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HomeMy WebLinkAbout2025-04-01 Finance Committee Summary MinutesFINANCE COMMITTEE SUMMARY MINUTES Page 1 of 20 Special Meeting April 1, 2025 The Finance Committee of the City of Palo Alto met on this date in the Community Meeting Room and by virtual teleconference at 5:30 PM. Present In-Person: Burt (Chair), Reckdahl Absent: Lythcott-Haims Public Comment None Action Items 1. Recommendation to the City Council to Adopt a Resolution Approving the Fiscal Year 2026 Water Utility Financial Forecast including Reserve Transfers, and Amending Rate Schedules W-1 (General Residential Water Service), W-2 (Water Service From Fire Hydrants), W-3 (Fire Service Connections), W-4 (Residential Master-Metered and General Non-Residential Water Service), and W-7 (Non-Residential Irrigation Water Service) Lisa Bilir, Senior Resource Planner, addressed the Finance Committee. In March of 2025, the UAC unanimously supported this proposal for a 10 percent ($11.40/month) water rate increase in Fiscal Year (FY) 2026 for residential customers. The City used $25 million of reserves over the past three years. Some of the drivers for this proposed rate increase were labor costs and sales reductions due to drought over recent years. Costs have increased an average of 5-6 percent per year while revenues increased an average of 1.3 percent since 2019. On April 22, 2025, the wholesaler will decide their rate increase. In December of 2024, the Finance Committee’s feedback to staff was that the preliminary 14 percent rate increase was too high. Therefore, staff modeled $4.6 million of CIP in 2026 and $2.7 million in 2028. This current 10 percent overall rate increase proposal reflected a 17 percent distribution rate increase and a 2 percent commodity rate increase. The alternative was to issue debt for two tank replacements, maintain the 10 percent rate increase for FY 2026, and have 7 percent rate increases in FY 2029 and FY 2030. A chart was shown of single-family residential bill comparisons with other agencies using 100 percent SFPUC water supply, which demonstrated CPAU’s water bills were near the average based on historical data from Mid-Peninsula Water District. SUMMARY MINUTES Page 2 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 A slide was shown of FY 2026 rate increase drivers. The majority of the increase was for operating expenses. To maintain a 10 percent overall rate increase would require using $4 million from reserves and deferral of $1.8 million CIP replacement. As revenue was below cost, reserves were being used to cover the difference. The plan proposed to rebuild the capital reserve over a five-year period. All the funds in the rate stabilization reserve will be used. The yearend 2024 water operations reserve was slightly below the minimum balance. Staff planned to continue using funds from the operations reserve but will gradually replenish the water operations reserve to within the guideline range during a five-year period. Catherine Elvert, Communications Manager, stated safety was the top priority. Communications to residents, businesses, community organizations, and other stakeholders will emphasize the need for infrastructure replacement, maintenance, and capital improvement. Multiple outreach channels will be utilized, such as public meetings with the UAC, Finance Committee, and City Council; digital communication via the website, social media, email newsletters, City blog, and videos; utility bill inserts, SFPUC rates postcard, and local media engagement via articles and interviews. The key messages will include the reasons for rate increases, benefits to customers such as safety and reliability, CPAU’s competitive rates in comparison to other cities, what the City was doing to keep costs down, and City programs and services to help customers keep utility bill costs low. Ms. Bilir, Senior Resource Planner, mentioned that staff will make any necessary modifications to the Prop 218 notice and will send it to customers in May in addition to a pass-through postcard for the SFPUC rate. Referring to Packet Page 18, Council Member Reckdahl noted the reserve will be well below minimum in 2030. Ms. Bilir, Senior Resource Planner, explained that the spending pattern fluctuated every other year with main replacements and acknowledged that she misspoke earlier when she stated the reserve would be within the guideline range in 2030. Council Member Reckdahl remarked that the reserve minimum was meant to cover unexpected capital and wondered if staff was comfortable with the reserve balance. Ms. Bilir, Senior Resource Planner, replied that staff had deferred capital and was comfortable with the model. The timeline in Figure 4 reflected the deferred capital expenditures. Council Member Reckdahl asked what was the risk of deferring replacement of old assets and what the lifespan was of HDPE compared to cast iron. Matt Zucca, Assistant Director of Utilities overseeing WGW Engineering and Operations, responded that the risk of deferring replacement of 100-year-old assets by two years was probably not much of a risk in the short term but there was a risk of exacerbating potential future problems such as additional leaks as well as more maintenance and repairs. Council Member Reckdahl noted the packet mentioned the risk of landslides or other big events. Assistant Director Zucca stated that a lot of the pipe in the ground was asbestos-cement (AC) pipe installed in the 70s and tended to be brittle. A program was in place to evaluate certain types of AC pipe known to fail earlier than other types SUMMARY MINUTES Page 3 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 and replacing with high-density polyethylene (HDPE), which was more flexible and more likely to withstand a seismic event. A 100-year lifespan was assumed for any pipe asset put in the ground but some last longer. Recent studies showed some post-1956 AC pipe will last over 100 years. Some of the pre-1956 AC pipe had a lifespan of 60 or 70 years; therefore, those were targeted for replacement. Assistant Director Zucca stated that staff would not propose delaying replacement by a couple years if they thought there was a substantial risk; however, the risk grows if deferrals continued year after year. Construction inflation would result in delayed replacement being more expensive. Referring to Packet Page 18, Council Member Burt asked why the reserve maximum and minimum range fluctuated. Ms. Bilir, Senior Resource Planner, explained that around 2021 or 2022, the minimum and maximum CIP reserve was changed to 12 and 24 months of the CIP budget based on a three-year average, respectively. Prior to the change, it fluctuated more because CIP budgets varied from year to year, depending if a large project was under construction. On Slide 5, Council Member Burt noted a seven-year period where rate increases were 2-3 percent on average, which was immediately followed by water supply costs significantly increasing because of SFPUC’s investment to rebuild their approximately 100-year-old supply system. From 2020 to 2023, the City wanted to minimize impacts to ratepayers during COVID. Council Member Burt urged staff to communicate to customers that there was an extended period of very little rate increase (less than the rate of inflation) while costs were increasing, so reserves were used and now the reserves had to be replenished. Referring to Slide 4, Council Member Burt queried how many positions were vacant, how many fewer vacancies there were as a result of filling those positions, and what the impact was of filling those vacancies. On Packet Page 11, Council Member Burt wanted to know what was meant by drought recovery and what the financial implications were of those assumptions. Ms. Bilir, Senior Resource Planner, explained that the forecast took into account the pattern of usage over the past few years. Weather in 2024 was relatively normal. The drought ended in 2023, so there was likely some rebound included in the 2024 actuals. In past droughts, rebound was seen beyond one year. The modest adjustments to increase and decrease the load forecasts did not have a large impact on rates. Ms. Bilir, Senior Resource Planner, confirmed Council Member Burt’s understanding that drought recovery meant that usage decreased during a drought, which drove up the cost per gallon because most of our cost is infrastructure, and we use more water after a drought. Council Member Burt advised staff to communicate to customers that CPAU’s rates were in the middle compared to our SFPUC neighbors getting high-quality Hetch Hetchy water. Valley Water’s cost was lower but their water quality was not as good. Ms. Elvert, Communications Manager, agreed it was an important comparison. In reply to the question about water vacancies, Assistant Director Zucca stated that six positions were filled within the last year (three installer/repairer positions, a Utilities supervisor, and two SUMMARY MINUTES Page 4 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 water system operators). In last year’s budget, the Council approved two additional headcount to the water fund for a program to address the new backflow regulations. To meet the requirement for maintaining a license within the system, the Utilities Supervisor position was outsourced until it was filled. The water system operator vacancies resulted in deferral of some annual maintenance because of the lack of staff to perform daily prescribed maintenance in addition to preventative maintenance. Council Member Burt inquired where outsourcing was reflected in the bar graph on Slide 4 as he was interested in comparing if it was more cost effective to have in-house resources. Kiely Nose, Assistant City Manager, replied that outsourcing was not reflected in the graph because it was netted out from salary and benefits. Oftentimes, vacancy savings offset the outsourcing contract expense. The graph demonstrated forecasted labor costs for financial planning of rates. Ms. Bilir, Senior Resource Planner, thought contract service appeared in the respective cost center in the O&M category and she offered to assemble the information for Council Member Burt. Council Member Reckdahl noticed mention of customer connections in the staff report and wondered what it referred to. Staff answered that it referred to connections with a new customer. There were no public comments. Referring to Packet Page 18, Council Member Reckdahl was concerned by the assumptions in Figure 4 because a drought affects revenue and unexpected failures affect cost. Council Member Reckdahl was not comfortable having low reserves, so he asked what was the most likely method for building up reserves, a slightly larger increase, cutting expenses, or buying technology that would result in future money savings. Ms. Bilir, Senior Resource Planner, replied that the capital budget could be further reduced or the rate could be increased more than proposed. Council Member Burt inquired if staff had looked into using AI technology to analyze where and when to perform line replacement to increase the quality and efficiency of deciding where to apply capital investments. Assistant Director Zucca responded that staff was looking into AI technology for wastewater but not for water. It was a very labor-intensive process to review videos of existing sewer mains, characterize them, and classify the defects. AI’s ability to process and categorize images looked promising and hopefully would extend the life of assets. The wastewater utility was implementing a closed circuit television (CCTV) program to decide whether full main replacement or spot repairs were needed. For the water utility, visual investigation does not work because of pressurized pipes. In staff’s experience, the technologies that were supposed to take into account soil conditions, pipe, and pipe age have not been extremely predictive. On Packet Page 14, Figure 3, Council Member Reckdahl noticed Customer Service increased over the last few years and would continue to increase. Comparing 2030 to 2018, it appeared to SUMMARY MINUTES Page 5 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 be an increase of 2½ times. Council Member Reckdahl inquired if the scope had changed or if it was due to labor costs. Ms. Bilir, Senior Resource Planner, replied that labor increases were occurring across different areas. Dave Yuan, Utility Strategic Business Manager, pointed out that Customer Service included reallocation of some charges from CIP to Operations. A couple years ago, some folks were reassigned from Wastewater and Gas to the copper lead testing program. Manager Yuan thought the cost will probably decrease when the copper testing program ends. Council Member Reckdahl requested staff to elaborate on the option to issue debt. Ms. Bilir, Senior Resource Planner, stated that the alternative would not impact 2026. Two tank replacements or rehabilitations were expected to occur in 2029 and 2030, ranging from $4 to $7 million per project, and could be debt financed to allow for 7 percent rate increases in those years instead of 10 percent. The debt service including financing charges had to be paid in 20 or 30 years, depending on the terms. Assistant Director Zucca mentioned that the City had eight tanks with a lifespan between 30 to 50 years. Park and Dahl were the two tanks on the horizon. Assistant Director Zucca thought pump stations and tanks were perfect opportunities for debt financing; however, debt financing pipes was a bad idea because it was an ongoing project. Staff was in negotiations with a consultant to perform an assessment of the tanks to determine if they need a full replacement costing $7 million or a $4 million project for partial replacement. With steel tanks, sometimes roof replacement might extend the lifespan of the tank and defer full replacement for a number of years. Seismic was the predominant failure mode. The tank can be bolted down or operated at a reduced water level, however, replacing the roof allowed the water levels to be raised, which will all be factored into the analysis. Council Member Burt recalled there were currently two bonds, the smaller one of $17 million expires at the end of FY 2025 or 2026 but he did not know when the 2009 Series A bond would retire. Ms. Bilir, Senior Resource Planner, presented a slide on the debt finance alternative. Debt service would decrease in 2027 but increase in 2028 with this alternative. The decision did not need to be made tonight because it did not affect 2026 rates. Ms. Nose, Assistant City Manager, stated that the 2009 Series A bond matured in 2035, based on the capital budget. MOTION: Council Member Burt moved, seconded by Council Member Reckdahl, to recommend the City Council adopt a resolution a resolution amending Utility Rate Schedule D1, approve the Fiscal Year (FY) 2026 Water Utility Financial Forecast, a reserve transfer of up to $3,000,000 from the Rate Stabilization Reserve to the Operations Reserve in FY 2025, and amendment to Rate Schedules effective July 1, 2025 (FY 2026) for W-1 (General Residential Water service), W- 2 (Water Service from Fire Hydrants), and W-3 (Fire Service Connections). MOTION PASSED: 2-0 2. Recommendation to the City Council to Adopt a Resolution Approving the Fiscal Year 2026 Wastewater Collection Utility Financial Forecast, and Amending Rate Schedules S-1 SUMMARY MINUTES Page 6 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal), and S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger), and Repealing Rate Schedules S-3 (Industrial Waste Laboratory and Analysis Charges) and S-4 (Hauled Liquid Waste Charges) Lisa Bilir, Senior Resource Planner, addressed the Finance Committee. Palo Alto and several neighboring cities send wastewater to the Regional Water Quality Control Plant in Palo Alto, operated by Palo Alto’s Public Works Department. The plant was in the process of rebuilding several key components that have been in service for over 50 years and were in need of replacement. Some of the drivers for the proposed rate increase included cost increases to rebuild the regional treatment plant, labor increases, and depleted reserves needed to be restored to within the guideline range. In December of 2024, staff’s preliminary proposal to the Finance Committee was an 18 percent rate increase for 2026; however, staff was now proposing a 20 percent rate because of additional vehicle replacement costs of between $100,000 and $450,000 annually in addition to $350,000 to $450,000 annually beginning in FY 2027 for the sewer CCTV program. Because the reserves did not recover as quickly as had been forecasted, costs rose more quickly than projected. The reserves need to be built up to cover the cost for future minor capital at the treatment plant, so that was added into the forecast. A slide was shown of wastewater residential and general commercial bill comparisons to neighboring utilities, demonstrating CPAU’s residential wastewater was 21 percent below the comparison city average, general commercial was 13 percent higher, and restaurant was 7 percent below the comparison city average. According to Silicon Valley Clean Water’s Long- Range Financial Plan, Palo Alto was the lowest of all the agencies included on the chart in 2023. With the proposed 20 percent rate increase, Palo Alto’s residential rate would remain 5 percent below neighboring community average. The drivers of the FY 2026 rate increase included the following: Need to replenish reserves to cover the treatment plant’s authorized annual amount for minor capital as well as a policy choice to recover a one-time outstanding amount, which this proposal would recover over a four-year period or the alternative was a 10-year period. The treatment plant can call on minor capital at any time, so those funds need to be made available. Operating expense increases were primarily driven by labor. The five-mile main replacement was deferred from 2026 to 2028. Lateral and manhole rehabilitations as well as a one-mile sewer main replacement were deferred from FY 2026 into the future. Deferrals offset the proposed rate increase. Of the 11.3 percent recommended increase to replenish reserves over a four-year span, 2 percent was for the collection system and 9 percent was for treatment plant future minor capital, which was currently in one reserve but staff was looking into separating it in different reserves this year. SUMMARY MINUTES Page 7 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 A chart was shown of wastewater costs and revenue projections. Starting in 2030, treatment capital was growing for larger capital projects needed at the plant. In 2024, capital was high due to the large sewer main replacement #31 along El Camino. Ms. Bilir, Senior Resource Planner, stated that staff was gradually restoring the wastewater operations reserve. Last year, with Council approval, the wastewater utility borrowed $3 million from the fiber utility to cover wastewater’s short-term cash needs to maintain cash levels at an adequate level and because its reserves were so low. In FY 2026, the wastewater utility needs to repay the fiber loan plus interest. In reply to Council Member Reckdahl asking why the operations reserve was very low in 2023 and 2024, Ms. Bilir, Senior Resource Planner, answered it was a combination of doing the largest capital project the utility had ever done, operating costs were higher than forecasted, and revenues were lower than forecasted. Matt Zucca, Assistant Director of WGW Engineering and Operations, pointed out that the sewer project was advanced a fiscal year because it needed to be done before Caltrans paved El Camino. Ms. Bilir, Senior Resource Planner, presented an alternative. The outstanding authorized amount for future minor capital could be recovered over a 10-year period instead of a four-year period, resulting in a 16 percent rate increase ($9/month) instead of the proposed 20 percent increase ($11.40/month). The alternative had the associated risk of the treatment plant charging the City if funds were needed for minor capital. As part of this alternative proposal, staff suggested to request the Council to approve a $2.5 million loan from the fiber utility to cover the additional risk. Catherine Elvert, Communications Manager, showed a photo of the sanitary sewer replacement project along El Camino Real. Ms. Elvert, Communications Manager, stated that communication about rate changes will reiterate the importance of the investment that ratepayers were providing to make sure this utility operated safely. Staff wanted to engage with stakeholders, address concerns, and encourage public participation in this process. The primary goals were safety, reliability, and regulatory compliance. Communications will include the reasons for rate increases, benefits to customers, how competitive CPAU’s rates were compared to neighboring cities, and the innovative projects happening at the aging Regional Water Quality Control Plant that will benefit our community and the environment. Staff will use a variety of outreach channels and strategies, such as electronic means, print, and direct mail, as well as engaging with local media and public stakeholders through meetings. In response to Council Member Reckdahl inquiring if the picture shown of the sanitary sewer replacement was HDPE, Assistant Director Zucca answered yes. On El Camino, mostly pipe bursting was done to avoid impact to the surface, which was staff’s preferred installation technique for sewer. With pipe bursting, a bursting head is dragged through to break the existing pipe and the new pipe is pulled behind it. Palo Alto, Mountain View, Los Altos, Stanford, Los Altos Hills, and East Palo Alto use the Palo Alto treatment plant. Council Member Reckdahl wondered if the rate increase was only for Palo SUMMARY MINUTES Page 8 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 Alto residents and why Palo Alto’s rates were different than neighboring cities on Slide 3. Ms. Bilir, Senior Resource Planner, explained that Palo Alto paid for the costs of Palo Alto’s collection system in addition to a portion of the treatment costs. Each City had its own costs for operating their collection system in addition to paying for their share of the treatment costs. Council Member Burt recalled an issue was raised two years ago about whether if it was necessary to update the calculation for participating Cities to pay their share of the capital cost for the wastewater treatment plant’s major rebuild. Mountain View experienced a lot of growth in the past decade. Council Member Burt wanted to know what the status was of reviewing the allocation of costs to Cities. Brad Eggleston, Director of Public Works, stated that the treatment plant’s long-rage facilities plan update was underway, which included looking at the allocation methods. The concern raised at the time of the contract award was that Palo Alto’s capacity-based share used for debt service allocation on capital projects was a fixed 38 percent. During COVID, the flow-based allocation percentage applied to the annual operating cost had decreased to 33 or 34 percent. In the current report, Palo Alto’s flow-based operations share increased because our flow was now close to 37 percent. Director Eggleston thought the assumptions used for forecasting rates was 38 percent. Council Member Burt asked staff to elaborate on the rebuild of the treatment plant using next- generation technologies, the environmental and other community benefits, and if it involved collaboration with Stanford’s engineering group. Director Eggleston said the largest project was for secondary treatment upgrades to replace equipment at the end of its life but there will now be a biological nutrient removal process to remove nitrogen from the wastewater discharge to the bay. This change will comply with the Regional Water Board’s new regulatory requirements for treatment plants throughout the San Francisco Bay Area to prevent algae blooms and other negative impacts; however, Palo Alto is the first or one of the first to do this. Palo Alto had discussions with the civil engineering group at Stanford on these topics 10 or 15 years ago when working on the treatment plant’s first long-range facility plan. As shown in the comparisons on Slide 3, Council Member Burt thought it was helpful to communicate to Palo Alto residents that they were paying on average at least 20 percent below surrounding comparable communities. On Slide 3, Council Member Reckdahl questioned why Los Altos had a much lower restaurant charge and if staff believed Palo Alto was charging a proper amount based on the cost of service. Ms. Bilir, Senior Resource Planner, replied that each City performed a cost of service study based on the size and other attributes of their customers. Palo Alto hired an outside consultant to perform a cost of service study for the wastewater utility in 2021, and the Council approved the consultant’s recommendation. There were no public comments. Referring to Figure 5, Council Member Reckdahl noted many years did not have capital reserves and there will be another decrease in 2028. Ms. Bilir, Senior Resource Planner, explained that SUMMARY MINUTES Page 9 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 all the reserves were utilized for the large SSR 31 project in 2024. The reserves have not recovered, so staff was working on a plan to keep reserves above the minimum. The first of the five-mile main replacements will occur in 2028. Council Member Reckdahl asked if the treatment center had its own pension or if they were part of the City of Palo Alto’s pension. Ms. Bilir, Senior Resource Planner, replied that the pension was factored into the treatment center’s labor costs and budget. Palo Alto paid its share of those costs based on the calculation formula. Director Eggleston stated that the City of Palo Alto’s pension trust fund included the wastewater treatment plant employees. Palo Alto charges the other participating cities for their share of the CalPERS pension payment for the wastewater treatment plant employees. In reply to Council Member Burt’s question about the unfunded pension liability, Director Eggleston explained that the issue was brought up in the staff report because of a misunderstanding in the way some of those costs were being allocated. The additional pension trust funds were not allocated to Palo Alto or the other partners but instead were being funded by the wastewater treatment fund balance, which has now been corrected to be part of the allocated costs going forward and will be seen as a new cost for the wastewater collection fund. MOTION: Council Member Reckdahl moved, seconded by Council Member Burt, to recommend the City Council adopt a resolution approving the Fiscal Year 2026 Wastewater Collection Utility Financial Forecast and amendment to Rate Schedules effective July 1, 2025 (FY 2026) for S-1 (Residential Wastewater Collection and Disposal), S-2 (Commercial Wastewater Collection and Disposal), S-6 (Restaurant Wastewater Collection and Disposal), S-7 (Commercial Wastewater Collection and Disposal – Industrial Discharger); and repealed Rate Schedules effective July 1, 2025 for S-3 (Industrial Waste Laboratory and Analysis Charges) and S-4 (Hauled Liquid Waste Charges) MOTION PASSED: 2-0 The Finance Committee took a break. 3. Evaluation of Fire and Ambulance Service Expansion Options (Follow-up from 11/19/2024 Meeting) Kiely Nose, Assistant City Manager, stated that staff recently issued a news release about a series of conversations on fire services and disaster preparedness that will be held at multiple venues between April and June of 2025. Fire Chief Geoffrey Blackshire delivered a slide presentation. Chief Blackshire thought that the Council made an appropriate decision in making public safety a priority for this year. Since COVID, the Fire Department eliminated some positions and reduced the budget by browning out a fire station and moving things around. Two fire stations did not have engines because deployment was moved to address the primary service demand for EMS at the time. Three full- SUMMARY MINUTES Page 10 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 time ambulances were put in service including a full-time ambulance in Fire Station 4 but only a two-person squad in Fire Station 2 instead of a fire engine. As a result of the FY 2025 budget hearing, the Council approved and adopted a budget that included three additional full-time employees (FTEs); therefore, a fire engine was put back in service at Fire Station 2. Fire Station 4 is the only fire station without a fire engine. At the midyear meeting in February of 2025, a proposal was presented to put an engine in Fire Station 4 with cross-staffing, meaning one crew staffed either an ambulance or an engine based on the call type. Approval was obtained to staff an overtime position with one captain per shift to have a full cross-staffing crew at that fire station. A chart was shown of calls for service from FY 2029 through FY 2024. Call volumes have increased, with over 9400 calls for service in FY 2024. In addition to an engine, a 12-hour peak ambulance was proposed to meet EMS demand and reduce reliance on Santa Clara County Ambulance to come in when all of Palo Alto’s ambulances are out attending to emergencies. In FY 2024, County Ambulance was called 327 times with a response time of 29 minutes and 43 seconds or less (90 percent of the time) compared to Palo Alto ambulance’s response time of 12 minutes and 2 seconds. The County’s ambulance standard was 11 minutes and 59 seconds. Using County Ambulance results in longer wait times and impacts the County because it is a County resource. Palo Alto’s adopted standard for medical and fire call response time was 8 minutes or less, 90 percent of the time. NFPA’s standard of 8 minutes provided an increased likelihood of survival. Other agencies in the county have adopted but not met their response standards. Unit hour utilization is how readily available our resources can respond to simultaneous calls. Palo Alto’s unit hour utilization of ambulances was twice the recommended amount in the LAFCo report. Adding another ambulance or engine to take more calls will reduce the unit hour utilization. The 24-hour staffing model meant units were staffed 24 hours a day, 7 days a week, 365 days a year, divided into three battalions or shifts (A, B, C). Three people staff one engine. When a firefighter is absent, the position is backfilled or covered with overtime. The Department had 0.5 FTE backfill positions for every daily position. Therefore, at least 10 FTE firefighters were needed to fully staff the three battalions for a dedicated engine. The Department used an integrated system to ensure there were enough personnel, tools, and fire stations. There are six fire stations. One ambulance is located at the north end of town at Fire Station 1, one at the center of town at Fire Station 2, and one in the south at Fire Station 4. The ladder firetruck was at Stanford campus because it fits. Resources were allocated where they were most effective. The call data from the previous year is entered into a predictive modeling program to run various scenarios such as resources needed during COVID, the Stanford contract, browning out a fire station, and putting in an ambulance at Station 4. Before 2013 or 2014, each fire station was responsible for a district based on map boundaries, which was not the most effective because those districts were drawn a long time ago. Now, a computer-automated dispatch service used automatic vehicle location to dispatch the closest SUMMARY MINUTES Page 11 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 unit to the emergency. The Department continues to monitor the effectiveness of its deployment model and this method has been more efficient. Council Member Reckdahl asked staff to talk about the decision making process for considering new engines in 2022. Kevin McNally, Deputy Fire Chief, replied that dozens of options were considered with the assistance of a consultant. Levrum Code3 software supplied a list of options. Fire Stations 2 and 4 were viable options because of their surrounding jurisdictions, geography, call types, and call volume; however, Engines 2 and 4 were not options. EMS was becoming a much larger part of the job. Two personnel were left over after transforming three full-time ambulances into the system. The Fire Department worked with the labor group to implement a new squad option. Station 2 had the ability to staff a wildland break at least for a patrol into the foothills for initial response. District 4 had an ambulance, which was the primary call type for EMS in that district. Districts 3 and 5 provided an adequate response into District 4. Districts 5 and 6 cannot get to District 2 quickly. District 6 was far busier. Three options were presented to the Finance Committee on November 19, 2024. Option A was a contract with a private ambulance service. Option B was having firefighters staff the units to build up resources. Option C was a single-role civilian model to staff ambulances and Fire Station 4 would be put in service by reassigning the current firefighters that were staffing the ambulances. Chief Blackshire presented three new options. Option D would cross-staff Engine 64 with Medic 64 without relying on overtime. Three FTE firefighters would be added to Fire Station 4. This resulted in an increased workload for the Fire Station 4 crew to run an ambulance and an engine. Medic 64 was unavailable if Engine 64 was in service and vice versa. Council Member Reckdahl asked what the anticipated utilization was of a fire engine at Station 4, based on running the software tool. Fire Chief Blackshire did not have the number but utilization of Medic 64 was about 20 percent. Other reasons for a unit not being available were if they were training, out of service for mechanical issues, or performing inspections. Deputy Fire Chief McNally stated they had a contract in the past with Levrum but they planned on running the model once staff can get time with Levrum. Option E was a single-role peak 12-hour ambulance staffed by civilian personnel but no engine at Fire Station 4. This option provided a total of four ambulances during the day, reduced reliance on Santa Clara County Ambulance by two-thirds, and would improve ambulance availability. Council Member Burt asked if Option E meant higher staffing than there had been at Fire Station 4 for the past couple decades. Fire Chief Blackshire replied that the proposed peak 12-hour ambulance may not be at Fire Station 4 because they had to determine the best location from where to deploy the ambulance. Option F was a single-role peak ambulance and a fully-staffed fire engine at Fire Station 4. This increased capacity would help with response times. Fire Chief Blackshire emphasized that having an engine assigned to a particular fire station only meant it was stationed there. Fire SUMMARY MINUTES Page 12 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 engines were responsible for the whole city. The automatic vehicle locator will dispatch the closest available fire engine. Amber Cameron, Senior Management Analyst for the Fire Department, addressed the Finance Committee. During the November meeting, the Finance Committee asked the Fire Department to research potential ways to generate additional revenue. The Fire Department billed insurance and self-pay around $3000 per ambulance transport. Typically, Medicare and Medicaid had a reimbursement cap of about $1000. Commercial insurance (27 percent of patients) was obligated to pay the full billed amount. Self-pay patients comprised 5 percent of ambulance transports. Ambulance transport revenue exceeded the budget revenue target over the last few years. In late April, the Citywide municipal fee study will be presented to the Finance Committee, which will include a proposed increase to the base ambulance transport fees in addition to a new first responder fee for engine response time to EMS calls. Currently, we did not charge for engine time when responding to medical calls. The City of San Jose will begin charging this fee in 2026. The first responder fee will be included added to the billing for ambulance transport. The estimated amount of additional revenue generated from the new first responder fee and the increased base ambulance transport fees will be included in Matrix Consulting’s report, which staff did not have yet. Palo Alto loses revenue to County Ambulance when our ambulances are unable to respond to a call. If the City adds an ambulance to the system as in Options A, B, C, E, and F, Palo Alto will capture more transport revenue that is currently captured by County Ambulance. Lauren Lai, CFO, spoke about the City’s financial position. In December, staff presented the long-range financial plan, which was a 10-year forecast of the approximately $300 million General Fund. At that time, the General Fund was forecasted to have a deficit of $12 million in 2026, $7.9 million in 2027, and $5.6 million in 2028. The December report was developed in the fall. Since then, the last two quarter-end sales tax reports have shown consecutive declines; therefore, the forecasted deficit was remarkably worse. The budget will be transmitted to the Council at the end of April. A study session was scheduled for May 5, 2025. The budget will come to the Finance Committee on May 6 and 7, 2025. Council Member Burt asked for the deficit amounts that were presented to Council in February. CFO Lai said that a midyear FY 2025 update was provided in February. Staff will get back to Council Member Burt with a response. Council Member Burt inquired if other agencies use Palo Alto ambulances. Fire Chief Blackshire responded that Palo Alto ambulances were exclusive to Palo Alto and Stanford. One of the advantages mentioned with Option F was not interrupting training. Council Member Burt asked how critical it was to minimize interruptions. Fire Chief Blackshire explained that training was one example but fire inspections, public education, report writing, and taking breaks were also part of a firefighter’s day. Training was critical. Some training was mandatory whereas sometimes training was for promotional opportunities when a firefighter was trying to become an engineer and needed to practice on a fire engine to run drills. A peak ambulance during the day or an extra engine could cover during training. SUMMARY MINUTES Page 13 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 Council Member Burt wondered if insurers would increase rates for residents in response to the new first responder fee, and how much additional revenue was expected. Ms. Cameron, Senior Management Analyst, stated that insured patients were responsible for their copay or deductible depending on their plan. By law, insurance companies had to pay the fees that we adopt. Staff provided an estimate in the report for captured calls. Analysis showed we would capture about $70,000 to $100,000 based on County Ambulance calls. The revenue from the first response fee was preliminarily $350,000 to $400,000 annually. Public Comments 1. Andy P. was in favor of a fire engine at Fire Station 4 and preferred Option F. Worst case scenario, Andy P. thought it was acceptable to have an emergency services fee on his utility bill or property tax bill. Andy P.’s friend watched his Peninsula house burn to the ground and observed that one minute made a devastating difference on a fire burning your house and possessions. Andy P. hoped the City could reduce response time. 2. Michael G. advocated for having a firetruck at Fire Station 4 to statistically improve the response time. Three schools were close to Fire Station 4 and there was a lot of new construction underway on Charleston. The area’s older homes made with wood construction burnt very quickly. 3. Patti R. is the emergency coordinator for her Mitchell Park neighborhood. Thirty years ago, Patti R. moved to Palo Alto after making sure there was a fire engine in the Mitchell Park neighborhood. Palo Alto Fire Department responded to a fire in her neighborhood in eight minutes. Mountain View Fire also responded. After everybody exited their homes, two electrical cars caught on fire. The Fire Department told everyone to get back inside their homes because of toxic fumes. Patti R. believed it was important to have a staffed fire engine because she did not feel safe. After finding out the City Manager and CFO made more than the Governor, Patti R. felt that Palo Alto should have a better budget. 4. Chris J., former City of Palo Alto Fire Captain and resident of south Palo Alto was in favor of returning Fire Engine 4 to the Mitchell Park Fire Station. In 2022, the fire engine was taken out of service and replaced by an ambulance. Palo Alto taxpayers were paying for a quality fire department and their expectation was to have a rapid response time for their fire or medical needs. Chris J. urged the City to stop funding parking structures and bridges over freeways, prioritize public safety and saving lives by funding staffing for the fire engine and ambulance, and eliminate cross-staffing. 5. Shirish P. strongly supported having a fully staffed fire engine at Fire Station 4. Shirish P. urged the City to strongly consider making this a priority. There were multiple schools in the area. Shirish P. has a 90-year-old immobile parent living with him, which was a concern for him if there was a fire. SUMMARY MINUTES Page 14 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 6. Terry H. stated it was unacceptable for cross-staffing to leave south Palo Alto without the fire protection it deserved. Terry H. believed there needed to be a fully operationally ambulance and firetruck. Terry H. wondered what happened with the replacement for the firetruck destroyed on the 101 seven years ago. Terry H. thought the City needed to focus less on consultants and instead work closely with citizens who have knowledge of City planning and other skills. Another way to increase revenue was by raising development fees. 7. In 1990, Albert P. and his wife purchased a residence across the street from Mitchell Park Library on Middlefield because of the good schools and the fire station. The budget was set by the City Council based on priorities. Albert P. prioritized fire safety ahead of bridges, freeways, planters on streets, roundabouts, and decorations on thoroughfare to slow down people. Albert P. thought we had the Police Department to slow people down. Albert P. urged the Council and the Finance Committee to consider fire safety a high priority. Albert P. believed the roundabout was not a good idea because it kept firetrucks from navigating certain intersections. 8. Dr. Pamela is a physician and resident of south Palo Alto for 30 years. Dr. Pamela urged the City to fully staff Fire Engine 4 with a dedicated three-person crew. Cross-staffing does not provide the equal protection the rest of the city had but this area was more vulnerable with high-density homes, Eichlers that burn in a few minutes, 12 schools, new high rises in Mitchel Park Place, and an increasing population. Every minute counts and eight minutes was not good enough. Burns over 20 percent of the body require immediate care; burns over 30 percent are usually fatal. Smoke can cause you to become unconscious within a few minutes, permanent brain damage in about three minutes, and death in about 10 minutes. Dr. Pamela described the injuries she had seen in the burn unit. Dr. Pamela said it was not about saving our homes from burning down but it was about saving our family, pets, and children from burning up. 9. Ceci K. stated Palo Alto had a model fire department 15 years ago, seven open fire stations, nine new fire engines, and firefighters who seldom worked mandatory overtime. Today, the two closed fire stations were located in the most fire-prone areas of the city. The City’s seven fire engines were purchased in 2008. Overworked firefighters work mandatory overtime. Lack of funding was the reason we went from having model fire protection rooted in best practice to having a fire department that struggled to answer calls. When fire chiefs have asked for new engines, more firefighters, and more resources, the City Managers have said no. Ceci K. asked the City to return to the staffing and resources we had 15 years ago. Public safety is the Council’s first responsibility. Fund fire first. 10. Joseph Penko, president of the local firefighters union, recently watched the state of the City, during which Mayor Lauing said public safety was the fundamental obligation of local government. The City’s main job was to keep residents safe so that the quality of life was not compromised. New buildings in the south end of town greatly expand our SUMMARY MINUTES Page 15 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 overworked fire department. Mr. Penko worked at Station 4 yesterday and they were on the ambulance during large stretches of the day, so they were unavailable if a fire call came in. Mr. Penko quoted Mayor Lauing, “I really want you to hear that we are in a very strong financial position as an organization and our cash balance is strong. Our reserves are strong. Our access to capital markets is significant.” Mr. Penko urged the City to quickly fund Fire Station 4 with firefighters, put an engine in service as well as the ambulance to lower response times. 11. Sunny G. is a Fire Captain at Station 1 and was going into his 15th year with Palo Alto Fire. Sunny G. advocated for his crew. The cross-staffing model made it very difficult for his crew. Speaking as a citizen, Sunny G. did not care if he had to pay for a product that provided an excellent service. Taxes fund things we need. Sunny G. implored the City Council to listen to what Palo Alto citizens want, and make sure they get the service they deserve and pay for. Sunny G. urged the public to continue making their voices heard. 12. Andrew M. stated that this issue relates to lives and deaths. Andrew M. hoped the Finance Committee and City Council read his full-page op-ed published last week in the Palo Alto Weekly. Andrew M.’s life was saved because the right resources were in place. Captain Penko was part of the crew of fully staffed Engine 64 that stopped his death from cardiac arrest nine years ago. Before the budget is finalized, Andrew M. wanted the Council to listen to the viewpoints of residents and emergency service professionals, and consider those perspectives when making decisions about resources for emergency services. Andrew M. offered to engage in a longer conversation with the City on this topic. Andrew M. hoped the Finance Committee and City Council will demonstrate leadership on this issue and bolster the Fire Department resources appropriately. 13. On Page 3 of the staff report, Fred B. noted the Stanford contract covered fire services only and explicitly excluded any costs associated with ambulance transport services, so it needed to be renegotiated in the next contract. Fred B. lives in the College Terrace neighborhood. A decade ago, a quick response saved his neighbor’s home on Hanover Street. Fred B. and his wife appealed unsuccessfully Stanford’s abutting 17-acre University Terrace proposal because the turnaround radius for fire vehicles was below the required minimum. Fred B. stated that Fire Station 4 needed a 24/7/365 fully staffed engine and EMS to increase coverage, decrease response time, and fulfill a prerequisite to receive automatic aid from neighboring jurisdictions. Costs for salaries and benefits are not as much in past years because of two major revisions and an initiative that went to the public. Fred B. was against having a civilian ambulance crew. 14. Fire Captain Daniel F., Vice President of Palo Alto Firefighters, has been with the Department for 15 years. Firefighters asked to have industry-standard tools and resources to serve this community well. Members of this community deserve to have their needs met without delay. Cross-staffing was not sustainable, not effective, and a detriment to the community and the firefighters called to serve them. A robust and reliable model is needed, based on known standards to meet the community’s needs. SUMMARY MINUTES Page 16 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 Daniel F. asked the Finance Committee to fully staff Engine 64, keep the cross-staffing timeline to an absolute minimum, and if it is the direction of the Council to pursue a single-role program to increase ambulance resources that it be thoroughly vetted and worked out between labor and management. 15. Forest P. is Palo Alto’s Labor Council delegate. Forest P. noticed fire crews consistently voicing their support for an engine at the Mitchell Park Fire Station and to not have cross-staffing. It is the fire crews’ professional opinion that having a fire engine at the Mitchel Park Station was the tool that allowed them to have capacity to provide the best service to the city. When making decisions, it is important to first listen to the opinions of the people doing the job. Forest P. asked the Finance Committee to support the fire crews and fully staff the Mitchell Park Station. 16. Nancy S. is a realtor who lives close to Fire Station 4 and echoed everyone’s comments. Nancy S. had a house fire and she would have lost everything if the response time had been any longer. Nancy S. believed it was important to keep public safety a top priority. Council Member Reckdahl was interested in Option F but with a 12-hour peak single-role ambulance instead of firefighter overtime. Ms. Cameron, Senior Management Analyst, pointed out that Option C included two full-time single-role ambulances and a 12-hour peak ambulance staffed with single-role civilians. Option F was two full-time ambulances staffed with single-role but the 12-hour peak ambulance was on overtime. Council Member Reckdahl thought the single-role was attractive because of less cost and training, not having to go through the fire academy, and was easier to staff. Council Member Reckdahl wondered if it was possible to have a mixed crew of single-role and firefighters to cover for absences. Fire Chief Blackshire stated a civilian was not trained to respond to a fire, so it depended on the type of call but it had to be worked out with labor on how they could mix crews. Council Member Burt thought the staff report indicated that overtime from other qualified ambulance people could staff the single-role. Deputy Fire Chief McNally explained that a firefighter could work on the ambulance but there had to be a separate set of duties assigned to the apparatus; however, someone could not be called in from the private sector. The hourly backfill positions could be used to backfill at a lesser cost and served as a training opportunity to bring in new folks. Ms. Cameron, Senior Management Analyst, added that the costs for hourly backfills and overtime for the single-role were included in Table 7. Fire Chief Blackshire provided the following answers to Council Member Reckdahl’s questions. The 12-hour ambulance can respond from any station. Fire Station 4 had three beds, so there were not enough beds to have a fully staffed full-time ambulance and full-time engine. Fire Station 4 could have a full-time engine and a 12-hour ambulance during the day, in which case the current 24-hour ambulance would relocate to another station. Fire Station 4 could have a dedicated fully staffed engine, no cross staffing, and a 12-hour single-role ambulance but it was a budget issue. SUMMARY MINUTES Page 17 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 Council Member Burt was interested in the single-role approach, which enabled greater ambulance coverage at a lower amount of cost increase. Council Member Burt wanted to know what the steps were to transition to single role. Fire Chief Blackshire replied that starting with the 12-hour ambulance was an option as a first step, had a lower cost and fewer personnel. Option E included staffing a 12-hour ambulance but did not address Engine 64. Fire Chief Blackshire stated that a 12-hour was proposed rather than a 24-hour because the current three ambulances were appropriate for the service demand during the evening but the challenge was the high demand for ambulance transport service during the day. Ms. Cameron, Senior Management Analyst, clarified that Option F’s two full-time ambulances would be staffed with four daily single-role positions in addition to the reassignment of firefighters to Engine 64 to staff the three daily positions, resulting in a net reduction of one daily position times three battalions for a total of three FTE budgeted positions. Referring to Packet Page 113, Council Member Reckdahl asked why there was a cost differential between Options C and F when they both had seven fire units and 3½ ambulances. Ms. Cameron, Senior Management Analyst, responded that Option C staffed the peak ambulance with single-role full-time employees whereas Option F staffed the peak ambulance with overtime from firefighters. The cost for full-time employees was more than overtime. Ms. Cameron and Fire Chief Blackshire agreed with Council Member Reckdahl’s comment that 12- hour overtime was not a popular option amongst the firefighters. Council Member Burt inquired on the timeline to implement single role. Fire Chief Blackshire answered it was 12-18 months for the single-role program, phasing it in with the provided resources. Ms. Cameron, Senior Management Analyst, stated that the staff report showed a timeline with an implementation date of about January 2026, so the 2026 budget would reflect 50 percent of the costs. Option F utilized overtime for the peak ambulance to be put in service as soon as possible to augment the overall system. To implement single-role, there needed to be labor negotiations, standing up the new division, as well as hiring and training civilian staff. Deputy Fire Chief McNally noted the timeline was on Page 113 of the packet. The column on the far left had the timeline for the 12-hour and the whole system. Option D was the only option not considering the 12-hour because it cross-staffed Engine 64. Ms. Cameron, Senior Management Analyst, pointed out Row 6 for Option D said no 12-hour ambulance added. Council Member Burt was interested in staff coming back with a couple different scenarios and timelines including Engine 64 and alternatives on a phased implementation of single role. Council Member Reckdahl agreed with Council Member Burt. Council Member Reckdahl requested further explanation on why it takes 12-18 months to phase in the single role. Fire Chief Blackshire replied that to start a new program involved hiring management and admin personnel to facilitate the program, the hiring process of single-role civilians, and labor negotiations. Ms. Cameron, Senior Management Analyst, stated the timeline showed they could work on negotiations in Fiscal Year 2025. The Council previously instructed staff to cross-staff Engine 64 on overtime. If the Council funded single-role positions as part of the budget, staff can start preparing and setting up the single-role division, plan for onboarding SUMMARY MINUTES Page 18 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 and training programs, post the positions, hire staff and get them ready to take over either the 12-hour ambulance or full-time ambulance in about the January timeframe, depending on the chosen option. Completing those steps in the first six months of the fiscal year was slightly ambitious but reasonable. Ms. Nose, Assistant City Manager, said that establishing a new program included labor negotiations with CalPERS on the type of benefits associated with the job classifications and the impact cost for pension. Ms. Nose, Assistant City Manager, clarified that Packet Page 99 referred to the latter six months of FY 2026, which was a year from now. The implementation timeline was 12-18 months. Council Member Reckdahl wanted clarification of the staffing differences between Options C and F. Ms. Cameron, Senior Management Analyst, stated that Option C had one full-time sworn ambulance unit and 2.5 single-role ambulances. Option F had one full-time sworn ambulance unit, two single role, and 0.5 sworn overtime. Sworn overtime was cheaper than civilians because benefits were usually 80-100 percent of the salary. The savings was about 30 percent. Council Member Reckdahl thought the lower price and greater flexibility with civilians seemed compelling, and was interested to know the associated timeline and costs of setting up the single-role division. Council Member Burt noted Joe Penko’s letter referred to Option F as the most realistic and implementable plan, even though it involved labor negotiations. CFO Lai provided a response to the previous question about the financial position of the City. The midyear report mentioned sales tax reduced by $3.9 million and the long-range assumed a $12 million General Fund deficit for 2026. Council Member Reckdahl was concerned about relying on overtime for cross-staffing and during the summer for Foothills Park. Council Member Reckdahl questioned if it was more advantageous to hire more full-time firefighters to reduce the amount of overtime. Fire Chief Blackshire responded that typically FTEs were not hired to cover overtime, besides the backfill positions. Council Member Reckdahl asked if there was a staffing model that involved less overtime and more full-time firefighters. Ms. Cameron, Senior Management Analyst, stated any of the options that included transitioning a unit to single role would reduce firefighters working overtime. Council Member Reckdahl wanted to know if someone was hired for Fire Station 8 what they would do in the offseason. Fire Chief Blackshire replied that the staffing model years ago would cover an overtime shift during the day and a vacancy at night. Now, coverage is from the backfill positions. Council Member Reckdahl urged consideration of staffing arrangements to make the transition better. Fire Chief Blackshire remarked that being fully staffed lessened the amount of firefighters working overtime to fill vacancies. The Fire Department was continually hiring. This week, there will be an announcement about the application process. Council Member Burt asked if Station 8, the wildland Foothills Park Station, was ever staffed year-round. Fire Chief Blackshire explained that Station 8 was a seasonal fire station. It was staffed years ago during the summer fire season, July 1 through October 31. Due to budget constraints, it was staffed only on red flag days. Now, there is an agreement with Santa Clara SUMMARY MINUTES Page 19 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 County Fire Department and Los Altos Hills Fire District to staff Station 8 for 12 hours daily during fire season, starting June 15, alternating months, for example July is Santa Clara County and August is Palo Alto. Council Member Burt mentioned that Palo Alto was no longer responsible for the SLAC area. Council Member Burt asked if staff planned to present an update on the wildland fire protection plan. Fire Chief Blackshire thought they will bring several items related to wildfire preparedness in May, including public education, prevention, inspections, fire hazard severity zone mapping, and an audit on wildland fire preparedness performed by the City Auditor. CFO Lai asked the Finance Committee to clarify the goals and principles they wanted staff to consider within the City’s financial framework. Council Member Burt wanted to staff the engine at Station 4, and see a range of options to ramp-up on single role with the highest priority starting with a 12-hour single role and transitioning to a full single role. The engine at Station 4 would be additive to the system, taking one of the engines from reserve and staffing it initially with overtime but staff to provide scenarios on how to staff it without overtime as soon as possible. Council Member Burt wanted to know the interim options, how to phase in single role in the medium term, but the objective was to staff it in the near term. Council Member Burt wanted staff to present options of an engine at Station 4 or a cross-staffed engine and ambulance at Station 4. Ms. Cameron, Senior Management Analyst, did not think it was likely for staff to come up with three more options within the time constraints for implementation. Council Member Burt closely aligned with option F. Council Member Reckdahl preferred Option C because 12-hour overtime was not popular with firefighters. Deputy Fire Chief McNally mentioned that originally Option F had the 12-hour single role and staff had built out a larger and longer term plan but it was truncated in an effort to get to an end in a fiscal year period. Council Member Reckdahl said if staff thought Option F was the best way to transition, staff can sketch it out when they come back to the Committee. Deputy Fire Chief McNally pointed out that, because of timing, overtime was the only way to put in a 12-hour ambulance as quick as possible. Option C started with a 12-hour and set the plan in motion of negotiating those positions, working with IAFF and CalPERS, and started at a lower cost level than owning two ambulances 24 hours/day. If firefighters volunteered to take those 12-hour positions, then F was a faster route but Council Member Reckdahl did not want mandatory overtime. Fire Chief Blackshire said the fastest way to get a 12-hour unit in service was with firefighter overtime because they do not have to be trained. Since the single-role model will take some time to build up, the option is starting with only the engine in service until single role is implemented. The question was how much of a priority was the 12-hour peak ambulance and how fast it can be put in service. Council Member Reckdahl encouraged staff to determine the best way to transition and come back to the Finance Committee with the options. Council Member Reckdahl wanted Option C in the long term but Option F was one way to get to Option C. Ms. Nose, Assistant City Manager, understood Council Member Reckdahl wanted an engine at Station 4, a desire to move toward single role, and options on how to step through the transition. Ms. Nose, Assistant City Manager, reminded the Committee that the options had to SUMMARY MINUTES Page 20 of 20 Finance Committee Special Meeting Summary Minutes: 04/01/2025 be weighed against the City’s financial position and struggle to balance the budget, taking into account the financial timing of those investments occurring in the next fiscal year. CFO Lai stated that staff will bring those back as alternatives in the budget as a part of the discussion. Given the City’s financial situation, Council Member Burt anticipated not being able to completely fund this through new revenue. It may be partially offset by fire/ambulance revenue but would also require cuts as part of the budget process. MOTION: Council Member Burt moved, seconded by Council Member Reckdahl, to direct staff to provide options toward having an engine at Fire Station 4, conversion to single role, and options on how and when to transition given the financial order of magnitude and through the budget development process. Future Meetings and Agendas Kiely Nose, Assistant City Manager, stated the Finance Committee will meet on April 15 and April 29. Agenda items will include reviewing the gas and electric rates that will be presented to the Utilities Advisory Commission tomorrow, municipal fees and charges, and a real estate transaction. May 6 and 7 will be all-day sessions. Adjournment: The meeting was adjourned at 9:21 PM.