterplan Study, making improvements in our facilities’ program. So, in the General Fund we are proposing to do
a realignment of a few of our FTE’s from the Capital Improvement Fund to the General Fund, 0.59; and we are proposing to drop a coordinator public works process, add a coordinator position
and drop a building service person lead. The purpose for that will be to better accomplish primarily Civic Center maintenance over time. Our operations request, we are planning to do
urban forestry mitigation fee to plant 200 additional trees annually. We are increasing our revenues through our municipal fees. You’ll see that during the municipal fee presentation.
I believe that’s also on the 18th, as I recall. As you just heard, we are proposing to go from a seven-year tree-trimming cycle to a ten-year cycle for the next two years and remind
you that the contract expires in two years and we will be going out to bid again for a new tree-trimming contract, and that will be an opportunity to look at those cycles again. We are
looking at doing some reductions and realignments in our facilities and street operations programs and we’re proposing to shift a Downtown tree light and street maintenance work that
primarily the Downtown streets team work to the parking district Downtown. So, that’s it for the General Fund.
Mr. Keene: Mr. Chairman, I think it’s pretty obvious you would be taking, making your decisions on each one of these fund by fund, rather than waiting in the entirety.
Chair Filseth: Yeah, I think that’s the right way to do this. I know there’s going to be some questions on the Refuse Fund, so I think we might was well take questions on the General
Fund issue now. Particularly given, I remember the tree-trimming discussion from last year as though it was yesterday. Council Member Holman.
Council Member Holman: And, hopefully, we will have a like outcome this time. So, that said…
Mr. Keene: This is precisely the Council’s purview.
Council Member Holman: Precisely. It so happens I just finished three days of having a crew at my house pruning my trees, so it just so happens.
Chair Filseth: So, did I, by the way.
Mr. Keene: Yeah, there was no conspiracy here.
Council Member Holman: No, but it just, you know, it just kind of puts front and center for me three days. That’s how many trees I have and how I care for them, and the expenditure that
I make for them and how much my neighbors are even commenting on the work that’s been done. And so, why? To put it bluntly, why?
Mr. Sartor: Recognizing the City’s General Fund Budget deficit this year, that was one area we felt that the Public Works Department could contribute.
Council Member Holman: I guess I would say it’s one area where I don’t think the public wants to contribute. I think the public wants to keep the trees maintained. I mean, I don’t have
to go through the litany of benefits that we get from our trees, whether it’s cleaning the air, cooling the environment, providing safer streetscapes, improving property values.
Chair Filseth: Council Member Holman, maybe there could be some color on the difference between sever and ten as opposed to the absolute, whether we need trees or not.
Council Member Holman: Well, I’m talking about the difference in dollars makes up that difference between seven and ten. So, the industry standard is, I’ve heard two different things.
I’ve heard five to seven, I’ve also been told three to seven years is the standard pruning cycle and I think Walter would have something to add to that, perhaps. But a ten-year cycle
is not a recommended industry standard, so.
Mr. Sartor: Let me ask our Urban Forester, Walter Passmore to come up and talk about tree-trimming cycles, because as I recall in our conversation last year, there is a broad range of
acceptable tree-trimming pruning cycles.
Council Member Holman: Can I just be clear on this, because there’s acceptable and there’s recommended, and can I suggest that may not be the same thing. And I know, my tree crew, it’s
like and other people I know that use professional pruners, arborists, they are on a three-year cycle.
Mr. Keene: Maybe Walter can also speak to the different between acceptable and recommended, and if I might just pile on, Mr. Chairman, this particular recommendation, as I understand
it is for, even though this is only an annual Budget recommendation, would be to continue this for two years. I mean, at least you would have to decide again to do that. I think you
guys should describe what you think the impact is on the City for being on a seven-year cycle this year. We’re going to move for the next two years to a ten-year cycle, and then potentially,
I’m assuming that the recommendation anticipated, we could move back to a seven-year cycle possibly. What’s the impact on the canopy with that situation?
Chair Filseth: I think that would be great. If Mr. Passmore has some color on sort of what neighboring cities do, that would be great too.
Walter Passmore, Manager of Urban Forestry: So, there’s not a set industry standard for the number of years for the pruning cycle. The recommendation varies. I think last year we had
discussed five to ten years was generally considered acceptable for a municipality. Residential homeowners would generally be recommended, you know, three to five years, which is a more
frequent pruning cycle, because the more frequent we prune the trees, the less we have to cut off in any one cycle, and we had a fairly extensive discussion last year about the amount
of leaf volume or branches pruned off in any one year, and the impact to the tree at any one time. Our American National Standard Institute specifies that no more than 25 percent of
the canopy should be pruned off in any one year. But that by no means sets your cycle length. It’s up to the City, the climate, the Budget to come up with an appropriate cycle that accomplishes
the quality and the health of the trees that you want. I know that’s a rather vague answer.
Chair Filseth: Do you have any idea what they do in Mountain View and Menlo Park and Los Altos?
Mr. Passmore: So, Palo Alto is somewhat rare among municipalities in that we own and maintain all of our public trees; whereas Mountain View, Menlo Park, San Jose assign some or all
of their public trees to the adjacent property owner, hence the quality of pruning and the cycle of pruning is quite variable. It’s also one of the reasons why Palo Alto has doubled
the amount of tree canopy per square mile that surrounding cities do. So, you know, comparing to Menlo Park or Sunnyvale or San Jose or most other cities in the State, I don’t think
gets us necessarily a desired cycle length that we would want.
Council Member Holman: So, watching the trees through drought and through these last years’, last winters’ storms and significant rains and such, it’s hard to conceive, and I’ve looked
to you Walter, it’s hard to conceive that having a more frequent pruning cycle isn’t beneficial to the tree. In times of drought it would seem to me that the tree is trying to support
more than maybe it needs to be because it isn’t pruned adequately. And in times of winds and overt rains, it seems like there is, you know, wind that can’t get through trees because
they haven’t been pruned frequently enough to let the wind pass through, you know, just to give a couple of examples. Can you comment on those?
Mr. Passmore: Sure. So, more frequent pruning cycle does reduce incidence of failure, whether that’s dead limbs caused by drought or whether that is overextended branches from excess
rain. You know, trees will naturally prune themselves in the woods, but in town we don’t like the effects of a branch dropping on someone’s car or roof; therefore, more frequent pruning
cycle will reduce the number of incidents and the size of branches that may drop off the tree naturally. Did that answer your question?
Council Member Holman: Yes, it does. So, question for the Director. Why tree-trimming services reductions? Are there not other areas that could be targeted for reductions that wouldn’t
focus on the tree pruning cycle in a City that’s known as a Tree City USA aware winner?
Mr. Sartor: The primary answer to that is in consultation with Walter, it was felt that going from a seven-year cycle to a ten-year cycle would not jeopardize the health of the trees
in general throughout Palo Alto. We have other programs, as you mentioned, our street maintenance program, for example. We have goals to improve our pavement conditions, so we felt that
was as important as the tree-trimming cycle and other programs that we have.
Council Member Holman: Personally, I would prioritize the tree maintenance over street. The trees over paving, it’s kind of like a no brainer for me, anyway. And, you know, we’re all
glad that we’ve gotten better street conditions. We’re all glad for that. We’ve been very aggressive in seeking that, but at the cost of a more frequent tree pruning cycle, I don’t think
it’s a wise choice. Comments have been made about, from me and from Walter about what private homeowners are prone to do. Not all do it, of course, on a three-to-five-year cycle. I mean,
trees are trees, so whether they’re street trees or on a private individual’s property, recommended tree pruning cycle of three-to-five seems to be an indication that seven is better
than ten, and three-to-five is certainly better than seven. So, if we’re going to like come in in a seven-to-ten, I think, to me, there’s just no question that seven is better. So that’s
on trees.
Chair Filseth: Karen, also I suspect that Council would put it back in and I suspect you’re going to want to ask for this in the parking lot, so why don’t we move on.
Council Member Holman: Okay, but we have two new Council Members here and they were not here for the discussion last year.
Chair Filseth: Fair enough. Wrap up.
Council Member Holman: So, I have a couple of other questions too, which are, shifting the Downtown streetlight and you mentioned also something about Downtown Street Team also being
shifted to the Downtown Parking District. That’s what I thought I heard, although it’s not in writing here. Could you explain that? That’s what I thought I heard in the oral presentation.
Mr. Sartor: So, if you go to our budget adjustments Page 359, there’s a description of what this proposal is intended to accomplish, and you’ll see that it’s just a contract for the
maintenance of the street tree lights as well as our contract for the Downtown streets team to the Parking District Fund.
Council Member Holman: So, the combined of those two – this is where it was confusing to me. So, in the green highlight it talks about the street tree lighting, but then below that it
talks about the Downtown streets team, so what part of the Downtown streets team is being shifted? I’m sorry, it’s just not clear to me. And is what’s in green, is that just the street
lights, or is that also? I’m confused.
Mr. Sartor: I’m just following the description below the green shading that you have, and I’m sorry, mine is not shaded in green. I have a black and white copy, but I’d have to, we’d
have to go to the breakdown. I believe, as I recall, the street tree maintenance contract is roughly $40,000 a year, so the difference would be what the amount of the Downtown streets
team cost is being proposed to be shifted.
Mr. Harper: Council Member Holman, we’ll look into that. We have the numbers. We just need a second to look into that, the split.
Council Member Holman: Okay, and then the follow-up question to that is, has there been any analysis of what that would mean to retailers in particular?
Mr. Sartor: We’re not proposing to eliminate the service.
Council Member Holman: I understand that, but what the impact would be?
Lalo Perez, Director of Administrative Services and Chief Financial Officer: The funding comes from the permit parking, not necessarily directly from the retailers, if I’m following
your question.
Council Member Holman: Not the retailers, okay.
Mr. Perez: So, this is not the, this is from the Parking Permit Fees.
Council Member Holman: Okay, alright. The other question had to do with the Urban Forest Masterplan funding, and it seemed like I heard two different things there.
Mr. Sartor: Well, as you may recall, the Urban Forest Masterplan is a ten-year plan, and there was funding put out and set aside for the Urban Forest Masterplan first two years, over
the last two years, so that work is progressing. What we are proposing this year is to defer the year three until a future, until potentially year four. And, again Walter can explain
a little bit more. Some of the initiatives that were in year three included an analysis of the north versus south canopy coverage, which is being done anyway without additional funding.
Another item in that was to look at the impacts of trees on solar installations, and Walter is working with our Utility Department on doing that evaluation without having to add additional
funding, so we are looking at ways to accomplish elements of year three in the Urban Forest Masterplan without additional funding.
Mr. Keene: Can I, a clarification, just so we’re clear. FY ‘18, which is the Budget the Committee is looking at, is year three of the Urban Forest Masterplan and roughly how much of
what, from a task basis, was included in the original year three plan and what is, how much is going to be provided anyway through other sources versus how much is now. You know, whether
that’s a simple percentage roughly. Because I don’t think we have any issue if we’re going to provide what was called for through some other means, I don’t think the Committee would
have an objection. However, what we’re doing is only partially what was in there, then we ought to identify what that delta is.
Council Member Holman: Yeah, you referred to Walter, so do you have comments Walter?
Gina Magliocco, Senior Management Analyst: My name is Gina Magliocco. I’m the Senior Management Analyst for the Public Works Department. The $200,000 that you’re seeing as a reduction
in the Budget, we never had money actually allocated, so it was all in the plan as, this is what we think it will take. When we looked at the Budget and we put everything together, we
talked with the different departments and looked through the programs that were being asked, and we found other ways to accomplish I would say probably 80 percent, 75 percent of what
is being asked for. We’re going to be working on the tree canopy data and we’re going to be working with Utilities for the solar. We’re going to be working with, we’ve got the canopy
increase that we’re going to be doing through the mitigation, and that will be primarily in…
Council Member Holman: So, can I suggest that you can go through a list, but if we don’t have in front of us what was to be accomplished in year three, we’re just, it’s just like shooting
darts at a board, or something like that. And we got a letter we want to acknowledge from canopy that was signed by a number of other organizations having to do with I think both the
tree pruning cycle and, if I remember correctly, also the Urban Forest Masterplan concerns.
Mr. Keene: Yes, if I might. Let me just follow up on what the Chair said earlier about this probably ending up in the parking lot. Assuming that that’s the case, why don’t you let us
go back and say, “Here were the expectations from the plan and here were the plan dollars. We’re removing the plan dollars,” we’ll do a comparison and we’ll just say, “Here’s what was
going to be assumed, and here’s what’s not.” And a rough estimate of what’s not, what that might cost. So, there’s no sense in appropriating $200,000 if we can do $170,000 of it through
other sources, or whatever it is. But you clearly may say, “Well, the $30,000 worth of stuff that is not being done, that is important to us.” And I’m just making those numbers up. They
may not be the right proportion. Then we could have that back in time for when you are in wrap up.
Council Member Holman: That would be very helpful to understand.
Chair Filseth: I’ll assume you’re going to move it and I’ll second it.
Mr. Harper: Chair Filseth.
Council Member Holman: I just wanted to give the other two Council Members a chance to speak first.
Mr. Harper: To answer your question on the Downtown Streets Team and the tree lighting, so $30,000 is for the tree lights and the difference, $46,201 is for the Downtown Street Team,
and they are mainly cleaning the sidewalks and alleyways and counseling the homeless in the Downtown area.
Council Member Holman: Okay, so when that comes back, also if that could be better described, that would be helpful.
Chair Filseth: Council Member Fine.
Council Member Fine: Thank you. One quick question. Page 353 we’re looking at the administration division increasing by about 23 percent? That just kind of stood out to me and I’m wondering
if we can get an idea of why the admin costs are going up?
Mr. Sartor: I’m sorry, where are you at Council Member Fine.
Council Member Fine: The top of 353 General Fund Administration, 23.4 percent increase.
Steve Guagliardo, Senior Management Analyst: Steve Guagliardo, Office of Management and Budget. I can help explain that a little bit. So, the way we do the allocated charges, the charges
you see that get allocated to the Utilities Funds, to a number of the Internal Service Funds, they’re charged to the administration division and so what you’re seeing is an overstatement
of that.
Council Member Fine: Just a second point. I generally do agree with Council Member Holman about the tree-trimming schedule. There may be some compromise between seven and ten, call it
eight years. I don’t know. And then it would be helpful, again, to see the breakdown of the Forest Masterplan and what we’re covering outside of this fund.
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: Yeah, I also agree on the tree trimming as well. Actually, I think Tuesday, I’ll look through here, because I see Manager of Office was increasing their Budget
by almost 14 percent, which was about, yeah, 14.8 percent, almost 15 percent, which was about $425,000. So, I was making the comment that maybe that could pay for the tree trimming instead.
But, anyways, so the question for you is, on the salary, it’s going up about 8 percent, right, on Page 353, and the year before, unless I did my math wrong, it went up about 9 percent.
So, it’s going much faster than the rate of inflation. Do you know why?
Mr. Guagliardo: Council Member Tanaka, Steve Guagliardo again, Office of Management and Budget. If you’re looking at the ‘16 column, you’re actually seeing the ‘16 actuals, which is…
Council Member Tanaka: I’m looking on 353.
Mr. Guagliardo: Correct. And if you look at the Fiscal Year ’16 column, which is how you would get your year-over-year growth to Fiscal Year ’17, you’re not seeing year-over-growth from
a budgetary perspective. What you’re seeing is the Fiscal Year ’16 actuals. As City Manager mentioned at the outset of this meeting, there are salary savings on an annual basis, and
so the salary savings are seen in those actuals numbers. Because we didn’t fill the positions, because they were left vacant, etc. So, what you’re seeing is the growth from actuals to
Budget, and then you are correct, you are seeing that year-over-year Budget growth of about 8 percent in salary.
Council Member Tanaka: Okay. So, is it going up this year then? Okay, why is it going up?
Mr. Guagliardo: It grows every year as a function of step increases for the unionized members of our workforce. That happens on an annual basis. There’s also merit increases for the
management employees in our organization, and in addition there are cost-of-living increases.
Council Member Tanaka: Okay, you’re cutting back our tree-trimming service for our residents and giving the Staff raises, which, is that what’s happening?
Mr. Keene: In the case of our employees, we have existing contracts that run through the end of 2018 that set those.
Council Member Tanaka: So, you’re saying this is a mandated increase?
Mr. Keene: Essentially, on the salary side.
Council Member Tanaka: I see. Okay. So, the other question is, on people have already asked about this. So, on the Budget adjustment on 359, so the street tree lighting, so this is going,
is this going to the bid, the parking district?
Mr. Perez: No. So, we have a program where we issue permits for the garages and the lots and we charge a fee for those, $466 for an annual permit, and the collection of those Revenues
Fund the maintenance, operational and administrative support of the parking district garages and the management and maintenance of them.
Mr. Keene: I would just add that we do have a Downtown Parking District Committee that has some stakeholders who will probably be arguing against us making this shift that I would just
share with you.
Chair Filseth: I was going to suggest that maybe one of those guys, it was probably his idea actually.
Mr. Perez: So, there’s two parts to this. So, to be clear, tonight on this end, and then on Tuesday, the 9th is the other end, which is the University Parking district itself. So, we
notified the head of the Committee. We’re meeting with that individual on Monday to go over the details and they’re obviously more than welcome to come and share their opinions on Tuesday
night. So, we’re reaching out to them and explaining our justification. From a legal standpoint you have authority to do that. It’s a matter of policy.
Chair Filseth: I wish you a successful meeting. Go ahead.
Council Member Tanaka: So, my other question is, on allocated charges, what is that, on 353?
Mr. Guagliardo: So, allocated charges includes all of the charges from the General Fund to the various funds like the Information Technology Fund, for example, for the Utilities Fund.
And you can see the breakdown in a little more clarity on Page 356. We try to call them out on that Budget reconciliation by using the words allocated charges adjustment in there. So,
for example, for Public Works, you can see there’s Utilities adjustments of about $100,000. There’s a refuse sales adjustment of $3,000, storm drain of $1,000, vehicle replacement actually
went down for Public Works this year, and you’ll see it in there.
Council Member Tanaka: So why did it go up by 12 percent?
Mr. Guagliardo: Again, you can see it detailed, general liability is a big chunk of that. We described that a little bit in detail on Tuesday night. So, general liability covers the
City’s insurance in case of a general liability claim against the City. In Fiscal Year ’17 the Fiscal Year we’re currently in, we were actually able to give a rate pass to every department
and every fund throughout the organization as a result of the accumulation of fund balance in that fund. This year, in order to achieve our fund balance goals, we’re not able to give
that rate pass. So, you’re seeing a normalization of that general liability charge this year.
Council Member Tanaka: And, I guess, what’s the idea behind, I see the contract services decreases. Why is that?
Mr. Guagliardo: I mean the contract services Budget is a number of things. So, again, in the reconciliation table, you’ll see the individual line items called out. A big chunk of that
is the Urban Forest Master Plan that we proposed to, and you’re seeing that manufactured there.
Council Member Tanaka: Thank you.
Chair Filseth: Okay. We actually have one more speaker from the public, which is Debbie Mytels. In general, I would prefer that, you know, we have done all this at the beginning, but
since there are so few, let’s invite Ms. Mytels to the podium here.
Debbie Mytels: Thank you for taking my comments. Is this on?
Chair Filseth: Yes, and you have three minutes for your comments.
Ms. Mytels: I just wanted to come and speak on behalf of the trees in Palo Alto also. We’ve all been through this four or five-year drought, and things are looking really quite bleak.
I live along Louse Road and my Modesto Ash trees are really looking like most of them are dead. They are often caught this time of year with the Anthracnose Disease. It means that first
leaves fall to ground and then they have to come back with another set of leaves. So, the second set of leaves are hardly coming back at all. And around town we can really see the discrepancy
of what’s happened with the trees. They’ve really been hit pretty badly and even though the rains have helped a lot of the other Plants, I think some of the trees have been seriously
impacted. So, to put the aspects of the Urban Forest Masterplan on hold is, I think, pretty distressing. It’s good to hear that you’re maybe going to find other places in the Budget
to be able to do that, but I really want to encourage the Finance Committee to not slight our trees. It’s one of the things that makes Palo Alto the real distinctive community that it
is, and I really appreciate the attention you’re paying to the tree-trimming Budget as well as considering all the aspect of the plan, and in particular the South Palo Alto, North Palo
Alto difference to it. It’s quite significant and those of us in South Palo Alto could use a lot more shade sometimes. So, thank you very much.
Chair Filseth: Thank you very much. I actually didn’t have anything that wasn’t uncovered, except, a pretty big jump in workers comp this year.
Mr. Guagliardo: Again, this is one of the things we went over on Tuesday night. It’s a similar story to general liability. We were able to give a rate pass to departments and funds last
year as a result of the accumulation of fund balance in the Workers’ Compensation Fund. What you’re seeing is the normalization of that this year.
Chair Filseth: We should expect to see that in some of the other departments as well?
Mr. Guagliardo: Yes, you’ll see it throughout the organization.
Chair Filseth: Okay, thank you. Council Member Holman, would you care to make a Motion on this?
Council Member Holman: Yeah, I would move that we move the Public Works General Fund Budget to the parking lot.
Chair Filseth: The whole thing or just.
Council Member Holman: Well, the reason I was doing that was because we didn’t know where we were going to find the make up for it. That’s why I put the whole thing in.
Mr. Keene: Right, but the fact maybe we find it even someplace else other than in Public Works. I mean, I think – you could approve it with moving those two items to the parking lot.
I think that would keep us more focused on…
Council Member Holman: Well, those are the things that we want to reconcile, so I can do that. So, move the Urban Force Master Plan and the tree-trimming cycle to the parking lot.
Council Member Fine: I’ll second that.
MOTION: Council Member Holman moved, seconded by Council Member Fine to tentatively approve the Public Works General Fund Operating Budget, with the exception of the Urban Forest Master
Plan and the tree trimming cycle, which will be placed in the parking lot for future discussion.
Mr. Harper: Can I make a clarification on the Urban Forest Master Plan, Paul Harper, Office of Management and Budget. So, that money was one-time money that was take out because it wasn’t
actually budgeted ongoing from one year to the next. So, that money would be an add to the Budget that was not originally in there. Just to clarify.
Chair Filseth: I think what I heard that you folks were going to come back with was, “Here are the impacts of we do this and we don’t and here’s the money involved,” and I think that’s
what we need.
Council Member Holman: To clarify that, it was, the things were on the program to be done this year, and the things that will or won’t be done without funding.
Mr. Sartor: That’s correct. We’ll go back to the Urban Forest Masterplan line items and identify what we’re covering already in year three, and then what we would need additional money
for.
Council Member Holman: And how it was scaled out. Yes, okay.
Chair Filseth: So, I think actually Council Member Holman got the Motion right to begin with, because we’ve been pretty much approving every single Budget unscathed, and so at our current
pace, how would we get the money for the tree trimming? That’s the thing I’m concerned about. So, I think, I’m just thinking like, if we just parking lot that one item, or two items,
where would the money come from? So, I’m concerned about that.
Mr. Keene: So, what typically happens is, we get to the parking lot. We start to be able to see the big picture of what we’re actually dealing with. At this point, it’s not going to
be huge and unmanageable, and then again, typically you could – first of all, we’re not stupid. We’re going to be thinking between now and the parking lot, what are our options and at
a minimum you’ll say, “Okay, we really want this money back in. What do you recommend we do?” So, I’m just saying it could even be sort of a false assumption that you would put, that
we’re going to take it out of Public Works. The real issue is, you’re saying, “We want to put some of this money potentially back in, or all of it, whatever that is.” And we’ll have
to find it, and trust me, we’ll know how to do that when we get there and you’ll know how to see what some of the tradeoffs are.
Chair Filseth: Council Member Holman.
Council Member Holman: So, the reason I was tempted to begin with is because it seemed like it might be a tradeoff between trees and pavement, and so the parking lot seems appropriate,
so I thought it might be that. Let me finish, Jim. So, to answer your point, it’s where the other Budgets are tentatively approved. So, we can revisit those and Staff will come back
with responses to our parking lot issues.
Mr. Sartor: Let me help with a little bit of this, Council Member Holman, because I may have misled you on the pavement. Our General Fund Budget in Public Works is relatively limited
to either staffing or contract services. In the paving area, we have proposed to reduce some of our materials costs. The other area in paving that we have in the General Fund is staffing.
Similarly, to our building maintenance and our other activities in our maintenance operations. So, the tree-trimming contract is an area where we can make reductions without impacting
our staffing and our work load.
Chair Filseth: Council Member Fine.
Council Member Fine: Thank you. If I’m understanding this process correctly, it’s not a game of musical chairs. We’re pulling things out, we’re going to get a Budget total off the end
and we’re going to say, “Gosh, Council wants another $2.5 million,” and we’re going to see where we flex across all the funds. It could be out of Public Works, it could be somewhere
else. I think it’s the right thing right now to try to pull these two out which we have concerns about, and come back to them at the end.
Mr. Keene: What you’re tentatively saying is, “Our outstanding concern on this Budget is in this area.” And, you know, again, we’ll get to the end and we’ll see it, which also includes,
you guys said tentatively approve everything, and you get to the end and then you freak out and say, “Gosh, we haven’t done anything. Let’s cut $5 million.” And then we say, “Okay, here
are the options.” That will be way more efficient than you guys trying to guess what the options ought to be as we’re going along.
Chair Filseth: Council Member Tanaka.
Council Member Holman: It was just too much fun.
Council Member Tanaka: So, I actually, while I do agree with the tree trimming, I actually disagree with taking it out of the paving, or the streets. So, what I wanted to ask the Chair
here is, if we wanted to make a big structural thing, let’s say, we want to cut about $5 million, or we want to do something like that, what is the form for us to do that?
Chair Filseth: This particular Budget or the overall Budget?
Council Member Tanaka: I guess both questions.
Chair Filseth: If it’s this particular Budget, then I believe the proper procedural thing would be to put the whole thing in the parking lot, and with the direction that, we think this
should be 50 percent smaller. And Staff would then attempt to go figure out how to do that. For the whole thing, I guess I want to ask the City Manager that, because my, the simplistic
thing would be to say the whole things goes in the parking lot and we deal with it on the 18th, but that doesn’t give us time to do anything, or the Staff time to do anything.
Mr. Keene: Let me restate what the parking lot has traditionally been. It’s been a way of you sort of culling out from the Budgets, for the most part you’re saying, “Okay, we’re tentatively
okay with, let’s just say this General Fund Public Works Budget. We have concerns though about these two areas, so we’re putting that in the parking lot, because we want to revisit that.”
And I’m assuming what will happen then is you’ll start to see the whole picture of what the size of the parking lot is that will have some influence on how you see the individual things
also. And it’s at that point you’ll say, “Well, this is so important.” The process will be for you to convince a majority of the Committee, well, actually you’ll have to look at the
way our process works is actually, you can get a majority of the Committee, or I think our process is, even if we have a 2-2 vote on an issue in the parking lot, that issue goes to the
Council as a whole, with the report that, “Well, this was in the parking lot, it was a tied 2-2 vote.” So, the Council still has the chance to see what the discussion was and still make
the final decision.
Mr. Perez: Correct. That’s what we did. And just to remind you, we do have a second backup date for the wrap up, and we’ll discuss that at the end of the meeting, as to what night that
will be, if we need it. But, also, last year you gave us a target to come back at the Council’s recommendations, which is what we did. You did not know what the specifics were of the
recommendation you made. Your recommendation was to put money back into the reserves, put it at 20 percent and that was somewhere around $3 million was my recommendation, and we came
back and gave you some deferrals on capital improvement projects.
Chair Filseth: Yes, please.
Council Member Tanaka: For me, where I think the money should come from is, okay, let me ask Staff, are there unfilled positions in Public Works?
Mr. Sartor: We do have a couple.
Council Member Tanaka: Okay, so could those couple, instead of filling those positions, could we use the money instead for tree trimming?
Mr. Keene: Why would we go that way?
Council Member Tanaka: I’m just asking.
Mr. Keene: Why wouldn’t you just say, “Find the money.” Because there’s a consequence – here’s why, because they need these positions. Okay, so if they don’t fill those positions, ultimately
that has an impact also. And so, what we want to do is be able to present to you, if you say, “We really want this.” What the people who deal with the day-to-day deliverables and the
consequences of not delivering you, giving you what they think, here’s the best way to fund what it is you want to achieve. If you don’t want this, if we made the wrong choice here,
then here’s our backup choices as to what to do. And it very well could end up being that we would decide it’s better to take it out of some other part of the Budget.
Council Member Tanaka: My concern is, we’re saying yes to everything, and we only have some much money, and in order for us to say yes to something that’s been set as no, we have to
say no to something.
Mr. Keene: Right now, I’ve presented you with essentially what I think is a balanced budget. You may ultimately disagree with some of the recommendations and it will take it out of balance,
and then we’ll have to deal with you saying, “I want you to find where the cuts should be to be able to do that.” If we do that in a timely enough way, we can do it with the Committee.
As Lalo was saying, last year the Committee had to say, “Well, here’s what we want back in. You bring the reductions that will make that happen to the Council.” And the Council ultimately,
I think for the most part it took those.
Mr. Perez: It did and so we ended up with a 20 percent plus Budget Stabilization Reserve, as a result of that recommendation the Finance Committee made.
Chair Filseth: Let me see if I can, if I understand what Council Member Tanaka is asking, and I’ll ask him if this is correct, which is, the City Manager has indicated when we came in,
and this is very macro high level stuff, right, but it’s a reasonable question. The City Manager and the Staff, which is Lalo and Kiely and Steve working 64 hours a day, have come back
with all this stuff, which is, as the City Manager says, essentially a balanced Budget within our definition of balanced. The question you’re asking is, suppose we wanted Staff to come
back with not a balanced Budget, but a 10 percent surplus Budget. What’s the process by which we ask that? Is that essentially it?
Council Member Tanaka: I had the question too, but more specifically, okay, so…
Chair Filseth: The City Manager’s guidance is, don’t have the Finance Committee and line out this program and that program. Let them, they can do it better. That’s what he’s saying.
Council Member Tanaka: I think, it seems like we have a fairly good consensus about the trees, I mean with this Committee and maybe with the Council. And so, then that means the money
has to come from somewhere, and I’m sure the City Manager, there’s not slack in the system. Something’s got to get cut in order to fund this right?
Chair Filseth: Right and he’ll give us the answer to that like they did last year.
Mr. Keene: … and say what about that, and we say, no that’s not good. We’ll get there faster…
Chair Filseth: What happened last year was, Staff came back and said, “If you want to do that, here are two or three options of, we could do this and this and this, and here would be
the impact. Or we could do that and that and that and here would be the impact, or we could do this and this and this and here would be the impact.” Council reviewed them all, picked
one and that was how we did it.
Mr. Perez: And you’re not going to like whatever recommendations we come back with, because everything has consequences. Right, it’s just a matter of what you feel is most important
from the options we give you.
Chair Filseth: Would Council Member Fine chime in?
Council Member Fine: I think that’s actually the point, is that the parking lot becomes more contextual as we add to it, right so at the end of the thing when we get to it and we say,
‘Gosh, we have $10 million, we’re going to say, gosh, the trees just aren’t that important in this case, because we have so much else in the parking lot.” If we see there is nothing
else in the parking lot, it’s just the trees, we’re going to move on that and we’ll find the slack in other places. So, the parking lot, I think, becomes more useful as we get to the
end.
Chair Filseth: I think that’s accurate. Council Member Holman.
Council Member Holman: Question on something maybe a little bit different and I’m sorry, I meant to bring this up earlier, but its’s tree related.
Chair Filseth: Bear in mind, there is a Motion on the floor.
Council Member Holman: Yes, yes, yes. Well, we can vote on that and I can bring up the question, but it’s still about General Funds, so, it’s an organizational question. So, I was looking
at this list and I’m looking at how it’s structured, and I guess, you don’t need to answer this tonight.
Mr. Perez: You’re looking at Page 344?
Council Member Holman: You don’t need to answer it tonight, but I would appreciate some follow up on this for the Council, and that is, when I look at this, I see under Assistant Director
of Public Services, that’s where the Urban Forestry Department is, and in the next column, it’s Environmental Services, which has to do with water quality, water shed protection, zero
waste and refuse. But the column in the org chart where the Urban Forestry Department is has got facilities, maintenance, the fleet, traffic control, street sweeping. I mean, it seems
like a misalignment of, and I don’t know how this all works, but it seems like a misalignment and it also seems like, again, we’re a Tree City, should the Urban Forestry Department be
at a higher level of organization, it seems like to me. And again, I don’t expect you to answer that tonight, but I really would like a response to that, because, I mean, it just doesn’t
seem to track for me.
Mr. Keene: In this case, you’re too much of a visual person. Honestly, I can easily move Urban Forestry up above facilities, maintenance. Honestly, there isn’t a, this is not expressing
a hierarchy.
Council Member Holman: What I’m saying, I’m sorry.
Mr. Keene: I meant that affectionately when I said your too visual.
Council Member Holman: Well, I know you’re a visual person too. But what I’m saying is, I don’t even know that’s the column it belongs in. Anyway.
Mr. Keene: You have to leave the organization of the departments to the Staff. There are many reasons we organize.
Council Member Holman: I’m just looking for some kind of explanation of why it’s the way it is, and why Urban Forestry isn’t at a higher level of, and I understand this is just a listing,
but why it isn’t at a higher level of consideration in the department organization. I look forward to a response to that coming forward, or going forward.
Chair Filseth: I believe the question, if I can restate, rephrase the question Council Member Holman is asking, I believe it would be like this. Is the way the department is currently
organized, is that structured in such as a way that Urban Forestry Program gets the attention that it should get?
Council Member Holman: Not just attention, but authority, so to speak.
Chair Filseth: Well, it gets the attention and influence, right and gravity that it should have?
Council Member Holman: Yes.
Chair Filseth: I think that’s the question Council Member Holman had.
Mr. Keene: That’s a legitimate question. Better than looking at this thing, but this is just a graphic.
Chair Filseth: Again, she should get a spreadsheet.
Mr. Keene. Alright, did you capture that?
Council Member Holman: We’re going to keep coming back to org charts, aren’t we? Okay, so shall we vote?
Chair Filseth: What was the Resolution on your question.
Council Member Holman: The Motion was to put the…
Chair Filseth: No, I understand, but you asked a question of the City Manager, right? Was there an answer to that or are they going to come back?
Council Member Holman: I asked for it to come back. Yeah.
Chair Filseth: If there is no further discussion, all in favor of the Motion as it stands? Motion carries 4-0. Thank you all very much.
MOTION PASSED: 4-0
Refuse Fund.
Operating Budget
Capital Budget
Paul Harper, Principal Management Analyst: The next fund we’re going to look at is the Refuse Fund, Operating Page 368, Capital Budget 481.
Mike Sartor, Public Works Director: Okay.
Chair Filseth: Where are we, the Refuse Fund we looked at back in April, a month ago, the Finance Committee, and there were a number of questions at that time, and so I think we’re sort
of awaiting – there was maybe going to be some more discussion on some of those issues, particularly relative to our rates versus neighboring cities’ rates and costs and so forth.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Yes, I believe Staff has a backup slide that can get into that level of detail. We weren’t sure if you wanted
to take it on.
Chair Filseth: Yes please.
Mr. Harper: Yeah, we’ll pull up the slide right now. Right now, or do we what it when we get there?
Mr. Perez: Why don’t we do the regular presentation and then maybe we skip to that slide, present that as well, and then take your questions and comments.
Mr. Sartor: Okay, quickly on the Refuse Fund. This year we implemented the second our three-phase recycle and compost Ordinance, focused on primarily some of the smaller commercial users
of our compost operation. We diverted 1,700 tons of residential food scraps and we raised our rate stabilization reserve within the fund to within the guidelines. So, for the next year
we will be doing Phase 3 for even the smallest commercial recycling compost users. We will be looking to divert over 2500 tons of residential food scraps via outreach and education.
We’re continuing our Go-box pilot and adding hot beverage containers to that and we will be piloting an increase to our household hazardous waste station use. Next slide. So, operating
requests for Fiscal Year ’18, we have a one-time, and actually this isn’t quite correct, we have a one-time $500,000 contract that we are proposing to go out on the street with to look
at our future refuse collection and disposal services. Recognizing that our current contract with Green Waste expires in 2021. We will be looking at, we will be bringing on a consultant
to help us plan for the future once that contract expires. We may even come back to you with a short extension of that current contract. And then we have $25,000 as an ongoing expense
for our outreach program in our zero-waste program. We have a landfill pipe replacement and groundwater studies that we’re doing as part of our landfill program, and we have a rate increase
that we talked to you about in Finance last month, and we have a slide to show you some of the comparable rates. We have no capital improvement projects planned in the Refuse Fund for
this coming year. So, why don’t we shift to that slide, Paul, that shows comparable rates. And then if I would, I’d like to either bring up Phil or Ron to speak to this slide. This is
Ron Arp, our Solid Waste Program Manager.
Ron Arp, Solid Waste Manager: Okay, so this is just kind of our fairly quick attempt to address some of the questions you had. This is not meant to be a Comprehensive Study, but what
we did, after our rate meeting with you folks back in April, April 4th, is we looked at, we kind of had a, it wasn’t the greatest comparison, the cities that we had in the chart for
the mini can, the smallest cart. So, we went back out in a brief amount of time and we think that these cities on the chart to your left, the bar chart, is more appropriate. There are
a lot of different factors we looked at. Are these high level of refuse service for these cities, do they have a high diversion rate, do they have a high service rate? So, we think they
are a little better fit than the ones we had in there before. So, the chart to the left is the 20-gallon, what we call the mini cart, and Palo Alto is in the green. This is 2017 data.
It was easier to get from these other cities than 2018. So, on the mini can, this shows that we’re kind of in the ballpark of these higher-level cities. Some of these cities are in Alameda
County. They have been doing a lot of good things over there from a zero-waste perspective. They’ve been very aggressive in terms of food scraps and that sort of thing. So, this is not
meant to mean that comprehensively our rates are that way in the commercial or the other service levels, but this is the one that we wanted to follow up with more information last time.
So, we also looked at, some cities do not have the mini can, so the chart on the right is our effort to give a weighted average, just to say where are we in terms of the mini can and
the 32-gallon, and we’re in the green on the far-right side. What happened to Menlo Park, that was kind of a ridiculous $13.99 I think it was rate, which kind of showed that we were
way higher than anything. Well, it turns out we’ve done more research on it. They are in the middle of a process to look at their rates to see if they’re appropriate, and they don’t
think that their rates are, meet the legal obligations that are Prop 218, or at least they’re doing the study now with a consultant R3. So, we just don’t think that it’s and apples-to-apples
comparison for Menlo Park. So, that’s kind of what we’ve done in the short amount of time since our rate meeting with you folks, and we tried to respond and put together something for
you. And then this is just, this pie chart is just what we talked to you about. That kind of pie wedge on the left, some of these costs are atypical of many of the cities around us.
So, we carry a higher level of additional services, and zero waste services, so that’s kind of the chunk of the Budget that we think most cities don’t have. At least, they may have one
or two of these, but most cities do not have these extra costs imbedded in their Refuse Fund.
Chair Filseth: And that was part of our confusion, because there was some discussion of that, and yet those added services accounted for so little of the total.
Mr. Arp: Yeah, it’s like 20 percent or something. And then on the other side, I think the handout, if you got the handout, on the other side we just listed out the additional services
that we do provide to the Community and the zero waste services, the additional zero waste services that many or I would say, most cities probably do not provide.
Phil Bobel, Assistant Director of Public Works: Ron, I don’t think I have that.
Mr. Arp: Okay, sure.
Mr. Bobel: So, Ron was speaking to the other side of this handout and there’s not a slide on it and I don’t think you have it, so here’s a hard copy. Phil Bobel, Public Works. I might
just add that what Ron said, that the big difference between the comparative chart we showed you last time and this time is, we added more that we thought were comparable and then, frankly,
we deleted Menlo Park because we don’t feel that it is at all comparable. The main difference with Menlo Park is that they have not, and they would be the first to admit this, they have
not done this effort that we’ve been doing over the last three years, to get a balance between the commercial sector and the residential sector, so one is not subsidizing the other.
And without having done that, we don’t think that’s a good city to compare ourselves with.
Chair Filseth: My recollection from the other day is that we were sort of looking at Mountain View and Santa Clara, as well, which the difference wasn’t quite as large, but was still
substantial. Did you look at those as well?
Mr. Bobel: Yeah, it’s on the chart. Maybe you could go back to that previous slide. Mountain View is the one furthest to the left, and it is lower than ours.
Chair Filseth: As was Santa Clara. Oh, actually, Santa Clara has changed.
Mr. Bobel: Well, remember, this is the mini can. So, what we got involved last time was a discussion both with respect to the mini can and the 32-gallon can, because some cities
didn’t have a mini can. So, we think we should focus on the mini can, because so many of our residents have now gone to that, that it’s a very good reflection of what our involved citizens
are achieving.
Chair Filseth: What percentage is mini can versus the 32-gallon can?
Mr. Arp: Well, the 32-gallon is right under 50 percent now, mini can is growing every year, and I think we have a Budget goal in here of like 42 percent. It’s close to 40 percent.
Chair Filseth: In the comparison from the previous time, San Jose and Sunnyvale, which were 32-gallon cans, also came in considerably lower than our 32-gallon can.
Mr. Bobel: We’re also looking longer term for next year, at a way that we can sort of collapse these things, so that we give you one metric and we just didn’t have time to really do
this in different ways and figure out what the best way was. You could envision doing a weighted average of the two with the number of cans and that kind of thing. What we think is actually
better, and Ron just was suggesting this to me today, is that, and it’s more Budget related than rate related, so it actually is more related to our current conversation tonight about
the Budget, is what might be useful is to look at some of these expenses that we have, and try to find those equivalent expenses in other cities. For example, the collection of garbage,
what is it actually costing us to go, which is a major cost, what does it actually cost to have the truck go around and pick this stuff up, and what does it cost to do that three times,
since we do three different pickups. And then how do those costs compare to other cities. I think that might be the best metric we can come up with, because any other metric you choose,
it’s very hard to find a number of cities that would have all those elements and be truly comparable. But, everybody picks up garbage, plus that’s such a big part of the Budget, the
collection, that driving around picking the stuff up is an enormous part of the Budget. I forget the exact percentage but isn’t it on the order of close to 50 percent, I think. Anyway,
that’s a metric that we’re toying with. The problem with any of these metrics is that forces you to dive deeper and get information that you can’t get on the web site from these cities.
So, it’ll take time to develop good metrics like that, but we intend to work on it this year.
Chair Filseth: It sounds logical though. For me personally, I’d just as soon see two different numbers than try to blend them by can size. So that seems simpler. Council Member Tanaka,
do you want to weigh in on this at all?
Council Member Tanaka: Well, I have something about that, but now.
Chair Filseth: In that case, let’s move on. Council Member Fine. Thank you very much Phil. Okay, go ahead.
Council Member Holman: So, if you could please, explain why the zero-waste planning and outreach is 525?
James Keene, City Manager: What Page?
Council Member Holman: Well, on the slides it’s 17.
Mr. Keene: Slide 17.
Mr. Arp: So, that’s a one-time expense of $500,000 for the consultant’s study, the consultant’s services to help us in our strategies for the next, really that contract would really
be in place over two or three years. The $25,000 is just ongoing outreach print ads, that sort of thing, that we thought we needed to promote, for one thing, the new Ordinance and some
of the zero waste activities that we’re pushing.
Council Member Holman: So, if the contract would be over three years, two or three years, why is it all piled into this year’s Budget?
Mr. Arp: Well, number one, it’s a good year to do it for us. The revenues exceed the expenses, but the other thing is, it would be better, this is going to be one consultant, so it would
be better to have one contract, we thought, to just get them on board, and then they could help us do a number of things. You know, do a waste characterization, and a lot of these tasks
will overlap each other, so it would be a waste characterization, a Zero-Waste Plan update and they will help us in strategies and do some environmental studies to see what kind of strategies
we could look at to bring in a new waste contractor onboard. And again, it’s not just Green Waste ending in 2021, Smart Station where we take our garbage ends in 2021, and then the Kirby
Canyon landfill, the waste management, all those, those 30-year agreements, they’re all ending about the same time, so we think this is an integrated way to kind of look at the way forward.
Mr. Keene: Can I just ask a follow up to your question, because I’m not sure that it was answered, if I heard right. Is it the point that we’re going to award the contract and do the
work essentially in one year, but it has a three-year horizon for the implementation of what we’re going to do as opposed to breaking it into say thirds, and doing one year’s planning
in the first year and whatnot.
Mr. Sartor: Let me answer that. It will be a contract; one contract that will have a schedule that will go beyond one year. So, when you enter into a contract for professional services,
you need to have the money to pay for the entire term of the contract. This will likely be a, Ron, a two to three-year schedule?
Mr. Arp: Right, that’s correct.
Mr. Sartor: So, you award the contract and then you have a schedule for the completion of the tasks within that contract.
Council Member Holman: So, that’s how it has to be budgeted? So, the money has to be identified on the first year of the contract, even though it might be paid over three years?
Mr. Sartor: Yes, because you will award the contract and encumber the money as a Council action.
Council Member Holman: Okay.
Mr. Bobel: Could I just add one thing.
Council Member Holman: And this dollar amount, just a second, Phil, we’ll get back to you. And the other thing is like, a contract of this size, I presume this will be a competitively
bid contract as well, because that’s a lot of money.
Mr. Sartor: Absolutely, but we have design contractors, you may recall, for some of our capital projects that are $2, $3 million, so it’s a lot of money, but it’s not certainly our largest
contract we’ve ever awarded for professional services.
Mr. Keene: Anything over $85,000 has to be competitively bid.
Council Member Holman: Yeah, I wasn’t sure if you had already identified the person, or the company, and that’s what you were basing this number on. Of course, you had contract services
for capital projects that are much more than this, but this is a different kind of endeavor. Can I make one request, which I’m sure you will look at anyway, and Phil, I didn’t want to
interrupt you, I don’t know what you were going to add, but, you’re sure?
Mr. Bobel: We may have failed to say the big picture of what this contract is for, because it is a lot of money. And, as Ron said, we’ve got all of our major contracts, our hauler, our
disposal facility, our processing facility, those three contracts, are expiring in 2021, so the purpose of this consultant is to help us plan out that whole process and execute it where
we select a new contractor. So, we’re either going to have to analyze the Green Waste situation and our three current contracts very carefully, and decide to extend those, or we’re going
to have to go out with an RFP process that will be millions of dollars, around $15 million, which is a huge deal, and almost all cities have a consultant help with that whole process.
So, we’ve imbedded in here the money to help us through this collection, disposal processing contractor selection. If we decide that we don’t need to go through an RFP and we’re going
to extend our existing contracts, we won’t spend all of this 525 or whatever it is. I just wanted to point that out, that it’s really, think of it like a preliminary design for something
where you’re going to spend $15 or $20 million.
Council Member Holman: Okay, that’s helpful. Thank you for that. Actually, I’ve been thinking about this a fair amount lately, so just a quick observation. So, I was thinking, you know,
not that many years ago we could leave our recycling can in the backyard and these friendly guys would jump out of the trucks and you could say hello to them and hand them a cup of coffee
or whatever, and there wasn’t a street littered with cans for a day or sometimes more, depending on who the neighbor is or what the street is, whatever. So, that was one thing and we’re
paying more for the services, of course, because over time you’re going to pay more, understood. And it’s just a perspective. And then, it was mentioned that we have three trucks coming
through, actually it’s more like six trucks because they do one side of the street at a time, so it’s really six trips. And I find that ironic as we’re trying to reduce waste, and of
course, we do reduce waste, but at the same time we have six vehicle trips, truck trips no less, down a street to pick up our refuse, so it’s like, what are we really gaining here in
the whole environmental realm. It’s just an observation. I’ve been thinking about it a lot lately. That’s all I have on this piece of this.
Chair Filseth: Council Member Fine, I mean Tanaka.
Council Member Tanaka: So, what is refuse administration, what’s in that?
Mr. Sartor: Excuse me, what Page are you one?
Council Member Tanaka: 373.
Steve Guagliardo, Senior Management Analyst: Steve Guagliardo, Office of Management and Budget. The Refuse Fund is an Enterprise Fund in that it is cost-recovery by the rate payers.
In that sense, it does have its own Staff responsible for administering it. You can see them in the back there. It’s the people responsible for managing the overall program itself. And
then again, a similar answer to Adrian Fine’s question, Council Member Fine’s question earlier, the overall decrease you’re seeing is a result of the allocated charges decreasing.
Council Member Tanaka: So, the thing I was just trying to understand, because the refuse administration is about $3.7 million, right? Okay, but then I look at the total salary and benefits
is $2.8 million.
Mr. Guagliardo: So, there’s also line Staff involved there, so the entire staffing is not contained within administration alone.
Council Member Tanaka: I guess my point though is salary and benefits are lower than the refuse administration.
Mr. Guagliardo: There are other costs included in the administration beyond just the staffing.
Council Member Tanaka: Oh, like what?
Mr. Guagliardo: So, again, the administration is where you’ll see the roll up of all those allocated charges, so anything like general liability you’ll see in there. Anything like a
charge to the Utilities Fund you’ll see in there. Again, those allocated charges are detailed on the Budget Reconciliation, which is on Page 376. So, just quickly some high-level highlights
there, you’re seeing an increase for vehicle replacement of 214, that’s one of the charges contained in the administration division.
Chair Filseth: Got it. Maybe I’m guessing what the real question generates around, which is, everything else here is outsourced, right? So, all the salaries and benefits go to administration.
Is that correct?
Mr. Guagliardo: So, the question was whether there are any other salary and benefits throughout the Refuse Fund other than the administration division?
Chair Filseth: Because everything else is outsourced, right, contracts?
Mr. Arp: Well, the way we have this organized, I’m not quite sure where all the salaries are, to tell you the truth.
Mr. Guagliardo: We can certainly look into that and give…
Council Member Tanaka: My point is, we’re outsourcing most of this, right? So, I’m kind of surprised that administration is so high. It’s $3.6 million. In fact, it’s higher than the
salaries, which is kind of bazaar.
Mr. Perez: Would you like to see a breakdown of administration? Maybe that will help you.
Council Member Tanaka: That would help, yes.
Mr. Perez: Okay, we can do that.
Mr. Guagliardo: So, we can certainly provide that. And you can see the staffing table detailed on Page 374. And to Chair Filseth’s point, there aren’t line positions in this fund. I
misspoke a little bit earlier. What you’re seeing in the administration is all of those positions. And then the other thing that’s happening, to your point about the question of salaries
being so much lower than the administration number, it’s really the roll up those allocated charges, and we can certainly provide a detailed explanation of that in an At-Places Memo
for next Tuesday.
Council Member Tanaka: So, the other question I have for you is, why is there overtime? Is there like an emergency trash pickup or something like that? What causes overtime?
Mr. Arp: The overtime is primarily by the landfill Staff and the household hazardous waste Staff. So, our household hazardous waste events are every Saturday, so we do have a contractor
pretty much manage it, but we do have a Staff go out there most of the time.
Council Member Tanaka: Does this mean we have to pay time and a half or double time, or something like that?
Mr. Arp: Time and a half sometimes.
Council Member Tanaka: Why don’t we just, I guess I’m at a loss why, because this is not an emergency. I’m trying to understand why could we not plan for this?
Mr. Arp: The landfill in particular is, it’s so highly regulated that we do have employees go out there, you know, if you have a heavy rainstorm they will actually respond and go out
there on weekends, that sort of thing. And if there’s compliance tasks, for example, maybe they’re in the middle of pulling a pump or something out of there, if there’s an issue that
they have to get back in for compliance, they might work overtime. It’s not a tremendous amount.
Council Member Tanaka: But I would expect zero for it.
Mr. Arp: Just one more thing. So, we were out there, our zero-waste Staff or zero waste coordinators are out many Saturdays going to events and trying to get our message out there. So,
some of that is overtime also.
Council Member Tanaka: I mean, it’s like a pretty consistent charge, right, throughout all the years, so it seems like you guys could plan for it.
Mr. Arp: I think we’re doing a lot better job than before, but I think it is important to get out there in these community events on Saturdays, and those, they are not an all-day event.
Pretty much we don’t schedule somebody as a regular day on Saturday, so if they do respond, one or two people from our crew responds, then they’ll work and it will be overtime.
Council Member Tanaka: It’s a small amount, but it just seems like there is no emergency, so to me it is just bazaar to have overtime for something like this.
Phil Bobel, Assistant Director of Public Works: Let me just add one thought, and that is the landfill part of this is an emergency. We have three systems out there and you don’t think
of it because you don’t see it, they’re underground. We have a leaching collection system, we have a gas collection system and we have a storm water system. So, we have to maintain all
those systems if the break or cause a problem of the flare goes down, we’ve got to respond right then. So, it’s not a life or death emergency, but the regulatory agencies consider it
something that has to be followed up on immediately.
Mr. Keene: We don’t have enough Staff to have different schedules and basically a main schedule and a few – I mean, if this was a really large number it would be a different issue, I
think, because of how we could program the Staff.
Mr. Sartor: Well, and I’d also like to point out that, as Ron mentioned, some of the effort is being done on Saturdays. That is for the convenience of our customers. It’s not an emergency,
but our household hazardous waste facility is open on Saturdays.
Mr. Keene: I had just one issue more, just a comment for the Committee, if that’s okay. Which is, you guys, so we’re really inching up our zero waste numbers. We’re talking about maybe
hitting 81 percent this year, which unless San Francisco is making commensurate improvements, it would make us the best in California. We actually have a stated zero waste goal of 95
percent, so our zero waste is effectively 5 percent short of zero, but anyway, 95 percent by 2030. And, I just sort of assumed that every percentage of improvement gets harder and harder
to achieve, right. So, if we look beyond this Budget we have goals that speak to the future that either say, we modify our goals or stuffs going to get tough.
Chair Filseth: This one is pretty easy, actually. It took us about a week to get used to the container and so forth. Council Member Tanaka, do you have more? Thank you very much. I,
just real briefly, so you have flat headcount and 6 percent was the salary increase this year? The headcount is flat and the salary growth is 6 percent, 5.9.
Mr. Sartor: Yeah.
Mr. Guagliardo: Again, that’s for the similar reasons cited earlier. We had those mandated contractual increases that we have to give.
Chair Filseth: I understand it’s contracted. My question is more about what we Budget when John Barton calculates the unfunded pension liability, because he assumes 3 percent. And I
just observed that, you know the 10 to 12 percent on pension increase seems to be pretty consistent across department to department. Salary increases seem to be pretty consistent and
Library is actually much lower, and yet the overall Budget is essentially flat from last year and the difference seems to be a big drop in debt service. Do you guys foresee that’s going
to reverse in the following year, or is there something expired and we don’t have to do that anymore? Is that structural?
Mr. Arp: A big chunk of that is the $409,000 that termed out, of debt service, that termed out at the Smart Station. That was some of our original investment in the 1990’s, early, and
so that’s kind of termed out after this year, so that $400,000 will not come back.
Chair Filseth: Council Member Holman.
Council Member Holman: I’m not sure I have the best way to ask this question, but Phil’s probably the one that will be more likely to answer it. Having to do with salvage versus recycling
and diversion rates and how are we doing on increasing salvage and is it being captured, salvage versus recycling. Our recycling never goes to, I mean, our salvage never goes to a facility.
So, is there cost savings associated with that?
Mr. Bobel: That is sort of the next big thing, after food waste or food scraps, that we’re going to attack starting this year, and we described it in the S-cap recently. So, we have
in the existing Ordinance, as you probably know, the requirement that when somebody above a given size is going to demolish, that they have to do an inventory now of things that could
be salvaged. So, that was our first step.
Mr. Keene: That’s the size of their building, not the size of the person.
Mr. Bobel: yeah, sorry. And so, they do the inventory now. So, we need to gauge, well how well is that working. Is that really working well, doing this inventory. Are we getting what
we need out of it?
Council Member Holman: And who’s doing the inventory?
Mr. Bobel: And who’s doing the inventory, right. So, we need to sort of analyze the step that we’ve taken so far and then determine what the next step is. The next possible step would
be to have a requirement associating with executing what you found in the survey. For example, let’s say you found there we a bunch of cabinets that could be salvaged and you showed
that on the checklist. Well, the next step we could take as a City, I’m not aware of any that have taken this step, but we’re seriously investigating it, is to say, “Okay, fine, you
identified that the cabinets can be salvaged. Now, it’s a requirement that you do, in fact, attempt to salvage them.” You list them, or maybe we could even require that they do salvage
them. That’s what we’re kind of analyzing. What can we do to push the system now that we’ve required this inventory? That’s the next thing for next year.
Council Member Holman: Wouldn’t that save the City money, because we’re not taking anything to a facility then. Those materials, we aren’t taking those – so the person who’s doing the
work, the entity that’s doing the work, they take it, but it also reflects on our, well the diversion rate would be the same.
Mr. Bobel: It would help on the diversion rate if they weren’t taking that material now and taking credit for it as being recycled. It may not help on the diversion rate if they were
at least recycling it now. But that whole area is difficult with respect to the diversion rate. So, even if it doesn’t technically help us on our diversion rate, we could know that we
were actually keeping stuff in circulation and furthering the zero-waste goal.
Council Member Holman: Exactly, which would be a goal. Speaking of goal, I just quickly looked to see what the Warriors score was. We won 115 to 104.
Chair Filseth: And nobody got hurt?
Council Member Holman: I don’t know. I just looked at the score. I think that was my only other question.
Chair Filseth: Let’s see. In that case, if there are no further questions?
Council Member Holman: There is one. So, when looking at the new contractor and getting that evaluation, of course you will look to see what other cities are doing and what other facilities
are out there, because in terms of cost savings for six trips down the street and the environmental impact of six trips down the street, you’ll be evaluating that and reporting all that
when you report back to the Council about awarding a contract to be approved?
Mr. Bobel: Right, and in particular we’re very interested in seeing if we can figure out a way to have fewer trips. You know, Mountain View recently proposed cutting back to once every
other week as opposed to every week on garbage and ran into a lot of resistance and stopped. So, that is Mountain View. So, we want to consider that as well. And like I think we talked
about the last time, that the big problem is these kind of human hygiene related things, pet waste and the human hygiene products that have to go in the garbage, and most people aren’t
going to want them to sit around for very long. But we will look at that frequency of collection on the other services too.
Council Member Holman: It could be recycling every other week too.
Mr. Bobel: Yeah.
Chair Filseth: If there are no questions, are we ready for motions? Council Member Tanaka.
Council Member Tanaka: Yeah, so I would like to move that we tentatively approve with the exception of refuse administration pending the data.
Mr. Guagliardo: So, on that note, we can actually provide an update on that data for you now, and maybe that will satisfy that. And if not, we can certainly explore putting it in the
parking lot. If you look on Page 374, you’ll see that there’s 0.43 FTE’s in refuse administration, so very small amount there. The allocated charges that I mentioned earlier are included
in the refuse administration area. The other very large expense, the singular expense, the single largest expense in the refuse administration division is the rent we pay on the landfill,
and that’s about $2.3 million a year. So, between the allocated charges and the rent for the landfill, that’s what constitutes the bulk of the expenses you see in the administration
division for refuse.
Council Member Holman: Why is it classified as rent as administration?
Mr. Guagliardo: So, again, it’s the roll up and just the treatment of it, so it gets put in that division so you see it in that division in the Budget book. We can certainly explore
the treatment of that in future years, if that’s a direction we’re given.
Council Member Holman: Yeah, it would provide clarity.
Mr. Perez: The good thing is, it’s going away by 2021, so the rent, yeah that will be done.
Council Member Tanaka: So, where is that rent showing, where’s the line item for the rent?
Mr. Perez: That’s what we were explaining.
Mr. Guagliardo: That line item is seen. There’s two breakdowns we provide. One is dollars by division, which is what you see for the administration, and you also see the dollars by category.
So, if you continue down that dollars by category, you see the rents and leases line item and there you see the $2.3 million.
Council Member Tanaka: Oh, I see.
Mr. Guagliardo: That is on Page 373.
Council Member Tanaka: I see.
Mr. Guagliardo: Were there further questions?
Council Member Tanaka: Just, for me, it’s just we’re outsourcing almost everything, right, in this area, and that’s why the administration sum just struck me as really high at $3.7 million
when we’re outsourcing almost everything. So, that’s why I was thinking, so we’re paying $2.3 million for rent, but still that’s part of administration. It just strikes me as rather
high.
Mr. Guagliardo: Again, the allocated charges are in there as well. So, if you look at that reconciliation sheet.
Council Member Tanaka: Even if it is, you’re talking about $2.8 million for salaries and then $2.3 million.
Mr. Guagliardo: Again, to clarify my other comments, there’s only 0.43 positions budgeted in administration. The bulk of the positions are assigned to one of those other divisions, so
it’s those allocated charged and that rent.
Council Member Tanaka: And what are the allocated charges?
Mr. Guagliardo: The allocated charges for this fund constitute about $1.3 million. You can see that line item, it’s a little higher than that, but again, $1.8 for this fund and you can
see them called out. They are the, the way the Refuse Fund pays for IT, the way it pays for general liability, the way it pays for utilities, the way it pays for vehicle replacement,
so if any of the vehicles need to be replaced, that’s where it comes from. That would be like street sweepers, etc.
Council Member Tanaka: I see. Okay, thank you.
Chair Filseth: Did you still want to make a Motion?
Council Member Tanaka: I’ll make a Motion to approve, tentatively approve.
Chair Filseth: Second.
MOTION: Council Member Tanaka moved, seconded by Chair Filseth to tentatively approve the Refuse Fund Operating and Capital Budgets.
Mr. Perez: Both operating and capital please.
Council Member Tanaka: Oh, yeah, the capital.
Mr. Perez: There is no capital in this fund.
Chair Filseth: Do you care to speak to your Motion? I’ll speak very briefly to my second, and it’s more general, but since we talked about this. You know, my interest in this is calculation
of the Unfunded Liability. I, in general, observe that 6 percent operation wide is pretty darn generous. Those of us who worked for decades in the private sector, I mean, nobody does
that in their company as an average, maybe Goldman Sachs, I don’t know. So, that’s handsome. I recognize that it’s a result of contracts and there’s nothing we’re going to do about it
tonight.
Council Member Tanaka: Now that you bring it up, I actually think that we should be spending a lot more time on that topic.
Mr. Keene: All of our contracts, for the most part, are coming up next year, so then you will have your chance.
Chair Filseth: You will have your chance. Let’s see. If there is no further discussion, all in favor. Motion carries by 4-0. Thanks very much guys.
MOTION PASSED: 4-0
Storm Drain Fund.
Operating Budget
Capital Budget
Chair Filseth: On to the next fund. Storm drains.
James Keene, City Manager: Page 379.
Chair Filseth: Storm drains, our favorite.
Steve Guagliardo, Senior Management Analyst: Council Member Filseth, I would also direct you to the At-Places Memo that you were provided last Tuesday and again tonight. This speaks
to the motions that we’re bringing forward based on the ballot measure passing. At the time of the Budget we weren’t sure if it was going to pass.
Chair Filseth: Apparently, people in Palo Alto don’t want water backing up in the street.
Mr. Keene: So, do you guys have a big presentation, or I’m just wondering, since we’ve been doing so much with the Council on this, skip the presentation and go right to questions?
Mike Sartor, Director of Public Works: That would be fine with me.
Chair Filseth: I wouldn’t mind seeing the presentation if it’s quick, because most of them have been one slide, right?
Mr. Sartor: So, real quick, this year we are wrapping up with the previous storm drain fee capital program and we are moving towards addressing the new storm water permit requirements,
so what we’ll be doing in this coming year, now that the ballot measure passed is starting to work on compliance with the new storm water permit requirements. A storm water permit was
passed January 2016. One of the major acts of that is to develop a Green Infrastructure Plan and some of the reporting requirements that we’ve been saddled with. Next slide. So, part
of that process adapting to the new storm water permit, we are shifting some of our FTE’s from our watershed protection program under the Wastewater Treatment Fund to the storm water
fund and we’re proposing to add an engineer for the Storm Water Fund to accomplish those activities, and I have a pie chart we can lay out some of the specific requirements that we’re
going to be addressing. In the Operating Budget, as you can see, we have a storm water management fee increase as part of our municipal fee. We have our regulatory requirements that
we need to address and we will be doing fiber connections from our pump stations and our creek monitors. Next slide. We have four initial storm drain capital projects that will be accomplished
in the next five years, that’s out of the 13 that were included in the ballot initiative, recognizing that the ballot initiative have a 15-year time horizon for capital improvements.
So, that’s the capital side of the Storm Drain Fund. And I think that’s it for slides.
Mr. Keene: Mike, could you speak to why we need another engineer?
Mr. Sartor: Yes, I can. So, the new National Pollutant Discharge Elimination System permit requirements were enacted in January of 2016 and right now we have not been putting resources
towards that compliance. The new engineer will be spending about two-thirds of their time developing a Green Infrastructure Plan for the storm drain permit. They will be doing private
storm water treatment and infiltration assessments. They will be doing trash control requirement compliance work. They will be looking at PCB and mercury load reductions in our storm
drain system and they will be looking at the construction inspection that will be needed for some of the green infrastructure systems that will be put in place.
Chair Filseth: Questions from the Committee? Council Member Holman. Council Member Fine.
Council Member Fine: Just one comment, on Page 387 on the fiber connection, in the description it begins talking about Pension Trust Fund?
Mr. Guagliardo: Thank you for that correction. We’ll make sure we get that in the adopted. It’s a carryover from the …
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: Is there somewhere in this Budget that has an overall summation of all the overtime that the City is doing? Like, what’s the Budget for, the total overtime Budget?
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Let me find the Page real quick.
Mr. Guagliardo: Council Member Tanaka, you can see it on Page 47. Well, that’s the average actually, so I guess we don’t really line it out on a single line item, but we can certainly
provide that for you.
Mr. Keene: We have it in every department, so we could simply pull it out for the next meeting.
Chair Filseth: And that meets the one-hour rule?
Mr. Keene: Yeah.
Chair Filseth: If I can make a suggestion to Council Member Tanaka, it’s, if Staff thinks it’s possible, you might want to see it split out with Public Safety and other categories on
overtime because the dynamics are pretty different in those two.
Mr. Perez: Yeah, we usually, you haven’t had an opportunity to go through a quarterly financial update, and that’s where we give you the updates on overtime, on a quarterly basis, as
well as what was budgeted and what was used. So, we’ll provide that. All of that again is by contractual agreements.
Council Member Tanaka: Oh, really, so you have to give overtime?
Mr. Perez: Well, you have to pay when they exceed certain hours.
Council Member Tanaka: I know that, but I didn’t know that we actually had to make people do overtime.
Mr. Perez: Well, no, we don’t necessarily make them, but there are times when we have to right, but it’s not necessarily scheduled, in most cases it’s not.
Chair Filseth: But, to be nauseatingly clear on this, there is no legal requirement that we require people to work more hours. If things are unstaffed we could do that?
Mr. Perez: There are actually for firefighters, if we need to have X number of people on a shift, so if we don’t have that number of people in Fire and Police, actually, then we do require
people to stay over.
Mr. Keene: I would just say when we come back we’ll give you the info, but in the areas where we have these big expenditures, it’s a worthwhile discussion to have, and I would say it
will be ultimately an involved and complicated and strategic and everything else conversation, because there’s history, there’s factors. Because you’ll see some very big numbers in a
couple of areas.
Council Member Tanaka: So, I guess to what the Chair was saying, it would be really good to see that breakdown. To see like the total overtime, the total number. How millions of dollars
are we spending on overtime, percentage of Budget and by department. Then, what’s driving up the administration costs? The other thing that would be helpful just in terms of process,
would be like whenever something is highly above, it would be treat to highlight that.
Mr. Guagliardo: Certainly, and Council Member Tanaka, Steve Guagliardo again. You’re probably sick of hearing me talk at this point. So, again, administration for the storm division,
there’s 0.6 positions budgeted there and then, again, you’re going to see all of the allocated charges pretty much sitting there. So, you’re seeing an increase of that $80,000 and then
you’re also seeing the increase in allocated charges. And I believe for this particular fund, some of the allocated charges are hitting CIP, so you’re not seeing the full bulk of them
hit administration, but that is accounting for the increase there.
Council Member Tanaka: Okay, thank you.
Chair Filseth: Council Member Holman. I’m generally good too. In the Capital Plan, Phil Bobel has been excruciatingly diligent about warning us that there are big capital expenditures
coming in this general area in the future that aren’t reflected in these. Is that still the case? There’s none of that in here?
Phil Bobel, Assistant Director of Public Works: Most of the discussion we were having was about the wastewater, where the treatment plant essentially needs to be rebuilt at a cost of
$200 million to $300 million. I don’t think we discussed the storm drain thing too much, but there is more work that will ultimately need to be done than what we funded with this last
ballot measure. There’s no question about it, but it’s not at the same scale as the treatment plant, where we have to spend hundreds of millions of dollars.
Chair Filseth: Yeah, go ahead.
Council Member Tanaka: So, on the CIP capital, like how do you decide what, where a new storm drain or storm drain cleanup or expansion happens?
Mr. Sartor: We did a Masterplan for storm drain system, which identified priorities for improvements, and then Phil can talk about in a little more detail about how the Blue-Ribbon Committee
went through that priority list …
Council Member Tanaka: Are you talking about the Infrastructure Blue Ribbon Commission (IBRC)?
Mr. Sartor: No. There was a separate Storm Drain Blue Ribbon Committee that was set up to work on the storm drain fee increase.
Mr. Bobel: We essentially used the priority system, though, that Mike’s talking about right from the Masterplan. The Blue-Ribbon Committee didn’t change those priorities. We considered
it, they looked at the list.
Council Member Tanaka: I just want to talk about two particular areas. One is Page Mill where it goes underneath the tracks. It actually wasn’t that bad, so maybe you guys fixed it already.
Then the other part is California Avenue and Yale, and that floods all the time.
Mr. Sartor: Well, Page Mill under the tracks is actually a County facility.
Council Member Tanaka: And what about Cal. Ave. and Yale.
Mr. Sartor: I’m not familiar with that location necessarily.
Council Member Tanaka: California Avenue and Yale Street. It’s like they have the sandbags there, it been there for years, and like every year it floods. Especially this year and even
repaved and it still floods, so I was just wondering if…
Mr. Sartor: We have John Hospitalier, our Public Service Division Assistant Director. He might be able to address that. Thanks John.
John Hospitalier, Assistant Director of Public Works: Yeah, John Hospitalier here. That rather complicated site, it’s not entirely a storm drain issue. One of the problems we have there
is that there is an underground water transmission facility at that site that you’re speaking of that has the sandbags around it. And one of the things that has to change is, the ceiling,
the roof, the street, it’s all integrated in one structure, so we have to work with Utilities to figure out what we have to do with that site, but it is on our radar as far as trying
to make a repair. Originally it was thought it was just a curb and gutter repair that was going to eliminate that flooding, but after we investigated it and found out that facility was
there, there’s far more to it than we originally anticipated. So, it is on the list.
Council Member Tanaka: Just so we’re all aware of this, is it like ten years from now, next year?
Mr. Hospitalier: I can’t speak to that. I couldn’t tell you at this point, but we can check on that and let you know.
Council Member Tanaka: Great.
Chair Filseth: If there are no further questions, I’ll move that we tentatively approve both the operating and Capital Budget for storm drains.
Council Member Holman: Second.
Chair Filseth: All in favor?
MOTION: Chair Filseth moved, seconded by Council Member Holman to tentatively approve the Storm Drain Fund Operating and Capital Budgets including the changes outlined in the At-Places
Memo.
MOTION PASSED: 4-0
Mr. Guagliardo: A real quick clarifying question before we move on. Can we just confirm that that Motion does include the At-Places Memo and the amendments included therein?
Mr. Perez: Yes, it does.
Wastewater Treatment Fund.
Operating Budget
Capital Budget
Mike Sartor, Director of Public Works: Okay, are you guys ready for wastewater treatment? So, this year we completed our Water Purification Feasibility Study, initiated our Recycled
Water Strategic Plan and completed design and awarded construction for the sludge disposal and offload, excuse me, sludge dewatering and offload facility with the intent to shut down
the incinerators once that’s completed. This coming year we expect to complete the construction of that facility. We will be planning and designing fixed filter reactor, primary citizen.
These are basically plan improvements that we will be working on as part of the capital program. We will be designing an advanced water purification facility and looking at the feasibility
of indirect potable reuse and recycled water expansion as part of our Wastewater Treatment Fund activities. Next slide. So, we have one request to adjust the pay for our senior industrial
waste investigator and as I talked in the Storm Drain Fund, we’re shifting 2.21 FTE’s to storm drains. We will be doing some operating requests with our partners and our waste hauler
revenue adjustments. We have an outfall line construction project as part of our capital program in the five-year plan, and then we have two changes to our capital improvement program;
one is a hedge works facility replacement. That’s where the inflow comes to the plant and we are eliminating the anaerobic digester project at this point in time, recognizing that the
sludge dewatering offload facility will allow the incinerators to be shut down.
Chair Filseth: When is the day that we actually turn off the incinerator?
Mr. Sartor: I think we’re talking about two years, Phil?
Phil Bobel, Assistant Director of Public Works: Right. The construction of this new facility is going to take about two years and debugging.
Mr. Sartor: Then we’ll be able to shut them off. 2019.
Chair Filseth: So, is there going to be a big party where we actually throw the switch out there?
Mr. Sartor: As you’re probably aware, in the S/CAP the incinerators are probably the single most, largest user of natural gas.
Mr. Bobel: We’re going to let everybody take a whack at it with a sledge hammer, and what you’ll find is you won’t get very far with just a sledge hammer. That thing is huge and thick.
Jamie does intend to give everybody a, there’s a, it’s lined with brick and everybody will be a brick.
Chair Filseth: And steel doors.
Mr. Sartor: I think that’s the last slide.
Chair Filseth: Council Member Holman, do you have any more good questions?
Council Member Holman: Because this is a shared facility, I just want to know that the capital costs and support Staff, is that our allocation, our share of the share in costs?
Mr. Bobel: Now this is where it gets a bit confusing, because when you look at the Collection System Budget, which you’ve done previously, the Palo Alto portion shows up, the 35 percent
that’s Palo Alto, shows up as an expense to the Wastewater Collection Fund. Now, tonight we’re not talking about the Wastewater Fund, we’re talking about the treatment plant. So, here
you see the whole Treatment Plant Budget, the whole 100 percent. So, Palo Alto is only paying for approximately 35 percent of everything that you see.
James Keene, City Manager: This was like a point that I made the other night that, like in this particular instance a head count is all on Palo Alto’s books as FTE’s, even though we
actually serve other jurisdictions.
Council Member Holman: Right, in terms of FTE’s yeah, so the capital cost is where I was questioning. I think that’s it for the moment.
Chair Filseth: Council Member Fine.
Council Member Fine: Thank you. Just two quick questions. One, in the capital improvements we’ve got about $30 million coming through here in the next year or two. This isn’t so much
a Budget question, but just, can you tell me a little bit about the oversight and contract management there, just because there is so much money going through here right now? And one
of my other questions is, you know, you just answered it, Phil. Will the facility be done in two years? It’s nice to hear it will, but I guess I’m just playing around those primaries.
Mr. Bobel: How we’re managing the project? Jamie can give you an overview of how we intend to manage and fund this.
Jamie Allen, Water Quality Control Plant Manager: We’ve hired a program manager to help us deliver these projects. We have a small in-house engineering Staff, three people, which is
not really possible to keep an eye on all these contractors and consultants, so we’re using a program management company to do that. That’s one way we’re helping manage it. And then
for the construction projects, we typically hire a construction management firm to handle the staffing, you know, their extension of Staff. We Staff up with engineers and consultants
to get these capital projects delivered.
Council Member Fine: And then the other thing I noticed for the head works new lab, there were mentions here of having trouble obtaining State loans. Can Council help anywhere with that?
Mr. Bobel: Well, I wish you could. Personal donations are always welcome.
Council Member Holman: We could donate our Council salaries, but that wouldn’t get you very far.
Mr. Bobel: It won’t, you’re right. Just a few bricks in the incinerator. So, what has happened to us since we talked about this six months ago, is we thought we were going to be funding
almost all of these projects with what’s called State Revolving Fund Loans, loans from the State. Very good interest rates. It’s not even really an interest rate, but it amounts to 1.8
percent interest rate right now, and so we have got that money for our $22 million sludge building, so that’s great. But the next three projects in line, our first step is design, we
had hoped to get that kind of loan for the design of those buildings, and we can see now that they are oversubscribed, the State is oversubscribed. Too many people want money. All these
plants were built about 1970. They all now need to be rebuilt. And there is sort of a funding crisis. So, we’re going to have to come up with a plan B for the design costs for the next
three projects, and then a plan B ½ maybe for the construction. We hope that we can still get the construction money from the State, but we’ll have to just hope for the best on that.
And if we don’t then we will be talking about bond funding principally.
Council Member Fine: So, I guess I’m just saying looking down the road, none of us (inaudible, no mic), so it would be helpful if Staff could let us know how we can get ahead of this
and if it is (inaudible, no mic).
Mr. Bobel: Yeah, and we’re working on a plan right now and as soon as we get this Budget done, this young lady here is going to help us do this overall plan. What is the funding strategy,
given that we can’t completely rely on this State loan thing, and we’ll be showing you that plan.
Chair Filseth: Just be aware that a bond is not the worst way to do this. A CIP cost, another percent on top of a bond. Council Member Tanaka.
Council Member Tanaka: We do, this service is for other cities, right? And they refund us, correct? So, and they basically refund our cost, is that right? So, the big thing I’m wondering
about though is, because it seems like we have, what 73 heads or something like that, in this section? And the pension is like $2 million, but this is, as I just learned yesterday, there’s
the pension number that’s listed here, and then there’s a massive number that’s not listed anywhere, right? So, I guess my question is, are we really collecting the full amount that
we should be from our fellow cities to collect all the fully unfunded liabilities that we are incurring right now in service of other cities?
Lalo Perez, Director of Administrative Services and Chief Financial Officer: So, as we discussed, we’re collecting what PERS is telling us we should pay, correct, but we don’t necessarily
agree that that is the right number. So, one of the recommendations we made, including with this fund, is to add 10 percent of the annual required payment to the trust, so the water
treatment plant, just like the other funds, is contributing an additional 10 percent towards that Unfunded Liability. Now, when we come back in the fall with you and discuss a plan,
and if we come back with a plan that asks additional funding, we do have to go to our partners and tell them, this is what we want to do and this is why, and we believe that they should
agree with us, because it is an obligation we are incurring. You heard Phil and Jamie say before that they can’t go anywhere else. They don’t have another option, so we’re in this together
for the long run. So, we might as well address the issue and take care of it. We may have to do some outreach to the City Manager, to the Staff, and eventually make some kind of presentation
to the Council. I’m not sure, but I can foresee that may be necessary. But I also know that my counterpart in Mountain View is also doing the same thing we are here in Palo Alto. So,
it’s not going to be new news to them.
Chair Filseth: I actually, that’s a very good catch. Thank you. I think we have discussed this in the context of some other kinds of service delivery we ask outside the City, but I think
we ought to look at this at every single one and, clearly, we shouldn’t gouge the other cities over this, but we shouldn’t subsidize them either.
Mr. Perez: Right. Yes, I’ll leave it at that.
Council Member Tanaka: Okay, so just to be clear what’s going to happen. Is the plan to like, this year collect money from the other cities to make up for the?
Mr. Perez: Correct.
Mr. Allen: The partners have actually already agreed to pay whatever the City’s overhead is, as long as it’s charged equitably to all the departments. So, whatever the City chooses to
charge the Utilities and General Fund and whatever, they’ll pay that. So, they have already agreed to that.
Council Member Tanaka: Okay, so this pension is $2.1 million. How much money should we be getting if we were to really fully fund this and we use like a reasonable probable rate of let’s
say 5 percent or whatever.
Mr. Perez: You may recall that Chair Filseth said it’s not a simple calculation. It’s an actuarial calculation.
Council Member Tanaka: So, how are you going to figure out how to charge them then?
Mr. Perez: What we did right now is did a straight 10 percent of the annual required contribution. So, we’re going to get an updated number from CalPERS in August. Once we get that number,
then what we’re going to do is have Mr. Bartel, we still have a contract with Bartel and Associates, and have him help us run some scenarios at different rate of return assumptions,
because the rate that we’ll get from CalPERS will be assuming a 6 percent. The latest news that I’ve seen, I’m sorry?
Chair Filseth: Seven percent.
Mr. Perez: So, I don’t know what I said. So, let me correct myself, 7 percent. We’re thinking more like 6, 6.2, that’s where the number came out of my head. CalPERS just stated that
they’re looking at about 5.8 so far. So, they’re not going to make 7. So, we will bring you some scenarios and you may not agree with those scenarios and we’ll run another number, whatever
the Committee wants.
Council Member Tanaka: So, you would then pass that cost on to the other cities?
Mr. Perez: Not just, Stanford, anybody else that we’re providing services to.
Council Member Tanaka: Okay. So, we’ll see like a line item that will show like the unfunded pension liabilities?
Mr. Perez: You’re kind of seeing it in the document, we’re calling it out, so like on Page 402, you’re seeing at the top budget adjustments Number 1, supplement to pension trust $210,000
and we’re what, 36 percent I think we said. It’s getting tight, 36 percent of that is our share, the rest is the partners.
James Keene, City Manager: We have that across the Enterprise Funds, that you’ll be seeing then. It’s one of the call outs that we did in the highlights in this Budget year that we will
be doing this 10 percent additional Unfunded Liability charge that would go into the trust for this year.
Mr. Perez: Exactly. You know, one of the beauties of this is if we’re aggressive enough, we could actually save the partners money, obviously, ourselves too, but the partners could save
money by doing that. So, it’s beneficial to all of us.
Council Member Tanaka: Wait, so how do you know it’s 10 percent? You said it’s a complex calculation. How do you know it’s not 20 percent or 5 percent?
Mr. Perez: We arbitrarily chose how much to add to this trust. That’s one way to add additional funding. To calculate the actual amount that we would be required assuming a 6 percent,
it’s an actuary contribution.
Mr. Keene: And I thought the 10 percent we were choosing was basically to match the approximate contribution that we made the past year to the General Fund and we set the money aside.
We happened to have this amount of money, we decided to put that into the trust. So, our rationale was not doing a detailed methodology to be able to justify the matching. What we did
in a sense to kind of catch the Enterprise Funds up at least with what we’ve done in the General Fund, and then we’ll have this opportunity, as Lalo said in the fall to start to really
recalculate what it should be.
Council Member Tanaka: Do you think it’s high or low, or you have no idea?
Mr. Perez: The 10 percent? It’s low. We need to be more aggressive and there’s going to be opportunities for us, for you to choose the path. But then again, there will be potential pain
points, because if you make that a hard number and we had a recession, then we have to make that hard number, and something else has to give. So, you know, that’s why we want to have
this lengthy discussion, so we can go through those paths and pros and cons and consequences.
Chair Filseth: I would look at it this way, which is, a comprehensive strategy is not something we can develop overnight and we’re working on it, right? That with the Section 115 and
picking a couple of numbers, we decided we wanted to start before we had the comprehensive strategy done.
Mr. Perez: Exactly. If there was an interest by the Council for us to not wait for this strategy to be formulated and you, the Council, not necessarily this group, gave us direction
that any excess monies that we could set aside to start, and that’s how we started.
Council Member Tanaka: So, do we set aside 10 percent for every department, or just this one?
Mr. Perez: So, we set the amount first to the General Fund, the 10 percent. So, what we are recommending to you in every Budget that is outside of the General Fund, that 10 percent.
So, yes.
Chair Filseth: To be really clear, the General Fund last year. This year we’re doing all the other funds, but there’s not an additional contribution from the General Fund.
Mr. Perez: That is correct. Because we want to have that strategy. One of the thoughts was, because CalPERS doesn’t really keep the numbers separated by fund, we’re doing that ourselves,
we wanted to keep it, from an accounting and reporting perspective at an even contribution. We made decide at some point not to do it that way, but for now to keep it simple and easy
to explain to you and to the community, we decided on keeping the same methodology across the board.
Council Member Tanaka: So, is this 10 percent, we need 10 percent every year, or just one time only?
Mr. Perez: No, you’re going to need some amount higher than that every year.
Council Member Tanaka: So why don’t we do it again this year for the General Fund?
Mr. Perez: Because we want you to get the big picture of all the issues, right. You know, we’re already having a discussion and I don’t want to bring it up to discuss it, but just to
make a point. The tree trimming is a significant issue, it’s $300,000. So, if I were to come back to you with a, if you told me, “Go find another $3 million,” we’re going to bring a
lot more tree trimming.
Council Member Tanaka: But I think we’ve got to live within our means, right? So, and you’re saying 10 percent is already too low, if we’re not even doing the minimum of 10 percent,
isn’t that negligent?
Mr. Perez: We’re suggesting we do this strategically and in a process manner and we’ll get there. You want to make informed decisions because as you push one lever, something else pops
up. So, we want to inform you…
Council Member Tanaka: But it seems like we’re kicking the can down the road, because if we know it’s already, 10 percent is kind of low, right, or not realistic and we’re not doing
it this year? I mean, to me it seems like we’re consciously, like not addressing the problem.
Mr. Perez: I would argue that you are ahead of the curve. Most cities in California are not even, don’t even have this on the radar. There’s more attention to this.
Council Member Tanaka: But we have a better…
Chair Filseth: Can I weigh in here? Again, as the City Manager said, we could devote the whole month talking to this, right. It’s 11:00 and we’re sort of going off the agenda topic.
Council Member Tanaka: Okay, so let me get back on the agenda. So, the other question I have for you is, first off is, does this include meters, like checking the meters? There were
no meters, okay.
Chair Filseth: I’ll ask my question of Phil, but I think it’s a yes or no question. The large anticipated future expenses aren’t in this yet, right?
Mr. Bobel: Correct.
Chair Filseth: Thanks. Council Member Holman.
Council Member Holman: Yeah, in the presentation it talks about shifting 2.21 FTE’s to the Storm Drainage Fund. I don’t find that savings here. I’m not able to identify it. Maybe it’s
combined with something else?
Paul Harper, Principal Management Analyst: The number would be in that At-Places Memo that we gave you for the Storm Drain Fund. It also affects this fund.
Council Member Holman: I was looking for the savings in this fund.
Mr. Keene: …putting the Budget together, so it’s not in this document that we printed, so that’s why.
Council Member Holman: It’s in the At-Places Memo, but.
Mr. Perez: Let me try again. So, this change came along as a result of the passage of the measure, so when we completed the document we didn’t want to be presumptuous and assume that
the measure was going to pass and make the change, so it’s an Amendment we’re making tonight to the document itself. So, you’re right, the savings is not identified there. What we’re
asking tonight when we approve it is that you approve that change as well and the shifting of those positions, so then we will add those savings to that.
Mr. Keene: In the final document when we adopt the Budget.
Council Member Holman: Okay.
Steve Guagliardo, Senior Management Analyst: To Council Member Holman’s question, I think you realize the 346 that you see going in would be realized in this fund once we get that Page
done. I think that’s where your question was going.
Council Member Holman: That’s what my question is. Okay. I thought I had two questions, but it’s 11:00, that is. Oh, I know what it was. It’s a Greg Tanaka question. So, on Page 400,
plant mechanic, there were none, and now there’s seven?
Mr. Guagliardo: So, if you look up a few rows, you’ll see the maintenance mechanic row. Not even, so if you look at plant mechanic you’ll see it increasing to 7.0 in the ’17 Adopted
Budget, but shift from maintenance mechanic and it gets back to the point Jim was mentioning there. In the earlier rate we’ve got a number of classifications. We’ve tried to consolidate,
we tried to make it a little bit more consistent throughout the organization, and this is one of those naming conventions. We didn’t actually add seven positions outright in the ’17
Budget. You would have remembered that from these meetings.
Chair Filseth: A reclassification.
Council Member Holman: Okay, and the other part of that question is, well, is it the same people?
Mr. Guagliardo: Yes, it’s a reclassification of the existing Staff.
Council Member Holman: It’s the same persons.
Mr. Guagliardo: Precisely.
Council Member Holman: Well, not positions but persons, it’s the same persons.
Mr. Guagliardo: If there was an incumbent in that position, then yes, it would have been that same person. There could have been Staff turnover. I don’t want to speak to that necessarily,
but yes.
Council Member Holman: Because the reason I ask is, it is a Greg Tanaka question, so it seems like maintenance and mechanic could be contractors as opposed to Staff. That’s a very much
a lay question.
Mr. Bobel: Well, no it’s a good question because we use contractors and we have our own Staff, and so with everything that, well, now a lot of stuff is breaking and falling apart. That’s
our problem. So, every time that occurs, we ask ourselves, should we use our seven people and try to do this project in house, or is that something we’re going to have to bring a contractor
in to do. So, an example was, last Saturday night some people at the plant stayed up all night installing this new flow meter, and that was a contractor job, right, the was Anderson
Pacific. So, for that we hired Anderson Pacific. It’s this big huge flow meter that we had to lower 25 feet into this big vault and we hired them to do it. But our own Staff does slightly
smaller projects and they’re qualified to do that same thing on a slightly smaller scale. We don’t have the big scale equipment. We actually had to hire a diver to dive down in the sewerage.
The next time we need that, we’re expecting on of the Council Members… No, we’re turning that over to Karen next time. This guy, we’ve hired him several times now, and I thanked him
profusely the first time. I said, “Wow, we really appreciate this.” I didn’t want to say; how could we find somebody who would dive into sewerage. And he said, “Oh, I loved it. That
was great. Any time you need me, call me back,” So, there are people that like to do that, but they get $1500 an hour with their whole crew, a crew has to come with them and all his
equipment. So, anyway, it’s a good question to what we use in house and out house.
Council Member Holman: So, it sounds like it’s seven FTE’s plus consultants?
Mr. Bobel: It is, it is. And that’s in a different category, of course.
Council Member Holman: And you might remember the person to call for this, really, is Sid Espinoza. Remember his fascination?
Mr. Bobel: I do.
Council Member Holman: So, call Sid Espinosa for this.
Mr. Bobel: I will for any more sludge diving.
Council Member Holman: So, when we have the new facility, will the need for so many positions go down? And what’s the completion date of the facility?
Mr. Bobel: Two years, so, the Summer of ’19 we hope to be done with this $22 million sludge dewatering and off load facility. I don’t really think we will be able to reduce the number
of positions. You could argue or say that this sludge dewatering facility is less complicated than the incinerator, which it is. But, the number of regulations, requirements, safety
features continues to go up. We think we’ve been very good about not adding to the number of operators for many years now. We’ve shifted and we’ve been more efficient on certain tasks
as new unit processes have come on at the sewerage treatment plant, so I think we’ll be lucky to kind of hold our own and not have increases as all this other stuff hits us, even though
this building is simpler than the incinerator.
Council Member Holman: Okay, that’s helpful. Thank you.
Council Member Fine: I’ll just move that we tentatively approve this Budget.
Council Member Holman: Second.
Chair Filseth: And the At-Places Memo?
Council Member Fine: Yes, and the At-Places and CIP.
MOTION: Council Member Fine moved, seconded by Council Member Holman to tentatively approve the Wastewater Treatment Fun Operating and Capital Budget including the changes outlined
in the At-Places Memo.
Chair Filseth: Okay. All in favor? Motion passes 4-0. Thank you very much.
MOTION PASSED: 4-0
Airport Fund.
Operating Budget
Capital Budget
Chair Filseth: We’re winding through here.
James Keene, City Manager: It’s 11:09.
Chair Filseth: It’s 11:09, we have two items left to go, the Airport Fund and …
Council Member Holman: So, could I suggest, because I think the Airport Fund might generate some questions, could we just do vehicle replacement tonight and do airport at our next meeting,
or is it not good to break it out like that, because it’s 11, after 11.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: The next meeting we’re starting at 6 and we’re scheduled to end by 11 again and I guarantee you will not
end at 11. You’ve got Police, Fire, which has huge changes, Community Services, Planning and then parking the special revenue, Stanford, so you have a really packed.
Chair Filseth: I suggest we bite the bullet here. Staff stayed.
Mr. Keene: I suggest, if you could try this as a, let’s really get through this, even if you have to put stuff in the parking lot and we will have the chance to revisit it at wrap up.
Council Member Holman: Okay. It’s the hour of the night, we’re going to hear a lot of puns that, we’re on a roll here.
Mike Sartor, Director of Public Works: Okay, real quickly here, this year we have the major thing that’s happened at the airport is that we have transitioned from the two leases that
the County had for maintenance, excuse me, for airport services and now have individual leases with all of the service providers and all the tie-down facilities. This has actually generated
an increase of almost $1.2 million over what we were receiving from the County leases. We’ve completed the design and construction of our perimeter fence and Andy Swanson, who is behind
me, our Airport Manager, has been very successful in bringing in FAA grant obligations to essentially improve the airport apron and runways. That’s about $15 million worth of work. To
anticipate Council Member Holman’s question about the payback of the General Fund Loans, we are delayed in that, but that’s primarily because we are taking advantage of those FAA grants.
Without those FAA grants we would still have an airport apron that has essentially a pavement condition of about a 35, which is poor condition. So, once we get through with that construction
in the next four years or so, we will be receiving the revenues directly into the fund and begin our payment schedule, and we actually have some information here on when our payback
schedule will occur. This coming year we will be updating our minimum standards, our rules and regulations for airport operations. We’re beginning to develop our Long-Range Business
Plan for how we will operate the airport, particularly with all the service providers that are out there, and we will continue to seek grant funding from the FAA for airport improvements.
Next slide. So, staffing requests, the one request we have for our maintenance and operations is, we’ve been functioning with hourly employees for a lot of our maintenance and operation
activities. We’ve had difficulty retaining these employees, so we are proposing to convert our hourlies to one and a half fulltime positions to provide support to our airport operations,
and that’s in addition, essentially primarily driven primarily by the fact that we have taken over all these leases and that we have the airport open seven days a week, as long as the
tower is in operation. Operating requests, we have, again, and I believe that figure is wrong on this slide. The rental lease tie-down in come is about $1.5 million as I recall. Over
the next two years we will be seeking, or getting $200,000 from the General Fund, and again, as I said, that will be to offset the matching funds that will be obligated with the FAA
grants we’re receiving. We have maintenance and legal fees on an on-going expense. And then we have, in the five-year Capital Plan, an apron reconstruction project of about $17.3 million,
of which $15.4 million will come from the FAA. We have airfield electrical improvements that has to do mainly with the runway lighting and those kinds of things, and Andy can provide
more detail if you need that. And then we have an Airport Layout Plan update that needs to be provided to meet FAA requirements for the capital funding. I think that’s our last slide.
So, open to questions.
Chair Filseth: Council Member Holman.
Council Member Holman: Since I asked a question about the payback we just got this tonight so I haven’t gone through it terribly clearly. Mr. Sartor.
Mr. Sartor: You’re looking at the payback schedule?
Council Member Holman: I’m looking at the payback schedule, yeah. So, it’s got, in 2017 it’s got the loan from the General Fund at $704, and then in 2020 General Fund loan repay, it’s
$370, so it’s metered out in ways that aren’t quite clear, and I guess what I was wondering to know too is, because it is a loan, are we getting interest on that?
Mr. Sartor: Yes, the repayment includes interest.
Council Member Holman: At what kind of rate? Can we decide our own rate?
Mr. Sartor: Lalo, I’m not…
Mr. Perez: Typically, we used our portfolio rate of return, so meaning that we don’t lose money if we assume it would have been invested for that period of time at the same rate. That’s
been our practice. I would have to check in and figure out if we were to try to use something else, if the FAA would approve that. I don’t know the answer tonight.
Council Member Holman: It’s probably worth inquiring about. So, if I added up these three numbers that are here, they’re going to add up to – no they’re not?
Mr. Keene: No, here’s the issue, on the back Page because prior to 2017 we had other loans, so the way I read this chart is, we’re really anticipating right now that at the, in FY 2019
we’ll be done loaning the Airport Funds, but the cumulative amount of what we would have loaned totals $3.3 million, if I remember correctly from the back?
Mr. Sartor: That’s correct. That’s on the back page.
Mr. Keene: And so, then we’re starting to pay back, starting in 2020, about 10 percent, well, yeah, about 10 percent a year at least the first two years, so that’s sort of a slow repayment
schedule, right, in one sense.
Council Member Holman: So, why are we doing it that way as opposed to, I mean, you could look at it both ways, but why are we doing it as a slow repay as opposed to a lump-sum repay?
Is it just like a savings account kind of? Is that how you’re looking at it?
Mr. Keene: …the money.
Mr. Perez: It’s really cash flow. The airport conditions, the County just let it go and there’s just a lot of maintenance and expenses. They didn’t Staff it appropriately and we have
these grant opportunities that are desperately needed for work and Andy was able to secure those grants for us. You may or may not recall, 90 percent of the cost is covered by the loan,
excuse me, the grant. So, it’s just really a cash flow. Obviously, if we see that the revenue generation changes, we’ll adjust. We are getting some pushback because some rates went up
on the leases that we’re proposing with the renters out there, to the point where they may come to you, but we feel that it’s justified because of the market rate. So, we’re doing it
market rate, the leases are, and so it’s really a cash flow.
Council Member Holman: Okay, and then the last question, I think about this for me is, this is the payback schedule, at least a slice of it. Thank you for doing this, and when is – okay,
so it’s looking to make a profit by 2018? Did I read that right, beginning fund balance, oh, that’s beginning fund balance.
Mr. Perez: Yeah, we start building up.
Council Member Holman: Operating revenue and operating expense, it looks like 2018.
Mr. Perez: You’ve got to look at the loan, right. If you look at ’17 it says it has $251,000 in fund balance, but you loaned $700,000 so you’re really in the hole still. In ’18 it has
$515, but you already made a loan of $700,000 and you’re making another loan of $200, so we kind of got to put those into the equation.
Council Member Holman: So, when do we start at least breaking even, if not making a profit?
Mr. Keene: Well, in 2018. Am I reading that right?
Paul Harper, Principal Management Analyst: Yes, that’s correct; however, some of the ending fund balance that you’re seeing there in 2018 is for capital projects that’s already been
encumbered. So, about half of that amount is set aside already for capital projects that are in process and so if you take that piece out, you only have about half left, so your ending
fund balance goes down and, thus, the money that’s rolling from year to year decreases, so every year you cumulatively decrease what you’re ending the year with.
Council Member Holman: Okay.
Mr. Harper: That’s why 2020 is the first year that you can essentially start paying back. And I just wanted to clarify, the loan documents that we have, we set aside a ten-year Repayment
Plan, so that’s why it’s phased out so long. There’s no requirement that we stick to that ten-year Repayment Plan, but this plan that we set aside here gets us back on track to pay each
loan back within that ten-year period, starting with the loan that was made in 2014 by 2023. So, every loan subsequent to that will be repaid in the ten-year Plan that we’ve set aside.
Council Member Holman: Okay, let me go back to one thing here, I apologize, but operating revenue isn’t the same thing as operating income, so in 2018 we have operating revenue, I’m
sorry, it is operating revenue, no revenue, okay income revenue. Never mind. I answered my own question.
Chair Filseth: Council Member Fine.
Council Member Fine: So, just a high-level comment. I mean, it’s a little frightening to see a Proposed Budget double from year to year, but I kind of understand it here as we’re investing
upfront in a service we’ve just taken on. We have good opportunities with the FAA grants to improve the project, and that kind of builds into Council Member Holman’s question of the
payment schedule and what we’re investing today and what the return is going forward and what the airport owes back to the City. It’s just kind of like a triangle there. I don’t know
if the rest of our Council Members will have questions around that, but it may be helpful to kind of describe that a little bit cleaner for folks. Otherwise, nothing.
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: I’m just trying to understand this. Is this, are we like, after everything said and done, are we cost-neutral on this?
Mr. Perez: I guess where I would look at it, I look at Fiscal Year 2020 and I’m looking at the revenue, $5.4 million, and $5.4 expenses including $370,000 in loan paybacks, so I think
we’re better. It’s just it’s going to take a while to pay this back at that level.
Mr. Keene: To be honest with you, I didn’t want to buy the airport when the Council first want to do it. I was just really worried that it was not going to be good. That we were inheriting
a place that was kind of a wreck, and once we took it over as a City, we’re much more responsive. So, it would be hard for us to just let things go to pieces. That being said, I think
we’ve done a great job in leveraging grants from the FAA and if I could just ask a question to the Staff too, Greg, along these lines. I would hope that we’re maximizing the tie-down
and user revenue, because what these grant invests say, we’re dramatically improving the quality of the airport. It’s already the third busiest airport in the Bay area, I mean as far
as takes offs and landings. Isn’t that crazy? And really what I understand, the most desirable for sort of small private pilots, as far as the winds and the location. So, I would just
hope we’re maximizing what we charge.
Andy Swanson, Airport Manager: Andy Swanson, Airport Manager, Public Works. To answer that question, yes and it was a real concern of mine when we first took the airport over, the quality
and the conditions that we were leasing these rates for, and the users really understood and continued paying the rates of really substandard conditions. At this time, our rates are
the highest rates probably, for an airport our size, probably throughout the nation, and especially in the Bay area, we’re well above San Carlos, our neighbor, they just reset their
rates. Hayward just went through and reset their rates. And so, I explain it to, if somebody asks me, our tenants, I say, “Well, if you buy a house here, you buy a house in San Carlos.
So, you want to live here, you want your airport close, there is a premium you pay.” It’s the most desirable airport and we’re bringing it up to the quality that it should have been
when we brought it back. It was in terrible shape and that was the message we delivered to the Council, maybe some of you were here, but that was our commitment, to make sure you were
fully aware of what we were bringing back, and the commitment I’ve seen has been really, it’s been – maybe we’ve done too good a job at bringing the grants in, but I think we need to
do that because that money might not always be there, so if we can take advantage of that now, get the airport, which we’re on line to do that, and be able to pay the loan back, so if
that answers your questions, Jim.
Mr. Perez: Council Member Tanaka, let me add one more point of reference, since you may not have the background. It’s a little bit like the pension. You can’t get out. Because of the
grants, we’ve signed up for throughout the years, every time you get a grant you re-up 20 years’ commitment of operations. That’s why Mr. Keene was saying when we looked at it, we didn’t
want it. And I said the same thing, I don’t know if we want to get into this business, and then the FAA said, “Well, you don’t have a choice, you’re already committed to it.” So that’s
part of the issue we have.
Council Member Tanaka: I think the City Manager actually asked a question that I was curious about is, are we maximizing the rates? So, let me ask you this. So, you said we have the
highest rates. What are we compared to San Carlos?
Mr. Swanson: I don’t have those numbers right in front of me, but San Carlos rates – I can get you an answer. I apologize I don’t have that. We just went through a study and did our
hangar rates and updated our hangar rates and we’re considerably higher, our rates than San Carlos.
Council Member Tanaka: Would you look at like let’s say the average price of a Palo Alto house versus San Carlos house, is the ratio kind of the same, or?
Mr. Swanson: Not quite like that. Aviation is, the rates are lower, and that sometimes is confusion because you take a simple tie-down and the rate of a tie-down is…
Council Member Tanaka: I’m talking about like if you took a ratio of let’s say a Palo Alto property versus a San Carlos property and you ratio that to the rates of San Carlos to Palo
Alto. Are we, are rates that much higher or is…
Chair Filseth: Housing is 30 percent.
Mr. Swanson: Percentage-wise I would say it is. I would have to look at it, but it is, there is a definite, I can’t tell you the actual number. I’m sorry, I don’t have that.
Mr. Perez: We can get it to you for a future meeting.
Council Member Tanaka: And is there, even with these rates, is there a lot of demand for space?
Mr. Swanson: There is. When we took the leases back in April, there actually was a list that was given to us.
Council Member Tanaka: Even at the higher rates?
Mr. Swanson: Yeah.
Council Member Tanaka: Is there a lot of extra demand for this airport?
Mr. Swanson: Yes, there is.
Council Member Tanaka: Then why don’t we raise the rates more?
Mr. Swanson: That’s a question that was asked of me before and there’s a rate that is, there was kind of a, there was a rate for hangars, a box hangar and the box hangar was going at
a rate of as high as $1600 versus some people were paying around $800, so when we looked at the rates and we looked at the appraisal and we said, okay, the appraisal didn’t have the
opportunity to look at the, they didn’t have the rates that were just given to us right before we took the leases back by the previous property, the large lease. So, when we did that
we looked at it and said, okay, well, we moved it up a little bit. We didn’t move it to the top, but we moved all the rates up and all the hangar owners, some hangar owners actually
rates increased drastically. Others came down a little bit. So, we kind of took the, we tried to make it not go to the highest point, and the reasons it was, some people were really
being actually, basically were paying way too high a rate for the conditions of the hangars. They are very old and there’s a lot of maintenance, so we tried to be fair.
Council Member Tanaka: But they’re paying for the location, right? I mean, isn’t that what they’re really paying for?
Mr. Swanson: Location and, yeah.
Council Member Tanaka: If you go to the airport let’s say in Fresno, I’m sure it’s a lot cheaper, right. I mean, it’s the location isn’t it, the Palo Alto location they’re paying for?
Mr. Swanson: Yes.
Council Member Tanaka: Is there a limit to how much money we can make from it. Is there some Nexus Study that’s been done or is there some sort of limit to what we can charge?
Mr. Swanson: The standards in the industry, there’s been no airport that I know of that has just taken their rates and pushed them up like you would in a lease. Because of the restraints
that an airport has, you can only use that building for a certain thing, it’s only for aviation activities. There’s all kinds of restraints on that, so I’ve never seen a municipality
actually handle their leases that way and raise them up like you would, I guess, in the private market. You know, just setting your rates.
Chair Filseth: If you were a pharmaceutical company.
Mr. Swanson: If that answers your question?
Council Member Tanaka: I mean, it seems like right now we at at least a 10 percent or more pension liability that we’re not accounting for, which is a very big number, so if the demand,
I can’t see why we would not raise the price more.
Mr. Sartor: Andy, let me jump in here. So, there’s one thing you need to understand, Council Member Tanaka, the money, the revenue that’s generated by the airport needs to stay at the
airport.
Chair Filseth: Is this covered by Prop 218?
Mr. Perez: FAA.
Mr. Sartor: It’s FAA requirements. The FAA will not allow a public agency to take revenue from an airport and divert it to the General Fund for example. It needs to stay in the Enterprise
Fund.
Council Member Holman: And that’s why I was asking about interest.
Mr. Sartor: We do have a payback schedule.
Council Member Holman: That’s why I was asking about the interest rate too, because the only time we can take the money out of the airport Enterprise Fund is when we’re paying that loan
back.
Mr. Perez: That’s fair, and we’re trying to maximize, because just so you know, we’re trying to do that. We have tenants out there that are allowed by the FAA, there are certain conditions
that they allow. An Audi dealership, for example, they can’t store their vehicles because they don’t have enough capacity in their lot. We let them use areas that are not restricted
by the FAA and charge them rent for that. So, where we can, we do that and we know that those funds help the operations and lessens the loan to the General Fund.
Chair Filseth: Does the airport lease land from the City?
Mr. Perez: That’s where I was going next. That was my first thought, I want to charge them rent. The FAA said, “No.” So, the General Fund cannot charge that enterprise rent. So, we looked
at that one as well.
Council Member Holman: So, it’s not pertinent to the Budget particularly, but it would be interesting to see a list of what the loans commit us to. There was a 20-year reference, but
sometimes the loans from the FAA also commit us to certain conditions, or the grants, I’m sorry. They commit us to certain conditions, and so some of those may or may not be advantageous
to our City.
Mr. Swanson: That is the grant assurances and it’s a quite large document and we can get a copy of that.
Council Member Holman: I’d like the Cliff notes of that.
Chair Filseth: Could Embarcadero be a toll road?
Mr. Harper: I was going to say, the initiative for this, or one of the initiatives for this fund is also to start the Airport Business Plan, which I would assume would deal with some
of these issues that you’re speaking to, Andy?
Mr. Swanson: Yeah, and I can speak to that. The Business Plan will be the start for Palo Alto to, the Palo Alto vision of your airport. What you want it to look like, and that’s why
you’ll see in the slides we saw that the ALP update follows that, so once you have your vision and Council has the vision of what they want the airport to look like, then we go back
to the FAA and we put that on our ALP and we move forward, and the projects that Paul is speaking of there, the ability to what I would hope would pay back the loans sooner would be
some more of a long-term lease of a facility, and pay back the loan that way. Probably partnering private sector or something like that.
Council Member Holman: To the Chair, maybe this is a conversation that we should have, more conversation about, outside of this. Because before I forget it, one thing that just does
occur to me because the airport is, as you said, is the busiest blah, blah. So, maybe one way of raising some revenue from the airport that maybe the FAA wouldn’t touch is if we charged
an impact fee of pilots because of air quality concerns?
Chair Filseth: I’m going to say that I think, given the hour and so forth, I think it’s a longer discussion. The issue that I think is interesting which is raised here, which is it looks
like there is economic upside on the airport, are there ways that we could capture that, or some of that. Obviously, the Staff’s been through it quite a bit already, so perhaps it makes
sense to think about it a little more. I think we have the issue. We’re probably not going to fix it tonight.
Council Member Tanaka: How do we take action for that?
Chair Filseth: What do you suggest?
Mr. Keene: Do you guys tentatively want to approve what we have before.
Council Member Holman: Yeah. I mean we have questions about.
Chair Filseth: He’s asking how do we have a further discussion on this?
Mr. Perez: Let me see if I can help with this, and it may not be what you’re looking for. The way we’re looking at it, for… Yeah, so right now what we’re trying to do is bridge this
gap between the time that we get the Business Plan completed to you, because I think that’s where the policy decision is going to come, because you want to enter into longer term leases,
understand what investments you want to make to maybe maximize the leases and the titles and the rents, because.
Chair Filseth: You probably said when we should expect that, but what was it again?
Mr. Swanson: If I can just add to that too. The rates and fees, rules and regs, all of the guiding documents.
Chair Filseth: When is the Business Plan?
Mr. Swanson: Yeah, and it will lead up to this. Sorry. So, that will build up to bringing rates and fees in front of you, and then once that’s established and we have the documents all
in Palo Alto, a lot of the documents were transferred from the County, and we’re operating under those documents, then you’ll be able to move into the Business Plan. So, that will start
that discussion. So, I anticipate into the fall those documents will be coming forward, and then we’ll be moving into the Business Plan later.
Chair Filseth: So late this year.
Mr. Swanson: Later in the year.
Council Member Tanaka: Okay, last two things which is, on 363, pensions and salary, pensions go up 44.5 percent. Now it’s not a big actual dollar amount, but I’m just curious is something
funny going on here? Why, I think it’s one of the highest jumps in pensions?
Mr. Guagliardo: Council Member Tanaka, Steve Guagliardo again. Last year there were positions in the Airport Fund that were temporary and hourly positions, which are not pensionable.
What’s recommended in this Budget is converting those to…
Council Member Tanaka: Oh, I don’t think we should do that. We already have a pension problem. Why would we want to do that?
Mr. Perez: I think Andy can talk to you.
Mr. Sartor: Let me address that first and then Andy can follow up. So, as I mentioned earlier, we’ve been using, when the County had the leases, we didn’t have responsibility for a lot
of the facilities. Now we do and we’ve been using hourly employees for a lot of the maintenance and operations. We’ve had a huge turnover. We have a chart here, I think for some of the
hourly positions, we’ve had an average of nine months per person and then we have to replace them and then retrain the people. So, we need to have some stability and consistency in our
maintenance and operations staffing.
Steve Guagliardo, Senior Management Analyst: I would also point out that since this is an Enterprise Fund, the liabilities for these pension positions are not borne by the General Fund.
They can be borne by the fund where the positions are funded.
Mr. Keene: I would just also add, I don’t see why we can’t bill the total cost into the rates and the fees. I mean, this is the price of doing business this way, and we could even have
an accelerated pay down of the Unfunded Liability.
Mr. Perez: Yes, you don’t have to maintain the same methodology across funds.
Chair Filseth: If there’s upward area in the rates we charge customers at the airport, this is the kind of thing that the FAA would have to approve.
Mr. Perez: And it impacts the service tied to the rates you charge too, right? If you don’t have the proper, if you can’t find, because these positions, some of them have special experience
because you have to have certain safety protocols, because you’re an airport, mandated, right, and you have to have all this training, and if you have a consistency in Staff, then you
can make that as part of your service delivery and why you’re charging, because you have adequate services.
Council Member Tanaka: I guess my point is, given the looming pension problem, I can’t see why we would want to add any Staff in general. I understand this is kind of a segregated Budget
that we can’t initially touch, but in general I think we should try very hard not to add any employees, given the pension problem, because you just add on to it.
Council Member Holman: Isn’t this a no-harm, no-foul position?
Mr. Keene: I mean, we can solve our pension problem if we had the money to do it, so that’s the problem. But this is both a small amount and there is clear nexus between the value we’re
providing and who is benefiting from it. We ought to just, this is something we can really build the full cost into the cost of being able to use the airport.
Chair Filseth: It sounds like we have the ability to do that. I’m going to ask one question and then we can do that, and I’m going to word it somewhat carefully here, but it goes back
to the issue of the FAA money and sort of things that come along with that, which is, our policy so far for the airport has been to be somewhat careful in the improvements, somewhat
selective in the improvements we make to that for a variety of reasons. When we do the apron reconstruction, we get, you know, almost $20 million from the FAA for this kind of stuff.
Are we going to be able to be as selective with our improvements as we have been in the past, or are we going to lose control of that?
Mr. Swanson: I want to make sure I fully understand the question.
Chair Filseth: You understand my question.
Mr. Swanson: You mean as far as having to…
Chair Filseth: We’ve been careful about expansion, right?
Mr. Swanson: And that’s up to the Council as far as, you have the control of that, yes. So, improvements? All these projects have been improvements, just strictly maintenance and improvements
on the air field. Any expansion or anything would first be…
Chair Filseth: We don’t have to do it because of the FAA contract to rebuild the apron?
Mr. Swanson: No, and I really don’t think the FAA would suggest you do that either. Your airport provides a certain service, and they’re not going to, well, if you wanted to, if you
desire to, there’s been airports that have.
Mr. Perez: You’re also limited by the type of runway you have, any expansion. Am I correct about that?
Mr. Swanson: Yes, that’s correct.
Council Member Holman: Well, that’s exactly where I was going, because I have an understanding that planes are being developed now that need a shorter runway, so it’s like, if we get
a grant to improve the runway, do we really want to improve the whole runway, or maybe, I don’t know, pick a number, 500 feet of it or something like that. So, and it goes to Eric’s
questions about expansion. So, that’s why I was saying what does accepting some of these grant monies commit us to, and what are the implications? That’s what I was asking.
Mr. Swanson: So, the grant assurances are very …
Council Member Holman: I think I’ve made my point.
Chair Filseth: In that case…
MOTION: Chair Filseth moved, seconded by Council Member Holman to tentatively approve the Airport Fund Operating and Capital Budget.
MOTION PASSED: 4-0
Mr. Guagliardo: (No mic) informational.
Mr. Perez: Once we get to the Business Plan we can also, you can revisit that, I think, and see where we want to go, and we’ll have a better sense of where we actually are, because right
now we’re projecting that everybody is going to stay, and the rates, so you’ll have another opportunity.
Mr. Keene: (No mic) and there’s no repayment in the ’18 Budget planned anyway.
Vehicle Replacement and Maintenance Fund.
Operating Budget
Capital Budget
James Keene, City Manager: Okay, last item.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Mike, I don’t think you’re doing anything out of the ordinary out of the Vehicle Fund. You’re just basically
doing the annual replacement, right?
Mike Sartor, Director of Public Works: That’s correct. This is basically it.
Mr. Perez: I think we can answer your questions.
Steve Guagliardo, Senior Management Analyst: And for the convenience of the Council Members, this starts on Page 388 of operating and Page 623 of capital.
Mr. Perez: While you’re looking, I’ll do a quick promo. On Saturday, at the May Fete Parade you’ll be able to see or ride or touch some of the vehicles that were obsolete that are coming
out, the ambulance are going to be part of the parade, and so you’ll see those vehicles then. So, the Staff if moving forward on making replacements of the fleet as appropriate.
Chair Filseth: Questions. Council Member Holman, do you want to lead off. Council Member Fine.
Council Member Fine: No questions, just a comment that costs seem to be escalating pretty quickly here and reconciliation is still a pretty big gap, 25 percent missing. It just stands
out to me.
Mr. Sartor: I appreciate your noticing that. We actually have a consultant working with us to develop a new charge back system, so that we can get the funds trued up so that we are collecting
the, yeah.
Mr. Perez: We do segregate the charges that we do, every fund pays their fair share.
Mr. Guagliardo: We actually have that number for you and Paul will get is shortly.
Mr. Perez: As every utility, you fire with the bigwigs.
Chair Filseth: So following on to Council Member Fine’s question, vehicle replacement and additions, you know, doubled from 2016 to 2017 and now it’s gone up another 25 percent. Why
is that?
Mr. Guagliardo: Once again, that second column you see is the FY 2016 actuals, so that reflects the money actually spent that year. So, any funding was re-appropriated to the next year,
a vehicle wasn’t purchased for some reason, the deadline of the Fiscal Year wasn’t met, it wouldn’t materialize in that column. So, that’s the doubling you see.
Chair Filseth: Total revenues I assume is charges to other departments?
Mr. Perez: Yes.
Chair Filseth: Where do they, in the staffing for this, all these are direct City employees and FTE’s, right? What’s the potential that there might be opportunities to contract some
of that out? Things like mechanics and so forth. I mean, we obviously have some specialty vehicles, right? Some of this should be fairly standard.
Mr. Perez: Mike, you might have to help me out, but one of the latest things that Mike’s group, that is the parts, did an agreement where, so, instead of having a Staff there now, we
have a vendor with the supplies just in time and service that.
Mr. Sartor: So far it’s so good. We’re actually evaluating, one of our initiatives this year is to evaluate the efficacy of that, efficiency.
Mr. Perez: I think Mike finished it. Sorry.
Mr. Sartor: Well, just to kind of give you – we did a Fleet Operational Study three years ago, brought in a consultant to look at our operation, and they compared our operation to other
comparable cities and municipalities, and came back with a recommendation that the staffing that we have, basically it kind of drove the staffing that we do have for now. The City of
San Mateo, for example, does contract out most of their services, and our reports back, that’s not really working quite as effectively as it should, particularly the fact that we have
a lot of specialized equipment for the Utility Department, and our Fire equipment is very specialized as well. So, we found that, and we’ve been advised that the method of operation
is, as comparably efficient as other agencies similar to ours.
Council Member Holman: So, if I could ask. Are you still – how many vehicles do we have in the fleet?
Mr. Sartor: I’m guessing roughly 500 or so.
Mr. Guagliardo: The number is detailed on Page 390. And for Fiscal Year ’17…
Council Member Holman: I’m sorry, Page what?
Mr. Guagliardo: 390 of the Operating Budget.
Council Member Holman: There we go, 500, yeah. So, I know this doesn’t quite work this way, but if you look at, and I know we have emergency vehicles that kind of skew everything else,
but if you look at a number of just vehicle replacement and additions, if you use a $6 million number or $7 million number from Page 391, we’re talking $120 to $150,000 a vehicle.
Mr. Perez: You’re taking that number and dividing it?
Council Member Holman: No, I’m using the number of like 52 vehicles delivered, so those are the new vehicles into that cost expenditure, and I’m rounding.
Mr. Perez: What we would need to do is provide you the type of vehicles because we could have, for example, if a fire engine comes in at…
Council Member Holman: That’s what I say, it’s like those kinds of vehicles skew it.
Mr. Perez: And then Utility vehicles are a couple hundred thousand, so we would have to give you the whole list in order for you to see what’s in it. We could do that.
Council Member Holman: So, the other thing is, you know, a few years ago, I think it was before even Jim came probably, there was an audit to see what the vehicle replacement schedule
was, and we were replacing vehicles way too frequently. Is there any thought that that might need to be revisited again?
Mr. Perez: Actually, we made changes that are permanent, and we have what’s called a Fleet Review Committee, so it’s myself, Mike and the Assistant City Manager, so it’s Ed Shikada,
and we meet pretty much almost monthly, and review vehicles that are requested, changes to the fleet, if somebody wants to add a vehicle, and we go through a very formal process that
it’s, the auditor recommended that there be an official form justifying the equipment, the change, why, the cost and what we’re going to be the benefits in delivering services. And the
three of us review that and we sign off personally that we reviewed it and we don’t approve them all. We send some back and say, you know, or ask to have an additional justification,
because we want to understand, why do you want to switch from a sedan to an SUV, that’s sometimes a request that we get, and Staff says equipment, we need a lot more equipment and it’s
not accessible enough in a sedan, and we try to figure out, well can there be an alternative field vehicle, you know, how many miles, how many people. And we review the carpool fleet
as well to ensure that we don’t have too many vehicles in the fleet overall.
Mr. Keene: In addition, Lalo, my understanding was, in addition to this individual review we actually did adjust and change and lengthen the cycle time for a number of replacements.
Mr. Perez: Yes, and we remove vehicles from the fleet as well.
Council Member Holman: I remember you did remove some. So, is it typical that 10 percent of the fleet would be replaced every year?
Mr. Sartor: You’re suggesting that we replace about 10 percent of our fleet each year?
Mr. Keene: You mentioned 52 vehicles.
Council Member Holman: 52 vehicles out of 500.
Mr. Sartor: Yeah, I mean, that’s probably a rule of thumb. We replace vehicles based on the mileage and we just created a new policy for replacement cycling, I believe, John? We’re like
on a ten-year cycle for replacements. One of the things we’ve done after the last audit report you mentioned is we looked at underutilized vehicles and we actually surplus I believe
a couple dozen vehicles as part of that process. And then to get back to Chair Filseth’s question about staffing, one of the things that came out of that study was, we are now contracting
out transmission repairs. We eliminated our mobile repair vehicle and the staffing for that. So, we are continually looking at efficiencies for the fleet operation, including looking
at each year’s replacements, what should actually be replaced and what can we go without.
Chair Filseth: There’s 57 SUVs and sedans, so if you’re on a ten-year cycle, then you’re roughly replacing six of those a year?
Mr. Perez: You know, I just remembered that these numbers may be impacted because I need to give you a little more history. As a result of that audit Council Member Holman is referring
to, the Council froze the Budget for replacements, and it was almost getting to the third year that we were not replacing unless it was an emergency situation. So, these numbers are
probably catch up. We’re getting there, but I just realized those numbers are being influenced by that slow down. So, we probably can go back and look and see if we normalize it, what
it could be. But that wasn’t that long ago that we had that.
Council Member Holman: So, the other number would be the vehicle operations and maintenance. And operations, obviously, is like fuel, tune-ups, that sort of thing, but again, averaging
across which could be skewed by some of these vehicles, but it’s $100,000 in operations and maintenance. I’m sorry, that’s not right, it’s $10,000. I was using the wrong number, sorry.
Never mind on that one.
Council Member Tanaka: So, on 626 of the CIP, is see that there’s 57 SUVs or sedans and are these special sedans or SUVs. Because I see there’s like Police marked units and there’s specialized
equipment, but what are these sedans and SUV’s used for?
John Hospitalier, Assistant Director of Public Works: John Hospitalier, Assistant Director, Public Works for Public Services. You’re correct, some of them are Public Safety vehicles.
One of the things we faced recently is the Crown Victoria model that Ford offers in the Police cruiser has been discontinued, so now.
Chair Filseth: He’s talking about a different category. Those are Police marked units. He’s talking about the 57 other.
Mr. Hospitalier: Okay, so that would be pool vehicles.
Council Member Tanaka: What are pool vehicles?
Mr. Hospitalier: Pool vehicles are cars that are not necessarily assigned to an individual. They’re shared vehicles by a department or by a region.
Council Member Tanaka: What do they use them for?
Mr. Hospitalier: For instance, like on our sixth floor, our Public Works engineers, they have, there is a pool here at City Hall. They’ll have a meeting across town with a contractor.
They’ll use that vehicle to go across town for that meeting or meet at the MSC or at Elwell Court, any other City facility that they might be working at.
Mr. Guagliardo: And correct me if I’m wrong, but also included in that sedans and SUV’s row are things like the Fire SUV’s?
Mr. Hospitalier: That’s what we were just touching on in there.
Mr. Guagliardo: Well, the Police marked units, I think, are the separate ones, but on Page 626, those sedans and SUV’s, the unmarked, the Fire, Public Safety vehicles?
Mr. Hospitalier: That’s correct.
Council Member Tanaka: How many of them are marked, of the 57?
Mr. Perez: All the Battalion Chiefs are marked.
Mr. Hospitalier: There’d be five or six of those, I think.
Mr. Perez: And then the Deputy Chiefs, the Fire Chief. Off the top of my head, maybe around ten or so.
Council Member Tanaka: Ten, okay.
Chair Filseth: So, one of those is the one that somebody was complaining about in Mountain View that was parked in front of their house.
Mr. Perez: Yes.
Chair Filseth: And that’s a pool vehicle?
Mr. Perez: No, that’s and assigned vehicle, and that’s the other thing we did. We removed a lot of vehicles from folks. We used to have vehicles assigned for take home, so you could
take it home to respond to emergencies, for example, in Mike’s group and then Utilities, and we removed all of those. Only Public Safety folks that are in command.
Chair Filseth: A different kind of emergency in Mountain View, that guy.
Council Member Holman: Could I just add to that. That also reduced our liability.
Council Member Tanaka: So, there are 47 vehicles that are unmarked, is that right, roughly, 47?
Mr. Perez: Off the top of my head, yeah.
Mr. Guagliardo: It’s probably best to return to you with an accurate count.
Mr. Keene: Why don’t we just bring you the list, the actual list.
Council Member Tanaka: My point here is more than that is, why don’t people use their own cars? What’s so special about these cars that the City has to provide them?
Mr. Perez: It’s an insurance issue. You’re now, the employee is saying, “Well you’re putting on me, on my insurance on my car.”
Council Member Tanaka: But every company I’ve worked at has always done mileage, or you could do Uber.
Mr. Perez: And we do that. We do have, you know, employees that submit for insurance reimbursement.
Council Member Tanaka: Doesn’t the IRS have mileage.
Mr. Perez: I’m sorry, I said insurance. I meant mileage reimbursement. We do have that available. It’s typically because, you know, most of the vehicles, they need them because they’re
assigned to do their job because they’re taking something like building inspectors, right. You know, they need to go from job site to job site and they need to carry their equipment
with them, so.
Council Member Tanaka: I used to be in sales, and I got mileage from driving from customer to customer, right, and I guess where I’m going on this, so kind of as Council Member Holman
mentioned, maintenance cost is also pretty high, that’s one thing. The second thing is we only have so many spots in City Hall, right. It takes up parking spaces as well. The capital
costs of it as well. There’s, I mean, to me do we know how utilized these vehicles are?
Mr. Keene: I think one of the things we could do is, I think we need to distinguish from the pool vehicles which would be available for occasional use and we worked to shrink that pool
in recent years. Then we have vehicles that are assigned to people that is really part of their job, and maybe unlike salesmen or saleswomen, this is more like RotoRooter or an exterminator.
I mean, you want somebody to show up who is official. We’re doing building inspections or Fire command Staff showing up on a scene.
Council Member Tanaka: Well, if the car is marked, I totally get it. I’m with you on that. That’s why I was talking about, like which ones are unmarked and it sounded like 47.
Mr. Guagliardo: For clarification, does the City of Palo Also count as marked, or are you only caring about Public Safety when you say use marked?
Council Member Tanaka: I guess I’m just trying to think, we’re trying to be, we have a parking problem that this is 47 cars. I’m not sure where these cars are located, but assuming some
of them are here in City Hall, we have a parking problem Downtown, and like this is not helping. I would imagine the employees have to drive their car here.
Chair Filseth: There’s really only four building inspectors in town.
Mr. Hospitalier: There’s really only about ten vehicles here at City Hall, and that services Development Center, Planning, Public Works, Utilities, all the floors here. So, it’s not
a large amount of those vehicles. There’s a pool at the MSC, there’s a pool at Elwell Court and there are pool vehicles throughout the City for CSD. So, just to kind of give you some
perspective, it’s not that large of a number. Off the top of my head, it’s ten to twelve vehicles here.
Council Member Tanaka: I still don’t understand why we need to have those kinds of cars.
Mr. Hospitalier: Just one other thing to add some perspective, somebody touched on it. You know, we have an expectation by our citizens, right, to respond and I personally, I wouldn’t
be comfortable with sending one of my managers out in their own vehicle to meet with the public on a matter that had to do with their sidewalk or storm drain. First off, there’s some
OSHA requirements that are built into the vehicle as far as safety lighting for traffic control, and…
Council Member Tanaka: If there’s special equipment in the vehicle I totally get it. Are these just regular cars?
Mr. Hospitalier: Some are pickup trucks, some are passenger vehicles. There’s a van or two in that pool, also.
Mr. Keene: We should give you the list. My understanding is, except for like an unmarked Police car, everything is marked. I mean, it has a City seal on it, it has…
Council Member Tanaka: I understand. But if you’re just using it to get like from here to MSC.
Mr. Keene: Well, I think we have a small number of people who do take public transportation for example, who obviously need to be able then to get in a pool car to go to a meeting somewhere.
I don’t think we have a lot of those, really in any location. We do have pool cars where it’s a normal part of someone’s job, and I actually do think if we’ve got a rec worker going
up to a school site with a bunch of kids to do some program, I’d want them to be in a City car at least, rather than just driving up in a plain car. We do need to announce that, hey,
this is part of the job of the City. But I think we could get the scale of this better if we actually gave you guys the actual list before we’re here and we actually identify roughly
what the use is, so there’s a better sense. I mean, if there’s eight pool cars in the whole City, that fit in this category, and everything else is much more…
Council Member Tanaka: I just can’t see the idea of having any, especially when there’s Uber and Lyft around.
Chair Filseth: I think what the City Manager is suggesting, if I can interject here, I think that would be helpful. If I can sort of extrapolate where I think Council Member Tanaka is
going is, you know, obviously, it all makes sense. I think what he’s really asking is, you know, the number if 57 sort of SUV’s and passenger or SUV and sedans, you know, what would
the impact on City business be if that number were 10 or 15 percent smaller. I think that’s what he’s asking.
Mr. Keene: And I would be very open to, I mean, for right now, this would be a great follow up thing, if you wanted us to do some study about utilizing Uber and Lyft in some circumstances,
I mean, what’ the tradeoff for us to do that. I would imagine if we want to move in some directions, probably a combination of alternatives or something right.
Mr. Sartor: Actually, I’d like to add, we are already committed to doing exactly that, as a result of the green purchasing policy audit. One of the commitments was to have our fleet
Staff look at options for transport vehicles, including pool vehicles, so we are in the process of gearing up to do that very same thing.
Mr. Keene: So, not to push it, but it is Friday morning.
Chair Filseth: Thank God, it’s Friday.
Mr. Keene: Lalo’s got a tee time in seven hours he says. I mean, his game’s not that good to begin with, so he needs a little bit of sleep.
Chair Filseth: I guess the question I was going to ask is, pending what the City Manager suggested, are we going to tentatively approve this, are we going to put it in the parking lot
until we see.
Mr. Keene: This is one that would deserve to be in the parking lot. As a matter of fact, if it was only in the parking lot, we ought to cut all of them. We’re never going anywhere.
Chair Filseth: Do they need RPP?
Mr. Keene: Why don’t you put it all in the parking lot if you’re unhappy and we’ll deal with it later.
Chair Filseth: I’ll move we put that in the parking lot, I’ll move we put the vehicle operating and Capital Budget in the parking lot. We’ll revisit it.
Council Member Holman: Second.
MOTION: Chair Filseth moved, seconded by Council Member Holman to put the Vehicle Replacement and Maintenance Fund Operating and Capital Budgets in the parking lot for future discussion.
Chair Filseth: All in favor? Motion passes.
MOTION PASSED: 4-0
Chair Filseth: Pending some more discussion, I’m sure we will be back having this discussion.
Future Meetings and Agendas
James Keene, City Manager: One last order of business, other than your next meeting, so as Lalo was saying earlier right now, you’re scheduled to do wrap up on the 18th, but need the
potential for a second follow-up day. One day we were looking at was the 23rd, but that is the day that P&S now looks like it only can meet, both give the folks who need to be there,
that’s the 23rd. So, what we wanted to ask is whether or not the Finance Committee could either the 24th or the 25th, as the backup day for Finance, because some of have got to be in
both of those sessions. So, if you can’t answer now, when is our next meeting?
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Tuesday night.
Chair Filseth: What time on the 24th or 25th.
Mr. Perez: Well, we would recommend 6:00 because if you have a lot of stuff rolling over, then you want to get through it.
Mr. Keene: Either one.
Mr. Perez: Not the 24th?
Mr. Keene: So, Adrian’s good on either one.
Chair Filseth: I can do the 25th.
Mr. Keene: 25th, 25th. And Karen will get back to us. So right now, three of you can do the 25th, Karen will let us know by Tuesday.
Adjournment: The meeting was adjourned at 12:08 A.M.
TRANSCRIPT
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Finance Committee Transcript
May 4, 2017
FINANCE COMMITTEE
TRANSCRIPT
Page 1 of 113
Finance Committee Transcript
May 4, 2017