HomeMy WebLinkAbout2017-05-18 Finance Committee Summary Minutes
Special Meeting
Tuesday, May 18, 2017
Chairperson Filseth called the meeting to order at 2:04 P.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California.
Present: Filseth (Chair), Fine, Holman, Tanaka
Absent:
Oral Communications
Chair Filseth: Thank you very much. Welcome to the May 18th Finance Committee budget meeting. First item is Oral Communications. If there are any members of the public here, normally,
if there are any members of the public here who wish to speak to an item that’s not on the agenda, now is the time to do it. I think, given the amount of time that we have before us,
and sort of the lengthy agenda, if somebody’s here and wants to speak to something that is on the agenda, I think that’s okay. You can do it now, if you want. If you want to wait until
we take the item up, then that’s okay too.
Action Items
1. May 9th Budget Hearing Continuation.
Chair Filseth: Seeing as how there are no speakers from the public at this time, let’s proceed to Item 1.
Kiely Nose, Budget Manager: Thank you Chair Filseth. Good afternoon. I’m Kiely. To start we would normally do a recap from where we were in the last meeting. However, given the agenda
today and us going through wrap up later this evening, I kind of figure we will address most of these things later on in the agenda planning process. So, this is just a recap of where
we’re at in terms of what’s been placed in the parking lot over the last three Finance Committee meetings, through May 9. There was additional information that was provided to you guys
in the wrap up memo that was put at your places today. In addition, you guys have a few more At-Places Memos today. You should have one in regard to electric vehicle chargers that is,
charges, I’m sorry, which will be taken up under the next item with the municipal fee schedule. You also have a few emails from the public as well as an At-Places Memo regarding parking
permit fees. So, unless you guys have any questions regarding where we’re at in the process, we can get along to the municipal fee review.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Let me, sorry to interrupt Kiely. Lalo Perez, Chief Financial Officer. I just wanted to kind of walk you
through a little bit further up through the agenda of tonight, just so we can have an understanding of the flow. So, what we’ll do is, after we have any, have discussions on the muni
fee schedule, then we get into the General Fund Capital Budget, so we’ll have various departments here to respond to questions that you may have on the status of projects, and the budget
requests. Then we’ll get into the Utilities Department and Chair Filseth, if you will indulge us, what we recommend that we do is, as we take each fund, so for example, Electric Fund,
we will have the Operating Budget and the Capital Budget, we also have the rate discussions on the agenda. So, what we recommend is that we do the rates with each of the particular funds
at the same time, and do all of it. And then after we conclude with the Utilities Department, then we will enter into what we call wrap up. And wrap-up is where we will discuss any item
that is outstanding, such as the parking lot that Kiely just mentioned, anything else that you have not brought up that you wish to bring up, and make motions. If we were to be fortunate
enough to finish and conclude the budget tonight, if not, then we have Thursday, May 25th as a continuation of the wrap-up process at 6:00. I just wanted to recap it and if there are
any questions.
Chair Filseth: Sounds good. Thank you.
NO ACTION TAKEN
2. Fiscal Year 2018 Proposed Municipal Fee Schedule.
Kiely Nose, Budget Manager: With that, we’ll start with the municipal fee schedule and we have Chris from the Budget Office who is going to walk us through this presentation.
Chris Yi, Senior Management Analyst: Good afternoon Chair Filseth and members of the Committee. As Kiely mentioned, my name is Chris Yi, and I’m with the OMB and I’ll be providing a
quick overview of the municipal fee schedule for the upcoming Fiscal Year. Before we start, just a quick reminder, again, as Kiely mentioned, there are two At-Places Memos, associated
with this muni fee Staff Report. One is for a new electric vehicle charge fee and another for making corrections to a number of parking fees listed in the Staff Report. As part of the
annual budget process, Staff submits changes to the, recommended changes to the muni fee schedule for the Finance Committee’s review, approval and recommendation to the City Council
for adoption. The muni fee schedule includes hundreds of fees for various services that the City provides. For example, there’s a wide range of rental fees for various facilities like
meeting rooms to masons and even camp sites. There are also planning and development related fees for architectural plan reviews and building inspections and permits and so on. Before
we get into recommended changes for the Fiscal Year (FY) ’18 fee schedule, I would like to take a moment to go over our existing fee policy. As recommended by this body, the OMB Staff
presented the user fee cost recovery level policy back in April of 2015 consisting of three different levels of cost recovery. This fee policy was subsequently adopted at the Council
Meeting on May 18, 2015. Using this policy as a guideline, OMB Staff works with each department every year as part of the annual budget development process to align fees to the appropriate
cost recovery levels, as well as adjusting rates based on their analysis or through a Fee Study. During Fiscal Year ’17 Development Services completed their first phase of their Fee
Study, examining their non-valuation fees, and adjusted rates using the industry standard method of utilizing the current International Code Council’s muni fee schedule structure as
the City’s green building and energy ordinances. Through this study, Development Services adjusted most of their fees to be more in line with the appropriate cost recovery levels, and
these changes were approved by the City Council at the December 12 meeting last year. Since these changes were discussed and approved at that meeting, they are excluded from the balance
of this presentation and the report, other than a small number of green building fees that needed to be adjusted subsequently. Phase 2 of the study is currently underway, looking at
valuation-based fees and Staff anticipates that it will be completed and submitted for this Committee’s review sometime at the end of summer or early fall. Consistent with past practice,
most fees are recommended to be increased this year by an amount equivalent to the year-to-year increase in the general salary and benefits. From Fiscal Year ’17 to ’18, this change
is about 6 percent. This will ensure that the City continues to recuperate its cost for services and, based on our analysis, some of the fees were also adjusted downward for Fiscal Year
’18 in order to not exceed the 100 percent cost recovery level. In order to note that the - it’s also important to note that development impact fees, which are based on strict formulas
as outlined in Section 16.64.110 of the City’s Municipal Code, were increased by a factor equivalent to the year-to-year increase in the San Francisco Bay area construction cost index.
In summary, we are recommending that – we are recommending adding 14 new fees, deleting 16 existing fees, and approving changes to 120 fees that are either decreasing or changing by
a rate greater than the base-line 6 percent. This slide shows a sample of new fees as well as those that are proposed to be deleted. On the left side, the Community Services Department
is proposing to add a new corporate package add-on option that provides the necessary audio visual equipment as well as other items like podium, tables and chairs. It is something that
a number of customers have requested to consolidate instead of having to rent these items separately when they rent a meeting room. Now the CSD is enabling them to do it through this
package. The next item is 3-D printing. 3-D printing is something that the City recently began offering to residents at no cost at the Downtown and Rinconada library locations and it’s
been very popular and I’m being told they have very long lists to utilize this printing service. Starting in Fiscal Year ’18, Library is looking to begin charging a small fee to recoup
some of its costs for materials as well as Staff time spent on maintaining and fixing printers. And also, Public Works Department is proposing a new fee to collect for any damages cost
of the track signs. On the other side, fees that are proposed to be deleted include a personal flotation device rental at Foothills Park, because the Department already provides life
vests for all canoe rentals. Playground inspection fee is proposed to be deleted, as there is no longer a demand for this service and Planning and Community Environment, as we will talk
about later, is reconfiguring their parking fees and rates for 2018, and all of their existing guest permit fees are going away. There are 120 fees that we are recommending to be changed
for Fiscal Year ’18. Some of those are to align the fees to market demand or value, some of them to reach desired cost recovery and others are technical adjustments to the fees themselves.
On that point, the first category of change is the outdoor Amphitheatre rental at Cubberley, and the proposed increased rate is 8 percent for base rate and 5 percent for nonprofit rate
to align with market value. To reach cost recovery, some of the fees are requested to be adjusted by more than base line 6 percent, and the listed example is Fire Department’s basic
life support service standby rate at special events. This fee is proposed to be increased by 9.4 percent to account for increasing staffing costs as well as a service and supply cost
to support the Fire Department’s paramedics program. There are also some technical adjustments, which include things like reducing rates for development services green building compliance
inspection-related fees. These adjustments are necessary in order to ensure development fees and time allocations are appropriately distributed to correct divisions leading to 100 percent
cost recovery. Finally, this slide shows a summary of all the changes that are being proposed to the parking fees. Parking fees are undergoing a major overhaul in this proposed muni
fee to better align fees with cost to provide service, as well as for various parking-related initiatives and projects. To quickly summarize these changes, daily parking permit fees
are going up to $25 a day, annual permit fees are going up at Downtown and California Avenue locations to $566 per year and $280 per year respectively. For residential parking permits,
every district’s annual residence permit rate which currently ranges from $40 to $100 per year is going to be standardized at $75 per year. Full-price employee permit rate is going up
to $280 per six months except at Evergreen and Mayfield districts, where the rate will be $140 per six months. Finally, there are no rate changes proposed for reduced price or resident
daily parking permits in all of the residential parking program districts. This concludes my presentation and I’ll be happy to answer any questions Council may have.
Chair Filseth: Thank you very much. Council Member Holman, I see your light’s on?
Council Member Holman: Not yet.
Chair Filseth: Questions and comments. Adrian, do you want to go?
Council Member Fine: Thank you very much. Just on the electric vehicle charging fee, do we know how many other cities in the area do that?
Ms. Nose: Thank you for the question, Council Member. I don’t know that we have an entire count, though in the memo we do have some comps on the second Page. Let me pull that one up.
Council Member Fine: Organizations and surrounding cities? Okay.
Ms. Nose: So, we do have some comparables in nearby jurisdictions. Okay, thank you.
Chair Filseth: Karen.
Council Member Holman: Yeah, I do have some questions. So, we’re only provided with the fees that change. We’re not provided with the whole table?
Ms. Nose: That is correct.
Council Member Holman: So, to bring up something that feels like beating a dead dog, but every year and every year and every year I bring up a low-income rate for our community gardens,
but we’re on this plateau of just everybody, all the services are treated the same, all the access to everything is treated the same. So, we don’t have a low income, and that’s always
been a frustration and I just don’t know why we don’t. For youth there’s a lower rate, but there aren’t kids in the community gardens, I can’t think of a single one, but yet there are
low income people who struggle to maintain access to the community garden and it’s a great resource to them, both from a health standpoint because of the activity, and also because of
the produce that results. So, I don’t know why that never gets addressed or why it never gets even really particularly responded to, to be a little bit aggressive to begin with here.
Rob de Geus, Community Services Director: Good afternoon Council Members. Rob de Geus, Director of Community Services. I appreciate that question, Council Member Holman, because it did
come up last year as well (crosstalk) plan to look at. We have a fee reduction program that supports low income and disabled individuals and it’s really focused at children, and adults
elect out of that subsidy. So, we did commit to taking a look at that and seeing if adults should be put back into the subsidy program, which would allow people like community gardeners
and other adults generally to get a similar discount that low income children and disabled get. We haven’t gotten to that yet, but it’s getting up on the list, so we will get to it soon.
Council Member Holman: Do you have a timeframe on that, because it has been quite some time?
Mr. de Geus: I’d have to check with my Staff, but we’re behind on it, so I’m committed to taking a look at that before the end of the calendar year.
Council Member Holman: Okay, I really appreciate that very much. Some other questions. I was trying to identify, it’s on the, I think this was something that was provided to us later,
maybe, or maybe not. It’s on Packet Page 5 of 8020, and it’s a corporate package add-on and a portable dance floor. It’s there; it’s under the second bullet under new fees. I didn’t
actually identify though a corporate package add-on in the fees themselves. Could you point me to that, please? And I don’t exactly know what corporate package add on means.
Mr. Yi: Are you talking about the new fee that’s being added?
Council Member Holman: Pardon me.
Mr. Yi: Are you talking about a new fee that’s being proposed to be added.
Council Member Holman: It says new fees, Packet Page 5, on Staff Report 8020, it’s the second bullet. It’s under new fees, it says Community Services is adding a fee to recover costs
associated with blah, blah, and one of those is a corporate package add on. So, can you tell me where that is?
Mr. de Geus: I can, yes. Thank you for the question. I think actually the name is probably not the best name. It’s not for corporations so much as it is for large groups that want help
with set up and we don’t normally do that. The people that rent rooms generally do the set up themselves, but what we’ve heard from some of the larger groups, including corporate groups
and nonprofit and other groups, they’d like a little extra service, so set up of the audio visual and all of the tables and chairs and that type of thing. So, they can now purchase this
package that allows us to provide that service and get reimbursed for the time and effort.
Council Member Holman: That makes sense, and can you point us to where that is, then. Is it Page 11 of the municipal fees, in that same Staff Report?
Mr. Yi: It’s on Page 4.
Mr. de Geus: Yeah, Page 4 of the Staff Report, the proposed Municipal Fee Schedule.
Mr. Yi: It’s the third line item in that table.
Council Member Holman: Pardon me.
Mr. Yi: It’s the third line item in the table.
Mr. de Geus: Page 4.
Council Member Holman: I see auditorium. What table are you referring to? I see auditorium on Packet Page 10.
Ms. Nose: Council Member, it’s under Table 1 on Packet Page 6.
Council Member Holman: There, okay. Good, thank you. And then, just clarification on the table, or those are being deleted, never mind. Then on the table under Community Services, and
this is Packet Page 10, again that same report. Under Golf under the one, two, three, four, five, the five last lines under there, I don’t see, or I don’t notice non-resident rates?
I see non-residents in some other places having to do with golf on Packet Page 11, but on Packet Page 10, it’s a little confusing. They’re not all together; all the golf stuff isn’t
together, but also…
Mr. de Geus: There will be a non-resident rate. It’s a higher rate. That’s the regular rate, really there’s a resident discount is what we call it, and then there’s the regular rack
rate for people that are playing. We don’t have exactly the same Packet; we don’t have the Packet that you have, so you have different numbers than us, that’s why it’s a little confusing.
Council Member Holman: Okay, alright. Apologies for that. And that’s 2A, okay. So, it says non-resident not available, so you don’t give senior discount rates to non-residents? That’s
just not?
Mr. de Geus: We do give senior discount rates to residents.
Council Member Holman: I’m sorry, senior discount, it is there. But it isn’t for senior monthly play discount, for student ten play discount, student annual, none of those seem to have
a non-resident component? They say, “not available”.
Mr. de Geus: Okay, so what I’m understanding is that some of the programs here, like the multi-play and the card programs are only available to residents at a discount rate, but again,
I’m not precisely sure what table you’re looking at.
Council Member Holman: So, is there a reason we don’t allow them for, at again at a higher level, but for non-residents?
Mr. de Geus: So, there’s a difference in rate for residents and non-residents for every matter in which you want to play golf, so for students, for seniors and for adult residents. If
that’s not clear in the table, it should be because residents get a lower rate to play golf at a municipal course than…
Council Member Holman: I understand that, but I know there are a number of golfers who have their groups they play with and they rotate from one golf course to another golf course, so
if, make up a name, if Jimmy Small comes and wants to play with Betty Boo and Betty Boo lives in Mountain View and Jimmy Small lives in Palo Alto, Better Boo doesn’t have access to a
reduced rate and so it kind of breaks up their group maybe.
Mr. de Geus: Well, the non-resident pays a little bit more because they’re not a resident of Palo Alto, that’s right.
Council Member Holman: Okay. I’m surprised you haven’t gotten some blow back on this or maybe people aren’t aware of it. Because they do have these rotating groups, you know that, and
a lot of them are seniors.
Mr. de Geus: They are, that’s true.
Council Member Holman: A lot of them are seniors.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Council Member Holman, as you know I’m a golfer. Sunnyvale and Mountain View have the same policy. I pay
extra for not being a resident of Mountain View or Sunnyvale. Since our Palo Alto course is not open, I’m helping them out and they charge me the non-resident rate. So, I think, the
challenge that the industry is having is making a bottom line, so I think some of it has been driven by finances more than policy, but as we go forward with our hopeful opening in November,
we’re going to have to look at all these variables, because if it means that we could attract more people, or keep people and have them play so we can make those bottom line numbers,
we’ll definitely look at that. So, it’s stuff that we’re going to be watching with a very close eye to ensure that we, that it’s viable, because that’s a commitment we made to you, that
we’re going to try to make it be that and look at all the opportunities that are available to us.
Council Member Holman: I appreciate that. I just don’t want to be losing money because we’re deterring people from coming here that are part of these groups. Same thing on the next page.
I only have Packet Page 11, under Community Services this next page that has to do with, I won’t name all of them, but starting on the third line, Cubberley theatre rentals and jams
and meeting rooms, large, small, blah, blah. Again, there’s non-profit rates and basic rates, but not non-resident rates. Is there a reason for that?
Mr. de Geus: I’m not sure if there’s a good reason for that, Council Member Holman. It has been that way for many years and we haven’t changed that, but that’s how it’s been for many
years, which is not necessarily an adequate answer, but that’s how we charge fees for rooms at Cubberly.
Council Member Holman: So, are groups from outside of Palo Alto taking over when, if the rate is the same? In other words, are local groups deterred from taking the space for particular
uses because non-Palo Alto groups are using the spaces?
Mr. de Geus: I don’t think we have non-residents taking over the Center in that sense, but Rhyena Halpern is the Assistant Director of Community Services, does a lot of work out of Cubberley
and oversees the Cubberley artists program, and might be able to add some insight.
Council Member Holman: And I don’t read this to be all at Cubberley. It just says meeting room, for instance, on some of these.
Rhyena Halpern, Assistant Director of Community Services: Yeah, so we can do an analysis of it, but by far the greater use is by Palo Alto residents and groups by a huge amount. Now,
that doesn’t mean that always the audience, you know, the people that come are, but by far the vast majority. And if you’d like an analysis, we can do that for you by like Cubberley
theater, meeting rooms, etc. if you’d like it, but it is really, really Palo Alto based and we’re very proud of that.
Council Member Holman: I’m not asking for an analysis, I just wanted to know if there was any anecdotal evidence that, like, gee, you know, we’ve got an issue here because Mountain View
groups are taking over the space.
Ms. Halpern: Yeah.
Council Member Holman: Okay, alright, good. One more for Rob having to do with golf. Again, all the golf things aren’t together, but it’s on Packet Page 11, and it has golf course 9
holes when available and it’s just a flat rate. It doesn’t indicate resident or non-resident, even though the two lines under that do talk about resident and non-resident?
Mr. de Geus: Can you repeat that question?
Council Member Holman: I’m sorry. It’s easier if you can find it too. So, we seem to have a resident and non-resident rate for the golf course daily fee, but we don’t have a resident
and non-resident rate for 9 holes.
James Keene, City Manager: Mr. Chair, while we’re looking, could I ask a question? I’m curious how long the Committee is thinking that this section of the discussion on the user fees
is going to take, if we could get an estimate. Because a lot of these, mostly so far, this has been informational, and I only say it since we have a lot of Staff people who are sitting
here, and if this is going to take an hour or more?
Chair Filseth: I was just looking at that exact question and it looks to me like we’re allocated 2:30 to 3:30 to talk about this item, so.
Mr. Keene: And do you think we would use that?
Chair Filseth: I would hope not. I’m sort of hoping not, but…
Mr. Keene: Could we get a good estimate and then I’d feel better about whether we said, ask people to go. I mean there are few people here, probably have to be here backup like Rob was
to answer some specifics and that sort of thing.
Council Member Holman: I can appreciate the time sensitivity thing, and yet this is our only opportunity to ask these questions, so. But I don’t anticipate taking an hour.
Mr. de Geus: So, the question about why we don’t have resident rate and a non-resident rate for the 9 hole, it’s sort of demand driven. It’s something we discussed with the Golf Advisory
Committee and Brad Lazarus, our golf professional, and decided on this menu of fees. I will say that we’ve broadened the range of fees because we have a brand-new golf course that will
open up and we’ll be having an operator out there that we would want to work with and see what the market will allow for the new course. That’s why the range is a little bit bigger.
I thought that might be a question.
Council Member Holman: Okay, good. Then, under Development Services, Green Building Division, I was rather surprised that most of these rates, if not all of them, dropped really significantly
from 45 percent it looks like to 59.5 percent and just a couple of them increased. Can I get just a little bit of description of why that is? This is on Packet Page 13.
Peter Pirnejad, Development Services Director: Absolutely. Peter Pirnejad, Development Services Director, happy to address that question. So, we’re in the process of going through our
Phase 2 Fees Study. As Chris indicated, we’re looking at all of the fees and in so doing, the building permit review fees are made up of green building portions and just traditional
building plan check portions, and essentially we just moved the line a little bit, so that the green building portion of the plan review is consistent and equal to the contract that
we sized to do that plan review, so that the only portion of the fee for green building that’s being collected is to pay for the portion of the review that’s being done by the consultant
for the green building review. So, the total bill is remaining the same, it’s just the distribution between green building relative work and the building inspection work, which will
come to you at a later time as part of the Phase 2 in the late summer, early fall, is taking a larger piece of the review. Does that make sense?
Council Member Holman: It does, except that it seems like if the total bill is the same, but there’s a reallocation by department, it seems like some of those other fees then would be
going up so we should also have a page on those fees because they’re changing.
Mr. Pirnejad: Correct, and those fees are going to be coming to you as part of the Phase 2. So, we’re still in the process of putting those fees together, but these needed to move forward
because they were part of the original Phase 1 Fee Study and we’re just making the fine tune to those fees.
Council Member Holman: And there’s not a gap where we won’t be receiving or collecting the full fee, if we’re not doing phase 1 and 2 at the same time?
Mr. Pirnejad: Well, Phase 1 was non-valuation based fees and Phase 2 is valuation-based fees, so we needed to separate the two because the first could be done in one trench, the second
was a bit more complicated. So, there won’t be an overlap. I can assure you of that. We just want to make sure that we can institute these fees to be at full cost recovery for that green
building contract, which is going to be coming to you in August to renew, so that’s why we wanted to get these before you tonight.
Council Member Holman: Okay, alright. And under public works on the next page, Page 14, the tree inspection for private developments the next to last line. I was surprised to see that
one go down, because it seems to be kind of a common, I hear pretty commonly complaints or comments or concerns, by people from the public, so I was kind of surprised that fee went down,
again because sometimes it requires multiple visits.
Gina Magliocco, Management Analyst: Gina Magliocco, Public Works Department. I can answer the question. I’m not really sure I’m understanding your question, actually. You’re saying that
the fee went down, but – So, the fee went down because we’re now using contract services for the majority and not the urban forester’s time. But I’m not sure I understand your question.
Council Member Holman: Okay, and that’s that much more efficient. It’s 34 percent more efficient?
Ms. Magliocco: We’re setting up a big contract that will come to you, to Council, to cover this and a couple of other fees.
Ms. Nose: So, one of the other things, just to add on to what Gina is answering for you here in terms of the difference. Obviously, there’s the general differential in terms of personal
costs, right. Pensions versus non-pensionable, but in addition to that, there’s also keep in mind the overhead costs of the City, right. So, when the City employee is doing it, it’s
not just the City employee’s total compensation cost that gets factored into the fee, but it’s the fact that we have an HR team, we have a Budget team that’s also helping Staff that
resource. So, the level of overhead necessary to manage contract is less than it would be on an actual individual that you hire, you train and all that. So, you’re probably seeing a
level of that, because that’s baked into the outside consultant’s fee already.
Council Member Holman: Okay. I hear what you’re saying, and that makes perfect sense. It’s just that, like you say, there’s a fair amount of activity in that area out in the field. Okay,
I think that was it. Just, do you know when that contract is coming forward or if it’s in this budget?
Ms. Magliocco: It’s definitely coming before the end of the Fiscal Year.
Council Member Holman: Okay, but in the budget, is it allocated in the budget?
Ms. Magliocco: It’s not in the budget, no. It’s a contract.
Council Member Holman: We want to know if there’s a budget allocation for it.
Ms. Magliocco: Yes. It’s within our Fiscal Year ’17 Budget.
Council Member Holman: Okay, great. Thank you. That’s it.
Council Member Fine: Yeah, a few more. So, just turning to Fire, which is on page, thank you. So, on Fire, I was just wondering how many rates does the Department have as a whole? So,
right here we’re increasing 10 or 12 for them, 15.
Ms. Nose: Let us pull that out for you real quick.
Council Member Fine: Okay, and I guess the thrust of this question is, most of our fees we’re raising 6 percent. There’s a few outliers, and then Fire has, you know, 10 or 12 here that
are all at 8 or 9 percent, and I’m just wondering if the index in Fire is higher than the 6 percent we see in other areas or is it something else.
Ms. Nose: Sure. So, there are about 17 fees in the Fire Department, all related to paramedics and training, and in areas where we are changing the cost beyond that 6 percent, we’re also,
when you look in the Fire Department’s Budget, are increasing the number of ambulances that are going to be either cross-staffed or dynamically staffed in some way, shape or form, which
is increasing our supply costs, and so we wanted to accurately capture that this year.
Council Member Fine: Okay. And then just the last issue, the last question is on the parking fees, do we have any idea of how much is supportable in the market. Like how much we could
raise them. In the memorandum you guys wrote, thank you very much for that, there’s idea if we raised fees, you know, 50 percent it would increase funds by half a million bucks or something
like that. Do we know what’s actually supportable in our parking market?
Hillary Gitelman, Director of Planning and Community Environment: Thank you Council Members. Hillary Gitelman, Planning Director. You know, I don’t have a specific number for you. I
do know that the consultant we had on the Downtown Parking Management Study suggested that we could increase our permit prices Downtown significantly to get to market. Same with California
Avenue and, you know, took a look at where we were and we thought that increase would be so significant, it would be hard to do it in one year. So, what we’re proposing is kind of a
phase-in. You’re seeing phase 1 of what will probably be two or three increases over the course of the next several years.
Council Member Fine: Okay, so I guess that sounds like a good strategy to me, at least just kind of segmenting the year-over-year, since we are so far below market, but in other parking
issues, when we talk about the TMA or the garage and things like that, it would be nice if we could see what we think is the maximum fee chargeable Downtown or California Avenue (Cal
Ave).
Ms. Gitelman: Josh has something.
Joshuah Mello, Chief Transportation Official: Yeah, just one other point that’s related to this. There’s currently 216 people on the wait list for permits Downtown and 255 on the wait
list on Cal Ave, so I think market pricing might be able to get the wait lists reduced a little bit.
Council Member Fine: Yeah, thank you.
Chair Filseth: Yeah, let me see about that. I have a whole bunch actually. Why don’t you go ahead?
Council Member Holman: Just a couple of clarifying questions. On parking on Page, this was the additional memo that we got, the information that we got. 800 High Street, it talks about
department contingencies into one Downtown garages and lots, but 800 High is not Downtown, is this referring to specifically the Downtown?
Ms. Gitelman: All of the garages in Downtown we’re trying to get on the same permit pricing structure and list them as one thing, instead of listing them in multiple places on the fee
schedule.
Council Member Holman: I understand that, and this may sound like a nit, and I apologize for that. It’s just that we have this slippage that happens sometimes with incorporating sofa
into the Downtown and it’s not, so I’m not saying it should be a different permit rate, but I just want to make sure that 800 High is not going to be included in the CD Downtown.
Ms. Gitelman: So, you’re asking if we can describe it as the Downtown and sofa rate?
Council Member Holman: Yes, just to be clear on that. And then, what was my question here. Oh, non-resident or commercial permits in the neighborhoods, is there any rationale for making
those actually a higher rate than the parking districts, to further encourage people to park in the commercial districts then in the neighborhoods, because that’s part of the intention
here?
Ms. Gitelman: You know, I think that’s something we’d like to look at further in the, as we delve into the Parking Management Study recommendations and the idea of paid parking Downtown,
there’s a complexity here which is that we have a low-income employee rate in the Residential Parking Permit (RPP) program and not in the garages, so we’d have to take that into consideration
and I think it warrants some additional thought. We just, sort of weren’t ready to take that additional step in this proposal until next year.
Council Member Holman: Okay, I appreciate it’s on your radar. I think that’s it.
Chair Filseth: I have a couple. So, first of all, in the presentation, we looked at the 6 percent per year as sort of the standard, and then you have a statistic that SF Bay area construction
cost index was going to go up 1 percent. That seems to me, I mean, conventional wisdom is it’s gone up quite a bit faster than that. Are we sure about that?
Sherry Nikzat, Management Analyst: Hi, Sherry Nikzat from the Planning Department. We pulled that number from the Engineering News Record, and they create the construction cost index
for the San Francisco area, so that’s where we get that, from the publication every year, and that’s the number we used.
Chair Filseth: Okay. If we look at infrastructure projects, I’m sorry.
Jessica Brettle, Assistant City Clerk: Chair Filseth: I’m sorry to interrupt. We lost quorum, so we need to wait for a second until Karen gets back.
Ms. Nikzat: I’m sorry, you were asking about the construction cost index?
Chair Filseth: We have to stop until Karen gets back.
Ms. Nikzat: Council Member, if I’m understanding your question correctly, you’re asking how the construction cost index is used in some of these rates?
Chair Filseth: Actually, I’m asking if we’re assuming construction costs are going up 1 percent a year and yet all our anecdotal evidence on City projects says that construction costs
are going up, you know, much faster than even inflation in the bay area right now, this seems, I mean, I’m not sure how much different it will make in terms of fees, but it seems like
an odd juxtaposition.
Ms. Nikzat: I’m not sure which fees you’re speaking of, but in some of our fees, like some of our impact fees, are set in the Code; it actually requires that we use the change in the
construction cost index from year to year as specified in the Engineering News Record.
Chair Filseth: That specific index?
Ms. Nikzat: Yes.
Chair Filseth: Okay. I guess we’re stuck with it then, but…
Mr. Perez: We could change the Code.
Chair Filseth: I think that’s an item for the long-term parking lot. I wanted to ask a question about the EV charging fee. It seems very nominal at a dollar an hour or two dollars an
hour. How much do we think we’re going to collect per year on these fees? Do we have an estimate of that? I mean, I’m basically asking the question, is it worth the administrative overhead?
I mean, are we going to collect enough to make it worthwhile?
Gil Friend, Chief Sustainability Officer: Gil Friend, Chief Sustainability Officer. Thank you for the question Council Member. We expect the collection to be in the order of around $200,000
to $250,000 a year. We’re installing a lot more chargers. Some of them have been grant supported, but there are operating costs, capital costs in installing them. The collection issue
is largely handled by Charge Point, the vendors. There’s a fee to charge to Charge Point for that, but most of the administrative work and the management of changing fees, if we choose
to do that, will fall to them with minimal load on Staff.
Ed Shikada, Assistant City Manager: If I may add also, Ed Shikada here, Assistant City Manager. As indicated in the memo you received, there are a couple of things at play. One is that
the fee level was set basically to cover the cost of replacement of the equipment. The other is that we have had on-going community interest in encouraging turnover at the chargers,
because as it currently sits, that cars are at the chargers and access to the equipment, to the resources are very limited. So, we think that with the implementation of the charge and
with some flexibility around the manner in which the additional charges might be applied, that we can encourage that turnover in a way that keeps the costs minimal, but at the same time,
gets what we’re looking for as far as access.
Mr. Friend: With regard to the pricing level, Council Member, we surveyed prices in surrounding communities and other jurisdictions. We’re starting at about the middle of the range that
we’re seeing. We don’t know what impact that will have on utilization, so we’re proposing that we start there and have your authorization to do some experimentation within a defined
range, so you know, it’s not a free range for us, but within a defined range, look at the data, see what response we get from that, then possibly adjust or experiment with different
fee structures.
Chair Filseth: Thanks very much.
Mr. Friend: You’re very welcome.
Chair Filseth: I had a couple of questions on the parking fees. Now, you say we’re going to raise the residential parking fees from basically $50 a year to $75. Do we have an estimate
of how much incremental revenue that’s going to bring in?
Ms. Gitelman: You know, I don’t know that we calculated that. We’re, actually, there are a few of them that are, there’s at least one, Crescent Park, that’s at $100, that’s going to
go down, so we’re just trying to get everybody to the same place so it’s a little easier to administer. I don’t think any of us see a huge increase in revenue, partially because a lot
of the permits are bought on an annual basis, we won’t see the new permit fees really have an impact until the next year’s permit purchase.
Chair Filseth: I understand, but other than the Crescent Park one, which is you know, 10 percent or something like that, aren’t they all $40 and $50?
Ms. Gitelman: That’s right.
Chair Filseth: I’m wondering if we should leave them at $50?
Ms. Gitelman: Really, a policy decision for the Council.
Chair Filseth: Okay. I’m assuming that the net revenue from the residents is somewhat in a minority relative to the employee ones. Is that a correct assumption?
Ms. Gitelman: That’s correct.
Chair Filseth: So, the other question I wanted to ask was about the…
Mr. Mello: If I could jump in here. Josh Mello, Chief Transportation Official. Not all of the RPP programs sell employee permits, so some of them are wholly supported by the resident
permits.
Chair Filseth: College Terrace.
Ms. Gitelman: And soon to be Southgate.
Chair Filseth: The question I wanted to ask was, the, again this goes back to the issue of up-side on the employee permits, and thank you Council Member Holman for asking about, sort
of, should we have a slightly higher rate in the neighborhoods than the garages and so forth. So, we’re talking about basically the main stream being in the Downtown and core area being
$280 for six months. Do we, if it were more than that, let’s say it were instead of $280 it was $330, do we have, $50 each six month or something like that, do we have an idea how much
incremental revenue that would do?
Ms. Gitelman: We have two numbers that we calculated at the last meeting. I think Kiely did some back-of-the-envelope and said if you increased about 10 percent you’d get only about
$70,000 additional revenue. We did the math on if we went all the way, let’s see, instead of increasing by 25 percent, if we increased by 50 percent Downtown, and instead of increasing
by 80 percent in Cal Ave we increased by 100 percent and we were in the area of about $400,000 to $500,000 of additional revenue.
Chair Filseth: That was actually sort of what I was wondering was more in the 50 percent range, because I understand the issue of sort of springing a big shock on people, but the intent
of this would be to use it to fund TMA, right, which means we’re going to put it back into transportation, which is sort of where we’re taking it out from, so I’m wondering how sensitive
are we to the issue of, because if we wait a year to do it, we’re going to leave a few hundred thousand dollars on the table that could be spent on TMA right, this year. So, I’m wondering
sort of how nervous we are and how sensitive we are to that, to that difference, because I would have guessed we would go for something larger.
Ms. Gitelman: You know, we’re a little anxious about such a percentage increase. I think we all recognize these fees are still below market and we think there’s room to raise them quite
a bit, but it’s just a question of how quickly we want to do that.
Chair Filseth: I understand. I think we all got a memo from Tina Levine sort of comparing prices in other neighborhoods around here and that sort of is consistent with what you just
said. And then, I was sort of interested in the idea that actually the RPP fee ought to be slightly higher than the garage fee, too, and again, this would only be for employees, because
as you say, I’m sorry, full-fare employees, because we don’t have a discount rate for low wage in the garages, which presumably means that basically most of the low wage permits get
sold in the neighborhoods, I assume. But, I was sort of interested in that one as well.
Ms. Gitelman: I think it’s certainly something we could look at. I think I would be a little reluctant to recommend we do that just on the fly, because we’ve had this input from medical
and dental professionals who really are relegated to buying these permits in the neighborhood for their employees, because their offices are a little outside the core. So, we might want
to think about what the impact would be on that constituency before we go in that direction. It just might take a little more thought.
Chair Filseth: And then, finally, I had one other one, which was, I noticed that we’re going to change the handicapped rate from I think it’s $250 a year to $915 for a five-year permit?
And I’m wondering if requiring everybody to buy five years at a time is going to be a hardship?
Mr. Mello: So, the $915 was calculated based on actual installation costs for signage and blue curb, and we wanted to extend the period to try to, $915 for an annual permit would be
excessive, so we thought a five-year cost spread out over five years might be more reasonable than to have an annual renewal. But that period could certainly be longer as well.
Chair Filseth: Still, you’ve got to come up with $915 in order to do it. Here, you take a try.
Council Member Fine: Is that fee paid upfront, the $900 at once for a five-year?
Mr. Mello: The $915 would be paid upfront, and then the space would be in place for five years, and then at the end of that five years they would need to renew the permit for the space.
It’s important to note that since I’ve been here we have not issued any on-street handicapped spaces. It’s not a common fee that’s collected.
Chair Filseth: Okay.
Ms. Gitelman: I just have one more addition. With your permission, on the question of the employee fees, I just want the Council Members to know that we haven’t done a lot of outreach
on the fee increases that we’re proposing. Our thought was to understand from this Committee whether you think we’re in the ballpark, and then do some outreach to the affected residents
and employees if we can before the Council acts on the Budget.
Chair Filseth: I think we’re low. I mean, I see some nodding here. Council Member Holman, what do you think?
Council Member Holman: Well, we’re certainly better than we have been. That’s for sure. It may be low. I don’t have a way of absolutely knowing that, but it may be low.
Council Member Fine: I think they are low and I take the concern of ratcheting these up too quickly. I guess the folks I’m worried about are the ones who might fall off the waiting list,
but ideally those are the folks going into the Transportation Management Association (TMA). So, I agree with the Chair. I think we are low. We could go higher here. So, right now we’re
looking at like 25 percent Downtown and 50 percent at Cal Ave?
Ms. Gitelman: It’s about 80.
Council Member Fine: Eighty percent at Cal Ave but Cal Ave has such a low baseline.
Mr. Keene: I mean, it’s about a little over $100 increase, right, on Cal Ave, even with that big, because the base is small.
Chair Filseth: But we’re targeting, you know, $560 a year Downtown. What do you think about $750, because looking at Edina’s memo and that would be sort of in the middle?
Mr. Keene: Could I interject Mr. Chair?
Chair Filseth: Yeah, please.
Mr. Keene: And I’ve been multitasking here, so if I miss this, in your Packet, I think, on wrap up we’re dealing with funding the TMA, there’s a gap funding go get it to say $500,000.
That would anticipate an increase Downtown I think to $730 a month in order to be able to provide that funding, so it’s right in the ballpark. That’s one statement. Number two, I don’t
think there’s any real science which should be more the prevue of the Staff when we’re trying to look at what a recommendation is then there is what do you think. I think, in many ways,
this is also a Council decision about what is the pacing that you think the community can bear. I don’t think we have the magic answer for that.
Chair Filseth: Yeah, so maybe that’s a better way of thinking it than I was, right, which was – I mean, again, I think our goal is to make, it’s sort of a natural thought that we ought
to charge more for parking, and put it back into alternative transportation, right. I mean, that would be very consistent. And, given that that’s the structure, and it is going to go
back into transportation as opposed to being used for, I don’t know, changing streetlights or something like that, my instinct is we ought to be a little more aggressive.
Council Member Fine: I agree.
Chair Filseth: So, how would you like us to direct you on that subject? I’m going to suggest we raise it enough to fund TMA.
Council Member Fine: So, just one comment there. If we are raising it to fund the TMA, I think that’s the right philosophy, but we all know the TMA will take a little bit of time to
ingest that and actually become effective, which gets back to the Director’s argument about ratcheting this up slowly, or somewhat fast. It’s a balance we have to strike.
Chair Filseth: Well, I think if we went to $730, and assume we would still ratchet it up, my sense is that there is headroom beyond that too.
Council Member Holman: So, I agree about the funds being used for funding the TMA and also just supporting by reiterating what Council Member Fine just said about a concern about ratcheting
up too fast. The other comment I would make is, we have different rates for low income, but I’m also wondering if, as we’re trying to support retail and personal service if, you know,
I’m making up a number here, if three permits could be provided at a lower rate than any permits beyond that size or beyond that number for, again, retail and personal service. Those
are businesses that have the hardest time surviving.
Chair Filseth: I certainly think we shouldn’t touch the low-income rates. I worry that it should be as simple as possible, but not simpler.
Council Member Holman: I think as simple as is practical and in concert with other goals, and certainly what we hear from the community is retail and personal service are really important.
So, I think maybe a separate category for a small number of permits in that category would be reasonable too, especially as we accelerate rates.
Chair Filseth: So, I think I will make a Motion that we approve the Staff recommendation on municipal fee schedule with the following changes. That the six-month fee for full-fare employees,
for RPPs and garages Downtown should go to $365 for six months. Did I do the arithmetic right, that’s your $730? Okay. And that the Cal Ave full-fare employee, RPPP and garage fees should
be half of that, so that’s $182.50. And also that, boy, I’d like to make an unfriendly Amendment to my own Motion here, so I’m going to suggest that the resident rates stay at $50 not
$75, but I’d like to see what you guys think about that, given that it’s not a huge amount of money, the majority is, and that’s moderate for the area.
Council Member Fine: I’ll second that.
MOTION: Chair Filseth moved, seconded by Council Member Fine to recommend Council approve the Fiscal Year 2018 Proposed Municipal Fee Schedule, including the amendments outlined in
the At-Places Memos provided by Staff, and with the following changes:
Amend the fee for Downtown Garage/Lot Permits and for full price Downtown RPP employee permits so they are set at $365 for 6 months and $730 for one year; and
Amend the fee for Evergreen Park/Mayfield RPP full price employee permits and the California Avenue and Garage/Lot permits so they are set at $182.50 for 6 months and $365 for one year;
and
Standardize all residential RPP permit fees at $50 per year, including the Crescent Park No Overnight Parking program; and
Ensure the revenue from the increased cost of Downtown Garage/Lot permits and full price employee RPP permits goes to fund the Transportation Management Association
Council Member Fine: I have a couple of questions. First, how many residential permits are we issuing, like 25 times?
Chair Filseth: That’s a good question.
Mr. Mello: This is completely off the top of my head, but there’s about 5,500 resident permits for the Downtown RPP, and I believe in Evergreen Park we’re around 1,000 I think, as of
today. I don’t know the numbers for Crescent Park and College Terrace.
Council Member Holman: I still think it’s the right thing to do, leave it at $50.
Council Member Fine: So, I’ll just say, I mean, I could go through with the whole Motion as it is. I don’t really think it’s the right message to keep residential fees at the same level
as the similar parking behavior we’re trying to discourage and if we’re raising the residential fees, you’re more likely to park in your driveway also. So, there is something there.
Last comment. This might be an Amendment. The Cal Ave permits, we are proposing then to be yearly, not every six months. Was there a reason for that specifically? Do we not expect the
same frequency of uptake?
Ms. Gitelman: I think we’re trying to show them in the fee schedule once, and then they would be prorated if we sold them on six-month or quarterly basis. So, we’re going to have some
flexibility, what duration of permit we sell.
Council Member Fine: Okay, because Staff has made the argument that it would be nice to have a six-month permit for Downtown and I assume the same for Cal Ave.
Ms. Gitelman: That’s right.
Chair Filseth: Would you be okay with leaving the residential rate at $50 this year and revisiting it again next year?
Council Member Fine: Okay. I think we should raise it but…
Mr. Keene: Mr. Chair. If I could make a couple of comments before you vote. I think this is one of these instances where the Committee process actually works well because you’re going
to make a recommendation and we’re going to carry it to wrap up and you may even make adjustments when you see wrap up, but even when you’re done, then it’s going to go to the Council.
So, there will be some time where this is out in the community and there will be a chance for some feedback to come in before the Council adopts it, if somehow the sense of the pacing
isn’t quite accurate or whatever. You’ll have that opportunity. One other kind of thought, though, and maybe Transportation Staff helps with this too, at least he logic on the Downtown
piece is that this is funding that goes to the TMA. The price increasing, the additional price increase on Cal Ave, we don’t have an existing TMA, so I think we have to think about either
the logic there or the additional directives you might want to somehow have that allows that to be, you know, serve the same purpose in some way. We have to figure that out.
Chair Filseth: I think that’s a good observation. We ought to think about that, but I think you’ve also just convinced me further on the residential issue, which is, I don’t think residents
should be paying for TMA, right? Council Member Holman.
Council Member Holman: And offer one Amendment, which is to have Staff look at providing retail and personal service either the same rate or a discounted rate for whatever number, you
pick a number, three permits or something like that, and bring that to Council. Is that agreeable.
Ms. Gitelman: If I can respond to that idea. I mean, that really isn’t a fee schedule change. That’s a change to the RPP program designs, so I would appreciate if we could take that
up at some point in the future, when you see RPP program come back to you, like the Evergreen, Mayfield will come back to you after the one-year pilot, that would be the time to consider
something like that. It’s just not a change we could make in the fee schedule without changing the Resolution to establish the RPP districts.
Council Member Holman: I’m just concerned about the impact on, you hear me.
Chair Filseth: So, Staff’s suggestion is we take it up when the RPP, when the next RPP comes back? Okay?
Ms. Gitelman: I would like to make sure that we understand what you’re asking. I just want to make sure I heard everything. So, you were suggesting that the Downtown annual permit, this
is for the lots and garages and for the full-price employee RPP would be $730 per year, or $365 for six months. Then in Cal Ave it would be half that? And also Evergreen, Mayfield RPP?
And then the residential RPP permits, you’re saying across the board it would go up or down to get to $50?
Chair Filseth: Across the board, $50?
Council Member Fine: So, I’ll definitely support this. It would just be nice for Staff to show us where we’re, all the places we’re changing these and what the impact is up or down.
Chair Filseth: Further comments? In that case, all in favor? Motion passes 3 in favor, 1 abstain. One absent, sorry. Thank you very much.
MOTION PASSED: 3-0 Tanaka absent
Ms. Nose: Just one clarification. Did that Motion include the two At-Places Memos and all the recommendations within?
Chair Filseth: Yes.
Chair Filseth: Awesome. Thank you.
3. General Fund Capital
Buildings and Facilities, Capital Budget
Parks and Open Space, Capital Budget
Streets and Sidewalks, Capital Budget
Traffic and Transportation, Capital Budget
Cubberley Infrastructure, Capital Budget
Kiely Nose, Budget Manager: Okay. Then we will move on to our Capital Improvement Budget where Brad and Paul will help us get through the presentation.
Chair Filseth: Before we leave that one entirely, we have two things, by the way. We have one speaker who wants to speak to an item not on the agenda, so let’s have her talk now. But
before that, it’s not in the Motion, but the intent of this is that the incremental revenue by raising the parking fee should go towards TMA, so, does that need to be part of the Motion?
I think everybody understands that, right?
Ms. Nose: You’ll have a chance to revisit this as part of wrap up actually, because one of the items that’s in the parking lot to take action on is TMA.
Chair Filseth: Okay. Thanks. In that case, we have one speaker from the public for the Oral Communications section, which is Judy Kleinberg.
Judy Kleinberg: Thank you. I’m just really confused because Lalo asked me to come and speak to the continuation of discussion from last event, and I was here at 2:05 and you weren’t
talking about it. So, I’m a little confused. I don’t know if this is Oral Communication or just what you’re doing today. I hope you take it in that spirit, because I’m completely confused.
So, I want to thank, sitting here and waiting to speak, I want to thank you for speaking about the TMA and about the RPP programs, so it all fits together anyway. I want to appreciate
the comments about having the parking permits for the garages be less than what it would be in the neighborhoods or in the Downtown area, because we do, as business owners and employees,
wish to incentivize our employees to park in the garages, and so we agree with that. We also agree with your comments about having the employee parking permits pay for the TMA, absolutely
agree. We don’t think the residents should have to pay for that. I’m not sure how all the numbers work out, and of course, you’re all doing this sort of in the air and hoping it works
out when you actually put pencil to paper, so we do hope that works out that way. I also want to commend you for pointing out, all three of you I think, that we don’t have enough garage
space on California Avenue and we don’t have a TMA in California Avenue, and so the timing of how you do this is critical. There are over 3,000 employees in the California Avenue area.
There are not 3,000 parking garage spots. There are not enough public transit systems to get the people there not in their cars. I think, unless there’s going to be just Armageddon there,
you really need to work, Staff needs to work with you and the rest of the Council on rolling this out in a way that really makes sense, and doesn’t force employees to then park in yet
more other areas that are not covered by RPP. I’ve already been told by some employers and employees that they just don’t know what they’re going to do. So, you’ve got a waiting list.
You just heard about that. There is going to be less parking as they take away a parking lot to build the garage. It just isn’t – it’s a little bit of a Rubik’s Cube. I understand that.
So, just help the Staff and help the Council think through that in a way that doesn’t impact the employees in a penalty way and then doesn’t impact the residents in that neighborhood.
And the last comment is, and I don’t know when this all got talked about, but if Measure B Funds don’t come through the way we thought they would to help fund the TMA, we do need an
option B. We need to think about exactly where those funds are going to come from, because as much as Measure B has been, we’ve been told those funds will come and we can spend them
the way we want, and they’re going to be spent on the TMA, sometimes County money just doesn’t seem to get to us the way we think it will. There’s no history of it working perfectly
that way. So, please do be thinking down the line about what do we do to fund that TMA, because the businesses in this community really want that TMA to work, absolutely do. We are in
agreement with all of the residents because it’s the employees who are stuck in that congestion and who don’t have a good place to park. So, we agree with you, but think about, you know,
be thinking ahead about what happens if that Measure B funding doesn’t come the way we thought it would. So, I don’t know what that applies to or where on the agenda, but thank you for
letting me talk about it today.
Chair Filseth: Thank you. So, with that we are going to move to Item 3. Is that correct? Before we do that, we have one speaker from the public who would like to speak to Item 3. I’m
going to suggest that we do that before the Staff discussion. So, Penny Ellson, welcome.
Penny Ellson: Thank you. Penny Ellson and I am speaking as an individual, although I’m first of all, really glad to see the bicycle, pedestrian transportation plan projects included
in this Budget, including the Charleston/Arastradero Plan. There’s a lot of good stuff in here. I did notice, actually the reason I stopped down today is I noticed there were a couple
of letters with some misunderstandings in them, and I want to make sure that we ask Staff to address these questions. I see Mr. Lieberman has questions about an additional $5 million
that I think is a misunderstanding. So, perhaps Staff could clarify that for Mr. Lieberman and put his mind at ease. Also, there were a couple of comments about how people felt that
putting the landscaping in place wouldn’t really make a significant difference. That it will just be beautification, but in fact, they will provide very significant additional safety.
There have been studies done that show when things are going by drivers’ peripheral vision, they automatically kind of let up on the accelerator and respond to the street more like a
residential street. They start scanning the road for pedestrians and operate less like they’re on an expressway. So, just having trees nearby really does help to change the way drivers
behave on a street, especially a street like this one, that’s very important. Also, for people who drive and bike, built medians control turning movements and provide some safety and
protection for those movements, making merges and lane changes calmer and more predictable. Medians will protect left-turning vehicles from rear-end and broadside collisions. Existing
paint striping provides no pedestrian refuge, no traffic smoothing or calming effect, no build-out benefits, no physical barriers between vehicles and other people who are walking, bicycling
or driving at potential conflict points. The planned hard scape will provide these important safety benefits and much more. Let’s see, we have exhaustively studied alternative mitigation
projects over the last 15 years and I sent a letter today that sort of sums all of that up, and I guess that’s all I really wanted to say. Thank you very much for the good work you’re
doing here.
Chair Filseth: Thank you. So, before we start, hey Lalo, this is a fairly large item because we’ve got the whole General Fund Capital – how do you want to do this. Do you want to wait
all this to the end or do you want to do it after each of the sub segments? How do you want to do this?
Lalo Perez, Director of Administrative Services and Chief Financial Officer: If you don’t mind, let us do the whole presentation and then we’ll take questions on the whole.
Chair Filseth: I understand. But when it comes time for motions, do you want us to do one big one, or five medium-sized ones?
Mr. Perez: Why don’t we do a holistic one?
Chair Filseth: Okay. Welcome.
Paul Harper, Principal Management Analyst: Thank you. Good afternoon Chair Filseth and Finance Committee. My name is Paul Harper with the Office of Management and Budget. I’m here with
Brad Eggleston, the Assistant Director of Public Works to present the Capital Improvement Fund, which can be found in the Capital Budget on Page 53 to Page 293. So, this first slide,
it talks about the overall capital projects, including the Capital Improvement Funds, so we have Internal Service Funds, Enterprise Funds and then what we’re talking about today, the
Capital Improvement Fund, which includes 107 projects within the five-year plan. 162 of those projects are funded in 2018, and this is about $662 million worth of funding for the entire
City for the projects across the City. This next slide shows the breakup of the project categories for the Capital Improvement Fund into different expenditure categories. The largest
one is the buildings and facilities. This includes projects such as Fire Station 3, Lucy Stern mechanical and electrical upgrades, and the Cal Ave parking garage. The second largest
group is the traffic and transportation group, which includes projects such as the Bicycle and Pedestrian Plan, the Charleston/Arastradero corridor and the Embarcadero Road at El Camino
Road. This encompasses about 79 projects in Fiscal Year 2018 at about a cost of $75.5 million. This next slide shows the last three Fiscal Year Capital Improvement Programs, also broken
down by those project categories. As you can see, year-over-year the dollars relatively remain the same. The number of projects also, in total, are about the same. There are 107 projects
in this current CIP, last year there were 101 projects, and in the Fiscal Year 2020 CIP there are 85 projects. In this current CIP, there are 15 new projects in the Capital Infrastructure
Fund. They are broken down into three main categories, the first one being Parks masterplan implementation. This includes a play for the Baylands 10 ½ acres that was split off from the
golf course. This is to establish a plan on what to do with that land. The next group keep-up projects. There are three in here, all related again, to Parks projects on the Parks masterplan
and these all come into play in the ’21, ‘22 years of the five-year CIP. Basically, we’ve just gotten to that point in time where these projects need to be programmed into the five years.
The last grouping is for safety issues and infrastructure repair. There are 8 projects in here. The Caltrain corridor video management system, which we discussed as part of the Police
Department Operating Budget. This is the project to install the cameras along the Caltrain corridor and eventually phase the Track Watch guards. So, there are operating costs in the
Police Department and this is a one-time cost to install the cameras on the capital side. A couple of other projects in here are the El Camino Real pedestrian safety and street scape,
which is majority funded by a VTA grant as well as the parking lot J elevator replacement, which is to mitigate repair costs for those elevators at that garage and ensure that the garage
is ADA compliant. Now I’m going to turn it over to Brad.
Brad Eggleston, Assistant Director of Public Works: Good afternoon Council Members, Brad Eggleston, Assistant Director of Public Works. So, I’ll take a few of these slides, then turn
it back to Paul to wrap up. So, a few accomplishments from the past Fiscal Year that we wanted to point out, the Baylands Interpretive Center improvements project, which was in the works
for some time. That was completed and we had a successful reopening of the Interpretive Center in April, just recently. Related to that, I wanted to point out, there is a separate capital
project for rebuilding the boardwalk at the Interpretive Center and work on that is continuing, but that will take longer. Another significant project, improvements at the Lucy Sterns
Center and Community Theatre for the improving the outdated mechanical and electrical systems that are there. Lucy Sterns Center just reopened, also in April, and has an air conditioning
system in the Center for the first time, in addition to a lot of other improvements that were made. And on that project, I wanted to also point out, that was the first phase, and so
looking through the Capital Budget, you’ll see there’s a proposal for $3 million in additional funding to complete the improvements that are for the Children’s Theatre as part of that
project. We had a park improvement project at Bowden Park, artificial turf replacement at the Stanford Palo Alto playing fields. We’ve continued to make progress on our goal of having
excellent street conditions Citywide, so at the end of last calendar year we were up to 83. As you recall, our goal is to hit 85 in 2019, so we’re tracking to do that. I think I told
you last year that we’re not, we have the highest PCI score of anyone in Santa Clara County, and I was hoping to be able to brag tonight and expand that a little, but there’s an Metropolitan
Transportation Commission (MTC) report that won’t be released until about the end of this month, and then we’ll be able to compare ourselves to the rest of the region. Another big accomplishment,
we completed the 30-year cycle of doing sidewalk repairs throughout the entire City. So that was begun in 1986 and just recently completed. And then some other improvements, Downtown,
the countdown pedestrian heads that have been added and kind of under construction right now, but wrapping up by about the end of this Fiscal Year, we’re going to have the new multi-use
pathway with lighting that will connect Quarry Road to the Transit Center. So, that’s another project that’s been in the works for a while. Thanks. This slide shows the IBRC catch-up,
which we’ve been talking about since the work at the Infrastructure Blue-Ribbon Commission did and their report in 2011. So, we’re continuing to track the progress of the kind of catch-up
or deferred maintenance backlog, and as you saw on the slide of new projects, one of the categories of new projects is IBRC keep-up projects, so we continue to have those scheduled,
track them, build them into the budget process and those were some of the new projects. And basically, what this is showing you, I won’t go through all the numbers here, but we started
out with about a $41 million backlog. We continue to fund through new projects and recurring projects, little and big pieces of that backlog. So, today we’ve either completed $23 million,
$23.3 million of that work, or it’s included in this current five-year plan, which means that the backlog is down to just about $18 million. So, some good progress there. And then a
key factor in development of this CIP Plan is the Council Infrastructure Plan that was adopted in 2014, and that consists of the projects shown on this slide, the Public Safety Building,
two parking garages, two fire stations, Bike/Pedestrian Plan and bridge and Charleston/Arastradero that we heard about a moment ago, and Byxbee Park. So, all of these projects are now
included and scheduled to be completed within this five-year CIP and there’s a number of funding sources that provide the funds for the Infrastructure Plan, but you’ll recall that by
far, the largest of them is the 2 percent transient occupancy tax increase that was passed in November 2014, as well as revenues that came from new hotels that were opening in the time
period after the Infrastructure Plan was adopted. And you’ll see here that we’re now talking about the current estimates, $196 million estimated costs. I wanted to point out, these are
essentially the most current numbers that we have, although a lot of these estimates we continue to work on. So, if you go through the CIP book, you’ll see that in general, like if you
look at the Public Safety Building here at $75.3 million, in the book that has not been updated because we’re in a very early stage, and we continue to work on that cost estimate. So,
that might be something that you notice. And then kind of, of note in this list of cost estimates, I would point out that in April we came to Council with the Cal Ave and the Downtown
parking garage and we talked about the program and additions for those projects, so these cost estimate figures here reflect the Council decisions on those projects. And then, of course,
as we think about the increased costs for the Infrastructure Plan and just overall funding of the capital program in general, it’s important to remember things that are kind of floating
around out there and being talked about that have funding implications but are not yet funded in the Capital Plan, and so we’ve got a list of some of those things here – animal shelter,
the Avenidas project. These are just examples. Some of them, we think, are definitely things that would eventually likely require City contributions and some of them just have that potential.
And with that, I will turn it back to Paul.
Mr. Harper: So, this next slide is showing the infrastructure reserve, which is the fund balance for the Capital Improvement Fund, or essentially unrestricted funds that are available
to pay for projects that need to be funded or unforeseen things that come up throughout the year. As you’ll notice, the blue like is the 2017/2021 CIP and the infrastructure reserve
stayed positive; however, as we go into the 2018/2022 CIP, the infrastructure reserve does go negative with the current list of projects that are programmed in here in Fiscal Year ’19.
It’s important to remember that the Council is only adopting the Fiscal Year ’18 numbers at this point, so the remaining four years are just a plan, so we need to solve this eventually,
but it doesn’t need to be solved as part of the adoption of this budget. We have a year to go through this and reprioritize projects and determine how we need to come up with funding
to support the Infrastructure Plan as well as the other projects that are priorities to the City. And then, in terms of expediency, I’ll go ahead and go through the Cubberley Fund really
quickly. It is a separate fund now, but we do need to adopt that as a separate action, but I’ll just go through the projects briefly here. So, in the Cubberley Fund, there were roof
replacements on wings M and P and installation of flooring in wing H1. In terms of new projects for this Capital Improvement Program, it’s track and field replacement that would come
on line in Fiscal Year 2020. There are five projects currently programmed in for the Cubberley property in Fiscal Year ’18 and this track and field project would add a sixth project
in Fiscal Year 2020. That’s the end of the presentation, and Staff is here to answer any questions.
Chair Filseth: Thank you very much. I want to ask a procedural question here, if I might, but it might be that you answered it already, but I want to just make sure. So, there’s a difference
between, for the Capital Infrastructure Plan, there’s a difference between the numbers in the binder and the numbers you just presented, as we all know. So, on the one hand you’re asking
us to approve a budget, but if we know the numbers aren’t right, I mean, how would you like us to do that? Or is it the case that we’re good for 2018, but it’s in the out years that…
Mr. Perez: Right. So, it’s a good question. Let me touch on it. What you’re doing is, you’re approving the outer years in concept. So, they’re not official budgets, they’re conceptual
budgets. It’s rare that we bring you a negative budget. It’s the first time I’ve ever done that, but I think it was important to show and demonstrate to the community that we have a
challenge ahead of us, and that we need to figure out what our priorities are and do it in a meaningful way and for us to explore all options as well, because we want to take a look
at our revenue base and see where we’re at to see at what level we’re comfortable funding our debt service. So, the point I’m making is, in reference to our recommendation that we use
70 percent of the dedicated hotel revenues for the Infrastructure Plan. Well, we may want to revisit that 70 percent target. We may want to go to a higher level. By the nature of some
of your decisions, have kind of forced us to look at a higher number, but there is a concern that if we start getting closer to, let’s say 90 percent, then we’re putting the Operating
Budget in jeopardy. What do I mean by that? If the revenues dry up for whatever reason, recession, you name it, the dedicated resource, then we will have an obligation to pay our debt
and that would mean that the Operating Budget would have to step in or further projects would have to be deferred in a particular timeframe. So, for that reason, we felt it was important
to show the current status of the outer years, but assure you that we have the proper funding for ’18 and what we believe are the priorities for ’18 as well.
Mr. Eggleston: Can I add to that as well, because I think I might have said something that could have caused a little confusion. So, I said that we have updated estimates for example,
for the Public Safety Building, but that we haven’t budgeted those into the projects, and I think that was part of your question. So, if you turn to Page 70 of the Capital Budget book,
and if you’re there and you look down towards the bottom and you see the section that shows reserves, and there’s a section that says reserve infrastructure contingency. So, essentially
what Budget Staff has done this year is, if you look at Fiscal Year ’19 you see that infrastructure contingency increases by $28 million. So, essentially what we’ve done is taken those
current cost estimate numbers that haven’t been allocated into the projects yet and increased the infrastructure contingency by that amount so that the infrastructure reserve numbers
that Paul presented actually essentially reflect the full funding through that contingency of the current project estimates.
Chair Filseth: Got it, which is why the infrastructure reserve goes below zero.
Mr. Harper: Chair Filseth, if I can add another point to that. On Page 65, if you look at the bottom of the grants and other revenue section, you’ll see the infrastructure contingency
reserve certificates of participation. So, in the past CIP Council approved a $30 million COP to cover basically that contingency. What we’ve done in here is, we haven’t added any additional
COP funding to cover the difference, so that’s where the funding gap comes from, because you don’t have additional Debt Service Funds to pay for the difference. We’ve increased the reserve
on one side, but not the source of funding on the other.
Chair Filseth: So, to make a very complex story overly simplified, on the one hand we can say, okay, we’re covered for 2018 so we approve this and conceptually we see the future, right.
On the other, we’re going down a path, because presumably we going to spend some money in 2018, we’re going to start digging holes, right, without being 100 percent certain where the
funding left to fill in the holes might all come from. And so, it’s conceivable we’ll end up in a situation where we have to choose between soft of drastically cutting, or cutting stuff
out of the Operating Budget or having half a building sitting there somewhere. I mean, is that overly (crosstalk).
Mr. Perez: No, that’s a good question and no, we’re not leading you into that direction, but we’re fairly comfortable that we can come up with a plan. The problem is that there’s going
to be some painful decisions, most likely deferral of projects, capital projects, before we hit into the Operating Budget. But, obviously, that’s your call. You give us direction. But,
yeah, we’re not going to start something we can’t finish. The emphasis has been from a Council direction that the Infrastructure Plan is the priority, so that is our focus. So that means
anything that is not in the Infrastructure Plan. It’s at play but we want to make that a discussion, not just a rash decision, and we want to explore any potential revenue options because
it could be a new revenue. There’s are some hotels in line that you may approve. There could be an auto dealership in line that could come back, so we’re trying to leave the options
open. We don’t want to put us in a box in year one when we can have a longer discussion.
Chair Filseth: I understand. That’s a good way to think about it. It’s a prioritization. Okay. Very good. Comments from the Committee? Council Member Holman, questions.
Council Member Holman: Yeah, there are so many moving parts here. I was trying to identify, I mean, a lot of moving parts. I was trying to find where Stanford’s funding is for the pedestrian
improvements are that go from the train station, across El Camino, and the only thing that I found in the grants or other revenues on Page 65 in the CIP book is some funding from, if
I can even find it, from a VTA grant that’s out in 2020.
Mr. Harper: Council Member, the funding from the Stanford Fund is actually on the bottom of 63 and continues over to Page 65. Transfer from Stanford University Medical Center Development
Agreement Fund.
Council Member Holman: And so that improvement I’m talking about, is that under Quarry Road improvements or is that part of Pedestrian/Bicycle Plan Implementation Project?
Mr. Harper: Quarry Road.
Council Member Holman: Quarry Road, okay. And then, I mean I think I may share, from what I’m understanding from the Chair, some concern about, you know, how big a commitment are we
making and is this the right time and do we need to make some choices and, you know, that sort of thing, and there were some things on the list that I would say like, don’t mess with
that one. But, I also don’t want to leave the next Council or whoever Staff in a situation of, gee, we’ve got this burden now because we’ve committed to X, Y or Z things, so we ‘ve started
down a certain path with these things, and so if we back out now we’ve wasted this amount of money. So, those are serious things to consider. And one of the things I know is, mentioned
and not mentioned, is the potential for purchasing the site in the Ventura neighborhood for park and I know that’s sort of like, you know, nebulous at this point in time, but if we were
to purchase it – so there are categories of things that are like, okay, this would be great to do, these are things that we’re absolutely committed to, these are the things we’d like
to do, and they are on a particular time chain. And then there are things that are like, you get one shot at it, and so I would put that in a you get one shot at it. So, if we were going
to go ahead and purchase that, has Staff estimated what that purchase price might be?
Mr. Perez: Not as yet, because the problem is that we don’t even know what the size of the potential lot availability will be yet. That’s still being determined. It’s going through the
process because the owner of the property wants to maintain some amount, and they’re trying to figure out what that some amount is, so that’s why it’s difficult for us to figure out.
But my understanding is, it’s in the process of being reviewed within our Public Works Department, so the owner of the property is in the process of determining the lines and the setbacks.
So, we’ll get some indication of that that size will be and then we can then proceed to have an appraisal done.
Council Member Holman: So, we haven’t done A, I don’t want to call it worst case, best case, because in terms of dollars it might be worst case, best case, but in terms of the land it
might be best case.
Mr. Perez: Yeah, I guess the reason I made the choice internally to recommend that we wait, is because there has been no indication that the property owner will go forward and put it
on the market. They are saying they are thinking about it. There’s no approval. They made that very clear to us that there is no approval internally to see it yet. They are exploring
their option as I last understood it.
Council Member Holman: Okay.
Mr. Perez: And keep in mind that they made it very clear that they expect to have a competitive process, that they’re not going to make an offer, or ask the City to make an offer. They
expect to have a competitive process. They made that very clear, that once they decide to go forward, that’s their requirement.
Council Member Holman: That’s not terribly surprising. The Lucy Stern and Community Center improvements and there is some component of that that includes the Children’s Theatre, I didn’t
recall seeing that it would include the Theatre there. Is that on a future schedule and I just, with all this, haven’t seen that?
Mr. Eggleston: There is work in all three buildings within this project, the Lucy Stern Community Center, the Community Theatre and the Children’s Theatre and essentially about a year
ago when we put the whole project out to bid, bids came back much higher than anticipated, and we made the decision at that time to split the project and to go forward with the part
of the work that could continue, which essentially addressed the Community Theatre, the Community Center and I believe, some fire life safety improvements in the Children’s Theatre.
So, the remaining work to be done in Children’s Theatre has to do with the mechanical and electrical systems.
Council Member Holman: Okay, alright. Thank you for that clarification. And then also, we’ve got you know, our street improvements, and in talking about our tree pruning cycle and street
improvements, they seem to be in competition with each other, and so how do we rectify street improvements as being part of the CIP, but you know, there’s also street charges and tree
charges, if you will, or costs, associated in what we’ve already talked about, and they seem to be balanced against each other. Part of it’s in CIP and part of it is not. So, how do
we balance that?
Mr. Perez: Let me see if I understood your question. You’re asking why, for example, trees is not in the capital, is that?
Council Member Holman: No, it’s, sorry for the lack of clarity of that. So, street improvements are CIP, okay. There’s no doubt of that. And then we have the tree pruning cycle that
we’ve already spoken about and talked about, had discussion about, but yet when comparing where do we trim, if you will, some costs, we’re comparing street improvements with tree pruning
cycle, but that means we’re talking about trees in CIP and trees aren’t in CIP, so how do we rectify that? Does that makes sense?
Mr. Perez: It does, and the geek answer is how we treat the acids, right. It’s an accounting requirement, so with the trees it’s a maintenance, so it’s an operating expense, and so what
we did not necessarily, where I don’t believe I did look at the trees and the street tradeoff. What we know is you’ve given us a direction as a Council and a goal on the streets as part
of the Infrastructure Plan, so that’s the direction we had, so for that reason we didn’t look at it that way. But it’s part of the process that we will go forward with, that as we make
decisions, we find that you as a Council don’t want to defer projects or eliminate projects, or to your earlier point, you want to acquire some new property, then there’s going to be
tradeoffs in what we can afford. So, we will be forced to look at everything.
Council Member Holman: So, Staff apparently isn’t looking at the Council direction last year having to do with the Budget for the tree pruning cycle, not to get into that because it’s
not where we are right now, but that wasn’t considered direction?
Mr. Perez: Well, I think you gave us (crosstalk) and so that’s why we are returning, because it was an annual Budget versus a directive with a goal and a target that was formalized in
a plan. I think that’s the difference in how I see it.
Council Member Holman: That helps explain that. I may have some more, but I’m going to defer right now because I don’t want to take up too much time at once.
Chair Filseth: Council Member Fine.
Council Member Fine: Thank you. A few comments and a couple of specifics. So, one, at the outset, thank you for letting us know about the number of projects proposed in each CIP. I will
take issue with what Staff said that we’re not having too many more. We’ve gone from 85 to 101, now 107. That’s clearly an upwards trend and you know, at some level that absolutely contributes
to the deficit we’re looking at going forward. So, just a comment there. A number of these projects especially for like the library bonds, so if they’re being defeased. Can you just
explain that a little bit to me?
Mr. Perez: Yes. What we did is we ended up with some additional money, cost savings, and then we had also set aside a set amount somewhere in the $3 million neighborhood that we were
required to maintain and subsequent bond Council opined that we could go ahead and release those dollars back, so by defease that means that we’re basically lowering the assessment to
the properties for the bond holders.
Council Member Fine: Okay, that makes sense. Thank you. So, it is kind of counted as an expense here, but I think I get it. And then just going to a couple of specific projects. So,
one, the SCUBA, the self-contained breathing apparatus for $800,000, are we doing that out of requirement that our old ones are expired or something like that?
Mr. Harper: Yes. I think Fire is here to speak too, but there are a number that are going to be out of compliance within the next year beyond their life cycle, and in order to replace
them all at the same time, and have everyone on the same training schedule, we don’t want to have two different types of SCVA’s so that’s the reasoning behind replacing them all at the
same time.
Council Member Fine: Okay, that’s helpful. Thank you. And then just a few specifics. I may have looked through some of them, but I can’t actually – it would be really helpful if we did
have the page number for each of these projects on the Budget chart, because we’re looking at, we’re all going through here and I know it’s got the project number, but then it’s broken
up by different sections. It would be helpful in the future. That’s all for now. Let me go look at a few of these specific and come back with more questions.
Chair Filseth: Council Member Holman, do you want to do some more or should I come back to you? Let me see. So, when we were at this point a year ago, one of the things we were doing
was sort of going through the list and saying, geez, what could be postponed, right. I think some things, I mean, ultimately, I think some things actually I think Jim actually did postpone
some things and so forth, so let me see about that. I wanted to ask a couple of those things and then I had a couple of other questions. Let me do it the other way first. In the security
cameras for the train tracks, there’s a line in here that says that the annual maintenance on those is $600,000 a year. Did I read that right? Let me see if I can find the Page.
Mr. Eggleston: I can speak to that a little bit. That was a place-holder number that had to do with estimates of paying the utilities fiber connection rates essentially, which I think
is somewhere in the neighborhood of $100,000 a year, but the biggest piece of that $600,000 operating cost was our estimate on what the 24-hour remote monitoring cost would be, and in
the negotiations with the design/build entity and the contract that we’re working on right now, we’re trying to build monitoring into that. We just got a proposal from them that I believe
is about $140,000 a year. So, these numbers are not finalized, but currently it’s looking like that operating cost may be greatly reduced.
Chair Filseth: So, here’s the basis of my question, which is as we think about this holistically, right now we’re paying a million and a quarter or something like that to have guards
at those intersections 24/7, I think something like that?
Ms. Nose: We’re paying about $1.7 right now for all the intersections.
Chair Filseth: For all the intersections?
Ms. Nose: Correct. And then in FY’18, given the implementation of these cameras, we would be phasing out, which is where I think you’re getting that million and a quarter figure.
Chair Filseth: Okay. I guess the question is, so I mean we’re going to do, aside from the capital cost, there’s going to be an ongoing cost, right, and then we’re sort of assuming that,
is the $1.7, is that everything? Is that the people cost?
Ms. Nose: $1.7 right now is the annual cost for the guards.
Chair Filseth: Okay, so that’s all of it.
Ms. Nose: Correct.
Chair Filseth: So, I mean, we’re presuming it’s going to be a lot more cost effective, but that assumes we’re going to have no guards there, right. Whereas, you know, some scenarios
say, well, we’re going to have guards there some of the time, but not all the time and so forth. I guess the question I’m wondering is, if you assume $600,000, now it could be south
of that, if you assume $600,000 in annual maintenance, annual operations just for the cameras, do we end up significantly better off if you assume that we’re not going to get rid of
all $1.7 million. I guess that’s sort of the question, how much in practice are we going to see economically from this.
Ms. Nose: Sure, and I think those are some policy calls that the Council are going to have to make over the course of this. (Crosstalk) To Brad’s point on the revised costs, you are
right, we had in the Budget $600,000 ongoing for the monitoring of the cameras. We also had the elimination of the guards in FY’19, right, so we took out the full 1.7. With the revised
Track Watch costs, I’m sorry, not Track Watch, the revised, did I say ’18? Yeah, FY’19. Sorry if I misspoke, but FY’19. But the ongoing costs would not be $600,000 anymore potentially.
We might reduce that by probably $300,000 so almost in half, if these new bids come forward as they have been projected.
Mr. Keene: That’s what it’s looking like.
Chair Filseth: Okay, so then starting in ’19, depending on how far we scale back sort of the people there, right, then potentially we’re looking at somewhere, it could be in the range
of a million dollars maybe per year in savings over that?
Ms. Nose: Correct. And just so we’re all on the same Page, when we gave you the FY’19 and the ongoing projected status of the General Fund, we did include this phase transition. So,
do know when we said, I think at the get go May 2, we said there’s about a surplus or positive balance of about $3 million in ongoing, that did assume this phase out.
Chair Filseth: Okay. That’s helpful. Thank you.
James Keene, City Manager: Mr. Chair, I apologize for being out if you guys covered this, but if I could add one or two comments as it relates to the Track Watch program. First of all,
just on the Staff level with our team, we’ve just in the past month started saying, it’s really not accurate for us to have been referring to these as Track Watch guards. Did we mention
that? They’re really monitors, okay. I mean, the idea of guard might imply that they actually would intercept and stop someone at the location, which they do not do. They call emergency
response, which is the same thing we would have with the monitors, the TV monitors, and the Staff probably mentioned, but we have demonstrated proof already in our tests that certainly
at nighttime our effectiveness of being able to see down the right of way is dramatically increased with the cameras over the human.
Chair Filseth: It makes sense. I had a question on Page 233, curb and gutter repairs, takes a huge spike this year relative to other years. Just any particular reason, or is this just
a lot of backup maintenance.
Mr. Eggleston: It has to do with street maintenance work we’re doing in the Barron Park neighborhood. So, you’ll see here there’s a note, significant changes 2018 to 2022, additional
funding of $250,000 requested, essentially to install new valley gutters in the Barron Park neighborhood. And that’s work that coincides with street maintenance in that neighborhood.
Chair Filseth: My Colleagues are pointing out that the picture showed sidewalks, which I believe there are not a lot of in Barron Park.
Mr. Eggleston: The project still primarily does address sidewalks, curbs and gutters, but this is an innovative use of the project.
Chair Filseth: So, of the $854,000, a quarter million is these gutters, right?
Mr. Eggleston: And some piece of that is, the majority of that probably is also reappropriations from the current year.
Chair Filseth: Okay. And then there’s a piece on the Downtown mobility Item, in Page 266, which is like $830,000 or something like that. What is that?
Joshuah Mello, Chief Transportation Official: So, the Downtown mobility and safety project, which begins on Page 266 is a project to address mobility and safety Downtown. Some of the
things we did this year are the purchase of 53 pedestrian countdown signal heads. In the coming year, we are going to be adding pedestrian signal heads to intersections where they don’t
currently exist. We’re also going to be facilitating a discussion around potential lane reconfiguration on Alma Street to add bicycle accommodations and improve access to the Caltrain
station at Hamilton, and that will be done in conjunction with a Public Works resurfacing project. So, this is a multifaceted project that is spread basically throughout the entire Downtown
area.
Chair Filseth: And it’s not specifically for either commuters or residents, shopping or anything. It’s just sort of across the board for everybody?
Mr. Mello: No, but it is more weighted towards active transportation users, cycles and pedestrians. But there are some motor vehicle improvements slated as well.
Chair Filseth: I shudder to even suggest this, but on Page 88 we’ve got $600,000 to have EV chargers for the Civic Center. How big a blow would it be if we put those off a year?
Ms. Nose: I’m sorry, can you repeat that? If you what?
Chair Filseth: How about if we delayed those a year, would it be a big crisis?
Mr. Eggleston: Let’s see. This project has two components. One is updating the switch gear electric equipment for the Civic Center. And then the funding that’s for EV chargers is actually
providing the matching funds for grants that have been received from the air quality management district for 40 new chargers. So, it’s not just matching funds, actually, it’s a reimbursement-based
grant where we have to buy the equipment, and then over time be reimbursed.
Chair Filseth: Got it. Shoot. And then my last question, actually, was kind of, I didn’t see anything here for the Ross Building in the out years. It was like zero. But I did see that
on your list of stuff that, you know.
Mr. Perez: Yes, that is correct. All we have right now is maintenance basically, and that’s in the operating side. It’s not a significant amount. What we’ve been doing is doing extensions
of the option, so the group, the Palo Alto History Museum has an option to lease.
Chair Filseth: Which I think is coming back up again this year, right?
Mr. Perez: It’s expiring in about five weeks. So, we’re probably going to do an extension. We are speaking to the Palo Alto History Museum board members and they are coming to you with
a proposal. So, we’re probably going to extend the option for maybe three months or so, so we have enough time to bring it back after the break and have them present to you what their
proposal on how they would like to proceed.
Chair Filseth: And you don’t expect any 2018 budget impact from that?
Mr. Perez: I do.
Chair Filseth: You do?
Mr. Perez: I don’t have a proposal on paper yet, so I can’t really speak to it and I think it’s better if they speak to it, but I know they are challenged on getting to where they want
to be on their goals. But I think it’s time for them to come to you and tell you where they’re at and what they believe their position is and what they can do. And then you’d need to
make a decision from there.
Chair Filseth: Is that before the break?
Mr. Perez: No, unfortunately it’s, we’re just too packed with crazy agendas and it’s such a meaty and substantive item that I think it’s better to do it after the break.
Chair Filseth: Alright. Thanks very much. Council Member Holman, do you have some more yet?
Mr. Eggleston: Can I make a small clarification, not on this point, but before I forget. Penny Ellson spoke at the beginning of the meeting and she was referencing a letter from a member
of the public that was suggesting that there was perhaps a $5 million increase to the Charleston/Arastradero corridor project, and that actually, I think, is a misreading of a statement
in the transmittal letter. That project has a budget of $10 million. It’s been fully budgeted and what’s happened is we’ve moved $5 million of funding within the existing Budget of the
project to match the phasing that’s occurring. So, there’s actually no change there.
Chair Filseth: It looked from here like it was 5 this year and 5 next year. Is that still accurate?
Mr. Eggleston: It is, but the sum remains the same.
Chair Filseth: Karen.
Council Member Holman: Yeah. I’m kind of back where I was earlier, and I know it’s somewhere in all of this. It was one of the late items that we got talked about, corrections and changes
and restatements and it talked about revenues going down 10 and I think expenses going up 9, or something like that. It’s a lot of material, but it talked about that somewhere and I
think it was in one of the late pieces of information we got, and along with that remind me how much the transfer is from General Fund to infrastructure this particular Fiscal Year.
Mr. Harper: Council Member, the transfer from the General Fund to the Infrastructure Fund can be found on Page 62. The General Fund portion without the TOT in Fiscal Year ’18 for just
the General Fund portion without the TOT is $14.3 million, and then the additional TOT funding is about $8.5 million. And, again, that’s on Page 62 at the bottom.
Council Member Holman: So, last year we ended up not transferring as much as was, frankly, desired because of trying to balance the Budget and I’m suggesting we might be in that predicament
this year as well.
Mr. Perez: Well, last year we asked you to transfer a little bit over a million less, and that was because we wanted to help offset the impacts of the street lights and traffic signal,
and that was the driver for that because that expense was $2.5 million. But keep in mind that what we’ve done, a lot of it came out of the deep recession, being conservative because
we didn’t know where we were going to go, but excess revenues that we’ve had or funds I should call it, in the operating side and I believe Paul can correct me here, but I think we transferred
$36 million from the operating side to the IR, infrastructure reserve, over the last four or five years as a result of that, so I would say that the Operating Budget has been doing more
than planned so it’s been a good thing. I think that is the right thing to do for our organization because we need to address our infrastructure as things brought out in the IBRC report.
So, you’ll still have an option. We’re projecting ’17 to have some excess funds. We’re still working on that number on what to do with that. It could go to infrastructure, it could go
to the unfunded pension liability. So, I think there’s another opportunity. You know, obviously, we have a gap in the infrastructure, so we have to keep that in mind. So, I think we’ve
done well as an organization in funding our infrastructure and trying to stay within our goal. The challenge has been that we’ve grown the scope of our projects and the cost of the projects
have gone up. So, that’s the challenging part.
Chair Filseth: Wait, I saw the construction costs are only going up 1 percent a year. I definitely heard that.
Mr. Perez: No, we’ve got to look at that. We will look at that.
Council Member Holman: I agree with what you’re saying. At the same time, it’s a little scary. I guess that’s my comment for the moment. It’s just we might have some difficult choices
to make.
Chair Filseth: Can I chime in on that one. You still have the floor, but I want to chime in on that one, because I think it’s something I was going to ask later, but maybe I’ll ask now
for the sake of argument. If, I mean, let’s say for the sake of argument we were to do what we did last year, which is, ask you folks to come back with an option that didn’t involve
drawing down from the Budget reserve. And the way you did that last year was, you deferred some capital projects. But I’m guessing that if we were to do that again, let’s say was asked
you the same thing, right. You would probably do something similar. On the other hand, since we’re already in the hole on the capital projects, it would just basically make the capital
projects’ hole deeper. Is that a fair sort of synthesis?
Mr. Perez: That’s absolutely correct. And I think, since you touched on it, if you don’t mind, let me comment on it.
Chair Filseth: Well, Karen (inaudible) not me.
Mr. Perez: Okay.
Council Member Holman: Can I just make one statement here. It’s just like, I agree with the capital hole deeper, but I also don’t want to make our reserves shallower. So, you know, it’s
the tradeoff that we’re faced with.
Mr. Keene: I’m going to make this argument really hard this year, because this is one-time adjustment. We are not going below our target reserve level. I’m glad you seized on this infrastructure
hole being larger because, I mean, one of the nice things about capital projects is they are ultimately limited projects and we don’t have to spend on them forever. So, spending one-time
money towards one-time funding gap problems versus what it takes to operate a service over years that is continually there. But I want to leave you with one other thought. How did those
reserves get to be at the level they were at? They were partly at the level by us conservatively estimating revenues and, therefore, also forcing less expenditures on the General Fund
side of things. If we had not done that, we wouldn’t be able to build those reserves. And so, in one sense, my sense, staying at a one-year time within your target is nothing different
than if we had budgeted differently in a given year, and hadn’t had that reserve there in the first place. So, we should think that there, from time to time, should be a draw on the
reserve, you know. As long as it doesn’t go below the level that you think we should be at. And that level isn’t set like the absolute bottom. It really is the target level for keeping
our reserves. As a matter of fact, if we were under that target level for whatever reason, we would treat that as really important for us to at least get to that target level on the
other side. So, I’m just trying to give you some things to help with why I think this makes sense this year.
Council Member Holman: Yeah, it makes a lot of sense and I’m also reflecting on last year, when the Council wasn’t willing to, we weren’t willing to approach that number. There’s been
a fair amount of conversation, not just in, amongst us, about a potential recession and that might be coming up, and so that kind of makes me feel a little more skittish about, even
more skittish about drawing down more on the infrastructure reserves, or excuse me, on our reserves. But the other piece of it is, if there is a downturn, one good side of that is that
construction costs go down. So, we know that, we’ve experienced that and things do go in cycles. So, you don’t want to speculate on the stock market with City funds, but there is a little
bit of that, you know, how do we try to navigate this.
Council Member Fine: Thank you. Just a couple I’m looking at. A number of my questions about kind of coordinating different projects here, so on Page 112 we’re looking at some Lucy Stern
improvements, about $3 million. Then on 132 we’re looking at roofing replacements on Lucy Stern scheduled for 2020. I’m just wondering, do we treat these things totally separately? You
know, building mechanical, electrical and roofing, and we just Budget them differently?
Mr. Eggleston: Good question. It’s actually different areas of Public Works that implement the roofing project and the mechanical and electric project, but we coordinate together. In
some instances, we have projects like that. For instance, there are similar projects at the MSC where we have them actually scheduled in successive years, so that we can address the
electrical and mechanical that have roof penetration issues, and then do the roofing. I think for this project that’s less important. Essentially the mechanical and electrical equipment
is pretty much all interior.
Council Member Fine: Okay. Are we in general scheduling things in a way that does save us costs, like you know, if you’re going to be ripping off the roof anyway, we do the electrical
that year? Are there synergies we work for there?
Mr. Eggleston: Yes. I wouldn’t say that’s necessarily perfect, but we always strive to do that coordination.
Council Member Fine: Okay, thank you, which gets kind of to the next one. As we’re drawing down spending on street maintenance, actually, but we are ramping up a lot of funding on the
bike lanes on Churchill, on Arastradero, I’m just wondering if there is any synergy there, again, with kind of our PCI score as we’re repaving those roads for other purposes?
Mr. Eggleston: There’s a great deal of coordination that goes on between Public Works, all the different areas of Utilities that do capital projects that impact streets, our storm drain
group, as well as transportation. So, we do coordination at least five years out, sometimes as much as ten years out, because essentially, we’re trying to maintain a situation where
when a road is resurfaced, it’s not touched again, except in case of emergency for at least five years.
Council Member Fine: Excellent. Thank you.
Mr. Eggleston: And I would also add, many of the bicycle and pedestrian improvements take place through street resurfacing contracts.
Council Member Fine: Speaking of pavement, Page 262, Churchill avenue bikeway. I’m excited about all the bike improvements here. I was just a little struck that overall the Bike Plan
is about $5 million and this Churchill one is about $1 million on its ow. Can Staff just give some background there?
Mr. Mello: The current construction estimate for the Churchill project is about $800,000. That includes a shared-use path on the north side, improvements at the El Camino intersection,
as well as a new right-turn lane going westbound approaching El Camino. There’s also some work in the intersections of Miramonte and Castilleja, so that’s the current estimate. The Bike
Plan is actually $20 million over five years and we’re estimating we’re going to outlay approximately $10 million over the next year.
Council Member Fine: Okay. And then just a last question. I noticed on Page 148 on the public art are plan it said 1 percent of the Capital Improvement Budget. So, do we adjust that
at the end once we’ve all finalized the CIP and go back and make sure that the Art Fund is in line with that, up or down?
Mr. Harper: Yes, Council Member. We go through an annual process and evaluate the projects that are eligible for public art. There are a lot of stipulations as to which projects are,
can provide Public Art Funds. So that project is set up annually, and then we review it each year to make sure that the projects that were budgeted in the previous year and in the next
five years had appropriate funding for public art.
Council Member Fine: Okay. That’s helpful. I think that’s about it for now. Thank you.
Chair Filseth: I don’t have anything further. Any other questions or comments from the Committee?
Council Member Holman: I don’t have any other questions, it’s just, I’m still struggling with the best procedure to move forward. So, maybe if we don’t act on this until we get like
later into our other projects so we can see like where we are in terms of balancing things. I don’t know.
Chair Filseth: Well, we don’t have that much left to go. I mean, we have the Utilities.
Council Member Holman: Right, which is a different fund, of course.
Chair Filseth: Yeah, a different area.
Council Member Holman: Another option is we could tentatively approve this and then at the end of the day, see what we want to save or not. I think Council Member Fine may have a thought.
Council Member Fine: So, I’ll try this and see if it gets support, and I know Staff may not love this idea. I move that we tentatively approve the CIP but we do ask Staff to come back
to the whole Council with options, kind of, if we did have to cut $4 million, and I’m just taking that figure because that’s where we’re going under here, on the reserves slide, what
would those CIP’s be? Which projects would you choose? So, it’s totally up to Staff. It looks like we’re going minus $4.3 million under by FY’19, so that’s my Motion.
MOTION: Council Member Fine moved, seconded by Council Member Holman to tentatively approve the CIP Budget and direct Staff to return to Council with a list of projects that could be
postponed or delayed, totaling an amount of $4.3 million.
Chair Filseth: Let me ask a question on that one. For Staff to come back with a sort of a framing option on that one, I suppose that probably doesn’t meet the one-hour rule.
Mr. Perez: No, but also was curious on the time frame. Would that be for the Council adoption or?
Chair Filseth: Well, if I understand, yeah.
Council Member Fine: It’s for the Council adoption and it’s not necessarily cutting right. It could be postponing like we’ve done in years past. But, just getting an idea from Staff
if.
Mr. Keene: I mean, my own guess would be, it would be less likely that we would do an absolute cut versus move something out of the CIP into, you know, the 4th or 5th year of the program.
You would see the implications of that in the tradeoff. I don’t think some of this stuff is so bad, because even though we try to plan for a five-year period, there are so many variables
from one year to the next that things move around, it wouldn’t be bad. And Lalo’s point is, you know, for the Council we’re going to be there on the 27th, right, so we’ve got a month
between now and then. I don’t have a problem with the recommendation.
Chair Filseth: Okay, so Staff’s okay with that. I think, first of all, I think that’s helpful. And the question is, I don’t want to give Staff a lot of extra work on it.
Council Member Fine: So, I’ll restate the Motion per Council Member Holman’s suggestion. So, we tentatively approve the CIP but direct Staff to return to the entire Council with a menu
of projects that we might postpone or delay in the amount of $4.3 million.
Council Member Holman: I’ll second that.
Chair Filseth: Care to speak to your Motion?
Council Member Fine: No, I just think it is wise words from Council Member Holman that we may be going into a recession, and it would be nice to see if we need flexibility, where it
will come from.
Chair Filseth: Care to speak to your second?
Council Member Holman: I don’t know why yeast comes to mind, but it’s sort of like, you know, we’re in kind of happy times now and yeast is rising, but it isn’t always going to be that
way, so I’d rather be a little bit conservative here, so yeast doesn’t always work.
Chair Filseth: Okay, so all in favor? Motion passes with 3-0 and one absent. Thank you very much.
MOTION PASSED: 3-0 Tanaka absent
Mr. Harper: Chair Filseth, can I just confirm that also included the Cubberley Improvement Fund as well.
Chair Filseth: Did that include Cubberley?
Council Member Fine: Just to be clean, I’ll just make a second Motion to approve the Cubberley Fund, tentatively approve the Cubberley Fund.
Chair Filseth: I’ll second.
MOTION: Council Member Fine moved, seconded by Chair Filseth to tentatively approve the Cubberley Infrastructure Capital Budget.
Chair Filseth: All in favor? Motion passes with 3 in favor, 1 absent.
MOTION PASSED: 3-0 Tanaka absent
Chair Filseth: We have a request here that we take a couple minutes’ break, so why don’t we do that and we’ll see you in 5 minutes.
Finance Committee took a break at 4:23 P.M. and returned at 4:42 P.M.
4. Utilities Department
Electric Fund
Operating Budget
Capital Budget
Fiber Optics Fund
Operating Budget
Capital Budget
Gas Fund
Operating Budget
Capital Budget
Wastewater Collection Fund
Operating Budget
Capital Budget
Water Fund
Operating Budget
Capital Budget
Chair Filseth: Alright, so with everybody here, let’s proceed on to Utilities.
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Just to remind the Committee, we were hoping we could collapse the operating capital and the rates through
each fund, if you…
Chair Filseth: I think that makes sense.
Ed Shikada, Assistant City Manager and Utilities General Manager: Yes, Chair, members of the Committee, Ed Shikada, wearing my General Manager of Utilities hat right now. The following
items on your agenda include Number 4, which have sub parts to them for each one of our Utility Funds, the Electric, Fiber Optics, Gas, Wastewater and Water. Also note that following
Item 4, you’ve got Item 5, really 5 through 8, which relate to Electric Rates as well as gas rates and some follow up information on the water rates. So, given the integration of all
of those, I’ll give a brief overview of all of the Utilities and then we can proceed through your questions at your discretion and I’ll be prepared to answer those questions related
to any or all of the above. Okay, so with that, let me just start at the top and note that while you see me in many situations, I’ll just note that this is actually my first Budget with
you as the General Manager of Utilities. I’ve moved from what I affectionately referred to as the substitute teacher role in Utilities up until October of this past year. So now I’m
full-fledged and fully responsible for all the activities that are going on in the Department. So, the team has embraced me quite well, and I appreciate the support that they’ve provided
in putting together the recommendations that are before you. So, with that let’s go into a quick overview; that’s interesting, our slides are screwed up. So, hopefully, your screen looks
a little better than that and you can actually read all of the text on there. Just to hit a few of our accomplishments, we’ve hit a number of capital projects over the course of the
year, many of which are happening behind the scenes. So, you’ve got a photo of our substation as an example, and transformers that, again, happen really behind the scenes. The only time
the public really knows about our electrical infrastructure work is when the power goes down, and, thankfully, we have a very reliable system based upon the work that our Staff is doing
to replace infrastructure as needed prior to equipment failure. I would also note a number of ongoing projects that are more visible to the public, including a rebuild of our underground
electrical system, replacement of water mains and sewer mains that you see through construction. Unfortunately, through sometimes inconvenience due to the construction that happens on
streets and public rights of way throughout the City, but again, nonetheless important and done on a preventative basis, rather than in response to equipment or infrastructure failures.
Also note, on the customer side noted here are new 24/7 interactive voice response, or IVR system as it’s known, to improve customer service and provide support to our customers. We
use the term customers, while often refer to our residents or constituents, but in the case of Utilities, these really do reflect customers, because they are making choice to purchase
different levels of services from the City of Palo Alto. And then, on some of our solar projects noted here are 80 megawatts of new solar brought on line this past year and progress
being made in other areas of our sustainability agenda, such as our carbon-neutral gas program and additional solar photovoltaic sensor metering program that are strategic moves as we
move into the next phase of providing rate options and looking at the implications of different implementation of sustainable energy across our customer base. Then moving forward, in
terms of our initiatives, if I were to put a theme around the Capital Improvements that you’ll see, as well as the on-going operating improvements that I’ll discuss, it’s really connecting
the dots among different elements, both within the Utilities Department as well as connecting the Utilities Department with different parts of the City of Palo Alto. And that begins
with our Utilities Strategic Plan, which is something of an umbrella effort that allows our Staff along with the community to, again, really connect the dots on the on-going activities
that we do on a day-to-day basis with the longer-term strategic goals. Our Downtown University Avenue CIP projects, which again, are cross departmental and involve a number of utilities,
water as well as sanitary sewer, gas; work that will be done throughout the Downtown area and cross departmental. We’ve had some discussion with the Department of Transportation as well
as Public Works in how the integration of transportation improvements and street paving is being done in a coordinated manner. Smart Grid work that will be coming up this year to continue
advancements with our technology, but also in a very prudent manner with respect to our billing systems and ensuring that we’re maintaining cost effectiveness in our improvements as
well. The same on our customer service portholes putting additional information in the hands of consumers, so they can make their own choices on their usage patterns. And, finally, certainly
last but not least, our workforce development strategies and we say that in the context of Utilities, we deal with resources all the time and clearly our human resources really are our
most valuable ones in terms of really using, again, the Strategic Plan as a specific example, but also on an ongoing basis, improvements we can make to our work environment. This is
the one that might be the picture worth a thousand words. In prior discussions with the Finance Committee, and specific around the water rates, we had quite a discussion and we had some
follow-up information for you in your Packet regarding what is really the blue block in the far left on this screen, and my apologies, it may be a little hard to read. Just to give you
a quick orientation, this shows our composite Utility rates, on the left side Palo Alto with the blue being water, the somewhat gray being wastewater, the red gas rates and the green
electric rates, again a composite for a typical residential rates with Palo Alto on the left and a number of other agencies shown for comparison purposes, and if it’s difficult to read,
it’s going from left to right, Palo Alto, Menlo Park, Redwood City third from the right, then Mountain View, Los Altos, Santa Clara and Hayward. So, again, picture being worth a thousand
words here, the idea here is to show composite of each one of the different types of utilities, water, wastewater, gas and electric across different agencies and looking at typical residential
rates that would be experienced by customers in each one of these service areas. And overall, just to give you a sense in terms of quantifying this, that as you notice the blue is relatively
big for Palo Alto in comparison to the other agencies, that overall our composite rates are about 16 percent below the average of these comparison agencies, and again, we can get into
specific if you’d like. So, from that let me hit the individual utilities and just touch on a few highlights and then get into questions. In terms of accomplishments, really remarkable
the implementation of 80 megawatts of new solar, as I mentioned earlier, which brings us to a total of about 150 megawatts in our solar renewable energy sources, what’s often called
the renewable portfolio standard or RPS, bringing us to a majority of our energy portfolio through renewable sources, and that under the Palo Alto clean program, our local solar program,
largely driven by our City garages, as has been approved by the Council, brought forward by Public Works in consultation both with ourselves and with Planning Department through all
the steps necessary to implement the local solar program. Then in terms of some initiatives for the upcoming year, safety and reliability continue to be a major priority for us. You
see our goal to finalize a decision, working with Stanford University on a second transmission line, as well as continued work on improvement and rebuilding of existing underground utility
districts throughout the City. Then in terms of energy efficiency initiatives, to continue to develop energy efficient, or cost effective electrification and energy efficiency programs
for consumers. Then, in terms of some of the key Budget proposals for the upcoming year, in the electric slide and, again, I hope that yours is a little more readable than that, but
I think all the text is there, with our operating requests that we’ve got a number of relatively small adjustments, electrification, R&D grants that will continue to provide options
for testing electrification projects, consulting agreement which is an example of our focus on transmission costs where this consulting work is in consultation with other agencies, the
Northern California Power Agency as well as other electric agencies including the City of Santa Clara, to keep an eye on the significant portion of our rates that are driven by electrical
transmission costs and with our overall rate increase shown at 14 percent, reflecting that transmission cost increase as well as on-going investment in Capital Improvements and operations.
In terms of staffing, these are largely swaps of positions and some adjustments within existing classifications. The compliance group workload realignment being one of reclassifications
in order to improve our ability to attract people into these positions that would be moving within our electrical operations group. The electric engineering staffing similarly a swap
of technicians to estimator classifications, and in customer service, moving from an hourly to permanent positions. So, again, relatively small staffing adjustments. Finally, in the
Capital Improvement Program, largely recurring projects and simply I like to highlight for the Committee and for the Council, that one project worth noting is that we are carrying a
$1.6 million project related to the Caltrain modernization that will allow our crossing lines to basically get out of the way and stay out of the way as needed as the Caltrain work proceeds.
So, that’s the electric piece. We could pause, if you’d like and open up for discussion before we move on to the next.
Mr. Perez: So, just to be clear, for Item 6, which is the Utilities Advisory Commission recommendation on the rates, that’s also part of the discussion.
Chair Filseth: Council Member Holman.
Council Member Holman: Say that again about the Utilities Advisory Commission (UAC).
Mr. Perez: What I was suggesting is that we also take into consideration the rate adjustment that we’re requesting, the 14 percent for Fiscal Year ’18, that was also approved by the
UAC. It’s Item Number 6.
Council Member Holman: And I am way late in bringing this up, but I just now realized, because you’re talking about a recommendation from a commission that I don’t recall seeing the
minutes or recommendations on the CIP from the Planning Commission.
Kiely Nose, Budget Manager: Thank you for the question. We actually just received them. I got them in my email about 30 minutes ago. So, due to the timing we didn't have a chance to
put it into an At-Places Memo for you guys. If you guys would like it this evening, it’s possible for us to do that in the break or, of course, we’ll include it in the adoption CMR.
Council Member Holman: I think, since this is in all theory, the wrap up for tonight for this, if there’s any way to summarize that or, I mean, did they have any particular comments
or suggestions or recommendations?
Ms. Nose: Sure, we can cover that in our wrap up comments and remarks.
Council Member Holman: Okay.
Ms. Nose: Does that work for you?
Council Member Holman: I think so, that would be great.
Ms. Nose: Sure, no problem.
Council Member Holman: He’s looking at me still. Could you point us to the relocation of the Caltrain modernization $1.6 million, could you point us to a Page number on that one.
Mr. Shikada: Yes, that is in the Capital Budget.
Council Member Holman: Right. Can you point us to a page on that, please?
Mr. Shikada: I will in a second, because I was just looking at it.
Council Member Holman: While I’m, because I had overlooked this one, so a little bit of a different question to ask, but it has to do actually with the photo that’s part of Slide 25.
Is there, I’m sure a lot of this is not Palo Alto lines, a lot of it is PG&E. PG&E doesn’t have to take away their abandoned lines unless we do something to require them to do it, which
we don’t do now, but how much of these lines are Palo Alto Utility lines?
Mr. Shikada: In terms of, are you referring to the Caltrain modernization?
Council Member Holman: No, I’m talking about the image that’s on Slide 25, your Slide 25. It’s like quite a mess and that’s what most of the power lines look like. It’s the image that’s
up here. So, it isn’t exactly on our agenda, I understand that, but since it’s here and you’re all here, is there any way of just kind of generally saying how much of that is Palo Alto,
how much is PG&E, how much of it is Telecommunications? I’m not looking for science here. I’m just kind of…
Mr. Shikada: I think relatively speaking, none of it would be PG&E. It would be…
Council Member Holman: Well, power lines in my neighborhood, PG&E has lines that go to the power lines, but they don’t have to take away abandoned lines.
Mr. Shikada: Is Dean here? Dean would know. I think we’re a little stumped, because typically we wouldn’t have PG&E lines running in our, what’s known as the distribution system. So,
if anything, it would be simply, the PG&E lines are the big metal poles that are running through town, at least electrical lines, and otherwise it’s all City and Telecom.
Council Member Holman: Well, maybe a City employee misinformed me, because, anyway – I was told because of a recent storm and lines that went down, that that line’s PG&E, this one’s
ours.
Dean Batchelor, Chief Operating Officer for Utilities: So, just looking at this picture, this picture right here is a typical pole that we would find here in Palo Alto. So, the very
tip top where you see just a version of the orange that’s on the right-hand side, that’s the primary side of the pole. The top, the very top is primary, that’s 12,0000 volts right there.
And then where the lineman is hanging on, on your left-hand side with his hand up on that line, that is the secondary line that would typically go to the homes or the services would
be dropped off. And then the next one below is feet, that would be typically Comcast or another fiber provider that’s on that pole and the bottom line is AT&T.
Council Member Holman: Maybe I was just given bad information. Okay.
Mr. Batchelor: Those look like, those look actually when I looked at it really close, it looks like two Palo Alto employees that are working on that pole.
Council Member Holman: Yeah, I don’t doubt that. Anyway, sorry for the diversion, but it is always striking to me when I see the tangled web here. Okay, alright. I need to take in this
Page 278, so if somebody else has a question, go for it.
Council Member Fine: Two quick questions. One, on the electric utility GIS upgrades, Page 276, didn’t we budget like half a million for other upgrades. Do Utilities just have a totally
separately GIS system that’s supported with separate contracts, all that?
Mr. Perez: Yes, you’re recalling correctly that we had in the IT group, Jonathan Reichental, our CIO did talk about the, having some funding to replace GIS system. Let us look to see
if this is the cost sharing or some other factor.
Council Member Fine: That would be helpful. I mean, I’m assuming it’s the same vendor and all that stuff.
Dave Yuan, Utilities Strategic Business Manager: Dave Yuan, Utilities Administration. So, yeah, Utilities does have a separate GIS system to manage our assets, the lines and so forth.
It’s called Topal Base. So, it is connected with the City’s Geographical Information system (GIS).
Council Member Fine: Okay, that’s helpful. It would be nice to know if there’s some cost sharing in those two items or not. And the second one is on Page 402, the Smart Grid upgrades.
Nothing really, I mean, I guess my question is, looking in the out years, we’re about to start spending a lot of money on this, and I think there’s a lot of froth in this marketplace,
in Smart Grid stuff. And so, when we’re looking at figures like $10 million per year for the next couple of years, I guess I just have questions, like how are we going to exercise oversight.
It isn’t so much a Budget question here, but how are we going to exercise oversight, what’s the strategy, what’s the ROI on these different investments?
Mr. Shikada: As a matter of fact, the Council just approved a consulting contract that will help us articulate the, actually review our workplan and the procurement sequence and really
help us drill down on the risk management side of how we will proceed in the overall Smart Grid piece. This is with the, I’m going to mess up the company, Utiliworks. All these companies
start with Utili something, and in this case it’s Utiliworks, that is going to be providing support to us. Shiva Swaminathan is our project manager and we will be putting together some
information that will be coming through the Council as that work proceeds.
Council Member Fine: Okay. It would also just be helpful when we’re spending this much money, what’s the return to our customers and to the City’s operations?
Mr. Yuan: Right now, those are just temporary placeholders.
Council Member Fine: They’re big placeholders.
Mr. Shikada: But I think you raise a very valid question and one actually that, in particular, the publicly-owned utilities are asking, where is the return on investment as opposed to
the investor-owned utilities, where they are able to capitalize the cost of the smart meters and the infrastructure behind it and maintain their return on investment. For us, the return
really has to be ultimately for the consumers. So, we’re very mindful of that part of the calculus is also that the California Energy Commission may be driving some of the mandates around
the data to be generated by us and our peers in order to meet their reporting requirements. So, that’s a part of the decision making going forward.
Chair Filseth: Actually, can I interrupt there, because I actually wanted to ask a question on that, as long as we’re on this topic, which was, so yeah, that’s a lot of coin. Do you
anticipate that over the next several years, what’s the impact on rates going to be? Is it going to go up because of covering the capital costs of this or is it going to go down because
we’re going to deliver services more efficiently or how’s that going to work?
Mr. Yuan: We actually have an electric special project reserve. There’s about $50 million in there right now that has been earmarked for the Smart Grid deployment or the second transmission
line, so it shouldn’t impact rates in the near future.
Chair Filseth: Council Member Fine’s point is, unless we use the reserve for transmission corridor or something like that…
Mr. Shikada: So, to your point, I think this is something for us to look very closely at before we make decisions to sink significant capital investment. I think it is fair to expect,
though, that this is a substantial investment and one that has the potential to impact rates.
Chair Filseth: That was good. So, I was interested in that one. The other one, the other question I wanted to ask is, there’s a project to Underground District 46 in South Palo Alto.
Is that the last major undergrounding project that we’ve got or are there more?
Mr. Batchelor: Dean Batchelor, CEO. So, yes, we do. This isn’t the last one. This one right now is the infrastructure is just in place right now, so the wires need to be still taken
down off the poles, but all the infrastructure was just recently done and there are three more major underground districts that will be on plans for the next five years. And then at
that point we’re going to have to start negotiating with AT&T on trying to get some agreements on where we go after that period of time.
Chair Filseth: So, the others of the three are going to be districts, I guess, 42 and 43, is that right?
Mr. Batchelor: Yes, and 47.
Chair Filseth: Those are all North Palo Alto, so 46 is the only one in South Palo Alto. So, further undergrounding in South Palo Alto is going to take AT&T interaction then?
Mr. Batchelor: Right.
Chair Filseth: Okay, thanks. That was it for me. Council Member Holman anything else? Council Member Fine? So, what would you like us to do? Would you like us to proceed one at a time
on these or should we?
Mr. Perez: That would be great. For these funds, it would be better to do it that way.
Chair Filseth: Move to approve the Electric Fund Operating, Capital Budget and Rate Plan.
Council Member Fine: Second.
MOTION: Chair Filseth moved, seconded by Council Member Fine to tentatively approve the Electric Fund Operating and Capital Budgets; a Resolution Approving the Fiscal Year 2018 Electric
Financial Plan; and a Resolution Increasing Electric Rates by Amending the E-1, E-2, E-2-G, E-4, E-4-G, E-4 TOU, E-7, E-7-G, E-7 TOU and E-14 Rate Schedules.
Chair Filseth: All in favor? Motion carries with 3 in favor and one absent. Thank you very much.
MOTION PASSED: 3-0 Tanaka absent
Mr. Shikada: Very good. Thank you. Now we move on to fiber. I actually just have one slide for the fiber. So, a quick overview in terms of some of the accomplishments. With our dark
fiber backbone, we completed this past year an inventory and audit of the condition of our current fiber network, and as a result, I have initiated a project to do a number of rebuild
and additional capacity projects. The key area for that new capacity is in the area serving the Stanford Research Park, so we’ll be proceeding with the design and on to construction
of that project in the upcoming year. The one other major initiative that's on the plate is looking forward to direction on the workplan related to next generation gigabits speed broadband,
affectionately known as fiber to the home or other market-based strategies to provide gigabit service to residents throughout the City. It’s a relatively small utility here in the context
of our others, so with that open to your questions.
Chair Filseth: Council Member Holman.
Council Member Holman: Nothing.
Chair Filseth: Council Member Fine? So, would I be right in assuming that fiber to the home, the costs of doing that would largely show up in the customer connections area?
Mr. Shikada: Not necessarily. It really depends on the model that Council directs, because a large portion of the infrastructure necessary, one of the options that we have been discussing
and that will be presented to Policy and Services next week is what’s known as fiber to the neighborhood or fiber to the node, so there’s a portion that, a portion of the work that will
be necessary to get into the proximity of homes, and then the so-called last mile, in order to get to the actual premises.
James Keene, City Manager: If I might add, Ed, Council may recall, and of course, this was before Council Member Fine joined the Council, but the consultant estimate that we had was
ultimately, I think, validated by peer review for funding the fiber to the home ubiquitously around the City was $77 million, and that really is a cost that would be, like even if we
were a private company, we would have to capitalize that upfront, and of course, then you would hope you somehow recapture that through a revenue stream over time. That’s a big chunk
of money and I think Staff report has gone out today to the Policy and Services Committee, the estimate on the sort of fiber to the node or fiber to the neighborhood model is more like
$12 million, if I recall. And the outstanding balance right now in the Fiber Fund is $27 million. So, there’s adequate funding for that. And while we’re at that we might as well share,
just since we had talked about the deployment of the camera system in the Capital Budget for the tracks, we’ve actually verified with the City Attorney that it would be appropriate for
us to be able to fund. First of all, we’re going to have to provide fiber and a big piece of the capital cost out of that Fiber Fund, so it’s not a General Fund expense. So, the operating
costs for running the, you know, doing the monitoring and stuff, that wouldn’t be appropriate, but the capital costs we’re looking at out of the Fiber Fund potentially too.
Mr. Shikada: Right, and that would come back to Council separately subsequent to the Budget.
Chair Filseth: Got it. Now you’re talking about the $1.55 million for the cameras?
Mr. Shikada: Yes.
Chair Filseth: Okay. Move to approve the Fiber Fund Operating and Capital Budget.
Council Member Holman: Second.
MOTION: Chair Filseth moved, seconded by Council Member Holman to tentatively approve the Fiber Optics Fund Operating and Capital Budgets.
Chair Filseth: All in favor? Motion carries with 3 in favor and 1 absent.
MOTION PASSED: 3-0 Tanaka absent
Mr. Shikada: Okay, so we’ll move on to natural gas and note a few items here. In terms of accomplishments, Council approved this past Fiscal Year, or this Fiscal Year the Carbon-Neutral
Natural Gas Plan, which allows our gas utility to focus on offsets as one means of ensuring carbon neutrality as we’ll talk in a minute how it drives a 4 percent increase in rates. Also,
note the 1 percent, slightly more than 1 percent gas load that had been reduced as a result of gas efficiency, energy efficiency programs exceeding our annual target. Then moving forward,
it’s really into the implementation of this Carbon-Neutral Natural Gas Plan, including looking at the potential for local offsets. That was a discussion item with the City Council. One
element that we’ll be looking at within the context of, again, the Strategic Plan is how we might bring forward recommendations for more flexible use of the offset funds in order to
support electrification that would require potentially even a ballot measure to use gas revenues more flexibly than is currently allowed under Prop 26. Wound note, significant projects
upcoming for the capital program in the Gas Fund, Gas Main Replacement Project 22, which has recently gone out to bid. We’re taking another look at that project. Bids came in very high
for that project and as a result, are looking at both scope and potential sequence changes in that project. Again, along the lines of earlier discussion on CIP, this is an area that
we’re seeing significant increase in costs, and so we’re having to adjust our plans accordingly. Finally, note the next phase coming forward on the cross-bore safety inspection program
that the City Auditor has been assisting us with over the last few months. In terms of significant Budget proposals for this, the gas utility note again the rate increase driven really
by the carbon-neutral gas program and that, separate from the cost of commodity, would be reflected in upcoming rate changes. In terms of staffing requests, again pretty minor items
here in staffing with our meter shop reorganization, a combination of skills with the gas and water meter shops that will assist in cross utility skills. And finally, in terms of Capital
Improvement Projects, we’ve got replacement of service lines, a new project coming up, as well as noted just a minute ago, the University, actually it’s not in University Avenue, but
our gas main replacement project that is being reevaluated related to the University Avenue project and timing there. And, actually with that, I believe those are our slides and a quick
overview of what’s happening in the gas utility.
Mr. Perez: With that we tie in Item Number 7 that’s also UAC recommendation on the rate increase.
Chair Filseth: Just out of curiosity, so the main, Gas Main 22 Project was one I think we approved last year, is that right?
Mr. Shikada: No, this is a new project. In fact, just again, we received bids on.
Chair Filseth: Because it shows up…
Mr. Shikada: Well, the budget approval, I’m sorry, yes.
Chair Filseth: The budget approval, last year, right, which was $3.5 million or something like that. And you said we’re getting bids. Are they, like a lot higher than that or like a
little higher than that?
Mr. Shikada: Yes. The bid came in over $5 million.
Chair Filseth: Okay, I was wondering. Karen.
Council Member Holman: So, a question on the customer connections, it talks about funding sources, it talks about the Gas Fund. Customer connections, because it is for new customers,
or expanded service demand, so why is there not, why is that not more fully covered? In terms of funding source should be not from the Gas Fund, but seems like it should be from applications
or applicants.
Mr. Shikada: And it is. This is really a capsule.
Council Member Holman: I’m just not finding it in this on Page 454, 456?
Mr. Shikada: Go ahead Dave.
Mr. Yuan: So, the other part is the customer reimbursement portion.
Council Member Holman: I’m sorry?
Mr. Yuan: The line that says other, so the Gas Fund pays about 20 percent and the customer reimburses us about 80 percent of the costs. And the funding source, you’ll see Gas Fund and
then another line that says other. The other represents the customer reimbursement.
Council Member Holman: I see Gas Fund as a funding source.
Mr. Yuan: Right, and then there’s other.
Council Member Holman: On Page 454.
Mr. Yuan: Yes. Right below the Gas Fund.
Council Member Holman: Okay, so that’s the customer, excuse me, I should say applicant? Okay. Alright. That clarifies that.
Mr. Shikada: You’d think we could come up with a more descriptive term than other but it’s just the categorization we have.
Council Member Holman: Yeah, that would help, actually, yes. Okay. I think that was my question.
Chair Filseth: So, I got a card in the mail from you folks a couple of weeks ago which I was delighted to see, which was one of these, if you need to replace your water heater, call
the City of Palo Alto, heat pump, water heaters and so forth, right. Do we anticipate, so my wife looked at it and said, “hey, a real program, at last”. So, do we anticipate any significant
expense with that over the next couple, three years?
Mr. Shikada: I’ll ask Jonathan to respond.
Jonathan Abendschein, Assistant Director of Utilities Resource Management: Hello. Jonathan Abendschein, Assistant Director of Resource Management. So, we’re actually really only in the
pilot phase with electrification programs. I don’t expect significant expense to the gas utility associated with that in the near term.
Mr. Yuan: I think in the Electric Fund we saw earlier I think we budgeted $50,000 for the heat pump program.
Chair Filseth: Going once. Move to approve. Sorry. Move to approve the operating capital and Rate Plan for the Gas Fund.
MOTION: Chair Filseth moved, seconded by Council Member Holman to tentatively approve the Gas Fund Operating and Capital Budgets, and a Resolution approving the Fiscal Year 2018 Gas
Utility Financial Plan with no changes to distribution rates.
Chair Filseth: All in favor? Motion carries with 3 in favor and 1 absent.
MOTION PASSED: 3-0 Tanaka absent
Mr. Shikada: Alright, that you. And move on to the Wastewater Utility and just for clarification, the Utilities Department is responsible for the wastewater collection portion of Wastewater
Utility. The Public Works Department handles the treatment. So, we get it to the plant, and they take care of it from there. So, in terms of some of the accomplishments, a number of
projects completed this current year. Just to, perhaps, give a couple of examples in order of magnitude, first noted, sanitary sewer replacement 24, 25, 26 for a total of $7.9 million
estimated costs and SSR 27 for a total of $3.8 million. These were the constructions costs, contract costs for the replacement work throughout the City over the past year plus. And going
forward, we’ve got a number of upcoming sanitary sewer replacement projects, Number 28, and we started to identify the neighborhoods that go along with these numbers to help newbie,
including myself, to be a little more descriptive on where these projects are and so, again, a $3.5 million project upcoming as well as our Cost of Service Study to ensure that our rate
structure reflects actual costs to provide the services to customers. And that’s actually it. So, we do not have a second slide for wastewater.
Chair Filseth: Karen, wastewater collection? Adrian? You’re going to say something about treatment next, right?
Mr. Shikada: I’m sorry.
Chair Filseth: Are you going to say something about treatment next?
Mr. Shikada: Actually no. We do not cover the treatment.
Ms. Nose: Treatment Plant is in Public Works.
Chair Filseth: Public Works. (Crosstalk). Karen is still looking.
Council Member Holman: I do have one question. Staffing is up 1.3 positions, 1.31 positions, on Operating Page 443, and if you look at prior 441, it’s gas and water meter measurements
control technician, it’s up 3.2 positions.
Mr. Shikada: This is the combination between the two funds, I believe, right? Oh, let’s see. Could you repeat that Karen?
Council Member Holman: Yes, on Packet Page 443 it identifies fulltime equivalent positions is increased 1.31 and on 441, Page 442, again it’s Operating Budget, the water and gas meter
measurement control technicians, it’s up 3.2. I’m just kind of wondering why. Is that some of the realignment or reassignment sort of things because gas technician 2 has gone down? So,
is it reclassifications or?
Mr. Yuan: Yeah, it’s a reclassification where we’re proposing to combine both the water and gas meter shops to provide more flexibility, staffing flexibility.
Council Member Holman: But we’re still up 1.31 positions. Is there a reason for that?
Mr. Shikada: As a total.
Council Member Holman: As a total.
Mr. Shikada: And that was actually driven by the Customer Service position going from hourly to permanent.
Ms. Nose: This, the 1.3 is really a lot of different actions that are going on. If you look on Page 441 you can see the gas and water meter shop reorganization and that’s adding the
fulltime FTE’s there, but you’re also taking away some of those gas system technicians. In that reorganization, we’re realigning the staffing between the two Funds, so that’s one example.
In addition to that, we do have things like reductions and temporary staffing to cover the addition of the conversion, rather, fulltime customer service position. I don’t know if that
one’s in this fund specifically. I actually don’t think it is. It’s probably elsewhere within the department. But, I will admit it is a little bit difficult to track the positions within
Utilities because they have over 200 positions across all of these funds. You do see a lot of movement as they readjust their staffing levels between the activities as opposed to adding
discretely, they are flexible from that standpoint. So, it is a true tally of a number of different things.
Council Member Holman: So, you’re saying it looks a little bit like the image that was up on the screen earlier.
Ms. Nose: Yes, basically.
Mr. Yuan: Just be clear, the 1.31 is for the Gas Fund, right, not for the Wastewater Fund. I think it’s also part of the Carbon-Neutral Plan we’re doing, the cross-bore programs and
the gas main projects and also a combination of the water and gas meter shops. So, a lot of the focus this year is going to be around the gas. And next year, as priorities change, we’ll
reassign folks where necessary.
Council Member Holman: So, I guess I’ll ask Chair Filseth a question, is like, so we’re moving somebody from temporary to fulltime position so it has implications.
Mr. Shikada: That was the customer service in particular and customer service representative, and that was a decision through both the Department as well as Budget Office and City Manager
reflecting the difficulty we’re having in attracting and retaining people to that position. So, mindful of the implications as described relative to fulltime and, what’s the right word,
long term benefits that we thought that, given the need in that area, it was an important move to make.
Council Member Holman: Okay. That’s it for me.
Mr. Shikada: Dave also just noted that this is the first add of a position in customer service for the last ten years roughly.
Chair Filseth: Everybody shares. Okay, so I think we have a Motion on the floor to approve. I think I did and you seconded it or Adrian seconded it? Do we have a Motion?
Jessica Brettle, Assistant City Clerk: I don’t yet have a Motion for this.
Chair Filseth: Move to approve wastewater collection.
Council Member Holman: Second.
MOTION: Chair Filseth moved, seconded by Council Member Holman to tentatively approve the Wastewater Collection Fund Operating and Capital Budgets.
Chair Filseth: All in favor? Motion passes 3 with 1 absent.
MOTION PASSED: 3-0 Tanaka absent
Mr. Keene: Mr. Chairman, just an info report, only water left in Utilities, which we suggest we do. I did want to share with you that your dinner pizza arrived at 5:15. Just keep that
in mind. I know that we’ve all eaten a lot of cold pizza in college, but just keep that in mind. Thanks.
Chair Filseth: What exactly is the City Manager trying to say to us here?
Mr. Shikada: We even have some water available. Okay, so just a quick overview of the water changes.
Chair Filseth: It’s not a real pizza until it’s been microwaved a couple times.
Council Member Holman: You know, the best time to have pizza is for breakfast.
Mr. Shikada: So, just a couple of accomplishments to note for the Committee and really, just acknowledging the work, the good work of the community as a whole through the drought, and
our accomplishment of water savings of 24 percent, surpassing our goals in water conservation. It’s really been an extraordinary effort by residents and businesses throughout the City.
And the other note of accomplishment is in the area of recycled water. So, going forward, noting that we’ve completed the environmental impact report on the recycled water pipeline project.
And going forward, the Water Main Replacement 26. So, this is the project that was just recently awarded by the Council and will be under construction for Hamilton, as well as a number
of other streets Downtown, in preparation for the University project. So, this one will be complete in time for University to begin construction. And, finally, our Water System Study
looking at our assets throughout the City, reservoirs and emergency response supply in order to ensure that our investments are being made in a strategic manner. In terms of significant
budget proposals in the Water Fund, the other side of the gas and water meter shop reorganization that was noted earlier, and the rate here I will note that the parentheses reflecting
a decrease is a typical or average rate impact for residents. As the item care forward to the Committee previously a couple of months ago, actually it was just a month ago, a discussion
of the rate increase of 4 percent really not reflecting the credit that perhaps should have been taken for the reduction or elimination of the drought surcharge. So, based on that we
have refined our messaging on how this will really be impacting residents in effect, a decrease based upon the net change between the increase of the cost of the commodity as well as
the decrease by the elimination of the drought surcharge. In terms of significant Capital Improvement Projects really being the next phase of Downtown upgrades, as was described by the
City Manager this week, and the University Avenue Capital Projects that we’ll be discussing at length with community stakeholders as well as sequencing through construction in the upcoming
year. And, I believe that’s it. We did want to make reference to the supplemental information that was provided relative to benchmarking of water rates between Palo Alto and other neighboring
agencies and that information is available, should you like to discuss it in more detail. And that’s it.
Chair Filseth: Council Member Holman.
Council Member Holman: Yeah, I always have a hard time finding this, but the (inaudible) I’ve never been a fan of the recycled water project that goes to Stanford’s Research Park and
there are only a couple of places here, in the CIP Fund anyway, that I notice where any monies could be expended on that, on Packet Page 557. And they are not the size numbers I would
have sort of anticipated here. It’s WS-1103 or WS-07001 and are those the right numbers, or am I pointed in the right direction? Is there any capital money going to be expended this
year for that?
Mr. Abendschein: There isn’t any capital spending anticipated. What we’re doing right now is a study to update the business case for recycled water, and this is just one component of
an overall study that’s being done for a whole variety of possible uses for recycled water, generally being led by Phil Bobel and the wastewater treatment plant.
Mr. Shikada: So, no capital improvements with respect to expansion of recycled.
Council Member Holman: Okay. I wasn’t sure if we were to that point yet or not.
Mr. Abendschein: Just evaluations.
Council Member Holman: Just evaluations, okay. But we are spending money on that.
Mr. Abendschein: Yes, we are.
Council Member Holman: And where would I find those dollars?
Mr. Abendschein: It should be in that, yes. So, it’s in the capital, it’s in one of the capital projects because if we were to ever move forward with that project, it would be, that
cost would be capitalized.
Council Member Holman: Right, so what project is it?
Mr. Yuan: So, it’s budgeted under project WS-07001, Page 574.
Council Member Holman: Yea, so it’s the $395,649.
Mr. Yuan: Right. That’s how much we have set aside for the Valuation Study.
Council Member Holman: Okay, and you’re saying it’s Stanford Research Park or, I know there’s one other one at least. I don’t find it right now. Stanford Research Park and where else
is this being considered for?
Mr. Shikada: El Camino Real.
Mr. Abendschein: Well, it’s not just projects within Palo Alto, so it’s part of a wider…
Council Member Holman: That’s right, part of it goes Mountain View.
Mr. Abendschein: Some of it already goes to Mountain View and there are discussions about Mountain View expanding their system. Use of the recycled water in other parts of the County,
connections to other cities, or evaluating the possibility of things like direct injection into the aquafer.
Council Member Holman: Yeah. Just to be clear, the reason I’ve never supported this for the Research Park is because they’re talking about changing their landscape and so their water
requirements have changed a great deal, and then they also talked about having their own source of recycled water, so there wouldn’t be a market for it if we even did get it there. Just
to be clear of why I have not been supportive of that. So, if the $395 is, for the EIR is for all these other possibilities as Phase 3?
Mr. Abendschein: Well, the $395 is specifically for the Research Park business case and one of the things that the treatment plant is evaluating right now is, and I believe, and I’d
have to research this, but I believe that is actually being funded in part by the Santa Clara Valley water districts, so I think it may have a minimal impact on our ratepayers. But one
other thing that the wastewater treatment plant is evaluating right now is the viability of things like reverse osmosis to bring the total dissolved solids in the water down, and so
that’s also part of the business case and evaluation as well.
Council Member Holman: So, how much of the $395 is being provided by Santa Clara Valley Water District?
Mr. Abendschein: I would have to get back to you on that.
Council Member Holman: Okay, my concerns about that are noted.
Council Member Fine: Thank you. It was actually on the same project, I had one question. So, if we’re spending about $400,000 on the study today and we’ve got some other studies in the
pipeline, I guess the question, there’s two parts. One, how much are we spending on these studies overall, and then two, if we did go forward with this, if we did do the pipe to the
SRP, what would that cost, just a guesstimate? I’m just wondering how much we’re putting out right now.
Mr. Abendschein: So, I have to confess, I don’t have all of the background on the recycled water. The last business case that was done, it’s a fairly old business case, which is why
we’re trying to update it right now, so we would be coming back to you with that information closer to the end of the year or maybe early next year.
Council Member Fine: Okay. I guess it would just be a nice idea to know how much we’re spending on these business cases, if there is some concern on the Council about moving forward
with the project as a whole. And then, do you have any guesstimate of what a pipe to SRP would cost?
Mr. Abendschein: I don’t think it would be a good idea for me to just try.
Council Member Fine: I’m just wondering, are we talking about like $10 million, $70 million, $12, I don’t know.
Mr. Abendschein: I don’t think it’s in the $70 million range, but I don’t think it’s a good idea for me to just guess off the top of my head.
Council Member Fine: Thank you.
Mr. Abendschein: One thing I’ve noticed, that a lot of these studies are in partnership with the Santa Clara Valley water district. I believe they are providing as much as roughly $2
million in funding for these different studies, not all of which are being run by the City of Palo Alto. They are in partnership with the district, so district Staff is doing them in
part. Wastewater treatment plant Staff. But this piece is being done by water utility Staff.
Chair Filseth: Actually, since we’re talking about that, it may be that you’ve answered this already, right, but the description is $395,000 for a consultant to provide a business case
and do some investigation where we could fund it and stuff like that, so that seems like a cash expenditure, not an existing Staff and so forth. Also, as you pointed out, some of these
things are funded elsewhere than the City and so forth. I guess, this is an over simplification, but the question I really want to ask is, if we decided to defer this a year, could we
use the money to trim trees or something like that instead, given its capital and General Fund and all this kind of stuff?
Mr. Perez: Right. No. The legal answer would be no. Because there would be no correlation to the trees to the fund. This is the purpose of the fund. It has to be a nexus in order for
us to justify an expenditure.
Chair Filseth: So, basically it’s not fungible is what we’re saying.
Mr. Perez: Correct. You have to have certain, you know, if it’s directly correlated or the nexus or you have to have some kind of formula that has some logic to it, which the Council
has approved that for the gas and electric. But with the Water Fund we could not do that type of transfer, and we discontinued that a few years back.
Chair Filseth: And there’s not a direct connection, for example, with the General Fund contribution to the Capital Improvement Plan, so you know, we could transfer $400,000 less this
year to the Capital Improvement Plan and do this the following year or something? It’s too indirect?
Mr. Perez: Right. And let’s assume that the vast majority of the money was grant funded and then we would be able to do that.
Chair Filseth: We wouldn’t be able to do that at all. Okay, I understand. So, I noticed that there’s not much in here for main replacement. I think we actually might have gone over this
in UAC before. However, starting next year there are several years of $6 million a year on main replacements and so forth. Do we expect a significant rate impact because of that?
Mr. Yuan: No, that’s already been budgeted in the rate forecast.
Chair Filseth: And then finally, I had one more which is, thank you very much for the comparison to other jurisdictions on water. We’re still, it still looks like from your graph like
we’re a little bit higher than other cities in the San Francisco Public Utilities umbrella. What’s the quick answer why that is?
Mr. Shikada: There’s not a quick answer, unfortunately. Yes, and that’s the reason we provided the additional memo. Really, the culmination perhaps of relatively high use on a per-customer
basis relatively, and since I think it’s also a conglomeration from the other agencies of multi-family, the geographic distribution and the magnitude of capital improvements we do put
into the water system. I think it’s primarily the capital improvements in the water system that drives the distinction.
Chair Filseth: And that’s because of the geography of the hills and the pipes and so forth?
Mr. Shikada: To a certain extent. The age of the system.
Mr. Keene: An older city.
Chair Filseth: Yes, Karen.
Council Member Holman: So, I agree, thank you for the chart on slide 24. These are residential, or are these citywide averages?
Mr. Shikada: Residential.
Council Member Holman: Residential only?
Mr. Shikada: Yes.
Council Member Holman: Any notion how we compare on the commercial side? I’m not asking you to scroll out a chart.
Mr. Shikada: I don’t think we have that handy. We’re checking.
Chair Filseth: Your chart is net bill too, it’s not rates, right? So, if you use more it looks more.
Mr. Shikada: Correct.
Mr. Perez: It might take a minute.
Mr. Keene: It may not affect your ultimate recommendation, correct? I mean, it’s something even by wrap up if we don’t have it now maybe you guys can find it.
Council Member Fine: I think it may be, but we’ve love to see the same chart on the commercial side across all utilities probably at some point. Yeah, it’s curiosity.
Mr. Abendschein: So, we do try to deliver a commercial comparison for every utility. It looks like we don’t have one for water, though, and we’ll have to take a look and see why that
is. It’s something that we may be able to deliver later on.
Chair Filseth: So, Motions?
Council Member Holman: So, I move that we approve the Water Fund and we’ll give this a fly here, approve the Water Fund sans in the Capital Fund, the WS-07001 expenditure of $395,649.
MOTION: Council Member Holman moved, seconded by Council Member XX to tentatively approve the Water Fund Operating and Capital Budgets, with the exception of Capital Project WS-07001.
I think I’ve spoken to why that is.
MOTION FAILED DUE TO THE LACK OF A SECOND
Council Member Fine: I move that we tentatively approve the Water Budget.
Chair Filseth: Second.
MOTION: Council Member Fine moved, seconded by Chair Filseth to tentatively approve the Water Fund Operating and Capital Budgets.
Council Member Fine: Council Member Holman, I hear your point on the recycling, the recycled water issue. I just think the stuff seems like it’s more in flight than for us to make a
change right here and now.
Council Member Holman: If I could comment, it’s just like this is specifically for Stanford Research Park.
Chair Filseth: I understand. Given that a lot of it’s being paid for by non-Palo Alto money.
Council Member Holman: We don’t know how much. We were just told a portion.
Chair Filseth: All in favor? All opposed? Let’s see, so I believe it carries, is that right, so with 2 in favor, 1 opposed and 1 absent. Thank you very much.
MOTION PASSED: 2-1 Holman no, Tanaka absent
Mr. Keene: Okay, Kiely. You are finished with Utilities and everything. What’s next, wrap up?
Ms. Nose: So, what’s next is wrap up, which this is probably the best time for us to take a break.
Mr. Keene: Would 30 minutes be appropriate and the reason is, we do want to let Staff who are here and waiting run out and grab something to eat. So, it would be 20 after 6.
Chair Filseth: Okay, sounds good.
The Committee took a break from 5:50 P.M. until 6:26 P.M.
5. Utility Rate Review and Approval
(Includes Item Numbers 6-8)
Utilities Advisory Commission Recommendation That the City Council Adopt 1) a Resolution Approving the Fiscal Year 2018 Electric Financial Plan, and 2) a Resolution Increasing Electric
Rates by Amending the E-1, E-2, E-2-G, E-4, E-4-G, E-4 TOU, E-7, E-7-G, E-7 TOU and E-14 Rate Schedules
Utilities Advisory Commission Recommendation That the City Council Adopt a Resolution Approving the Fiscal Year 2018 Gas Utility Financial Plan with no Changes to Distribution Rates
Follow-up Information on Water Utility Rate Comparisons
9. Wrap-Up
Chair Filseth: We’re ready to proceed with whatever is next on the Agenda.
James Keene, City Manager: Thank you. I will turn it over to Kiely, but if I might say just one thing. I mean, we’re doing very well tonight and hopefully we could stick with the mind
set of budgeting and efficiency and everything. The same thing, for example, that has let us build up reserves is the fact that we didn’t always spend all the money that we had so we
don’t have to spend all the time that we had tonight or next week.
Chair Filseth: We got till 9:30, right?
Mr. Keene: Okay, here we are, Kiely.
Kiely Nose, Budget Manager: Thank you all. Alright, so we are going to roll right into our Budget wrap up. You guys were all emailed an At-Places Memorandum yesterday which we have provided
today as well. It kind of recapped the entire process thus far. To go over where you’re at in terms of the parking lot, you have just a handful of items in here that you guys have to
basically revisit tonight and then hopefully make tentative Motions on. After that, we have kind of a summary of where we’re at. In addition to what’s in your parking lot Staff has a
couple of additional recommended changes that they outlined in the At-Places Memo. A couple corrections, frankly, on a number of them, as well as reappropriations for some additional
CIP projects based on the current timeline of them. You also had asked at the last, or during the former session, about what happened at PTC. So, in the wrap up memo there is the letter
from PTC. As Council Member Holman pointed out, we don’t have the minutes quite yet. Well, I have them now but I will transmit them in the Adopted Budget. Overall, the conversation with
PTC went really well, I think. They were curious about the Budget process in general. They pointed out basically what you guys have pointed out as well, in the General Fund, and wondered
about the negative fund balances. So, we explained to them, as we explained to you, that we’re working on a plan for that. They were very interested in a couple of transportation projects
and if you look in the letter itself, it’s on Page 42, I think, and 43 of your memo, the letter itself gives their approval in terms of compliance with the Comp Plan; however, it also
added an attachment just where they have some of their comments, recommendations of things to consider. Again, this goes back to just some comments that they had about transportation.
So, they recognize that their role is to just review the Capital Budget in terms of its compliance with the Comp Plan; however, they just wanted to add these two additional anecdotes.
That being said, tonight the decision points that we have before you are, again, the Staff-recommended changes, as well as those items that you guys have placed in the parking lot over
the course of the Finance Committee hearings.
Mr. Keene: Mr. Chairman, if I might ask the Committee’s indulgence or consideration. There are a bunch of Staff people who are sitting behind us. I can’t see all of them. If there’s
any way that we could be mindful of the fact that they don’t all need to stay here till the end. If we kind of were to work through an item, let’s just say that dealt with Public Works
or whatever, I would hope we might be in a situation to soft of say, hey, thank you guys very much. You guys can leave for this evening, Public Works, without necessary – so, I’ll leave
that up to you to be able to ascertain whether or not you have lingering questions, but if we could pay attention to that, I think that would be good. Most of these people who are here
are the ones who are often here at the Council meetings and for some of them, tomorrow is a 9/80 that probably would be looking forward to getting out if they could. Thanks.
Ms. Nose: To Jim’s point, the last thing just to point out for you guys is, in addition to the parking lot, we have continued to document the long-term parking lot that you guys have
been discussing over the course of these hearings. That’s on Page 18 of the memo itself, so to the extent we want to have further conversations about items, don’t forget we have that
vehicle as well. And with that, I think Staff is all here for questions. Staff’s here for questions, but we would love Motions.
Mr. Keene: What we were asking, Mr. Chairman, was whether or not the Staff recommended changes, some of which are sort of clean up or whatever, that could be done first without having
any impact on, you know, what you would be doing in the parking lot component of it. So, we kind of get that aside and out of the way.
Chair Filseth: So, why don’t we do that then. If I understand what you’re saying is the Staff-recommended changes aren’t going to materially change the bottom line of this Budget.
Ms. Nose: Correct.
Chair Filseth: Okay, so let’s do that.
Council Member Fine: Can I make a Motion?
Chair Filseth: Please proceed.
Council Member Fine: I’ll move that we adopt the Staff recommended changes for the Airport Fund, the Below Market Rate (BMR) program oversight, capital reappropriations and the JMZ capital
funding shift.
MOTION: Council Member Fine moved, seconded by Chair Filseth to tentatively approve the Staff recommended changes to the Fiscal Year 2018 Proposed Budget.
Mr. Keene: And the restated, is the correction something that needs to be?
Ms. Nose: If this line is not comprehensible of all the changes, it is, but I think if you guys just say, the Staff recommended changes, that’s sufficient.
Council Member Holman: Yeah, I have a question. Could you say a little bit more about the Below Market Rate Program oversight contract?
Ms. Nose: Sure. I’m actually potentially have Sherry come up and help me with this, or Hillary. This is actually a contract that Staff is anticipating bringing to you, to Council for
review in June of this year; however, the contract would be entered into as of July 1, so we wanted to, in order not to have a Budget Amendment Ordinance (BAO) later, get it in now.
Hillary Gitelman, Director of Planning and Community Development: What she said. Hillary Gitelman, the Planning Director. This is an ongoing program we contract with Palo Alto Housing
Corp to run our BMR program and the contract is up. We went out and issued an RFP. We’re going to re-enter a contract with the same vendor, Palo Alto Housing Corp, and we’re bringing
it to the Council in the next month.
Council Member Holman: And one other clarification is, the Airport Fund, the tie down, it says this actually increases the amount or the estimate of the tie-down lease and probably rental
revenue at the airport that was inadvertently cited as a million blah, blah, blah in the Proposed Operating Budget. About $500,000. So, that increases, okay so that increases our revenue,
so okay.
Ms. Nose: It does; however, all the numbers we have provided you guys previously about where the fund is from a financial standpoint had all the correct financial assumptions in it.
It’s just a change to what was printed in the proposed documents. So, memorializing it.
Chair Filseth: Can you say a couple of words about the JMZ shift.
Ms. Nose: Sure, of course. So, what’s happening with the JMZ is, obviously, we all know that we’re working with the Friends to do the whole capital program. However, as part of that
we’re going to need to move the zoo, frankly, to do the construction and we anticipate that the timing might be slightly off between the time that we go to Council for the award and
agreement with the Friends, of the actual construction and when we go forward and need to start pulling permits and actually physically moving the animals. So, this gives Staff the flexibility
to kind of dual track those, so there are no further delays in the project. It is pulling some funding from the Rinconada Park project.
Chair Filseth: No further discussion? All in favor? Adrian made the Motion and I seconded it. Alright, so we accept the Staff recommended changes with 3 in favor and 1 absent.
MOTION PASSED: 3-0 Tanaka absent
Ms. Nose: So then if we can maybe focus back to the summary of the parking lot, where we can either make sweeping Motions or we can go item by item.
Mr. Keene: So, maybe we could also pay attention to the departments that these things fall into, so for example, the City Manager’s Office, I’m going to be here for the duration. Do
you know what I mean?
Chair Filseth: I hear you. So, I want to make sure I understand this correctly, which is that the current Budget calls for a 3.2 dip into the BSR and that on this list, that includes
some of these things but not others. And the ones that it doesn’t include are the tree-trimming cycle time, the Youth Community Services (YCS) funding and that’s it, right? There’s not
a dollar figure on TMA here though.
Ms. Nose: There’s not because all the discussions have been surrounding having that Funded by the University Ave Parking Fund, so from a General Fund standpoint, right now nothing contemplates
use of General Fund to fund TMA in addition. However, to your point, if you guys so chose, you could make a recommendation.
Chair Filseth: So, the discussion we had before was that we would contribute money from the change in parking permit fees to the TMA.
Ms. Nose: Correct.
Chair Filseth: Okay.
Ms. Nose: So, you semi dealt with that.
Chair Filseth: So, if you assume that, then the unfunded the “unfunded” components of this are the tree trimming and the YCS, is that right?
Mr. Keene: That’s correct. What about Public Works first, tree trimming, Community Services, YCS next, then I think the other questions here on the non-departmental and those other things
we can handle.
Chair Filseth: Well, let me ask this. On the tree trimming, do we need, tree trimming is Public Works, right? Do we need Public Works here for that? I mean, we understand it, right.
It’s just a question of, are we going to do it or not, right? We don’t need any further explanation.
Council Member Holman: Yeah, and I don’t see Walter, so I don’t know that we (crosstalk) back row.
Chair Filseth: What else is Public Works? The vehicle maintenance or Replacement Fund is Public Works, too, right. Why don’t we talk about that for a second? Terribly micro engineer
this from the Council desk up here, there’s a whole bunch of vehicles that need to be replaced and each one costs $50,000 and so any one of those would pay for YCS. And some of these
are pretty low mileage, right, so do we need to do all these? I’m sure there’s a better way I can ask that.
Mike Sartor, Director of Public Works: Good evening Chair Filseth and members of the Finance Committee. I’m Mike Sartor, Public Works Director. If you’ll go to your At-Places Memo, there
is a listing as Attachment H for the vehicles that are proposed. You got it, Chair Filseth. These are vehicles that are proposed to be replaced in Fiscal Year ’18. It’s not just a matter
of mileage that dictates replacement, it’s also age. As you can see, some of these vehicles go back as far as 1999, which are almost 20 years old. So, as they age the cost of maintenance
increases substantially, so that’s why these vehicles are listed here for replacement. One other comment I would have to make is, as you may recall, Council Member Holman, I believe
you were here a few years ago when we put a pause on any replacements in the capital program for vehicles. So, a lot of this is catching up with a deferred maintenance and coming forward
with replacement of vehicles that need to be replaced.
Mr. Keene: Mr. Chairman, may I call for another perspective. I would say if the Committee really wanted to be sure to make the $50,000 contribution and you said for us this year to figure
out where in the Vehicle Fund to find $50,000, we could find the least impactful vehicle, right Mike, if need be? You can cut the maintenance on my care. I bike all the time anyway.
Just kidding, I don’t have a car.
Chair Filseth: I’m the kind of old cars up here. Would you want us to constrain you to the Vehicle Fund on that, or would you want us to, would you rather we directed you to find a place
to save it?
Mr. Keene: I mean, $50,000 is so small, it doesn’t matter. If you started rolling up a bunch of numbers as we go on in the evening, then I’d rather have that general direction.
Chair Filseth: I know, but tree trimming is coming next. Thanks Mike. Does anybody else have a question for Mike?
Council Member Holman: Maybe it’s a question. Maybe it’s more of a comment. So, I’ll just say like how I do my car thing, and I’m not out in the field as much as you guys are, but I
have a 2006 car and it’s got 70 something thousand miles on it, and maybe I’m just really, really fortunate. I know one example is not going to develop a trend, but I guess I look at,
now I’m feeling like I should really knock wood, but I look at some of these vehicles and I notice for instance, CSD has a Honda Accord that is a 2006, 125,000. That’s some mileage,
but I appreciate that its age and mileage, but I’m presuming that these cars have been maintained. I mean, we do have a good-sized Budget for maintenance, so I’m presuming these cars
are well maintained. So, I have a hard time with replacing a 1999 car that’s got 27,000 on it. You know, I don’t need to go down the list here, but there are some that – here’s a 2003
Ford Ranger that’s got 71,000 miles on it. You know, how I do things is not necessarily how the City should do things. I can’t, personally I can’t justify spending a lot of money on
a car, but that’s just my personal lifestyle choices.
Mr. Keene: Why don’t we manage this for you and your direction, find the $50,000 in the Vehicle Maintenance Fund.
Council Member Holman: But we don’t know that it’s $50,000 because we’ve got tree trimming and some other stuff coming along too.
Mr. Keene: I know. Let’s do it this way, and then the numbers will start to add up and then we’ll figure out whether we have a problem. How’s that?
Council Member Fine: Just a process question. Do we actually, do we buy these at government rates? Is that a yes? Alright, so it just surprises me that a Honda Accord for $35,000. Is
the government rate just not that good, or are Honda Accords that expensive?
Chair Filseth: I think we’ve reached closure on this one. You want to put up the previous with the list, jog our memory.
Council Member Holman: I can only say, hey, you know, when I buy my backhoes.
Mr. Keene: We’ll look at that one too. How’s that?
Chair Filseth: So, remind me again, what’s non-departmental section?
Ms. Nose: The non-departmental section is kind of a catch-all and we were reviewing it on the very first night and the Committee’s decision was to, you guys wanted to see it at the end,
basically see where we’re at, see everything that’s gone forward, and at the end of the hearings, be able to regroup and look at that. So, that was the intent behind putting that in
the parking lot.
Chair Filseth: That’s right.
Council Member Holman: Excuse me. It’s Page 474 in the Operating Budget.
Mr. Perez: Yeah, 32 in your at-places, or your wrap up memo.
Ms. Nose: And so, one of the things you guys had talked about and asked for, what Lalo is pointing to, is one of the things you had talked about in non-departmental were the contingent
accounts, which we provided additional information to you on, and when Lalo is referring to Page 42, that’s the, I’m sorry, 32, that’s the information he was referring to.
Council Member Holman: I don’t see everything here.
Ms. Nose: On Page 32?
Council Member Holman: Yeah, on Page 32. There’s more categories on 474 of operating.
Ms. Nose: So, Page 32 is only intended to provide a summary of the historical budgeted levels of the contingent and reserve accounts in non-departmental. Right, so the full $37 million
is, we didn’t re-outline that. It is in the proposed document as Council Member Holman referenced at the beginning. So, I think 474 is the best summary of the non-departmental section.
Mr. Keene: So, you see the salary reserve, contingencies and of course the bigger things, the transfers in, the transfers out, infrastructure, debt service, general expense. Almost all
of these are nonnegotiable really.
Council Member Holman: So, one of these that still, it’s okay Chair?
Chair Filseth: Go ahead.
Council Member Holman: One of these that still kind of baffles me is that last year we had started out with $250,000 for Planning and Transportation and then it became $500,000 because
of various things, projects and stuff going on, and I guess I’m a little baffled. I don’t still understand, I thought about a lot of this since our meetings and in between our meetings,
and you know, on the one hand I appreciate there’s a little bit of a reduction in the Planning Department Budget, and I appreciate that, to say the least. At the same time, when we have
so many, especially, well Planning but maybe especially Transportation projects. And we talk about not having enough staffing because of this long list of things that we want to do,
including the Council wants to do, and there’s been a lot of talk about, is creating the Transportation Tax Committee, or working group or whatever one wants to call it. So, it’s hard
for me to understand how we don’t have the bandwidth to do it, but we’re still not accounting for having some contingency money her to cover that. It seems like a non-sequitur to me.
Mr. Keene: So, I mean, I kind of feel like we’ve made a little bit of a decision for this next year for the most part on this transportation tax issue, but put that aside. There are
some FY18 issues that we identified I the memo that will, that we anticipate facing, right. So, both the cost for the wayfinding system for garages, right, and depending upon further
policy decisions about the parking management program itself, there will be the need for additional funding, if we’re going to move ahead. Our thought this year was that putting in a
contingency is, again, it’s either just sort of saying, well, let’s just make an estimate, or let’s think about coming back to you when we have much more specific numbers, since those
are the two big unfunded projects that we have. As opposed to, in some of the earlier years, so many kind of components were moving that we thought it was important to have that adaptability.
And, you know, we do expect that we would have some potential unspent funds, we may close the year a little bit better than we’ve estimated, and we are not in a position to be able to
estimate that, to Budget it now for you to do that. So, what we would be doing is we would be maybe making cut decisions somewhere else now, when it would be foolish to do that because
in three months or four months, whenever it is, when we have better information about these programs, we may then be able to say, here’s the exact cost and here’s exactly how you can
pay for it. So, I generally don’t think you want to sort of have a standing policy of putting contingencies in department budgets, because of things that might come up. I do think we’re
better served generally to really try to manage to the numbers and provide you with the dollars when they come. I know you don’t like BAO’s, so that’s the hurdle you have to get over
in that regard. But I think we can, I mean, to be honest with you, I think we can be more accurate and even sort of transparent about what we’re doing by waiting and being able to come
back. That’s the thinking there. Because I would agree with you that that’s, that we will certainly need more funding in Transportation in Fiscal Year ’18. That is one of the areas that
I would say we have some things known. And then the other thing is, is that if the Council really goes wild and comes up with some new initiatives that you really want, then again, we
would have to come back to you probably with additional funding for those. I mean, if they’re outside our ability to deal with them with the existing contingencies. But it’s a $600 million
Budget. You should have some adjustments.
Chair Filseth: Can I interrupt for just a second here. It occurs to me that we might be done with Public Works. Do you think? We had tree trimming, Vehicle Fund we already said, you
know, maybe we’ll dip into that right. I think we don’t need to keep poor Mike here anymore, right? Unless there’s, if I understand this.
Council Member Holman: Unless there are not questions more for Walter for the tree trimming.
Chair Filseth: Okay, maybe we need him.
Mr. Keene: Do you guys have any feeling where you’re going to end up on the tree trimming contract? Do you want to put it back in?
Council Member Holman: Well, I do but I don’t know where my Colleagues are.
Chair Filseth: Well, I’m going to support putting it back in.
Mr. Keene: Okay, so good. We don’t really need to Walter around if you guys want to do that. So, I would say though, we have this outstanding issue with the Urban Forest Masterplan where
it was a desire to put some more money back in, which was unclear to me as to why we needed to do that.
Council Member Holman: For me I needed a little bit of, I didn’t find this to be really, really clear. I know you’re dealing with a lot of different moving parts here in the Urban Forest
Masterplan, but just a brief walkthrough of this would be really helpful, I think.
Ms. Nose: Just to clarify, a walkthrough of the language in the memo or the attachments to it?
Council Member Holman: That attachment. I’m sorry, it’s Packet Page 12. Maybe I should be looking at the attachment instead.
Ms. Nose: Sure. So, on Packet Page 12, this is just one of the requests out of putting the urban forest masterplan into the parking lot was a review of what the third year of that masterplan
entailed, and whether or not the department would be able to execute and complete that without additional resources being specifically added in the General Fund. We anecdotally walked
through some of the things that were going to happen, and so the request was to have a full list. So, that’s what’s in the attachment, is the full list for the third year of the urban
forest masterplan. What’s going on in the write-up is a discussion of all of the elements within that third year in general are either funded or have some dedicated resource to it. However,
there are a few remaining programs that would require additional funding of somewhere between $25,000 and $90,000, in that range. And so, right now those are recommended to be deferred
to FY19; however, if you guys wanted to add additional money and move those back up to FY18, that’s at the Committee’s discretion.
Council Member Holman: And I can’t at this moment again find the attachment for that. Could you tell us what Page that is?
Ms. Nose: So, Attachment G, page, starts on Page 34 and runs through Page 40.
Council Member Holman: So, which ones would we not do, cutting to the chase, which ones would we not do if we didn’t fund this?
Ms. Nose: I’m going to ask for some help from our Public Works Staff on that one.
Gina Magliocco, Management Analyst: Gina Magliocco, Public Works. So, you want me to walk you through the programs, what is and isn’t?
Council Member Holman: If you please.
Ms. Magliocco: Okay, so what we essentially did was we grouped them into four groups, and what will be deferred if we don’t have additional funding would be the wildlife programs, which
are 52 through 57. So, if you look at the year three on the far left, on Page 38, Number 52 through 57 on Page 40, those are all the wildlife pieces that would have to be deferred and
total approximately $90,000. And then the other pieces, I’m sorry. And then the other pieces are the development. Okay, so I’ve got the numbers wrong though, right? Because the wildlife
is $25,000 the development is $90,000. Do you follow me? Sorry. The development is 41 through 49, which is the $90,000 and then the wildlife is $25,000 which is 52 through 57. So, development
is on Page 34 are the development pieces which are listed in 41, 42 through 49. There’s a lot of overlap, that’s why we kind of grouped them together.
Chair Filseth: You know, some of this is pretty small numbers, $790 and stuff like that. It doesn’t seem like it needs specific direction from this room.
Ms. Nose: I’m sorry.
Chair Filseth: It probably doesn’t need specific action one way or the other on the $600,000 Budget.
Ms. Nose: I think it’s more the aggregate when you pull everything together, 41 through 49 kind of thing, then that’s when you start to get to the larger numbers. Each individual initiative,
you’re right, they are tiny.
Council Member Holman: And could I just suggest that, while I appreciate the point, it’s like you don’t need direction for $790, but it is a piece of the urban forest masterplan, so
I think it’s important to track it that way. And actually I think 41 is a really important one. Are there no grants available for this kind of work? The development portion of this,
or the other?
Ms. Nose: I’m sorry, can you repeat the question for me.
Mr. Keene: (Inaudible) So, I’m going to be tough here. Walt, you’re going to have to get us some fast answers. When I’m in Budget, when we’re doing this and we don’t have fast answers,
I’m really disinclined to fund things, so sorry. I mean.
Walter Passmore, Urban Forestry: I’m not aware of any grants available for development policies. We could research that, but if you’re talking about trying to obtain a grant to fund
$90,000 worth of programs, you know, the administrative process would be pretty burdensome to find that amount of money.
Chair Filseth: My inclination is actually sort of like close to what the City Manager said, which is, I think we’re on track, assuming that Council Member Holman and I and potentially
Council Member Fine are all going to take a look at the tree-trimming cycle time. We’re on track to ask the City Manager to use management judgement to find about $400,000, and I think
that’s probably about as much as we ought to be, unless we figure out someplace to find another quarter million dollars on the fly here, right, I think my inclination is to say, let’s
leave the urban forest masterplan stuff in 2019.
Council Member Holman: I understand that the Public Works Department is here and that’s why we’re doing this now, but some of these are pretty small dollars, so…
Chair Filseth: I assume the really small ones have a chance of getting done anyway.
Council Member Holman: The small ones are what?
Chair Filseth: $790.
Council Member Holman: Well, there’s more than that. So, we’re eliminating what is it, $90,000 by deferring this?
Ms. Nose: We’re not actually eliminating anything. Historically the urban forest…
Council Member Holman: Deferring not eliminating, deferring. Eliminating out of this year’s Budget, right.
Ms. Nose: Approximately. It’s actually more than that. I think it would be the $90 plus the $25 in total, if I’m reading the memo correctly. Every year we add one-time money for Urban
Forest Masterplan, for the last two years rather, I should say, not every year. And so, it’s not that we’re eliminating it, it’s that Council has never approved an ongoing action for
this plan, and so in this instance those two initiatives would be deferred to FY19.
Council Member Holman: And $25,000 would not be enough to carry forward the wildlife concerns, because that adds up to much more than that.
Ms. Magliocco: Excuse me. Gina Magliocco again. So, if you’re looking at, there’s the column in the three-year plan, if you’re looking at the table say for number 41, there’s the needs,
the personnel is staffed; essentially the estimated cost for Staff time versus other, which is where we feel our actual Budget dollars for a contract or something.
Chair Filseth: I think all we’re saying we’re going to do is we’re not going to add $125,000 to fund cash outlays for that line, right. Is that an accurate statement?
Ms. Nose: I’m not quite sure I heard you correctly.
Chair Filseth: If, so that went into the parking lot, but if we say, you know, we’re not going to proceed with that, then all it says is we’re not going to fund $125,000 in cash outlays
for that item, to the extent that it’s covered with existing Staff and doesn’t cost anything, it might still happen. Is that what I think I heard?
Ms. Magliocco: I would say that the $115,000 does not include what we estimated as Staff time. But to that point, I don’t know that, because what we need to do, we wouldn’t just do a
little piece of it.
Chair Filseth: You would do it all.
Ms. Magliocco: We would do it all.
Council Member Holman: So, without getting picky patty though, because I do think we keep talking about this one, the $790 one, it’s Number 41. I think that is a really remarkably important
piece of the urban forest masterplan, and if we don’t fully fund this, how we could best direct Staff to continue with Number 41. I guess would must make it that simple. I don’t know.
Chair Filseth: I think we leave it at Staff’s discretion. All we’re saying is we’re not going to put $115,000 in cash into this.
Council Member Holman: But how do we direct that there are some that are priorities in this list, such as Number 41? And we want Staff to continue with that.
Chair Filseth: Well, the simple way is you and I agree to take out the tree trimming thing and we do this instead.
Council Member Holman: You know we’re not doing that. I don’t want to fund the whole thing this year because of other priorities, but I do want to have that direction given to Council.
Council Member Fine: So, I’ll just chime in for a second. Project Number 41 here does seem like something we should be pursuing. I think Public Works has probably gotten that message.
If there’s bandwidth we’d love to see it. I’m not willing to fund $800 separately, and I don’t think we’re willing to do the $125,000.
Mr. Keene: If you guys adopt a budget recommendation tonight, we’ll definitely do it. We’ll find the money.
Council Member Fine: I think it’s also important to note, there’s just the three of us here tonight, right, so we are a minority of our Council, and it may not be everyone’s priority.
Mr. Passmore: So, if I can inject really quickly, the Program 41 did not have any budget associated with other, so we could implement that one program independent of any new funding.
Chair Filseth: That’s sort of what I was trying to do. There you go. And the place I don’t want to go, the place I don’t want to go is, I don’t want to be in a situation where Staff
says it’s going to cost X and we say we’re not willing to spend X, but Staff should do it anyway, right. That’s what we need to avoid. Okay, with that do we need Public Works here anymore
for questions and consultation? Folks, Mike, Walter. There isn’t a Motion yet. We’re sort of doing a group scrum, but you can certainly stay. All we’re committing to is we’re not going
to call you up here and ask you more questions. I see that Leif Erikson has arrived. We have at least one speaker for YCS, so why don’t we, since we’re somewhat informal here, why don’t
we ask Mr. Erikson to speak? (Inaudible) We can do that. You should be aware that, sort of, we already sort of said that we are probably going to fund this. So, don’t convince us not
to. Okay, what should we talk about next? Let’s see, trees we said we’re going to, actually, we were on the non-departmental stuff.
Ms. Nose: Actually, do you mind if we switch gears to do Parking and TMA so that we can let Hillary and Sherry head out potentially. Since they spend most of their Mondays with us. Thank
you guys. So, I guess I should give you guys one recap really quickly.
Chair Filseth: Yeah, do you want to do that?
Ms. Nose: So, after muni fees, we went and did a few calculations and so with the tentative Motion that you guys have approved with the increase of Downtown parking permits up to about
$700, $730, $740 permit value and Cal Ave at 50 percent of that, in University Ave that’s going to generate almost $500,000, just shy, probably about $475,000, which would be sufficient
to cover an additional allocation to TMA. In addition, what it actually would also do, in the California Avenue Fund, would eliminate the need I FY ‘18 for the current $75,000 loan that’s
budgeted in non-departmental, because the original increase in Cal Ave was a small rate increase. To move it up to the $365 you guys had proposed is about a 145 percent increase where
we only had 80. So, what that does do is just, barring no other changes, and not the tons of other parking initiatives that we know we have on the horizon, you could take away the $75,000
loan that’s in non-departmental right now.
Mr. Keene: So, that’s a reduction.
Ms. Nose: Yup, that is a reduction. So that would help fund your trees. So, from where you’re at, from those kind of standpoints, those are the fungibility of the Motions that you have
made previously.
Chair Filseth: That sounds sensible. Staff consensus, that’s a good idea?
Mr. Keene: Yes, I think so.
Council Member Holman: Yeah, I thought we were on non-departmental and that’s why I was not tracking it.
Council Member Fine: So, net is like $550, something like that?
Ms. Nose: I’m sorry, oh, you’re talking between Downtown and Cal Ave? Actually, it’s a little bit more if you take into consideration everything on the California Avenue side of things.
Council Member Fine: What would that be? It’s like $475 for University, $75 for the fund?
Ms. Nose: $475 for University and about $100, $125 in Cal Ave.
Council Member Fine: $125, that includes the $75?
Ms. Nose: Yeah, so out of that $125 you’re eliminating the need for $75.
Council Member Fine: Okay. And just a quick question. The TMA was asking officially for something like $480? Okay, so we have $100,000 left over.
Ms. Nose: So, if you did bring up in the University Avenue Fund solely the $480,000, it would bring TMA from $135 to $480 in total, or would it be the $480 in addition to the $135?
Council Member Fine: So, we asked to bring both up, and I think it’s actually, yeah, it’s $480 total for the two. I think it’s coincidental that the Parking Rates Downtown Fund that
and, yes, Mr. City Manager I hear your concern that there’s no TMA for Cal Ave, but at least they’re not taking on the loan, right.
Mr. Keene: Right, and I think we’ll have some, we’ll have opportunity to talk about how best to apply those funds. You know what I mean, if you want to reserve a certain amount for the
TMA itself, there’s certainly going to be whatever, incentives or other good ways to spend it more locally than if not, if that’s what you want to do.
Ms. Nose: Sound good?
Mr. Keene: Now, was there anything else?
Ms. Nose: I think that’s it for University Ave as long as everything is copasetic from that standpoint, at which point, unless you guys have further questions for Planning on anything
else, then we can probably let them head out.
Chair Filseth: There’s another question for PC.
Council Member Holman: And, you know, it’s answered in here, but I just, it’s kind of the response that I’ve gotten over and I just don’t get it, and it’s about Code Enforcement. You
know, I’ve said before even that we talk about cost recovery on this and that, and cost recovery on everything else, and it just seems to me like with Code Enforcement that we have so
many occasions where there’s recidivism where, you know, we’re sending Staff out, we’re sending Staff out, spending a lot of Staff time, and yet we just, we’re so loath for whatever
reason to do penalties or fines, and as I’ve said before, it’s like I’m becoming a broken record, I’ve said before I understand like the first priority would not be to penalize someone.
You want to get them into code compliance, but we just don’t penalize people with one noted exception. And so, it seems to me that we’re subsidizing violators and the public is not happy
and we’re not collecting monies. Because we don’t penalize people or fine people, they have no incentive to stay in compliance. They just go do it again.
Ms. Gitelman: Council Member Holman, Hillary Gitelman, the Planning Director. You know I welcome an opportunity to have a longer conversation about Code Enforcement. I think there’s
a basic misunderstanding about the process that we go through in Code Enforcement. Fines and penalties are way at the end of a long process, and our goal is to try to get compliance
before we even get to that end. So, when we receive a complaint, we undertake an investigation. If that investigation determines that a violation has occurred, we provide a notice that
we’ve discovered a violation and we seek voluntary compliance. If we don’t get voluntary compliance, we escalate that to some kind of notice to comply. We get sterner. Where I’ve worked
in the past, we can do two or three notices, kind of escalating the tone and the demands and the deadlines for compliance. Now, a lot of property owners, in fact, very many property
owners, when they get a nasty letter from the City saying you’ve got a big problem and you better address it or else, they come into compliance, and we don’t really have the ability
to jump the que and start charging fines and penalties until we exhaust these administrative steps. So, it’s only those very few cases where you get to the end and you haven’t gotten
compliance, where a fine or penalty is actually levied, or the City itself undertakes remediation or abatement of the violation, like cleaning some bushes or cleaning up property, and
then imposes a lien on the property itself. But, this is like in a very small percentage of the cases, and that’s the way this system is designed to work. And in the case I think you’ve
mentioned of repeat offenders, once again, we cannot jump immediately to fines and penalties with a repeat offender. If someone has a violation, they abate the violation, it’s done,
then it happens again, we still have to go through the steps of investigating, providing notice and then escalating that notice at least one more time, sometimes another time before
we get to the point where we can impose fines or penalties. That’s just the way the system works. It works that way here and every other Code Enforcement agency that I’ve worked with.
Council Member Holman: Even when these things go on for years?
Ms. Gitelman: You know, not a lot of our cases go on for years. Some of the high-profile ones sure do, and I think that’s what has captured the peoples’ imagination right now. We have
a couple of real high-profile cases, but the vast majority of the complaints we receive are resolved quite quickly and without the necessity of escalating through this kind of ladder
of enforcement actions.
Council Member Holman: I appreciate the description. Maybe this is going to be a good use of the audit and education for the community, because the community has a very different experience,
and frankly, I do too. I appreciate your description. That’s probably the clearest, most concise description that’s, at least I’ve heard, and I do appreciate that, and yet we have issues
in the community and they’re fairly prolific.
Ms. Gitelman: We did include in the memo some ideas about if the Council is interested in increasing cost recovery for this function, we certainly could look at other ways of doing that.
We could undertake a Nexus Study and prove the nexus between our permitting process and our Code Enforcement process, the theory being that people who are good citizens and get permits
benefit and stay true to them, benefit from us having a Code Enforcement program to go after the bad actors. And if we establish that nexus we can raise our permit fees to subsidize
the Code Enforcement program more than we currently do. So, there are opportunities that we could look at in the future.
Council Member Tanaka arrived at 7:20 P.M.
Council Member Holman: So, increasing permit fees for the good guys, though the good guys are subsidizing the bad guys, so.
Mr. Keene: It’s more of a longer discussion and it may be Police and Services, whatever. I mean we take this up as to how to intensify it. I mean, it is a little bit like the law just
in general. Most people are law abiding, most of the criminal justice system spent on the criminals. And in this case, it’s the difficult cases that are the ones that stand out and we’ve
got to, as Hillary said, follow due process with folks and in many ways those who are most reluctant do take a lot of time and attention and we understand that. So, that’s a worthwhile
conversation to familiarize ourselves with.
Council Member Holman: Right, and do understand the reason I was going down that path tonight was because it still had to do with the Planning and Transportation Department, whether
you needed any Contingency Funds to help address that. That was the purpose of the dialogue.
Mr. Keene: Yeah, again I’d rather have us have a program and come back to you and have you fund it, if that’s what we need to do.
Chair Filseth: Okay, with that, are we done with PCE? Yeah, why don’t we do YCS. Are you all here yet? You’re not going to be here till after the Motion is done. Let’s see. So, we have
two items left, non-departmental section, I’m not sure we were done with that, and…
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Chair Filseth, could we show you a, what we believe is the running total of your dinner bill, and that way
you can look at it.
Council Member Fine: Just one random question. I know you want to jump to something else, but on that issue of Code Enforcement, do we have an idea of how much value of liens the City
has against property holders? No clue, okay.
Ms. Nose: Okay, so while this is warming up and we’re going to switch screens here in a second, but just to orient you to what we will be looking at, is we have on the right side a list
of what’s in the parking lot. So, it’s an abbreviated list, but it’s the list that you guys have in front of you on your memo. And on the left I’ve just taken the liberty of going through
some of the actions and items that we’ve tentatively been discussing today, and so on the left you can see, we have started this process with a surplus, frankly, in terms of our General
Fund BSR level, so we still had a few hundred thousand left before we would hit that 18.5 percent targeted level. Then on May 2 you guys had taken an action to add $20,000 to the Auditors
Office and so those are those first two lines. As we’re moving down into the third, fourth and fifth, we’re talking about the things that we’ve discussed tonight.
Chair Filseth: Should the increment on the parking be in there too?
Ms. Nose: I was trying to show you guys just General Fund for right now, and you are correct, absolutely, parking will be a component of that, but I do have all the impacts of the parking
side of it. So, we have, assuming that you guys want to tentatively fund the $50,000 for YCS, that’s why you see the negative 50. However, on the other side we’ve talked about reducing
vehicle by $50,000 so that offsets that, and then with those parking changes that we’ve tentatively approved, that gives you an extra $75,000. So, at the bottom, at the end of the day,
you’re sitting at $328,000 positive.
Mr. Perez: And your tree trimming is $338.
Ms. Nose: I’m not sure if Staff can figure out that extra $10. I’m kidding. So, I wanted to give you guys a status update so where your conversations have taken you.
Chair Filseth: Thanks, that’s helpful. Why don’t we go back to non-DMO? But I’m not sure that we, in fact, were we done with that or almost done? Non-departmental, yeah.
Council Member Holman: Except HR.
Ms. Nose: Council Member Holman is referring to the HR additional information that we had provided.
Council Member Holman: But I’m also looking at the, Page 474, it says HR and it’s got a $50,000?
Mr. Keene: That’s a special fund that we’ve been keeping with them related to negotiations for the uncertainty, so if there is some outside expertise or whatever.
Council Member Holman: That is helpful. And then the, what I had asked for and I saw it earlier and can’t find it now. Where ever it was, the grievances and hotline complaints, I know
I read it earlier.
Mr. Keene: I don’t think that would have any bearing, though, on non-departmental.
Council Member Holman: No, it wouldn’t.
Mr. Keene: Just trying to let you guys be able to make decisions and complete each section, then we can go on to the other areas that may be more relevant to that question. The Operating
Budget itself.
Council Member Holman: You’re like a hunting dog, Jim, just keep pointing us.
Chair Filseth: Follow the money. So, on non-departmental, are we closed on that?
Mr. Keene: If I understand it, you would be essentially adopting it as it is with the removal of the $75,000 that was included in the non-departmental.
Chair Filseth: That’s where my head is, having not seen anything to do with it.
Council Member Holman: Hey look, there are four of us now. My only question is, because under other on non-departmental it’s go transfer to infrastructure and are we okay with those
numbers? We talked about potentially finding, according to another earlier Motion, 4.3 might not be – we don’t know yet.
Mr. Perez: Council Member Holman, let me just add a little bit of, just to help your conversation, for Fiscal Year ’18 you’re fine with that number. I think your Motion was for Fiscal
Year ’19, so that would not be reflected in these numbers.
Mr. Keene: Yeah, we’re only dealing with the actual appropriation (crosstalk) for Fiscal Year ’18.
Council Member Holman: I understood it to be ’18 not ’19.
Ms. Nose: So, the $4.3 negative balance in the CAP Fund is FY19, not FY18. FY18 is solvent with the transfer that you have before you in the non-departmental section.
Chair Filseth: The $4.3 is a projection if we don’t come up with something else.
Mr. Keene: That’s correct. And so, it is a plan, not a Budget, so those other years, even though you have asked us to look at fixing it in the plan or smoothing it out so it’s not there
in ’19. So, we would look at that for the capital improvement program. But the Capital Improvement Budget is just the first year always of the five-year CIP. So, we’re covering the $4.3
million request, it’s just not something that has to be balanced in the ’18 Budget.
Chair Filseth: Okay, so with no further questions on non-departmental, I think non-departmental is going to be on track to go out of the parking lot and back into the regular Budget.
Is that an accurate summary?
Mr. Perez: Yes, whenever you’re ready, the appropriate Motions would be good.
Chair Filseth: Good. Now that Leif and his group are here, should we do YCS? We have three speakers from the public to speak on the subject of YCS, who are going to, if you wish. Bear
in mind that it’s already, it’s good unless somebody changes their mind.
Linda Lenoir: No, no one changed their mind. Thank you so much for allowing us to be heard this evening. I’m Linda Lenoir and I’m retired from Palo Alto Unified School District as the
district nurse for 26 years. I was formerly on the Human Relations Commission here in Palo Alto and I’m more recently on the Healthy Cities Committee. Thank you for letting us be here
and talk about YCS and our efforts. As you all remember I’m sure clearly, in 2009 we had a cotangent suicide. At that time, a couple of us, a committee got together and we actually wrote
a toolkit for schools. The toolkit for schools was about really intervention, and at that time we were in a crisis, and the City and all of us had to come together to intervene during
a crisis. More recently we just completed our second toolkit, which is K12 for our mental health promotion and suicide prevention. The reason why I bring this up is because YCS does
promotion. It does wellness efforts. And so, I just want to make sure that there’s an understanding of that. We need to go more upstream in our efforts and that’s what YCS does. This
City has been absolutely wonderful in maintaining and keeping a lot of the intervention and crisis efforts there and we’ve worked with them for many years. At this point in time, we
are trying to provide more upstream efforts. So, a recent survey that was done a number of years ago and more recently done, shows that our students are still feeling that they are really
not totally connected and that our community and families don’t really care about them. I think that YCS is the group, the organization who comes in to make that change. It connects
students and Staff and families to activities that promote social and emotional development, social and emotional learning. It provides social skills so that the kids become engaged,
more engaged, both at school and in the community. It provides trusting and caring relationships, both between the students amongst themselves, the students with other cities, the students
with their Staff and also provides within the families itself. It also gives families the opportunity to be out in our community to enlist in different activities that brings us all
together. So, at this point in time we really need more upstream efforts, and that’s what YCS does for us. So, I hope that you will support us in our efforts, because I think that’s
the direction that we’re all trying to go is more upstream and more positive to get better outcomes much earlier for our students, so that they don’t have to be in a crisis. So, thank
you very much for letting us talk.
Chair Filseth: Thank you. Next person.
Kathleen Blanchard: Hello, my name is Kathleen Blanchard. I’m a parent in the district. I’m active with Project Safety Net and I’m on the board of Youth Community Services, YCS. I think
I know I’m speaking to kindred souls when I talk about the importance of service in our lives and in the lives of the many students and the families who have been touched by YCS. I just
wanted to say very briefly that YCS has been an important, almost critical factor, in our lives, as my family has looked for continued meaning and purpose to keep us going, thriving
and not just surviving. And so YCS has played a very critical role and I know it has helped my daughters in particular connect with other students and with other families, so I’m very
thankful for the support for YCS. I want to just relate something that occurred to me last week. I was up in Petaluma and I was talking to the freshman class at Casa Grande High School,
there’s a human interactions class there. They’ve been teaching it for 30 years and they happened to have a segment on suicide and my niece goes there and so the teacher asked if I would
be so kind as to go all the way up to Petaluma and speak to the freshmen there on this difficult topic. The children are amazing. They asked the most insightful, thoughtful, compassionate
questions and some of them asked, in their little handwritten notes to me, how did you manage to cope, how did you and your family cope after this devastating loss? And it reminded me
of, what were they really asking is, how did we manage to find ourselves again, right. And it just reminded me of a quote from Gandhi which you probably know, it’s “The best way to find
yourself is to lose yourself in the service of others.” So, I thank you again for your support. If you were apt to change your mind at all, I encourage you to change your mind in favor
of increasing your contribution to YCS. Thank you.
Chair Filseth: Thank you. And our final speaker is Leif.
Leif Erickson: And I’m Leif Erickson, Executive Director of Youth Community Services, and I want to say as little as possible so you don’t change your mind. But to thank our two active,
very active board members and community members, and to thank Council Member Karen Holman and Joe (unknown) and for putting together this matching proposal. So, I welcome your questions
if there are any, and otherwise welcome your support.
Chair Filseth: Thank you and thank you all for your service. With that, let’s move on to, I guess our final remaining item in the parking lot, which is CMO staffing.
Mr. Keene: Mr. Chairman, do you want to consummate the decision on the swap on YCS and the equal funding piece now or not?
Chair Filseth: Sure. Well, let’s see, why not. So, I’ll move that we tentatively accept, well, actually we don’t accept the whole thing yet. I’ll move that we append the Budget to add
$20,000 to the Code Enforcement survey, $50,000 for YCS funding, reduce the Vehicle Fund reduction by $50,000 and remove the Cal Ave loan from the General Fund by $75,000. Is that it?
MOTION: Chair Filseth moved, seconded by Council Member Holman to tentatively approve the addition of $20,000 for the Auditor’s Office Code Enforcement Survey, $50,000 for YCS funding,
reduce the Vehicle Maintenance and Replacement Fund by $50,000 and reduce the California Avenue Fund by $75,000.
Chair Filseth: All in favor? All opposed. All abstained. Okay, that passes by a vote of 3 to 0 with 1 abstaining.
MOTION PASSED: 3-0-1 Tanaka abstained
Chair Filseth: Okay, so with that we still have a discussion on CMO staffing.
Ms. Nose: You actually have three things left, just to summarize, you’ve got the City Manager’s Office staffing, but you also then have the non-departmental section.
Mr. Keene: You didn’t make a Motion on that.
Ms. Nose: Yeah, you had only done the 75. And then you also have the tree trimming as well. Oh, I thought we added the tree trimming.
Mr. Perez: We took the liberty to add the amount because we weren’t sure where you were exactly heading.
Chair Filseth: I’ll make another Motion that we add the tree trimming, alright, and we accept the non-departmental as is.
MOTION: Chair Filseth moved, seconded by Council Member Holman approve the Tree Trimming funding with a seven-year cycle and approve the Non-Departmental Operating Budget.
Chair Filseth: All in favor? Okay, so the Motion is that we add the, restore the accelerated, restore the current tree-trimming cycle time out of the $338, right, and we accept the Non-Departmental
Budget as is. Okay.
Council Member Holman: And so, restoring the tree trimming, that means we’re going back to seven-year cycle, okay.
Chair Filseth: So, all opposed? All abstained? That passes with 3 in favor, none opposed and 1 abstained.
MOTION PASSED: 3-0-1 Tanaka abstained
Council Member Tanaka: I just wanted to say I’m abstaining because I was out.
Chair Filseth: Technically within the zone, then.
Council Member Holman: I did have a couple other things that we have, that have come up that we haven’t really decided on. And one thing that I’ve given further thought to, because we
have tentative approvals on a lot of stuff. So, the things that I’ve given a lot of thought to are the information person in the Police Department, and I was convinced the other night
that it’s a warranted position, and just the more I thought about it, this is why it’s good to be able to reflect on this stuff, and the more I thought about it the more I think it’s
just not a fulltime position. It doesn’t resonate with me, and I gave Jim a little heads up on this the other day. And I look to how it’s been done prior to this. You know it was a Police
officer who was doing it also as part of his job, and so that’s kind of where I am. I just don’t see it being a fulltime position. And it’s not a full PR expertise kind of position,
so I’m having a hard time not understanding why an articulate person couldn’t be, who is in the Police Department now, couldn’t be trained to do this as another adjunct of their job.
So, I need some help with this.
Mr. Keene: So, Mr. Chairman, Council Member Holman mentioned that to me when we were having lunch. I mean, obviously, I did say that half a position in one sense is better than none,
but I also started thinking about it in the nature of the time clock for Police and I’m just, I mean, Ron is here. He can probably give you a better sense of what the implications of
a 0.5 versus a full FTE are.
Council Member Holman: And that’s why I appreciate that very much, and I’ve thought about that too, and that’s why I said, it seems to make more sense to me that someone who is already
in the Police Department take this on as Zach Perron did, so that’s where I am.
Chair Filseth: You know, thanks Chief Watson for joining us. And I’d love to hear his, love to hear your thoughts on this.
Ron Watson, Interim Police Chief: I actually thought about what’s going to happen if the position doesn’t get approved, and one of two things would happen. All of the bad things that
I mentioned last Tuesday would stop. The alternative to that would be we try to do what we did with Zach Perron five years ago and have someone in the Police Department do it. The problem
is, I went down all of the lieutenant positions, because they would likely be the ones that would do it, and there’s no one in that group right now that would be able to do it in a really
constructive fashion. The one person that would probably be best at it has already been placed into a critical position for the next two to three years. So, functionally one of the problems
I have, because I really can’t replicate what I did with Zach, or not that I did with Zach, but what we have been doing with Zach for the last five years. So, I’m going to be at a real
crossroads if we don’t approve it and go out and hire a professional, and even if we were to attempt to do it half-time, we would not get anyone to put in for that position, if we were
to try to hire a half-time person. It struck me the other day how important this was, even though I was pretty passionate about it last week. We had a meeting down in the EOC yesterday
and there was probably 20 people in the room, and it was a collaboration between the Palo Alto Police Department, Sanford Department of Public Safety and the Stanford Hospitals, which
the Stanford Hospitals are actually much more than just Stanford Hospital. It’s Stanford Hospital, the clinics, Lucille Packard, it’s the School of Medicine. And it struck me how many
communications people Stanford has between the hospital, the university, Lucille Packard, the medical clinics, the school of medicine and how much they rely on the information from us
for any kind of critical incidents that happen around the hospital or in the hospital. And if we don’t have at least one person doing that, there’s a tremendous form of jeopardizing
what we have with Stanford University and Stanford Hospital. We are at a critical time where we’re going to have to do this, and I, unfortunately, don’t have anybody in-house, so like
we mentioned last week, I think it’s pretty significant that Jim hasn’t approved this position in the past two or three years, and this is the one position he is recommending this year.
And in terms of the Police Department Budget, it’s unrelated, but the fact is, there’s no increase in our FTE’s in our Budget by doing this, because it happens to happen in a year where
we were able to reorganize another position. So, I would implore you to keep this in and let the entire Council take a look at it. We can give the presentation to them that we did on
Tuesday last week, and see what happens from there.
Council Member Holman: Do you have any notion as to how much time Zach spent in his communication role?
Mr. Watson: Zach spends 100 and probably 20 percent of his time doing this, so. You know, the problem within the Police Department as saying, somebody can take this on as an ancillary
duty, all of the management team, they are already working more hours than a normal person on their regular job and trying to do other things. We don’t do the ancillary stuff very well,
quite honestly, when you’re trying to add it in to somebody else’s job. And the City Manager just mentioned it to me, we’re talking the 24 nature, 24/7 nature of the Police Department
is, we’re all on call and working 7 days a week, 24 hours a day. So, this person is not only going to be doing this stuff fulltime, but they are available at home on their days off to
either come in or jump on the phones and jump on the computer. You don’t necessarily see this from the public side, of a lot of our incidents go down during off hours and our public
information officer is actually at their home doing the social media on the phone with the command post and the people here at work, so it’s just not an ancillary duty anymore. It’s
a 24/7 thing that happens 365 days, whenever we need it. It’s a fulltime deal.
Council Member Holman: So, is the headline that will come out of what you just said is that Police Officers are abnormal? I remember what you said earlier. Never mind. Well, I certainly
don’t want to minimize the importance of it. It’s just trying to, I hope you can understand the challenge.
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: Yeah, I have a question for the Chief. So, my question for you is, for the social media, I think the idea that you’re trying to do with it is like, try to maybe
alert the neighborhoods about a burglar on the prowl, right. I mean, we’re trying to catch him or inform the neighborhood about something, right. You’re using it as a communication tool
with the people that are here in Palo Alto, correct?
Mr. Watson: That’s one aspect of the job. Actually, a very large part of the job is all the press relations, the, I mean we get inquiries every day from all the local newspapers and
the TV stations about everything they see on our press log. I know it seems like an easy thing, but I’ll just give you an example. When the press log goes out every day, the press starts
calling us and they’ll say, hey, I see a burglary at Stanford Shopping Center. I want to know about that. That requires a Staff member to go pull the report out of the system, read the
report, figure out what’s releasable, call that person back and give them the information. And that’s on one report we took on one day. That happens with all the news organizations every
day on numerous reports that come out. And that’s just back and forth on the press deciding what they are going to report on. We also, obviously, issue press releases on anything that’s
important.
Council Member Tanaka: So, why doesn’t, the City has a lot of other PR people. Why doesn’t, like the City’s other PR Department handle all this. Why does it have to be the Police Department?
Mr. Watson: Well, those folks don’t work for me and they have their own work load and also the Police Department is very specialized in the information that we put out. They would have
to (crosstalk).
Council Member Tanaka: How many press releases do we do, from the Police Department?
Mr. Watson: I don’t have the exact number in front of me.
Council Member Tanaka: Is it like more than ten?
Mr. Watson: In a year?
Council Member Tanaka: Yeah.
Mr. Watson: Oh, sure. We put them out every week.
Council Member Tanaka: So, okay. What kind of press releases do you do?
Mr. Watson: We do press released on indecent exposures, major accidents, certainly any violent crimes. Any number of things. I can get you the number and we can email that on. But, again,
that’s just one piece. To pick and choose different things, they may not seem like they take a lot of time, but you put it all together, and it’s more than a fulltime job. And also,
like I said last week, we run our Citizen’s Academy. There’s a lot of public outreach programs. We get hundreds of emails every month from the community inquiring about things that have
happened. Some of them you guys know because they come through you. Some of them come directly to us. Some of them come to the City Manager’s Office. Each and every inquiry we get requires
someone to go out and research what happened, why it happened and why did we do something or why didn’t we do something. That’s all public outreach. There’s a tremendous amount that
goes into this job and it’s just a fulltime job.
Council Member Tanaka: Okay. And so, before Zach was doing all this?
Mr. Watson: I’m sorry, what?
Council Member Tanaka: So, Zach was doing all this before?
Mr. Watson: Zach was doing all of this, yes.
Council Member Tanaka: Okay. At least the initial thought I had in terms of what you guys were saying last time was that this is mainly to help with the social medial. But you’re saying
it’s much more than that.
Mr. Watson: Actually, I don’t know where that came from, because I actually don’t view that as the largest part of the job. It certainly is a significant part, but it’s just a piece
of it. The social medial is very important when we have a significant incident in the field, whether we’re searching for a burglar, there’s a major crime. You know, anything, a major
traffic disruption. The other thing too, just to highlight it is, our position works very well with the other communications folks that work in the City, especially when any time we
open the EOC downstairs for something significant like flooding or anticipated flooding, we take the lead most of the time down in the EOC Center, unless it’s say, like a specific utility
incident, which I think Katherine is here. Katherine works very well with Zach. Between the two of them, they take the lead role down in the Emergency Operations Center as the…
Council Member Tanaka: Can I ask a quick question, because I know we’re short on time. What do other cities do?
Mr. Watson: What do other cities do? Well, they either do what we’ve been doing for the last five years, or they don’t have the significant presence in the press and social media and
the community engagement that we do. If it helps at all, I’m not sure if this is a philosophical thing with filling the position.
Council Member Tanaka: I mean, my point is, you know we have scarce dollars and I’d rather put those dollars on the street with people who have work do to, traffic enforcement or people
who are able to help with catching criminals, right. I would rather put the dollars where our residents would value it, right. Because right now we put it into marketing, right. Like
marketing the Department. It just seems kind of like not the right use of our money. And that’s why I’m questioning it.
Mr. Watson: It’s not marketing. It’s providing the community with information that they really want.
Council Member Tanaka: Okay, well anyways, it sounds like the person is kind of like a marcom person, right, marketing communications, doing press releases, right, doing social media,
and don’t get me wrong, I think it’s very important to have that, but I think it’s also important to have police on the street, right. I think it’s also important to have the dollars
to put into actionable area, and that’s why I’m asking.
Ed Shikada, Assistant City Manager: If I might interject, again, Ed Shikada, Assistant City Manager, putting on that hat. I work with Zach, just as an example, on a regular basis and
I would say that marketing is definitely not the context in which I work with him on, and typically it would be during some event that is in progress. Let’s take the situation where
we had the burglary suspects that hit the cyclist a few weeks ago. Where those types of situations come up, the communications person within the Police Department is really in a pivotal
role to provide information to the community as a whole, so to your point in terms of feet on the street, in many ways, that role plays a force multiplier in the term that the Police
Department uses often, by engaging with real-time information that is really being sought after, not only by the press but individual residents, as well as, quite frankly, the City Council
and the City Manager. So, on an ongoing basis I’m pinging the communications person in the Police Department in order to get that information.
Council Member Tanaka: And I do think that communication and information flow is really important, but more where I’m coming from is, and that’s why I was trying to understand what this
person is doing. It sounds like he’s doing a lot of press releases, a lot of media relations, and that’s all really good, but you know, what’s happened also is, because I used to be
in marketing, marketing used to be dominated like say by the papers, right. But what’s happened is a lot of people in terms of how they get the news today, they get it through social
media, right. Facebook has become one of the largest sources of news, right. A lot of the old school printed paper type of stuff has kind of gone to the wayside, and what has happened
is there’s been a kind of like a, communications, instead of information sources being centralized into a few key places, a few key channels, it’s been kind of spread out where basically
any person could be a new person now, right. A person with their phone could post a message on twitter and they could be a news source, right.
Mr. Shikada: If they know what they’re talking about.
Council Member Tanaka: Yeah, and so I guess what you’re talking about, what you’re describing is kind of like a very traditional type of communication role, where communication is all
funneled through a very single person and kind of distributed out. But what communications has done recently, especially over the past ten years, has moved from kind of this centralized
source to a much more distributed source where everyone is part of, is communicating right. So, it’s like having a walkie-talkie, everyone uses a walkie-talkie to communicate that we
need help, right. So, I just wonder how much of this should be centralized in kind of the more traditional kind of market role and how much of this should be more distributed among everyone.
So, like if you’re chasing down a criminal and you want to say, hey, looking for this guy like right now, versus trying to send this message off to a centralized person and that person
broadcasts it out, because the truth is, I’m sure most of your officers have smart phones, is that right or no?
Mr. Watson: They do, (crosstalk) and we do not want them using them, quite frankly.
Mr. Keene: I think it’s a very, very good point. It is reality, but the need for centralized and unified and careful and carefully distributed information, especially in the public realm
or in a crisis realm is absolutely, absolutely critical. I mean, let’s just look at Washington right now. I mean forget it. It’s a madhouse. Everybody is talking to everybody. I wouldn’t
say that is helping anything at all. (Crosstalk) let me just please finish. I think this is really, really important. We don’t want 12 different Police officers simultaneously out there
talking to the media and the community based on what they know from their perspective, which may be just one angle on the issue as opposed to trying to coordinate when we’re really trying
to get clear information out to the public. Let’s just take the worse example, what everyone says when there is a suspect or something, even people who witness it describe the suspect
and the car 12 different ways. That doesn’t help us. We want to force things into some coherency and so, yes, we’re in a highly permeable world. Our folks actually do try to coordinate
to reach out and get the community engaged, and in feeding things, but we do have to have some rational order and we have to have somebody, people who are practice and experienced in
that realm. And that takes experience, that takes relationships to be built up with different people. That’s where the real payoff is.
Chair Filseth: Let me try a shot on that too, because I agree with the City Manager. I think we’re just not ready for individual officers to tweet the news to their twitter feed, right.
It seems to me, as I thought about this, one way to frame this is, are we going to do this activity or not, right. If we’re not going to do it, if we don’t need to do it, that’s one
thing at all. If we are going to do it, it makes a lot more sense to me to do it with a civilian than it is to do with Zach, because if you want more Police on the street catching burglars,
then that’s the way to do it, is free up Zach to go do that. So, in my mind that’s sort of the question, do we need to do this or not? Because if we do need to do this, we ought to do
it with, it’s much less expensive to do it with a civilian than with a sworn officer.
Mr. Watson: You will save $155,000 if you do it with a civilian.
Chair Filseth: Alright.
Mr. Watson: And Council Member Tanaka actually just made one of the best reasons why we need to do this. He’s absolutely right that the entire world now can disseminate information as
fast as they can get on their phones, and as soon as we have an incident happen, the very first thing, whether it’s in Police or it’s a utilities incident in the field, is Katherine
and Zach jump out there on social medial to correct the erroneous information the citizens have already put out about whatever is going on. And by virtue of correcting it, then they
are putting out the accurate information. Quite often Zach is the only one that actually has the accurate information, so therefore, he’s putting it out. So, to disperse it amongst a
handful of officers, even if they had time to do it, they’re not all going to have the whole picture. They’re not going to put the information out with what we want the community to
do, and we’re correcting the citizens. We’re now forced to be in that environment, to deal with the erroneous information that the citizens are putting out.
Chair Filseth: Well, that’s actually an interesting question. Is this a task that can be actually done by a Staff person, or does it require a manager?
Mr. Watson: I think, based on the on-call and 24/7 nature, 365 days a year, if you don’t do it with a manager, Staff is going to cost you more in overtime than it will to have the manager.
Chair Filseth: I guess I said that the wrong way. Does it have to be an operating manager like Zach, or can it actually be a Staff person like a separate communications person?
Mr. Watson: Well, I think that’s what we’re actually asking for is, our new version of this will be like utilities version. It’s just a nonsworn position, and they do a great job. And
it’s much cheaper. That’s why we’re proposing it this way.
Chair Filseth: Council Member Fine.
Council Member Fine: Just a few comments. One, thank you Chief for coming and I’ll just speak from personal experience. I’ve worked with Zach for four years. He is 120 percent of the
time there, and I’ve texted him in the middle of the night and he’s on it. A few other things, just for context, most of the cities here in the peninsula have one of these, like Redwood
City, Los Alto, Santa Clara, Sunnyvale, San Mateo, South San Francisco. They all have a separate position specifically in Public Safety, and as the City Manager has mentioned, there
are very different liabilities of the Public Safety communications case, where Zach has to have certifications to get this privileged information and get it out in the right way. There’s
also an advantage I think the City and, again, the Public Safety side, that you’re reducing your liability if it’s coming from one source who actually has these relationships with the
media. I think Council Member Tanaka brings up a good point about, you know, we do have City columns as well, but I know Zach had previously worked with Claudia and Katherine now kind
of work together. I’m sure the Council would be interested in seeing how those teams collaborate. But I do think this is an important position. It’s not something you just get rid of
anymore. And then just a last point on this, it would be a real shame, actually, if Palo Alto did back away from this. We really are seen as like the leader on this communications front,
whether it’s social media, whether it’s relationships with the media. I don’t know if you’ve seen some of the videos the PD’s produce, but they have, I think, been pretty instructive
to citizens. I even saw Mountain View recently, they were using Pinterest for lost and found. Actually connect residents with their belongings. So, I would encourage us all to keep this.
Chair Filseth: Council Member Holman.
Council Member Holman: Yeah, I just want to be really, really clear. I’m in no way, have I been suggesting that we wouldn’t do it, that we wouldn’t have somebody to do that. My question
has been about a Budget aspect of it, which is, is it fulltime? I never have been suggesting that we not do this or have this position, have this faculty, if you will, fulfilled. Just
to be clear on that. I’m not suggesting we go backwards. It was just a matter of staffing, what the requirements for staffing were and how much of a fulltime or not job it was and whether
it was somebody on the Staff who could do it as a part of their regular job. So, those were my questions. They came up subsequent to the prior meeting. So, just so there’s, hopefully,
some clarity around that.
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: So, I hear what everyone is saying. (Crosstalk) so, really I guess my last point here is just the trend is going away from this. It’s going to much more first-party
reporting versus second and third party reporting. That’s just the way the world is headed. Everyone has smart phones, it’s everywhere. So, anyways, I just said my piece.
Chair Filseth: So, oh, Kiely stepped out. So, what is the disposition of this item in the parking lot? Is it in the parking lot or not? I think it’s not in the parking lot.
Mr. Perez: It’s not in the parking lot. So, we don’t need to do anything? Unless we’re going to pull it out, we don’t need to do anything? If we’re going to approve it, we just leave
it in. We do nothing.
Chair Filseth: Right. I believe the Motion was 3-1 to approve the Police Budget, is my recollection. We already, didn’t we already approve the Police Budget?
Mr. Perez: With the position, yes.
Chair Filseth: Okay, alright. Are we done with Acting Chief Watson?
Council Member Holman: Just to be clear, it’s like everything was, or most everything was tentatively approved, so we still need to affirm.
Council Member Fine: Maybe it’s important for Zach to put out a press release about his job being saved. I’m joking.
Mr. Watson: I’m quite sure he’s watching this right now and tweeting everyone.
Chair Filseth: Thanks, Acting Chief. Okay. You had another item you wanted to bring up?
Council Member Holman: Yes, the other one I wanted to bring up was, well, two things actually. I had asked about, in the HR, and I’ve closed that Page again, HR and I thought I had asked
how this was, in terms of grievances and hotline complaints.
Chair Filseth: I think we already approved the Budget for HR, right?
Council Member Holman: Everything was, things were tentatively approved. Not finally approved.
Chair Filseth: Okay, tentatively approved for tonight. Are you going to unapproved it, because that will take a Motion?
Council Member Holman: So, I didn’t hear what you said.
Chair Filseth: We already said we were going to proceed with the Non-Departmental Budget, so is this something else?
Council Member Holman: My recollection is that the things that we tentatively approved, we still need to go back and approve. We don’t have to do them one by one. We can do them as a
lot, but there was an outstanding question that is in what we got just yesterday, and it had to do with the HR Department’s – here it is, on Page 6.
Chair Filseth: Is it a budgetary issue?
Council Member Holman: Yes. As I indicated earlier, it’s like my questioning had to do with, if there was an outlying, and I didn’t get an answer to this, if there was an outlying department
or two or whatever, and I didn’t get an answer to that. And there’s nobody here from HR and the reason I wanted to ask the question was because I wanted to know if there was, you know,
HR Staff adequate to address the issues, if there were particular outstanding departments that had a lot of grievances. That was, so it was a staffing and a budget issue in that regard.
And I didn’t, all I got was just a lump sum total here.
Mr. Keene: So, first of all, I don’t think a departmental distribution, I don’t see, one, what bearing that would have on whether or not more staffing is needed. The HR Director did
not ask for any Staff this year. Are there lots of issues in HR? Darn right. Why are there so many issues in HR? It’s not so much even the number of grievances. I think a better conversation
is a strategic one for us to talk about, which is long term looking at the agreements and the method of Resolution in our processes as a City. That’s a little bit like a Code Enforcement
question. How time consuming some decision making could be in this organization, and I think maybe Ed would agree with me. We have some of the most cumbersome and most laborious processes
in this organization.
Mr. Shikada: That says a lot because I’ve seen some pretty cumbersome processes.
Mr. Keene: That built up over time. So, the real work is, what would it take to be able to streamline that for more effectiveness as an organization. And that isn’t so much another staffer
in HR. I mean, it’s a combination of folks from the Attorney’s Office and the City Manager’s Office and HR and others, actually a whole bunch of folks working on how we change those.
And I think that’s a worthy conversation this next year with the Council. And it’s going to be hard to solve.
Council Member Holman: And I’m happy to have that conversation. Please do understand where I’m coming from on this. It’s like, and I know departments were asked to, at least from what
I’m ascertaining, departments were asked to, you know, trim things where you can or don’t ask for Staff if you actually don’t need it, because we have a Budget to balance. And so, I
can point to last year when we added half a million dollars in contingency for Planning and Transportation. So, it could be, it could have been, with answers to my question, that you
know, gee, well do you need more to address these kinds of issues. So, it’s a question that I didn’t have an answer to and that’s why I asked the question.
Ms. Nose: So, in working with Rumi this year, we really did look at her staffing and so there are some staffing realignments in there, and you actually do see them in the labor and training
division, where we’re taking one position and actually upgrading it. We’re also taking another position in another division and downgrading it. So, when she is doing the staffing and
reorg she’s doing that to give her the capacity she needs in the areas that she needs it and the level of staffing necessary, both from a skills and qualifications standpoint, as well
as kind of just managing within and reducing elsewhere. So, I think in general she’s comfortable with where she’s at and we talked about adding and changing her compliment of staffing
and that is why we did bring forward those adjustments.
Council Member Holman: Okay, and that’s helpful.
Mr. Keene: And I don’t want to seem unhappy with the desire of a Council Member or a Council to give more resources to our Staff. I mean, I do appreciate that. But I would also ask that,
we really do try to pay attention to what we need and where it’s needed most and I think we want to be careful about that, and I do think we’ve got an excellent Director in HR now and
she’s doing some really good work, as Kiely was talking about. About trying to align her staffing, both in who she is recruiting and what their job focus is to meet the needs of the
organization. So, as your City Manager I would tell you, I would not recommend that we add another position in HR this year. I mean, even if we had free money to do that right now. I
would say there would be someplace else, if you had $100,000 or whatever it was, that you should spend it there first.
Council Member Holman: And that’s the whole point, from my perspective, that’s the whole point of these conversations is the whole point of asking questions and you often say, Jim, it’s
like Staff needs to hear from Council Members that they are supported and appreciated and stuff, and I think one way to do that, and it’s an earnest exploration, is to say, hey, are
you okay? How is this? Is there a balance? Do you need more? Is this necessary? Could we be more thoughtful in how we approach this or that in terms of staffing and resources? So, it’s
all of that.
Mr. Keene: Thank you.
Council Member Holman: I did have one other one. Okay, the other one, and Jim and I have had this conversation over, gosh, a year and a half at least.
Mr. Keene: I added it up, $750 worth of lunches I think.
Chair Filseth: I would like to get to the long-term parking lot tonight.
Council Member Holman: Yeah. So, this has to do with the economic development person, and we have, like I say over some period of time, had long conversations about this. My long-term
frustration about not having an economic development person and, how should I say, not having the outcomes that I would hope to get from someone in that position. I did some research
from other communities around. Mountain View has such an office, Menlo Park does, Los Altos does. A lot of other communities around us have such a position, and I didn’t get enough research
done to say that it is typical, but common is seven years’ experience in the economic development field. And associations and relationships with professional organization that provide
training, support and information ongoing in the field of economic development. I don’t think it’s something that, you know, even the smartest person can step into and say, hey, I can
do that. Because it takes experience. It takes experience, relationships and connections with others in the field and other organizations in the field. I think, interestingly enough,
I think it’s a position that could, at least partially, pay for itself. I had asked for the recruitment brochure when we last went out for such a position, and that’s not available,
but you have in the thing that we received yesterday, what the information was that was used to develop the recruitment brochure, and I find it to be, huh. That’s kind of my response
when I read through it. It’s like, it seems to be rather directionless from my perspective. It seems to be very…
Mr. Keene: That’s a job description.
Council Member Holman: Directionless.
Mr. Keene: What you got is a copy of the job description. We probably have a couple hundred of those across the organization.
Council Member Holman: Well, I didn’t see anything about the kinds of outcomes and responsibilities that I see in other cities write ups, about what their Office of Economic Develop
does and is responsible for, having to do with outreach and retention of local businesses, and local serving businesses, local independent businesses, preserving and retaining and enhancing
the quality of life for residents. None of that stuff was in here, and that’s the kind of job that I think this community wants. When I hear people in the community talk about, gee,
you know, we don’t have any retailers that I want to go see now. I never go Downtown. You and I, Jim, have had the conversations about the interrelatedness of the arts and culture with
retail, how they mutually attract. That’s not reference here. It’s, frankly, not reference very much, maybe minimally in the research I did of other communities. But that’s the kind
of position that I think could take this community to another step of being really very attractive to other retailers, to other personal service, to cultural venues, to enhancing our
sales tax dollars. You know, there’s a reason, people talk about how much retail has gone on line. You know, you can’t sit here and deny that. At the same time, there’s a reason that
Stanford Shopping Center, Charleston Center, Town and Country Village, they’re at least half retail, if not more and very successful and provide very good sales tax dollars to the City.
It’s a little bit more challenging an environment when you don’t have a common property owner, but nevertheless, we do pretty much nothing. I mean, there was, just one more example and
I’ll hush about this, well, maybe two quick ones. A few years, or several years ago now, I had a point of sale that I was hand delivering to the City, hand delivering and we had an economic
development manager then that probably nobody here even remembers, and they then, I don’t remember if it was the Planning Director or I don’t remember whichever it was, just kind of
didn’t get it. Just didn’t get it, and so someplace else got it. More recently I had an idea for what, a business that could move into one of the two sites on Addison Avenue and the
suggestion, while it’s not inappropriate, was to go talk to one of the Downtown major property owners and that was fine. Their response was, yeah, it’s a great idea. We need an economic
development manager. So, it’s a position that needs to be filled. It’s a position that needs to be filled with good description of what the responsibilities are and what the outcomes
are that we would seek and desire. So, that’s where I am with that, and the prior position was $167,000, so I don’t know if that’s the right number or not. I don’t know what other cities
fund their positions at, but just for back of the envelope I’d say $160,000.
Chair Filseth: So, you and I talked about this too and I think I understand what you want, but am not persuaded that what you’re asking for is likely to deliver it and I think that once
you added the loaded cost of the person and benefits and so forth, it will be quite a bit north of there.
Council Member Fine: So, I’ll just comment here too, I think in my experience working with cities, many of them our size do have an economic development manager, but the role is probably
unique here in Palo Alto, and I don’t want us specing that up here from the dais. And that also, in deference to the City Manager, I think the hiring decisions are more his than ours.
So, you know, it may be a discussion to have over the next year and in next year’s Budget if there’s an opportunity, that may be interesting. Council Member Holman, I really liked your
point about, maybe it’s a position that pays for itself. That could be a possibility.
Chair Filseth: Would you care to make a Motion?
Council Member Holman: Well, I can see where it’s going, so I will not be voting to support the CMO’s Budget because of this, though.
Chair Filseth: So, in the parking lot is the CMO’s, is the CMO office the last thing we’ve got in the parking lot?
Ms. Nose: I believe so, yes.
Chair Filseth: Council Member Fine? Council Member Tanaka? Do you have any questions on the CMO, the two assistant to the City Manager and Deputy City Manager?
Council Member Tanaka: Yeah, I kind of still feel the same way as last time, which is, the City Manager’s budget is going up by 14 percent, which is way past the rate of inflation, way
past the rate of the budget itself. I still think that, instead of investing our taxpayer dollars in management, we should invest it in the people that actually serve our residents.
So, I think this budget should be in line with all the other departments. It should be somewhere around 6 percent, not 14 percent. I think it’s not the wise use of our taxpayer dollars.
Mr. Keene: Could I speak to that?
Chair Filseth: Yes, please.
Mr. Keene: I agree with you. So, we went back and looked at the budget to have and apples-to-apples comparison. So, the first thing that Kiely did was removed the $150,000 one-time expenditure
for the Parking Plan change management contract, which in truth, there’s no reason for it to be in the City Manager’s Budget. It’s not exactly mine. So, we put it in non-departmental,
which is typically where it is. That took it down to 9.6 percent.
Ms. Nose: And Jim, you can actually, we demonstrated that on Page 33 for them.
Mr. Keene: Okay, Page 33. Then the Assistant to positions and the Deputy City Manager positions are approved positions in the current budget. They are not additions. This would be the
only cuts in the entire budget that you would make, would be to eliminate almost half of the City Manager’s Office. Now, I know what I’m talking about. We have been limping along this
whole year without these positions. As a matter of fact, if I want to play games with this, I’d say we’ve saved the City hundreds of thousands of dollars by not filling them this year.
When we normalize those and put the 2017 comparison to the 2018 comparison, which is what you’re looking at on that chart, the City Manager’s year-over-year increase drops to 3 percent,
half of 6 percent. So, I can tell you right now, it is impossible for us to deliver in a complex organization across still silo boundaries with systems problems that require lots of
different departments, that require responding to the community and the Council in a complex say, these aren’t just manager positions. These are people who are expected to lead initiatives
across this organization and in the case of the assistant to’s, to have some capacity for the deputies to do the needed research and support that’s necessary to fill in gaps in this
organization. That’s what the Council asked me to do last year, was to create a budget that would allow us to bring that capacity, and that’s why they approved this. So, we have filled
essentially two of those deputy positions already. We’re not ready to announce the second person and we’re doing interviews right now in the assistant to’s and we’re not going to be
able to be effective if we can’t have some really good facing talented Staff support to work with these deputies. Most of Ed’s work now is in Utilities. So, I’m not a person who is in
to building lots of capacity, but I’m your City Manager and I can tell you we can’t even come close to delivering what we’re doing right now if we don’t get some capacity to assist in
these different departments. They need the sort of broader, more of the birds-eye view that you get in the City Manager’s Office and the capacity to make people connect with each other.
So, there’s two focuses. One is dedicated mostly internal, which is to drive the performance management initiative that we want to have that will really develop unified metrics, performance
measures that are linked to, that aren’t just ad hoc and hodgepodge. To be able to engage with the Council, to be able to create sort of unified dashboards and reporting systems. The
other is to be, essentially Rob would be focused on, is to be the interface out of the City Manager’s Office, leading initiatives that are focused on community-based initiatives. Whether
it’s, how do we work a little bit better with our retailers, or with neighborhoods on particular issues. You know, are there engagement exercises that we’ve got to run that support folks
in transportation or wherever it is. So, that’s what we’re hoping to be able to achieve to amp up our capacity, and that’s absolutely fundamental. I mean, if you want to cut them, you
can do that, but I’ll tell you right now, our responsiveness and productivity, not only will it not be able to deliver on what we want to be able to do with what, the staffing approved
last year, it will decline from where it is right now. Argument for myself.
Chair Filseth: Thank you. Let me see if I can offer a couple of thoughts on this. Let me start with the really big picture and then zero in on this issue. I think the two big fiscal
challenges we face as a City are, one, obviously, the liabilities, right. And the other is that we need to be very careful that our structural expense growth rate doesn’t outpace our
structural revenue growth rate. I think those are two really important things. And, I think those are going to be the subject of the next discussion in the long-term parking lot maybe
a little bit. But, going forward in 2018, we have the circumstance where even not counting the effect of the liabilities, our expenses are growing 8 percent and our revenues are growing
6 percent, okay. And in order to cover the gap, we’re going to dip into the Budget stabilization reserve. We’re going to burn down some reserves to do that, according to this Budget,
right. So, in that kind of circumstance, I think it’s hard to justify increasing head count. However, if you look at the General Fund, the General Fund is actually decreasing head count
next year by 0.8 or something like that, and we’re increasing the Utilities, but the Utilities is sort of a different business model, and so forth, right. So, in my mind flat or declining
head count in this kind of year is the right way to do it. So, the City Manager moved the DCM from internally to, from CSD to that office. He didn’t hire somebody from St. Louis or somebody
like that and bring in outside. And we’re preserving that dynamic, so it’s in that dynamic, I think the City Manager wants to organize that way, at least for me as finance person, it
meets what I think is important in finance and beyond that, I think it’s the City Manager’s discretion. So, that would be my two bits on this.
Council Member Fine: So, I’ll agree with the Chair on that. I think it is the City Manager’s purview to shift some of these folks around. I think we’re just increasing head count by
like 3.8 people, right.
Chair Filseth: We’re decreasing the General Fund, which is where this is.
Council Member Fine: But across the whole City.
Mr. Keene: Well, we had the Enterprise Funds in there, the other funds.
Council Member Fine: And then in the General Fund we’re decreasing, right? So, that’s almost flat in an organization this size. I guess the second part is, and then, you know, Jim if
you get this and I hope you do and I’ll support it, let’s make it all worth it, right, internally and externally and in terms of the performance management stuff you’re talking about,
let’s just do it right.
Chair Filseth: If there are – yeah, Council Member Tanaka.
Council Member Tanaka: So, I guess I misunderstood that. So, what is the net increase or decrease of our head count for the whole City?
Ms. Nose: So, in the Proposed Budget that you guys have in front of you, it’s actually in the transmittal letter, Roman numeral 9.
Council Member Tanaka: I’m looking at slide 5 that you gave us, it’s 3.85, right. So, I agree with the Chair in terms of, I think we should be flat or down in terms of our head count,
but overall, we’re actually going up. We’re going up almost 4 heads.
Chair Filseth: That’s true, but the Utilities is a funny business model. I think, you may draw your own conclusions, right, but it is kind of a different kind of beast, right. So, revenues
and expenses are required to match by law in the Utility space, and they’re sort of not fungible between the General Fund and the Utilities.
Council Member Tanaka: But in the end, it’s our constituents who are paying for it. I mean, one way or another, it’s taxes or utilities, but they’re paying for it. So, I still think
that you had it right. That we want to keep the head count flat or declining. I think that means overall, in my mind. You guys may disagree, but I think that in this kind of environment,
stock market plummeted recently. I’m not sure if you guys saw that. I think, you know, there might be storm clouds on the horizon, and it would be prudent for us to be conservative here,
and keep the head count, I mean, I would prefer to actually decrease it, but at least keep it flat. So, I would say that instead of increasing the heads by 3.85, we should just keep
it flat.
Council Member Fine: Question there quickly, there was a report in here about the vacancies. How long do we keep a vacancy on the books, and what does that mean first? There were like
100 vacancies or something across the City. What do those actually impact in terms of the Budget? Do we ever (unknown) those, anything like that?
Ms. Nose: So, from a technical standpoint, budgetarily, we still, obviously, those positions are authorized in the table of org. However, as we’ve kind of sporadically talked throughout
these hearings, especially in the General Fund, we do assume a certain level of vacancies. So, for example, in this year’s Budget, in the General Fund we’re already assuming over $2
million worth of vacancy savings.
Mr. Keene: We Budget a credit against those anticipated vacancies.
Council Member Fine: And have we typically used that credit? I mean, have we been roughly accurate over the years on that?
Ms. Nose: Yes. And we don’t squeeze it too far because, then why have the positions, so to speak. So, the work still needs to be done, but just generally from a normal business standpoint,
you have attrition, you have turnover. So, in any given year you’re going to have some gap.
Council Member Fine: Right, and then do we just have a measure of like the length some of these have been vacant? I mean, I was just thinking about like the economic development manager
has been vacant a few years but it’s been on the books. We’re supposedly getting rid of it here?
Mr. Keene: That’s a position, for example, we actually did eliminate that position from funding. What we often do is still keep this, it may be sometimes in what we call this table of
org chart, which is another arcane artifact that the City has that I would love to eliminate that asks us to sort of track positions. We probably ought to say, look, we’re done with
them.
Council Member Fine: I guess I’m just getting at, if there are vacant positions, we could, you know, not even let go of, but eliminate, and if that would be able to assuage some of my
fellow Council Members concerns.
Ms. Nose: So, I can say two things. One, just as someone who is in charge of the Budget, anytime we even remotely think about giving departments either a reduction goal or anything like
that, we always look to vacancies. So, me and my Staff, will always, when we go over Budget proposals, look at what’s been vacant in a department, challenge them on how long it’s been
vacant, understand why it’s vacant and why they still need to keep it. Otherwise, we push them to really understand the business case. And you saw that in the Police Department with
our reduction in that CSO. In addition, a lot of these vacancies are backfilled, so either we have contractors filling in for the gap, we’ve got people working out of class, we’ve got
temporary people covering. So, just because a position might be vacant on the books, it might be vacant because we’re having recruitment issues or retention issues or something like
that. So, you know, we as an organization are covering those. Secondly, to your point of kind of having a year-over-year reduction, one of the things that’s huge in this Budget, as we
kind of talked about earlier, was in the Fire Department, we have that $1.3 million reduction. We fully anticipate that once we’re finalized with all of our discussions with both Stanford
and the labor group, that there will be reductions brought forward in the Fire Department. Now at this point both tables are still open, so I don’t know exactly what it will look like,
but in order to get to a $1.3 million reduction goal, you’re going to have to have positions in there.
Chair Filseth: So, I couldn’t tell you if it’s going to be 2 or 10, but this Budget is artificially high, I would say in terms of the FTE that you’re approving, because we’re already
defunded $1.3 million. So, with that, we’re going to come forward with staffing reductions.
Chair Filseth: So, let’s see. I’m trying to think how a Motion is going to work. It probably doesn’t matter either way. I’m trying to think how we’re supposed to do this. I guess we
should just deal with this item by itself, right?
Mr. Keene: Well, I think you should deal with the City Manager’s Office budget, right. What you need to approve or whatever you’re going to do, so we get all in the same situation. Then
you have this other conversation about staffing levels.
Chair Filseth: Council Member Fine:
Council Member Fine: I’ll move that we tentatively approve the CMO Budget.
Chair Filseth: Second.
MOTION: Council Member Fine moved, seconded by Council Member Filseth to tentatively approve the City Manager’s Operating Budget.
Chair Filseth: Do you care to speak to your Motion?
Council Member Fine: I think the City Manager has done a good job of making the case for these positions. I don’t believe we should be shifting them around within his department. And
just a last reminder to our Colleagues, this is kind of the head of the organization, and does have, you know (not understood) so I’d appreciate your support.
Chair Filseth: I don’t have a lot to say. I understand Council Member Tanaka’s perspective, that the enterprise is the enterprise. I do think Utilities is a little bit different. I think
the City Manager stayed within the constraints of what the Finance Committee should look at, which is, you know, flat head count and how he wants to organize it. I don’t want to interfere
with it. Council Member Holman.
Council Member Holman: My no vote, as I said earlier, is because of the economic development person.
Chair Filseth: Okay, if there are no further comments, all in favor? All opposed. Motion fails 2-2.
MOTION FAILED: 2-2 Holman, Tanaka no
Mr. Keene: That goes to the Council as a 2-2.
Mr. Perez: So, I’m not sure if we have any other items. Here is a suggestion on how to proceed. That you close up and wrap up the budget so the Motion would be to approve the City Manager’s
Proposed Budget with the changes that have been approved by you the Committee. Those are the items that you approved earlier, and the changes, and that it go to the Council for a hearing.
Once you do that, then it sounded like you wanted to discuss the long-term parking lot.
Chair Filseth: That we discuss the long-term parking lot before we break ranks here. Sounds good.
Ms. Nose: Then I think, if we have just a second, Ed and I, again after you do what Lalo talked about, Ed and I want to just clarify one thing with you on water. So, water and long-term
parking lot, that would be great.
Mr. Keene: And then, could I just add, maybe this staffing level is a long-term parking lot item also, or you can make a Motion and see what happens here right now, to see if you want
to just, I would say fairly arbitrarily, that’s just my view, say, do this. I don’t think you’ve had a deep enough discussion to understand, to clarify why it really should be done,
other than, I don’t think you’ve done that yet, and I don’t think you know the implications of it, and I don’t think that’s the way to make decisions. But I do think if you want to have
a discussion about what does it mean to keep a flat or declining organization, that is a worthwhile conversation, and it would be one that we ought to understand the consequence of.
Because I’m assuming that, for the most part, the Council doesn’t want to accept declines in services or outputs that we do. So, what we’re really having a conversation about is, how
do we increase productivity, how do we maintain all the things we want, and have fewer head count doing it. And that’s an involved conversation, particularly in a California with a strong
labor environment that requires a lot of conversation with folks who are affected by these things. It is not the same. I wish it were. It would make my job a lot easier to quickly make
some decisions, but there’s a lot of process. I would ask that if you really want to do that, you vote this up or down, and if not, you consider whether you want to put it in long-term.
You may or may not decide you want to do that.
Chair Filseth: Actually, I think, I’m sort of getting ahead of myself, but I was going to suggest later on that we recommend the Council direct the Finance Committee to dig into a couple
of things, and potentially that’s one way of stimulating the conversation that you’re talking about. Okay, I’m sorry. I understood about 90 percent of what you said, but not the last
10 percent.
Ms. Nose: So, in terms of next steps? So, I think the first step is, if everyone is amenable, that we move forward to approve all of your tentative Motions that you’ve made.
Chair Filseth: With the changes that we made, excluding the City Manager’s budget.
Mr. Perez: You include it, it’s just it’s a 2-2.
Chair Filseth: I’m sorry.
Mr. Perez: It would go forward, it’s just as a 2-2. Okay, and then you said something about water.
Ms. Nose: We’ll take that up after. Do this first.
Mr. Shikada: It might actually make sense to do it as a whole, because it actually is a part of, a piece of the entire package, which is, when the Finance Committee discussed the water
rate increase a couple of meetings, or actually several meetings ago, in terms of your sessions, there was the distinction between the 4 percent average rate increase versus the 3 percent,
and with the supplemental information we’ve provided as well as the presentation today, we’ve effectively re-characterized it. At the time that we presented it the first time, the 4
percent average did not take into account the 20 percent drought surcharge elimination. So, in effect, as we have presented it today, the net effect for most residents is actually a
decrease rather than an increase. So, as such, we wanted to get clarification that effectively the Budget as proposed reflects the 4 minus the 20 of the commodity equaling a net minus
3. So, I wanted to make sure that was clear as a part of what the Committee’s acting on. If, on the other hand, the Committee really wanted to stick with, really wants to decrease by
1 percent the revenue that goes to the Water Fund, that we would need to look a little further, quite frankly, the easiest thing for us to do would be to reduce the amount of funding
to the reserve. But that wouldn’t necessarily be a productive approach.
Chair Filseth: I understand. So, in the budget that we have considered and tentatively approved, the net effect to Palo Alto utilities consumers, customers, avoid using the word ratepayers,
Palo Alto customers, is this year a 3 percent decrease in their water bill?
Mr. Shikada: Correct.
Chair Filseth: Is that consistent with what everybody else understands? I believe that’s our understanding too. Going once, going twice, done.
Ms. Nose: Thank you.
Chair Filseth: In that case, I will move that we accept the City Manager’s Budget, including the changes we have made, and with the 2-2 vote on the City Manager’s Office Budget.
Council Member Fine: I’ll second that.
MOTION: Chair Filseth moved, seconded by Council Member Fine to tentatively approve the Fiscal Year 2018 Proposed Budget including the changes made tonight, as well as the 2-2 vote on
the City Manager’s Operating Budget.
Council Member Holman: Did we not have some prior 2-2 votes. Have we resolved all of those? I guess maybe I’ll look to Lalo.
Chair Filseth: I thought we did.
Mr. Perez: You might have on the parking lot, I think, and then there were some that you went 2-2, but then modified and went to 3-0 in some cases.
Chair Filseth: Well, the parking lot we’ve resolved. Was there anything else?
Mr. Perez: I don’t recall off the top of my head that you had anything outstanding from a budget.
Chair Filseth: I do think we had some that went into the parking lot. The City Attorney’s Budget, did we pass that? I thought that was 3-1, I think.
Mr. Perez: Yes, and with additional information, half a day justification on the…
Chair Filseth: Which she has delivered.
Mr. Perez: So, let’s say if we forgot somebody, we will make sure all the Motions are going to be listed for the Council to see. And then just for those that may still be watching, we
have everything in the Administrative Services website on the Budget, we have a summary of all the presentations, all the handouts, all the reports. So, if you forget anything, that’s
where you can go and find it. If you want to look at Motions, we also will have them there.
Ms. Nose: Just to clarify, the City Attorney’s Office actually passed 4-0.
Chair Filseth: Oh, it did, okay. Thank you.
Ms. Nose: With the additional work on the analysis, correct.
Mr. Keene: So, I would just point out, which is fine, is I would do it also that, if I understand correctly, every Budget has passed with one exception being 2-2 and that’s the City
Manager’s Budget.
Chair Filseth: Okay, that’s my understanding. Okay. Council Member Tanaka.
Council Member Tanaka: Just kind of a process question, so we have some fairly substantial issues in our long-term parking lot, from what I understand. Would it not make sense for us
to take this vote after you go through those long-term parking lot issues? Why would we approve the Budget, then go through the long-term parking lot issues? It doesn’t seem to make
sense to me.
Mr. Keene: Wait, did you just make the long-term parking lot a short-term parking lot? I mean, that presumes that…
Chair Filseth: Council Member Tanaka’s point is that, based on what we discussed in the long-term parking lot, we might change our mind on something in the Budget. Is that where you’re
going?
Mr. Keene: That would presume, I’m guessing, you’re going to presume that you’re going to resolve a position on these items in the long-term parking lot in the next two to three weeks.
Is, that right? I mean, in order to get it to Council for a Budget that you adopt. We do have to start the Fiscal Year July 1. We don’t have the luxury of the U.S. Government.
Council Member Fine: So, I had kind of seen the long-term parking lot as issues that we thought expanded beyond this Budget cycle, and that’s why they were there. They’re still worthwhile.
If, you know, we solved them today, that would be affecting today’s Budget, but we’re not there yet. And if I heard you correctly Chair, you were thinking of maybe making a Motion to
send the long-term parking lot to Council?
Chair Filseth: I think the long-term parking lot should go to Council too, right.
Mr. Perez: Yes, it will go to Council.
Council Member Fine: And then they will direct Finance to look at it over the next year and if we resolve some of those issues, next year’s Budget may improve.
Chair Filseth: Council Member Holman.
Council Member Holman: Yes, thinking along those lines, and long-term doesn’t mean six years necessarily, but it doesn’t mean the next two or three weeks either. I did have one that
I would like to add to the long-term parking lot.
Chair Filseth: Well, let’s do that after we decide whether we’re going to close this or not. I think I’d rather, I mean, the simple thing to do is do this and then do the long-term parking
lot, and let me suggest this, that if somebody wants to make a Motion that we reopen the Budget at the end of the long-term parking lot discussion, we could do that too. Would that work?
Mr. Keene: You can do that.
Chair Filseth: We can do that, okay. So, in that case, I’m going to suggest that we do that, vote on this Motion now, have the long-term parking lot discussion and then revisit the issue
whether we want to reopen the Budget. Council Member Tanaka, think about that. Is it possible that if we make a decision and a Motion in the long-term parking lot, that it can override
something in the Budget?
Mr. Keene: Why don’t we go through this list. We have both the long-term parking lot and then we also have some other pending issues. I’m wondering if those shouldn’t be thrown in the
mix also or not. Or just, you may say, well, forget it, but things that we know that could arise and you look at those things. So, I’ll just give you an example, which is, it’s not in
the parking lot, but it is the Westside fencing potentially for the Caltrain section to secure that piece of it, we’re pursuing funding from Caltrain to do that. If we’re unsuccessful
to some degree, do we want to find funding for that or not. There are things like that.
Chair Filseth: Let me think about this. I’m not sure how long and where the long-term parking lot is going to go and I’d like to move forward with a Motion on the Budget, a Resolution
on the Budget before that happens, because I don’t know what the next discussion is going to be, somewhat a little bit more open ended, right? That said, Council Member Tanaka makes
an interesting and important point, which is, we might decide something in the long-term parking lot discussion that requires us to go make a change to the Budget we just approved of
some kind. So, I want to make sure we can do that.
Mr. Keene: Can I just add something. Well, I think the point you were making earlier about being able to revisit it in Finance is fine. I shouldn’t, I don’t think we should lose site
of the fact that it is, we’re approaching the end of May and a month from now you have to have an Adopted Budget by the whole Council. So, there’s nothing, you don’t have to have everything
fixed in Finance. You can bring things to Council because the same thing on reconsideration within Finance could happen at Council. I mean, you could thrash or really work through and
make some stuff, and it doesn’t fly with the Council. So, I just think surfacing these long-term issues is really important, putting as much texture on it as you maybe want to or making
really specific recommendations about how important they are at a minimum for the Council to consider, is something you want to do to the extent that you want to adjust your own budget
balancing recommendations by doing that, that’s fine. You just do need to understand ultimately this whole thing has to be adopted by the Council, and I think what you’ve done so far
seems fairly easy, I think, for the Council to understand what you’re doing. The more you get into some of these bigger strategic issues, it might be a little harder.
Chair Filseth: Okay. So, I think let’s do this one, and if we have to unwind it in an hour, then let’s do that. So, all in favor?
Council Member Holman: You’re voting on the budget, right now, with all the changes that we made, yeah.
Chair Filseth: All opposed? So, it passes 3 in favor with Council Member Tanaka opposed. I hope we’ll get him to change his vote in an hour.
MOTION PASSED: 3-1 Tanaka no
Chair Filseth: With that, let’s wade into the long-term parking lot.
Ms. Nose: So, just to orient you guys to what’s on the screen, what’s on the screen is actually on Page 18 of your At-places Memo for today, and these on the top half reflect the items
where you guys took motions over the course of the Finance Committee hearings to place these items in the long-term parking lot to be revisited. The second section is that list that
Jim was talking about, about different initiatives that we’re anticipating to arise during FY ‘18. And I’ll do my best to track the conversation on this as we go through.
Chair Filseth: So, let me, let me start with something that I think is maybe a framing discussion for part of it, which is, again, I think that the two really dominant fiscal issues
that we need to solve, and we won’t solve it all in the next three weeks, are again, one, the disposition of what we’re going to do about the long-term liabilities, and the second is
the concern to make sure that our structural expense growth rate doesn’t exceed our structural revenue growth rate, okay. And so, I think that we should direct, we should ask the Council
to direct the Finance Committee to come back in August after the break, you know, and assess what to do on these two issues, okay. And so, I think that’s one of the things, right. A
corollary to do that is, if you look at the Budget we’ve just approved, expenses are going up 8 percent this year, revenue’s going up 6 percent, and I’m struck that, you know, one of
the major issues we have to deal with, and I don’t mean this to be pejorative, I just, this is what it is, right. I mean, almost half the Budget is Public Safety, and the fact is that
Public Safety is growing 10 or 11 percent a year, okay, which means that somebody else has grown zero, right? And so I think that’s one of the issues that we really need to look at in
the context of sort of how we view our structural expense growth, okay. And it’s not lost, okay, on me or any of us, I think, that if Public Safety, which is scheduled to grow at 10
or 11 percent, if that were growing at 6 percent, which is the rate of revenue growth, there would be $3 million more to go around, which means we would not be dipping into the BSR,
okay. So, I’m going to suggest that as part of this, and one of the things that should be in the long-term parking lot here, is actually the Fire Department in particular has 14 recs
open, okay. I’m going to suggest that there be a hiring freeze. I mean, Eric has been not aggressive to fill those anyway with uncertainty over what’s going on with some of the other
macro issues, right. I’m going to suggest that we have a moratorium on hiring those, at least through the end of this year, until we get through the Finance discussion and Council discussion
on what we’re going to do about the long-term liabilities and the structural expense growth rate. So, I’m going to suggest that go into the parking lot too.
Mr. Keene: Just a clarification, what I would hear is you’re talking about, in a sense, a freeze on filling the current vacant positions, not a freeze on if we had subsequent departures
of some folks, that would – let’s just suppose we, just for whatever discussion, we had ten people leave in the next few months, we know the experience of late of being down the twelve
or so, I’d honestly have no idea what it would mean if we were down 22 at one time and the direction was a freeze completely.
Ms. Nose: I can tell you right now, we are approaching staffing levels where they can’t meet minimum daily staffing requirements in terms of the number of vacancies that we have, so
it requires a significant amount of backfill on an overtime perspective or, if we went so far that they lost more than that, that would potentially mean that you brown out apparatuses.
Chair Filseth: So, I would support just the existing 14 then. (Inaudible) You know it’s not yet a Motion, because I think we’ve got more discussion to do before we do Motions, but I
certainly hope it will become one. Council Member Fine.
Council Member Fine: So, I was kind of taking the first part of your explanation there as the more all-encompassing Motion for what we’re going to do for these long-term things, and
then right now I think you’re just trying to add one more item to that?
Chair Filseth: Yeah.
Council Member Fine: Okay. So, I mean I would support that Item Number 6.
Chair Filseth: We’ve got other stuff to talk about.
Council Member Fine: Yeah, I’m just trying to figure out which area we’re on.
Chair Filseth: Council Member Tanaka.
Council Member Tanaka: If that became a Motion, I would support it as well.
Chair Filseth: Council Member Holman.
Council Member Holman: I just want to know what the implications are in terms of, we don’t hire Staff here, but I just want to know what the implications are. It’s like, are we, yes
if another vacancy became available, then that position could be filled, that’s not part of the current Motion, but are we, with 14 vacancies currently, are we in a bad position if we
freeze all 14 of these? Or are these just like, you know, they’re out there, they’re available. Eric really isn’t pushing to try to fill these? I need to know what the implications are.
Mr. Keene: There’s a sizeable number of these that we have intentionally not been filling because of the uncertainty of where we are with the Stanford contract and, obviously to the
extent of if we’re going to be reducing staffing and positions to not be in a position we have to lay people off. So, clearly, there’s, I don’t know if it’s all 14, but there’s a sizeable
number within there that has been a conscious strategy to hold open. So, it’s, we’re almost halfway through the year. The Motion is just saying till the end of this calendar year, is
that what I heard? Is that what it was?
Chair Filseth: That will give us time to sort of go through the assessment we’re going to try to do in the fall.
Council Member Fine: This wouldn’t actually, would this actually carry the force of freezing that, or is this just going in our parking lot and wouldn’t it take the full Council to enact
that?
Mr. Keene: I heard the Chair’s Motion would be this would be something that the Committee could be recommending to the Council as part of your Budget, and asking the Council to endorse
it. Both the idea of looking at these really, I don’t want to just say structural; these key drivers really in the City’s fiscal situation of the liabilities and the expense to revenue
ratio.
Council Member Fine: It’s not going to get frozen right here.
Mr. Keene: And then a specific one, though, that if the Council did say yes, you have the chance between even now and when you do this, to get some feedback. I mean, maybe somebody says,
maybe the Chief comes and say, wow, 14, I don’t know if I can make that work. Here’s the implications. But I can make 12 work or whatever it is. I don’t know.
Council Member Holman: So, and to Council Member Fine, this Committee doesn’t have the authority. It takes the Council to do that. I’m a little bit queasy about it. I’m a little bit
queasy about it. I absolutely support the thought and the concept behind it. I wish Eric was here to answer the question. (Inaudible) You don’t have the right last name though. If you
could make it 13 of the 14, I could support it. That way it gives him just a little bit of wiggle room, should something.
Chair Filseth: I think we do too much baby splitting in government already.
Ms. Nose: So, if I can just add Council Member, I think they are anticipating some turnover from retirements, so they are working on a Recruitment Plan as they’re moving forward to maintain
at least their current staffing levels. And at that time we will also know potentially better, a position on the environment that we’re going on in Fire, so if all of this passed, I
think it would still behoove us that if the Chief came forward, once we finalize these negotiations, and said, okay, here’s the number, can I start filling? That you guys in Council
could make an action later on during the Fiscal Year to reverse something.
Council Member Holman: You’re not talking about the Fiscal Year, you’re talking about the calendar year, weren’t you Eric? The calendar, which is…
Chair Filseth: To the end of 2017.
Council Member Holman: So, the Motion on the screen needs to be completed too.
Ms. Nose: I’m sorry, just the Calendar Year ’17, or Fiscal Year ’18?
Council Member Holman: Calendar year ’17 is what I was.
Chair Filseth: I was thinking of Calendar Year ’17.
Ms. Nose: Then even more, it’s only six months, so the recruitment cycle is significant.
Council Member Holman: So, if the Motion on the board can then reflect to hold vacant the current Fire Department vacancies, 14, for the remainder of the current calendar year, then
I could support it.
Chair Filseth: Also, in addition to the structural revenue, it was actually two things. One was the structural revenue and expense growth, and the other was the strategy for the Unfunded
Liability.
Mr. Perez: May I offer a comment that, Ed, maybe you could help me here. The CalPERS actuary report is, we’ve all been told, won’t come out till July.
Chair Filseth: Super, so it will be here when we get back.
Mr. Perez: The problem is, we need to do some number crunching and put a report together, so probably the earliest I could do is September on the pension side.
Chair Filseth: The pension side. I think the whole process will take some number of weeks, right, so if we start in August with the other stuff, I’m sure we’ll have plenty of time.
Mr. Shikada: So, if I might, as the Committee is considering this Motion, I would be remiss if I didn’t point out that I think if the Committee were to pass this, this is actually going
to have a pretty significant impact on the Fire Chief and the Fire recruitment, which as Kiely pointed out, would in the best-case scenario, probably not be finished by the end of the
calendar year anyway. But what this Motion would do is, quite frankly, put a pall on the recruitment itself. So, I guess I would suggest that, just as conversation, pretty much sends
a message that before we’ll be able to fill those positions, we’re going to have this conversation. So, be that as it may, I guess I’m inclined to suggest that the Motion can have its
intended effect without even passing. For what it’s worth.
Chair Filseth: I think, Jim, what do you think?
Mr. Keene: I didn’t hear it. I’m reading it.
Chair Filseth: The Assistant City Manager raises the concern that even moving in this direction might impact Chief Nickles’ long-term recruitment efforts.
Mr. Shikada: I think just organizing to put this out for hiring, and so assuming this is in place through that recruitment period is going to be the question he has to answer.
Council Member Holman: So, could I speak Chair?
Mr. Keene: What if you left it more open ended, and the request was between now and when we report to the Council that the Chief would bring a report on the, what the right number is
and what the implications, understanding that we have been, we have intentionally been holding some vacancies, and we want the opportunity to explore that as a potentially long-term
possibility. What are the implications of that to understand that? So that you don’t have to be defending the recommendation as much as saying, we want to hear more about this between
now and then. I’m trying to shepherd sort of where I was and where, what Ed was saying with you all.
Chair Filseth: What we need to do, I mean, fundamentally what we need to do is we need to be in a position where we can still afford to deliver the level of services that everybody has
committed to and that both Chief Watson and Chief Nichol have been delivering, right? So, we need to figure out how to be in a position that we can afford to continue doing that, which
is what’s at risk, you know. As the structural expenses grow faster than the structural revenues, right? So, I mean, we could for example say, you know what, 2019 Budget’s got to be
flat from 2018, right, but my guess is that would be, that would have its own set of challenges, right? So, I mean, I think we’re going to need Chief Nichol’s help on this, obviously,
right?
Mr. Keene: So, yeah, I mean I don’t think we want to be presumptuous, just sort of guessing at what the number ought to be right now, since there is some potential hiring underway, even
though we’re not, in my understanding, in any situation all going out to fill all of the vacancies that we’ve got. Because there is this understanding that we have uncertainty separate
from this long-term structural issue. We have near-term uncertainty until we resolve this Stanford Fire contract issue. I mean, Ed’s been the one more recently talking about them. We’re
not making exactly like, really swift progress. I mean, it’s not outside the realm of possibility that by your December date we still haven’t gotten a contract. I’m just saying, the
way it’s been going.
Ms. Nose: We’ll need an Amendment by then at least.
Chair Filseth: Council Member Holman, did you want to weigh in on this?
Council Member Holman: I did. So, I’d like to amend what’s up there, which is…
Chair Filseth: It’s not a Motion yet.
Council Member Holman: Well, it’s not exactly a Motion, but I’d still like to amend what’s there. I would like to delete 6B and amend the language in 6A to say, “look at” instead of
“look in” to say specifically “look at Public Safety, current Public Safety growth rate, look at current Public Safety growth rate” are you with me Jessica?
Chair Filseth: What do you want to do Karen?
Jessica Brettle, Assistant City Clerk: Council Member Holman, that’s actually Kiely typing. That’s not me.
Council Member Holman: So, the reason I want to change this is, I know it’s not a Motion, the reason I want to change this is because I think Ed struck on something, which is how this
message is delivered to Council I think is really important, so we don’t, you know, I won’t use the words that I’m thinking, but, so we don’t really send a terrible message to Chief
Nichol. So, that’s why I’m saying, you know, “a specific look at Public Safety, current Public Safety growth rate,” so current, “look at current Public Safety growth rate of 10 to 12
percent in relation to, 10 to 12 percent in relation to Citywide growth rate of, you’ve often said 6 percent,” and I think just leave it at that. And that way we’re just asking him
to do a comparison. We want to know why this, not that, and we’re not kind of busting his chops on this.
Mr. Keene: Could I suggest maybe, I mean even before A and B, also what I understand, so that the message isn’t misconstrued, this isn’t singling out and solely focusing on Public Safety.
This is an issue that is across our City, but because you’re got, I mean, this is more like a, not pilot program, but it’s like a pilot review process of this challenge with a group
that is more uniform, no pun intended. You know, that does have the highest growth rates, and I think that’s important, that people don’t realize this isn’t about Public Safety per se.
This is just about, how do we start to, how do you start to have a conversation to break apart what the challenges are to match our expenses with what our long-term revenue stream is,
and what are the implications for the services we provide.
Chair Filseth: Thank you for that. I think that’s a very important point actually. I mean, this is a Citywide kind of thing, and you know, this Public Safety, it’s large and growing
fast and so why it’s, it makes sense to sort of look at it as sort of an entry point, but I think it is a Citywide thing. I don’t mean to single out one department or another. You’re
absolutely right, I think it’s an important point. So, Jim, you had some language before about maybe we ought to have a discussion with Eric or something like that on this?
Council Member Holman: His was the alternative Number 7.
Chair Filseth: Oh yeah.
Council Member Holman: But frankly, I don’t know that we need to go with this.
Chair Filseth: Maybe we captured it in the language that’s in there now?
Council Member Holman: Yeah. So, are we good, if we go with 6 and 6A as edited?
Chair Filseth: In fact, I’d say specifically look first at Public Safety growth.
Council Member Holman: So, are we agreed that we don’t need Number 7? It’s a bit redundant.
Chair Filseth: Probably. I’d like to see the City Manager weigh in.
Mr. Keene: I think that all that’s assumed in what we will have to do as part of looking at this. And, you know, I mean I think one of the, if you’re choosing Public Safety, I think
there’s another reason that it’s a good pilot, is that it is a fundamentally necessary service that we provide, and it is highly valued and to not have it, the entire community can clearly
understand the implications. And, therefore, it means, it puts into more sharp contrast the fact that we have to look at some big challenging choices to have the service levels that
we would like to have and our ability to buy them and pay for them, you know. Usually what we do in budgeting is we don’t take, we don’t take anything off the outside of the house, we
just start pulling the timber out from the inner house. Nobody can see what’s happening, you know, really. This is where it’s visible, so it’s more useful in a sense.
Chair Filseth: So then, you concur that 7 may not be necessary at this point? Actually, I kind of like it.
Mr. Keene: Well, I think clearly the question of how are we able to, how could we be able to provide the level of service we want to with a reduced or reduced staffing.
Chair Filseth: Or restructure.
Mr. Keene: I mean, alternative staffing.
Chair Filseth: Alternate staffing, yeah.
Mr. Keene: I mean, it’s not like they’re arcane. I mean, we’ve talked about, what about civilianizing Fire Inspection, what happens if there are ways, the Chief even shared with you
ways to look at, are there ways to civilianize at least EMT’s and those sorts of things, at least to help bring down some of the costs.
Chair Filseth: Yeah, I mean, my guess is we probably know what most of the levers are, right? And it’s a question of sort of figuring out how to do this right.
Council Member Holman: So, my question is, Kiely, are you trying to incorporate Number 7 into Number 6A?
Ms. Nose: Kind of. You guys can strike the language if you want, but just what it could look like.
Council Member Holman: Can we at least agree that we’re striking the language that we struck? Up there, can we just get rid of that?
Chair Filseth: Okay, yes.
Council Member Holman: Okay, good.
Chair Filseth: Actually, I think that if you stopped it after models, you’re probably okay. And then you’re probably (unknown) most of 7, okay?
Ms. Nose: So, if you guys like this 6A then I’ll get rid of B, then if you guys made a Motion, we’ll add that to the list.
Chair Fine: Okay. Council Member Fine, you want to ask a question?
Council Member Fine: Sure, Council Member Holman, I think you added number 3, about the power redundancy, second line?
Council Member Holman: Yes, I did. It’s been a topic of discussion for some time, and I think it’s time we got updated on that and made some kind of, I shouldn’t say made a final decision,
but make some kind of recommendations going forward, because it has been languishing for some time.
Council Member Fine: Yup. So, if I remember correctly, I think when Utilities was presenting earlier one of their Budget items, this was in there, that we have to make a decision within
the next year, so I guess I’m wondering, is that going to come to Council as a whole, and is it redundant for us to include?
Mr. Keene: Yeah, so, yes. But the issue, I mean, we have been working on this pretty intensely really within a year after the plane crash that we had. This is as much in other parties’
hands, again. I mean, this is Department of Energy, this is Stanford and this is other agencies. Ed can probably give you a better sense, but I, not doubt we could have a meaningful
Study Session with the Council pretty quickly on where we are.
Council Member Fine: I guess I’m just wondering why is it a Finance Committee, of course, there are financial implications, but if, Staff, if you’re going to be bringing this to Council
at some point for a decision anyways, do you kind of hear me?
Mr. Keene: Well, I would also agree. I mean, to me if there was the need to have an update on this and talk about it, I mean, I would think the first thing we should do is have some
sort of a Study Session with the Council, really, to bring the whole Council up to speed. I mean, and in a sense, the whole community with where we are.
Council Member Holman: I don’t disagree with that, if it’s just a Study Session, the Council can’t refer it to Finance.
Mr. Keene: Well, okay then. It doesn’t have to be a Study Session. It can be an Action Item, but it’s in the form of, where are we and what do we want to do, and then if the Council
says, okay, wow, there’s a lot of – I mean, there are a couple of known pathways that we can go on to provide this, and it’s just a question of what are the pros and the cons and the
costs and the obstacles, and then the Council very well could then say, well, based on what we’re hearing now, we kind of like this option over that one, but we would like Finance to
chew on it or something.
Chair Filseth: Has this been through Utilities and the UAC and so forth yet?
Mr. Shikada: It did some time ago, but it’s been a while.
Council Member Fine: Okay, so in that case, it’s been going through some of that rigmarole, then it might be helpful for us to ask Council to direct us to do it. I mean, does that seem
like a good pathway for you all?
Mr. Keene: I think that some public acknowledgement of this, and then a Council Action, will be helpful to nudging, at a minimum, nudging us off where we are right now. So, I think that
serves that purpose, and then we’ll see where we go from there.
Council Member Holman: I would relish a nudge. So, I have one that I would like to add that’s also been brought up a number of times, and it’s longer term and it’s a little bit controversial,
but at the same time, from my perspective I think it’s practical, and that is to, so it would be a number 7, which is to review, or maybe it’s evaluate, evaluate the cost transfer of
crossing guards to PAUSD. And the reason for that is because, and again, Jim and I have talked about this too, not at great length, but you know, the City provides, and for good reason,
provides an awful lot of funding to the school district for a variety of things, and some of those, I think, are really appropriate. This is one where it seems to me, and it’s been talked
about, just nobody has ever done anything about it. Nobody has ever brought it to Finance to have a discussion about it or to recommend even having a serious conversation with the school
district about it. I didn’t, I mean, when this came to the Council a while back, I didn’t suggest we do it this year, given their circumstance and their situation, but I think we do
need to look at, you know, the school district paying for some of the services that the City provides. You know, it’s easier for them to pass bond measures, it’s easier for them to raise
funds, it’s, from my perspective and observations. And I think this is one that they could well, and maybe should, carry. So, that’s one I would like to add.
Council Member Tanaka: I just want to understand the process here. So, do we all just kind of give our 2 cents to the stuff on the long-term parking lot, or do we actually vote on it?
What’s the process?
Chair Filseth: You know, I’ve been thinking there would be, at some point or other, there would be a Motion, but do we vote on each one of these?
Mr. Perez: It’s your choice. You could, you know, do each item or take them as a whole.
Mr. Keene: You know, the best way is if somehow you could take them all as a whole and you could do it just like that, but you may have differences. But, I mean, as you well know, in
one sense these are going nowhere unless you vote to bring them to Council for some direction back to you. You know, the Committee can’t create and refer work to itself. It has to go
to the Council. So, you are going to have to vote on them. But you may not agree with all of them, so you may feel, you know.
Council Member Holman: So, it seems to me to be practical, is that if there’s even a couple of us who support the things on this list, we should send it to Council and let them maybe
prioritize, but even refer all of them and we prioritize or some fashion.
Chair Filseth: If we’re going to send a list of stuff to Council, I think it should be a short list.
Council Member Holman: I think Number 7 is kind of low-hanging fruit.
Chair Filseth: I actually think of 2 as part of 6, if that makes sense. In fact, could 2 be a sub of 6 or, actually, I think it’s part of 6.
Mr. Keene: Yeah, so if I might interject, and maybe Staff if you guys disagree, I actually think 2, well what was 2, it’s okay, no, is actually pretty easy to do, and you know, that’s
almost more in the kind of directive from the Finance Committee that you could say now and we could be in a position to tell the Council when we present the Budget, what that could look
like. What form that would take, right.
Chair Filseth: Even in a couple of weeks.
Mr. Keene: Yeah. I mean, just so we’re clear, I mean, and I don’t know if you got to see, Council Member Tanaka asked me a question that I sent back to all of the Council as it related
to GASB requirements on reporting, which we meet in the CAFR. But as far as the Budget, we could do something, putting it in the individual departmental budgets, but let me tell you
there are ten reasons why that one would be really difficult and it would not be useful over time because we’ve go new people coming in, they’re on all kinds of different pension tiers.
I mean, but we could develop a portion of the Budget, right, that deals with the Unfunded Liability piece and ways to report it, so that you could easily, and anybody could easily go
and see and take a look at it. Whether it’s a tab in this Budget just like the non-departmental, and be able to see this. And I’m not saying we would have it done for the meeting, but
we could tell the Council what it looked like and it could possibly be done in the final printed Adopted Budget.
Mr. Perez: I think it’s a good idea. My suggestion would be that we do it for the following year, because I think we want to do that ourselves, and that’s what we were thinking and having
prior discussions with some of you. But what I would like to add to it, the outcome of this, the September meetings, which is a formal plan on how we’re going to proceed to fund it,
because it ties the two together. Because we want to send the message out to the community, out to any credit rating agency, our labor groups, that here’s our problem and here’s our
attempt to resolve it, and here’s our strategy on how we’re going to do that. And reflect all of that in the document.
Chair Filseth: Council Member Holman.
Council Member Holman: So, a question, trying to simplify here a little bit. It seems to me that 5.2 and 5B are basically the same thing, and if what you mean in B is, by review of the
financial reporting display, is that what you mean.
Chair Filseth: No, they’re not, they’re not the same.
Council Member Holman: So, tell me what reporting display means and how they’re not the same.
Ms. Nose: My interpretation of it is how we report the Unfunded Liability in these documents, so when we show you and bring you an annual Budget, what we, like how we articulate that.
Whereas Number 2 is how we actually are going to address that Unfunded Liability, so what our financial mechanism, plans, policies that we can do as an organization in order to financially
address it.
Council Member Holman: So, maybe 5B then could be, for my purposes anyway, clarified a little bit because I didn’t know what display meant. If you mean, reported in the budgets.
Chair Filseth: How about get rid of the word display? I have another question, are 3 and 4 sort of the same thing? I mean, they’re both about cost recovery, right?
Council Member Holman: I agree, 3 is a subset of 4.
Chair Filseth: Yeah, they’re not exactly the same. I mean one is, yeah. Although, is 3 just, is 3 just, you know, fee adjustments?
Mr. Perez: Introduction of new fees would probably be a better classification.
Mr. Keene: You know, I guess I tend to be a pattern and big picture perspective, and then I’d like a certain order and so I naturally want to match this up. I sort of feel like some
of these things, like even 3 or 4, are almost, they’re really more subsets of what grows out of 5, which is, you know, what are the structural revenue and expense, I mean, what are the
kinds of things we want to start looking at. (Crosstalk).
Chair Filseth: That’s a good point. (Crosstalk).
Mr. Keene: (Crosstalk) enough of the daytime population growth. If we don’t tackle that, that’s what it is. So, they’re almost indicators of the kinds of things that we need to be looking
at under 5 and 6, even 1. And now to put it in one even nice neater way, let’s not lose site of the fact that one of the five Council priorities for this year is Budget and finance,
so you are exercising in this your responsibility of saying, in response to this being priorities we’ve identified, I think 5 is the big, I mean, that is in many ways the overarching
thing you’ve got to deal with. Unfunded Liability and the structural imbalance. And then all of these other things start to be examples of the kinds of things we need to be looking at,
and you’re just calling some of them out. And I think they almost make it better that way, because they’re not as much lightening rod and people arguing, should we do it or not do it.
They’re all viable.
Council Member Fine: Question then to my Colleagues. Do we want to actually just, in terms of priorities, keep it really simple on those two? Five as a two-part thing, and you know,
if in the report Staff can list some of these ideas we’ve listed here, right, overtime use, power redundancy, medical and service calls, daytime cost recovery, crossing guards, those
are all examples.
Chair Filseth: I’d support that.
Council Member Holman: Well, I see it a little bit differently. I think if we were going to do what Kiely started here, it’s like if it was 5C and 5D, C might be 2 and D might be 3.
I’m sorry 3 and 4.
Council Member Fine: I guess, I’m starting to realize each of these in a funny way is one of our pet projects or personal interests, right? I brought the Fire thing, you brought up the
crossing guards. We take this to Council, you know, is Council Member Kou going to bring up, you know, emergency services or, you know, paint on the streets, whatever it is. And I think
we benefit by prioritizing our priorities.
Chair Filseth: You’re worried about distracting from the gravity of, right.
Council Member Fine: And these are all good ideas, right? But I think Jim is right about them being lightning rods in some way and distracting from that main mission.
Council Member Holman: I am concerned, though, about 4 in particular getting lost, so I’d really like 4 to be a C.
Mr. Keene: But, can I just suggest this, honestly. Don’t lose sight of, what you’re really asking the Council to do is to ask you to do 5, and then it’s back in your lap, so you just
pull these out and you start working on them, rather than arguing, you know, they might not even make it through the Council right now. This way you have the opportunity to look at all
of these. And you will give the Council a taste of those.
Chair Filseth: Yeah. You know, I think that’s right. I think you want the Council to direct us to do 5, right? And the rest of it is, look at transfer crossing guards, look at JUSD and
so forth, right? So, if I understand what City Manager just said, I think it was delete at least 3 and 4 and this group brings them back up again when we get the whole thing in the fall,
when we get the charter in the fall.
Mr. Keene: I thought the way Council Member Fine mentioned it was appropriate in the body of even what we wright, we give examples of things that surface, without saying we’re committed
to it. Then the Council kind of gets to think, oh, you know, it puts some texture to what 5 is, and then they start to see it. And then you say, there could be many more.
Council Member Holman: Okay, so they’re not lost. They’re just not part of the list. They’re in the body of commentary?
Mr. Keene: That’s right.
Council Member Holman: Okay.
Ms. Nose: And just to alleviate all fears, you still have this list, the original list in the At-places Memo, so if any of us need a refresher, we did document the original list.
Chair Filseth: Okay.
Ms. Nose: What does that do to 6? That as well?
Council Member Fine: Yeah, 6 and 2 I think are, those should be mentioned in the report.
Council Member Holman: Two is kind of a separate animal, though.
Chair Filseth: Yeah, it is.
Council Member Fine: Okay, leave 2.
Mr. Keene: To be honest with you, we can bring this back without you even having to report it to the Council. I mean, you’ve asked me as City Manager, and I do have the authority to
put things on the agenda when we do it, when we sit down with the Mayor, we will just say that, you know, this came up and we’re going to schedule an action session with the City Council,
or in the process of whatever, you’re saying Finance is really looking forward to getting the assignment on 5. We want to let you know there are some other things we may want to get
sent to us this year too, including this redundancy issue. We’re going to have a session with the whole Council, and you make that decision. I think you’re good. So, we have a Motion?
Chair Filseth: So then we need a Motion to forward what is now 1, used to be 5.
Council Member Holman: Wait a minute. What happened to Number 2. We need the, the power of redundancy needs to go back in. And that list I would move that we forward this list to City
Council.
Mr. Keene: Make it work.
Council Member Fine: I’ll second that.
MOTION: Council Member Holman moved, seconded by Council Member Fine to direct Staff on the following:
Return to the Finance Committee in August to review the citywide implications of: 1) structural revenue and expense growth ensuring expense growth remains at or below that of revenues;
and 2) unfunded pension liability. Some specific areas to address include:
Look first at current public safety growth rate of 10 to 12 percent in relation to citywide growth rate of 6 percent. Include a review of staffing levels and alternative models.
Review of the financial reporting of the unfunded pension liability
Report to City Council on the plan and implications for power redundancy
Council Member Holman: So, you want us to talk about this for ten more minutes, Jim?
Mr. Keene: No, I think we can make a silk purse out of this.
Chair Filseth: Council Member Fine, do you care to speak to your second?
Council Member Fine: No, I think you framed Number 1 pretty well, Mr. Chair.
Chair Filseth: Other commentary Council Member Tanaka? I don’t have any either. All in favor? Motion carries 4-0.
MOTION PASSED: 4-0
Chair Filseth: Now, do we want to go back, as I promised Council Member Tanaka, do we want to go back and revisit the original Motion, now that we sort of didn’t, we sort of backed away
from the head count thing? No. okay. Yeah, Council Member Tanaka.
Council Member Tanaka: Yeah, so at the beginning of the Budget process, I had a very simple request, which I thought was kind of administrative, which was to see, because I imagine this
whole Budget was created with spreadsheets. No, it wasn’t? How was it created?
Ms. Nose: Sorry. The Budget was created within the Questica software system that the City uses.
Mr. Keene: We have a public finance Budget creation software system.
Council Member Tanaka: Okay, well I guess my request is to get this in a format that can be dumped into a spreadsheet, and I would assume whatever system you're using has some sort of
output to do that, other than PDF, and the reason why I suggested that and I asked for that is because, when we were going through, you know, a couple of thick binders of the Budget
it makes it easier to analyze what’s going on. So, I requested this, this is my fourth time requesting this, and so I, it’s a kind of simple request and it’s just what we have here but
just in electronic form that we could actually manipulate with a spreadsheet, and I guess I’m at a loss as to why it’s that hard for us to get it, and will we be getting this after the
Budget is approved, or is it possible to get it before?
Mr. Keene: So, Number one, I mean, I honestly think this is something that the Council should ask us for. Trying to understand that the utility of it is, in particular to the entire
Council, which is who we support. It seems to me it should be able to be clearly articulated to everyone why this is an advantage. How this moves us forward. I mean, we’re being asked
to create new documentation forms, right, and…
Chair Filseth: Let me see if I can interject a thought on that, which is, I understand the issue, right? It seems to me that from 90,000 feet all this is public information and so, in
fact, not just Council Member Tanaka, but any member of the Public, Herb Borock or somebody like that, could legitimately request it too, the information. So, it seems to me that if
it exists in the format that Council Member Tanaka is asking about, it’s not unreasonable to transmit it, right? If it doesn’t exist in that format and it’s going to take a huge amount
of work, okay, more than an hour, then it falls into the bucket of, you know, it should be, that amount of work should be prioritized. Some of these, having had past experience with,
gee, this data exists in the system, we ought to be able to get it, right? And it costs a million dollar IT project in order to be able to generate it, right? So, it seems to me that
that’s sort of the pulls. If it exists in that format, it seems like it’s public information, you should be able to get it. If it doesn’t and it’s going to take a lot of work, then it’s
got to be prioritized along with other Staff activity.
Mr. Keene: It doesn’t exist in this format, so we are only required to produce public information that we have. Now we do have an open data site. I don’t know what we’ve got in the open
data site on this in that sense, you know, that means there is some other work on conversion that needs to be done by other folks. I guess I’m trying to understand, we’re trying to understand
the public policy benefit of having information at that detail. I’m not saying that it’s wrong. I will tell you this, I don’t want us to have to answer 5,000 more detailed questions
as a result of that being there. I think the Council, I mean, I don’t think we have to be obligated to doing that sort of thing. There needs to be some process, because basically what
we’re going to be doing is training you all in the Budget Office. And your job isn’t to be a Budget analyst, and I don’t mean that in a mean way. So, we’ve got to figure out some way
that, if we do create information, you really want to do it, that it’s something the Council directs and you can really articulate why it’s beneficial, and how you can protect us from
the unknown consequences of it being either misused, misinterpreted, whatever. I mean, I’m sorry, we’ve already put out summary information. If it comes from you guys, it has a certain
status as opposed to somebody else, and if it’s inaccurate, we have to maybe then spend time, just like if we put out inaccurate information, and it embarrasses you all, or something,
you want us to do what it takes to make sure we make it right. And we need to have that conversation if we’re going to get into this sort of thing. I’m not saying no, but I don’t think
it’s just a simple as, hey, just give us this and let us play around with this. I think it’s a deeper conversation, particularly since it doesn’t exist.
Chair Filseth: Well, it seems to me it falls under, like any other topic we deal with, which is you know, Council can’t, I mean, there are sort of – Council can’t just waste a lot of
Staff’s time, okay. I mean, we have processes and procedures by which we try to work out sort of asking Staff to do stuff. And it seems like this, you know, this should fit into any
other, so if we come up with some kind of analysis and so forth, that it will take Staff a while to respond to that, and if it’s the one-hour or two-hour kind of bucket, then it’s one
thing. But if it’s six man months of work, then it’s cumulative, then it’s a completely different kind of bucket, and we’ve got procedures for that, and we need to follow those, and
Council needs to follow those too. So, I think the answer is, it doesn’t exist in that format, right? Yes sir.
Council Member Tanaka: Okay. What software do you guys use?
Ms. Nose: We use Questica.
Council Member Tanaka: What’s it called?
Ms. Nose: Questica.
Council Member Tanaka: How do you spell that?
Ms. Nose: QU…
Mr. Keene: Could we have a separate conversation, and I’m open to it, with the whole Council about this. I mean, this is new territory. It’s unusual. I’m not saying it shouldn’t happen.
But it is unusual, and it has implications and we should have a professional discussion about it. Somebody else says, gosh, I’d really like to see the notes that you had as Staff so
I can see the thought processes you went through when you developed this.
Council Member Tanaka: To be clear, what I’m asking for is, for instance, on Page 170 there’s a table here and it’s a table, right? I’m not asking for anything for anything but what’s
on this Page. I’m not asking for the formulas. I’m just asking for the numbers that could be manipulated in a spreadsheet, and I find it really hard to believe in 2017 that there’s not
a financial package that could immediately export that out into like a CSV file or Excel file. I find that extremely hard to believe. (Crosstalk).
Mr. Keene: I thought you were looking at all the, you wanted to see all the background data in all the (crosstalk).
Council Member Tanaka: No, I’m just asking, all the stuff that we see here in PDF file.
Mr. Keene: That wasn’t clear. I apologize and we didn’t understand that. You’re asking us to convert this document here with the detail it has here into a…
Council Member Tanaka: I’m just asking for the tables, the tables and graphs. For us to get that in a form that we could easily print to a spreadsheet versus having to type it in manually.
Ms. Nose: Sure. So, the data that you’re looking at in these tables is actually in Frame Maker. It’s not in a software system. We use Frame Maker, or like a database system rather, we
actually have a system that integrates from Questica to publishing software, and so there are sequel queries behind all of the tables that’s pulling raw data from our Questica system
into Frame Maker files. So, in terms of the record and the form of that table that you’re requesting, we could provide you with the Frame Maker file or PDF file.
Council Member Tanaka: If you give me the Frame Maker file, that’s fine.
Mr. Keene: Okay. So, I do want to apologize. I just want to apologize to Council Member Tanaka, because my understanding had also been that it wasn’t just this level of data, that it
was all of the background data that rolls up into what we do.
Council Member Tanaka: I didn’t ask for that. I asked just for what we see here in a manipulable form, right? Just what you gave us in the two binders.
Ms. Nose: Sure. They are Frame Maker book files, at which point I don’t know enough about the technical software system because there’s a lot that gets on a server. So, I’d have to check
with IT on how.
Chair Filseth: So, I want to make sure I understand what Council Member Tanaka is asking for, which is, I think you’re asking for all of it, right? As opposed to I just want to see Libraries,
or I just want to see Electric Fund or something like that? Is that practical?
Ms. Nose: So, that’s what I just want to make sure. I actually don’t know kind of the background side of it. I know how to create it. I know how to manipulate it and change the stuff,
but in terms of, if I pull that book file off of this discrete publishing software, or discrete publishing server, I don’t know if it’s going to like break any links or anything like
that. So, let me just check that. I think it should be okay.
Mr. Keene: We’ll tell you what it would take to be able to use that and then if we can do it, we’ll certainly make it available and we can ask who wants to have it available in that
format. And I would feel better knowing that we can, we’re producing exactly what we gave you here, but just in a slightly different format that allows you to do some math with it I
guess.
Chair Filseth: Okay, if you’re comfortable with that, okay. Karen.
Council Member Holman: Yeah, I have a question about this. And here ahead of time, I’m not questioning anybody’s motivations. That’s really important. It’s not a question of that. I
have some concern about, if these are transferred to anybody in tabular form that can be manipulated, how their identified, because stranger things have happened. Like if somebody says,
oh look, if we just did this, and it’s identified as a City document, it could be misinforming someone. So, I just want to, I just have that concern of, I’ve seen it happen before, and
actually I’ve seen something happen with City documents that we talk about outside of here, but with some City stuff that even happened. Just like no ill intentions, I think, but things
can get misconstrued, misrepresented, misunderstood, so I think it’s not quite as simple as, oh, we’ll give you the files.
Chair Filseth: It’s public data. It’s public information.
Council Member Holman: Yes, but it’s public information but not in manipulable form, with City identification on it. That’s the discrepancy that I’m making.
Mr. Keene: I think let us see what the form is and what the controls are and that sort of thing. I think this is a very legitimate concern, but it’s all hypothetical right now. So, we
need to see what this looks like. Like you said, if it’s readily identifiable in some way or whatever, that’s a little bit different than it’s just some sort of raw data that is able
then to be put into some other format.
Council Member Holman: Exactly. And then if we’re ready to go do something else, I have just a really simple question. I have a really simple question. So, under issues anticipated for
2018, number 1 there, I’ve been hearing some wild numbers related to that. Does Staff have any indication of what?
Mr. Keene: What we just want to identify are things that we know that are out there that could come forward. So, really quickly, the Cool Block grant is a potential program that would
have a $400,000 a year grant that would ask for a matching grant of the same amount. So, that’s the issue that would have to be looked at.
Council Member Holman: So, that does match the number I have been hearing, which is $1.2 million.
Mr. Keene: Yeah, and then we would have to tell you where that funding source could come from. I mean, we’d have to hear what the pros and cons are on that. I do know that, my understanding
is that under one in 2018 it would be a half-year issue, so it would be $200,000 that leverages $200 or maybe $400, that’s not clear. We just know that’s going to come forward. We talked
about the consolidated parking permit and the automated parking system, the Junior Museum and Zoo. You probably know, if you’ve been briefed by different folks you know about it, but
the projects really, the public/private partnership project’s moving along. There’s a big need, though, because of that, that we kind of completely redo and restructure the parking lot
there at Lucy Stern and all of that stuff. That’s to be identified, necessary funding, and how we find that. So, we just want to identify it as an emergency IP project. And, again, I
mention the Caltrain’s means restriction. That’s a $500,000 to $700,000 capital cost, depending upon how many linear feet that we would install, the matching E-site fencing, that’s the
8-foot fencing that has those winglets on them and the entire west side section. And it’s one of the things that the Means Restrictions Committee of Project Safety Net and Shashonka
and a bunch of the folks will identify that. As much limitations as you can put in access to, say the tracks in this case. Those are important things for us to look at.
Council Member Holman: So, just in relation to 5, it’s just a comment that on the east side of fencing we had told people that we would do in-fill planting and we haven’t done that.
There’s still some pretty significant gaps.
Mr. Keene: But there is some growing up. I mean, it’s not like as bare as it was before. You would agree with that, right?
Council Member Holman: In some places. There’s still some pretty significant gaps and we didn’t do the plantings that we said we were going to do, so, yeah.
Chair Filseth: Are we still more or less sort of the main topic here?
Mr. Keene: So, those are things that we just know about that we just wanted to surface to you. (Inaudible) We weren’t aware of it. Is that it for you guys?
Chair Filseth: We are at the end of the formal agenda, so is there anything else? Going once.
Mr. Perez: Chair Filseth, you’re starting to do what I was going to do. I was going to thank Kiely and the team behind for all their work.
Chair Filseth: Finance team, thank you for working so hard on this. We know you guys have been up late at night.
Mr. Keene: And we thank you, really.
Chair Filseth: And you guys too. Kiely, we are not worthy.
Mr. Keene: These guys are workhorses.
Ms. Nose: And trust me, it’s not me, it’s all of them. It’s the whole team. I couldn’t do it without them.
Future Meetings and Agendas
Lalo Perez, Director of Administrative Services and Chief Financial Officer: Future agendas real quick.
Chair Filseth: Go ahead.
Mr. Perez: So, we are cancelling the 25th meeting because we are complete. So, thank you for that. Congratulations. You have a free night. We are reviewing whether we need to meet on
the 6th or not. We do not need to meet the third Tuesday of June. We don’t have anything on the agenda, so we’ll put out the plenary notice to you if the 6th is cancelled as well. And
then after that we go to the break. We’re going to come back with some portions of the long-term parking lot even if the Council doesn’t approve it, because we have some, you know, we
have our plan on the pension and so on, so we will have that after the break.
Chair Filseth: And with that, do you want to do the honors?
Mr. Perez: It’s a wrap.
Adjournment: The meeting was adjourned at 9:55 P.M.
TRANSCRIPT
Page 144 of 144
Finance Committee Transcript
May 18, 2017
FINANCE COMMITTEE
FINAL TRANSCRIPT
Page 1 of 144
Finance Committee Transcript
May 9, 2017