HomeMy WebLinkAbout2025-05-06 Finance Committee Summary MinutesFINANCE COMMITTEE
SUMMARY MINUTES
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Special Meeting
May 6, 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: Reckdahl, Lythcott-Haims, Chair Burt
Absent: None
Call to Order
Chair Burt called the meeting to order.
Public Comment
Steve L. did not approve of the way the budget had been balanced. Suggestions offered were to
make a more wide ranging set of revenue alternatives over the next two years and looking at
potential variations in revenue growth, the impact of price on the budget and on long-term
interest rates.
Agenda Items
1.Fiscal Year 2026 Budget Process Overview
NO ACTION
Lauren Lai, Administrative Services Director, provided a slide presentation about the proposed
budget for operating and capital including a calendar of budget conversations, Open Budget
Web app, At-Places Memorandum, staff presentations available online, meeting proceedings
organized by agenda items, recommended motions, explanation of the Parking Lot and a list of
budget conversations.
Ed Shikada, City Manager, noted it felt out of body to be presenting a balanced budget while
recognizing it was balanced in a manner contrary to principles on which budgets had been
operated previously. The budget being presented reflected the second of the Council’s two-
year strategy. In FY24, 49 positions were added and in FY25, 29 positions were added which
are ongoing expenses. As a result, there is need to reconcile how the long-term and ongoing
revenues and expenses will be rebalanced at the conclusion of that two-year strategy. This was
anticipated to pose a challenge.
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SUMMARY MINUTES
Administrative Services Director Lai provided an overview via slide presentation including the
City vision and Council priorities; economic outlook; FY 2026 budget; proposed budget
overview; use of one -time funding; labor agreements ; capital investments ; City’s pension and
other post-employment benefits; cautious assumptions of revenues, expenditures and risk
mitigation; pie charts of all funds sources and expenses; historical full-time staffing comparison;
full-time staffing and vacancies; retiree benefit funding policy; general fund sources and
expenses; FY 2026 general fund balancing; major tax revenue; general fund revenues – major
taxes; investments funded by business tax – Measure K; gas equity transfer funding (Measure
L); FY 2026 proposed budget investments including public safety CSA, community and library
services CSA, Planning, Transportation and Infrastructure CSA and internal support and
administration CSA; capital improvement program (CIP) – overview 5-year plan; general fund
investment in capital improvement fund; and 2026 capital improvement fund revenues by
source: $117.5 million.
Chair Burt remarked when looking at the historical full-time staffing comparison, it was
important to look at outsourced positions.
Paul Harper, Budget Manager, responded to Councilmember Reckdahl’s question about the
other funds category on the full-time staffing and vacancies slide explaining it includes things
like the capital fund, internal service funds and special revenue funds. Internal service funds are
things like the IT fund and the print and mail fund. Special revenue funds are the parking funds.
In response to Councilmember Reckdahl’s question about funded status on the retiree benefit
funding policy slide, Administrative Services Director Lai explained the actuarial report looks at
total liability and the assets associated to the city for its share of pension or retiree health and
compares the two. Current year portions are always paid and there is an obligation to pay down
liability. Chair Burt observed it would be helpful to clarify that it did not include Section 115.
Administrative Services Director Lai agreed to bring that back. Everything being done aligned
with Council policy and goals to get to a point of pre-funding by 2036 at 90% and tapering off in
2030. City Manager Shikada suggested coming back with those numbers to confirm the 115, the
CalPERS component and the total. Administrative Services Director Lai offered to bring back
slides to facilitate the conversation about the retiree benefit funding policy.
Chair Burt commented the FY 2026 general fund balancing slide was valuable and requested to
refer back to the long-range financial forecast slide. Budget Manager Harper pointed out there
is a summary of the long-range financial forecast on page 62 of the operating budget including
the base table presented as part of that report. Administrative Services Director Lai remarked
the takeaway is similar to the long-range forecast in December. Based on the updated numbers,
it is anticipated that 2030 is when the financial position will turn around so work would
continue on increasing revenues and managing expenses. The outlook is still consistent with the
outlook from December's long-range financial forecast.
Responding to Chair Burt’s inquiry if there was confidence in the 6.8% projection on the major
tax revenue slide, Administrative Services Director Lai stated it came from the 20-year average.
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Tarun Narayan, Manager of Treasury Debt and Investments, explained the 2025 numbers
provided by the county is the core basis of that growth. The county also provides tentative
numbers of all the sales and what that translates into. The bulk of properties are solid and do
not change hands. They get the usual 2% increase year over year based on CPI and Prop 13
There is reasonable confidence it is an achievable one and property tax is less subject to
economics like sales and TOTs that have immediate impact in terms of having a downturn.
Property tax tends to have at least a one-year lag.
In response to Chair Burt’s queries about why the percentage of gross utilities is flat when rates
are increasing, Christine Paras, Assistant Director of Administrative Services, explained the
revenue forecast was realigned. UUT was increased by about $1 million midyear. A gut check
was performed compared to the forecast received in the recent months from the utilities
department. The forecasted revenue in the proposed budget is more aligned closely with those
forecasts. Manager Narayan added the UUT is composed of the city provided utilities and the
telephone. Telephone has weakened and is flatlined, dragging down the overall growth of the
UUT. Chair Burt requested a breakdown on how that was derived. Administrative Services
Director Lai commented a reconciliation would be done to show the crosswalk between FY25
adopted, midyear, and the proposed that would show the trends by the different line items and
be more illustrative. FY26 proposed was recently tied out to the utilities financial forecast and
would be walked back from 25 to 26.
Councilmember Reckdahl queried if the phone tax was on both landlines and cell phones to
which Administrative Services Director Lai replied the tax was modernized and put before the
voters so is all forms of telecommunications. Councilmember Reckdahl assumed that would be
the billing address. The city attorney’s office agreed to come back with that information.
Councilmember Reckdahl wanted to know if the reassessments on the amount of real estate or
the property tax increase is have already occurred or are projected to which Administrative
Services Director Lai answered they are projected. Manager Narayan added it is a combination
of the two. As the county is processing the occurring sales a number is given what the growth
will be for the following year. They are still processing some of the sales so some of it will be
sales processed between that time and end of June 30 and others have already reflected that.
Chair Burt asked for an explanation of what is driving the difference in the projected estimates
of revenue. Administrative Services Director Lai explained when the budget forecast was done,
CoStar information was used to get a ballpark sense. The $6.5 million reflects real data. City
Manager Shikada added originally when the business tax was being develop, there were
forecaster estimates of the number of businesses that would fit within certain square footage
categories. He hoped the consultant could put together a report on actuals with a statistical
breakdown. Assistant Director Paras agreed to provide that and added that in the ad hoc
committees for business tax, CoStar data with more or less 20,000 different real estate parcel
pieces was looked at. That was the data set looked at for the about $9 million estimate. The
latest avenue quarterly business report was about 8000 to 9000 businesses. Compliance around
that was actively being worked on. That explained a little of the variance in developing the tax.
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Administrative Services Director Lai Staff could focus on the utility tax reconciliation and bring
BT back another time.
Regarding questions Chair Burt had about YCI, Administrative Services Director Lai remarked it
would be effective if a simple table was presented in the CSD segment saying what is in the
budget and the Committee could move things around. Administrative Services Director Lai
agreed to bring that back in the CSD segment later in the meeting.
Councilmember Reckdahl wanted a discussion for options to avoid burning up the uncertainty
reserves. Councilmember Lythcott-Haims agreed with Councilmember Reckdahl’s concern but
felt it was intentional that it would be used up in two years with the intention to segue back to
a budget that did not have an uncertainty reserve or a plan to fund it periodically. Chair Burt
pointed out unexpected changes had occurred since the two-year was established. Areas for
reconsideration including scrutinizing consulting contracts, unfilled staff positions, bonded
indebtedness on capital programs, the supplemental retirement account and funding for grade
separation work.
Administrative Services Director Lai clarified Staff would bring back a table of CalPERS
information and pension retiree trust, a table for the nonprofit, debt ratio information,
headcount information and Measure B versus Measure K alternative projects to be funded. City
Manager Shikada suggested some of the topics would make sense to bring up in certain
sections of the discussions that would happen over the next couple days.
2. Infrastructure and Environment: Capital Improvement Program, Capital Fund Projects
a) Capital Improvement Fund (C: 61-342)
b) Cubberley Property Infrastructure Fund (C: 343-370)
Staff Member and Holly Boyd, Assistant Director of Public Works, provided a slide presentation
about the General Capital Improvement Fund and Cubberley Property Fund Capital
Improvement Plans including FY 2026-2030 proposed budget summary (expenses), a pie chart
breaking expenditures down by program area, a pie chart showing various funding sources for
those expenditures, FY 2026 – FY 2030 CIP baseline budget summary, general fund transfer
categories, examples of cost increases in FY 2026 for existing projects, FY 2026-2030 new
general fund capital projects and FY 2026 Cubberley Improvement Plan.
Councilmember Reckdahl queried if there would be discussion breaking down the $98 million
expenses. Staff Member explained that is larger than the expenses in other years because of
reappropriations.
Chair Burt inquired if the California Avenue Parking Garage expense was the automation.
Assistant Director of Public Works Boyd replied it is the barrier repair removal, concrete
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patching and things not covered in the warranty. Chair Burt asked what portion of FY 26 is for
grade separations. Budget Manager Harper replied $1 million went toward grade separations,
half toward Meadow/Charleston and half toward Churchill. Chair Burt wanted to know if those
expenditures would be eligible to tap into the Measure B dollars instead. Ripon Bhatia, Senior
Engineer, commented the Measure B grade separation funds could be used if needed.
Councilmember Reckdahl asked if the ending fund balance on the Cubberley Improvement Plan
could be used if the bond measure passed and construction started. Staff Member confirmed
the ending fund balance could be used that way. Chair Burt added it is intended for capital
improvements.
Chair Burt expressed interest in whether local share Measure B dollars could be pulled out for
other transportation and transit-related services. Senior Engineer Bhatia indicated the original
plan was to use Measure K funding for local match and VTA funding of $14 million would be
used. A $6 million FRA grant was obtained and being used to cover for the local match. The is
indication that the grant could be in jeopardy so the remaining Measure K funding was left and
could be substituted to fund the local match if necessary to continue moving forward. If the
FRA funding does not go through, there are some appropriations for Palo Alto Avenue that
could be used because only appropriated funding can be used. The funding can be renegotiated
from another project to come into Meadow, Charleston and Churchill. The match would still bel
required to come from the local funding if FRA funding falls through. Measure B cannot be used
for a local match for another Measure B grant. City Manager Shikada advised further
exploration might be needed to free up Measure K funds to allow additional funding of CIPs or
other one-time expenses. Management of those projects would require staff resources.
In response to questions raised by Councilmember Reckdahl, Staff Member replied the
$450,000 on PDF page 130 is reappropriated funding from the current fiscal year for the build
out of 445 Bryant as a community center, the funding needed for the first phase of
improvements that go along with bringing La Comida into the facility. There will be an
additional phase beyond that that needs to be designed and that will likely need additional
funding beyond that.
Councilmember Reckdahl queried what was on the docket for the JMZ renovation. Kristen
O’Kane, Director of Community Services stated this would be the last year the CIP was in the
budget book that funding would be used to finish some exhibits that still need to be added to
the museum and would get back to the Committee on the impacts of delaying that. This would
be to bring in new things and for some performance improvements.
In response to questions about the library automated material handling, Assistant Director of
Public Works Boyd commented the installation of the automated material handling machine at
children's library would be completed at the end of the month. Gayathri Kanth, Library Services
Director, commented the $324 was to finish the children's library automated materials handling
system. The installation was happening at that time. Staff Member added the original funding
for this came from library impact fees and that same funding is being reappropriated and is
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dedicated for a specific purpose. Staff Member explained the $80,000 mentioned on page 134
is funding from the capital improvement fund. It is a project library staff had proposed for four
to five years that had not been budgeted for until this year. Library Services Director Kanth
explained this was to replace the most broken items amongst all the libraries.
Councilmember Reckdahl had questions about the $1 million mentioned on PDF 164. Assistant
Director of Public Works Boyd remarked it is additional funding needed to complete day two
items. Staff Member mentioned the parking guidance system was installed during the project.
Councilmember Reckdahl wondered how much of that could be put off to next year. Assistant
Director of Public Works Boyd agreed to bring that information back.
In response to questions about the downtown parking garage on page 154, Staff Member
commented the $13 million in funds is the sum of the In Lieu Parking Fee Funds that have been
appropriated into the project. Not much of that would be spent except what was being used on
design for this year. Assistant Director of Public Works Boyd followed up that the electrical
design work had not been started for the California Avenue Parking Garage so $250,000 could
potentially be deferred to the next year.
Councilmember Reckdahl asked about PDF 176, performing arts venue seat replacement.
Assistant Director of Public Works Boyd stated that project is nearly complete.
Councilmember Reckdahl requested explanation for PDF 200, $1.7 million for public art. Budget
Manager Harper explained this is money that is set aside every year for public art. The formula
is 1% of eligible projects. If the money is not spent, it is rolled over. The expenditures line is
funding that has been set aside for this project so it does not get used for other things. The
money in 2026 is the anticipated need for the projects in 2026, the 1% of projects that have not
been allocated yet and everything that has not been spent from previous years that was
accumulated for public art. Moving forward, projects that are planned and out in future years
are the 1% of those projects that are budgeted in years 2027 through 2030. It is funding set
aside for public art within the capital fund and is treated like its own fund in order to keep the
money separate to make sure it does not get commingled with other projects or needs.
Councilmember Reckdahl asked if the $365,000 for court resurfacing could be delayed a year.
Lam Do, Superintendent of Community Services, responded there are various needs.
Assessments are needed to determine if it would be better to invest in repairs opposed to
reconstruction. Councilmember Lythcott-Haims wondered if some kind of shuffling would be
possible. Superintendent of Community Services Do confirmed shuffling is a possibility and
would look into that.
Councilmember Reckdahl inquired about the $450,000 for the Bixby Park completion on PDF
224. Staff Member remarked this project is part of the 2014 Council Infrastructure Plan and has
been delayed for a while. All funding comes from Parks Impact Fee Fund, a dedicated funding
source. Director of Community Services O’Kane commented the funds could technically be
reprioritized for tasks within the parks but there are limitations to what can be paid for with
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these funds. Staff Member added this funding generally cannot be used for regular park
improvement projects.
Assistant Director of Public Works Boyd responded to Councilmember Reckdahl’s question
about PDF page 236 explaining it is reappropriating the construction funding for Foothills
Nature Preserve. The construction could be done in 2027 but the costs could go up. Staff
Member pointed out a lot of the work is maintenance work and letting that go incur more cost
for repairs aside from the potential of cost escalation.
Chair Burt wanted to know about the dollar share on Fire Station 4 versus grants. Assistant
Director of Public Works Boyd answered a $5.2 million earmark was received from the state a
couple of years before. The rest was city funded. Staff Member commented there was no plan
to bond for that. Chair Burt advised it might be the biggest bonding consideration. City
Manager Shikada believed it may be too late to bond for this project. Assistant Director of
Public Works Boyd confirmed it was fully designed with plans to go out to bid the last week of
May. Chair Burt wanted to look into front funding and bonding the project. City Manager
Shikada stated the interest rates and identifying what the debt service obligation would be in
comparison to the near-term cash freed up are key considerations. Budget Manager Harper
noted about $8 million of the $14 million would go back to the SUMC. Staff Member pointed
out the total general fund annual transfer was about $25 to $30 million dollars a year. The debt
service on the bonds for the Cal Ave Parking Garage and public safety building is $7.4 million. A
reference had been made to 3% of the general fund and that was a fairly large percentage of
the annual funding in this fund is already going to debt service. Administrative Services Director
Lai advised when looking at the opportunity to use debt to finance to free up money for
maintaining services, it is important to think about a financial goal, the cost of issuance and the
current cost of borrowing and look at the strategy in the context of those opportunities and
opportunity cost. She stated Staff would come back with that information.
Chair Burt asked how much was grant funded on the Newell Bridge. Assistant Director of Public
Works Boyd replied most of that is grant funded. The only thing not grant funding is the non-
participating costs, about $2,000,000 and a $2,000,000 earmark was received for that one. City
Manager Shikada added the full expenses for the bridge would be fronted and reimbursement
sought from the state after.
Councilmember Reckdahl had questions about the $178,000 on PDF page 244. Superintendent
of Community Services Do explained the golf course project construction includes regulatory
mitigation monitoring. This funding is earmarked for the needs to complete that mitigation
monitoring process. Chair Burt added this was necessary because it was cited for
noncompliance by the Regional Water Quality Control Board two years before.
Councilmember Reckdahl inquired about the $1.7 million for next year on printed page 238 for
Johnson Park. Assistant Director of Public Works Boyd explained this project was identified as
CSD’s highest priority park renovation project. Superintendent of Community Services Do
confirmed it to be a functional issue.
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Councilmember Reckdahl queried if maintenance mentioned on printed page 242 could be
deferred. Superintendent of Community Services Do replied this project is in conjunction
between Open Space and also Parks and Public Works. It is on an as-needed basis. Needs have
been identified. Consideration for pushing any projects back would be a collaboration between
the three departments. Three projects have been identified as needing to move forward. The
funded $208,000 is all needed. Chair Burt suggested this might be appropriate for Measure K
dollars. Superintendent of Community Services Do thought further exploration was needed to
determine if funds could be shifted and Staff would have to vet that out.
Councilmember Reckdahl asked about Robles Park on PDF 279. Assistant Director of Public
Works Boyd explained the additional funding is to address the improvements to the site
amenities, pathways, landscaping and irrigation. The playground was under contract but Staff
would look at deferring the other items.
Councilmember Reckdahl inquired about Werry Park on printed page 270. Superintendent of
Community Services Do remarked this project could be considered to be bumped out one year
working with Public Works and Community Services.
Councilmember Lythcott Haims felt this was helpful and advised an alternative approach would
be for Staff to come back with a set of things from the set of CIP projects that could be deferred
by a year or two in order to achieve the desired savings. Chair Burt agreed this was helpful in
terms of giving subjective context and suggested asking Staff’s opinion on either a 5% or a 10%
reduction in general fund transfer. The Committee Members were in agreement. City Manager
Shikada appreciated the referral. Administrative Services Director Lai added that to the Parking
Lot to be brought back for recap the next day.
Public Comment
Sarah A. spoke in support of bathrooms being built at Eleanor Park in 2026, encouraged the City
to fund the project and reassured the community members that crime would not happen in the
park just because of bathrooms.
Sharon E. read a statement for Nancy thanking the Committee for approving the Eleanor
Pardee Park restroom.
Mary Kate S. spoke in appreciation of the approval of a restroom in Pardee Park.
Penny P. expressed gratitude for the approval of a restroom in Pardee Park.
Chair Burt remarked it would be helpful to look at how clean the bathrooms are kept given the
current maintenance budget on it. City Manager Shikada added recent acts of vandalism had
also been an issue at Rinconada.
Budget Manager Harper asked clarifying questions about the 10% reduction to capital. Chair
Burt replied the reduction would be based on the $31 million looking at reducing $1.5 million
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and $3 million. Councilmember Lythcott-Haims opined they might need to reduce it by more.
Chair Burt advised asking to look at 5%, 10% and 15%.
No Tentative Approval.
LUNCH BREAK
3. Public Safety
a) Police (O: 331-344)
b) Fire (O: 227-240) Supplemental Report
c) Office of Emergency Services (O: 293-302)
Katie Lee, senior analyst with the Office of Management and Budget, introduced the City
Service area of Public Safety.
Andrew Binder, Chief of Police, provided a slide presentation about the Police Department
including FY 2025 proposed budget community impact and proposed changes in general fund
and FY 2026 department outlook.
Councilmember Lythcott-Haims saw PERT as a potential thing to defer and wanted to hear Chief
Binder’s case for it. Chief Binder described the value that was seen in the PERT trial two and a
half years ago. The PERT officer was built into the org chart when the police department was
rebuilt. That PERT officer serves out of the patrol division in the org chart. The department has
hoped to work with the county Behavioral Health Services to get a PERT clinician. Two years
ago, the Council approved money out of the Stanford Reserve Fund to pay for a clinician. It was
the department’s thought that if Behavioral Health did not have the money to hire a county
clinician, they would pay for Behavioral Health to do the recruiting and hiring with the
advantage of having that clinician have access to the medical records. The department has
recently learned that it is possible that the county is going to absorb the PERT clinicians into
MCRT. The department is proposing to pay for the PERT officer in the org chart with the funds
from the Stanford Reserve. The police department's budget would be supplemented with those
reserves funds. If a clinician comes up, there is a plan B in motion to bring on a clinician through
another means. That is why the money is on the table. Councilmember Lythcott-Haims
suggested if there is not a partner from the county, the PERT term should be changed.
Councilmember Reckdahl had questions about the department. Chief Binder replied the
vacancies were at zero in December of last year but were at eight on that day. The Council had
done things to make the department a very competitive employer and the department was
continually recruiting. The minimum patrol staffing is generally filled with overtime or by
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shifting other resources when vacancies occur. Council approved 10 additional license plate
readers. That technology is a force multiplier for the eyes out in the field. Palo Alto is the only
police agency in Santa Clara County not using drones. There has been a lot of research to bring
something forward to Council. City Manager Shikada noted the surveillance ordinance has been
a constraint on Staff's willingness to explore use of various surveillance technologies. Chief
Binder envisioned any type of technology could be cross-used for public safety. City Manager
Shikada noted there would be staffing requirements associated with the use of drones.
Councilmember Reckdahl queried how many more license plate readers the city wanted. James
Reifschneider, Assistant Chief of Police, replied 10 more license plate readers could be used in
the future assuming the funding is there to support it.
Chair Burt posed questions about the readers and drones related to privacy policies. Chief
Binder explained the readers are not actively watched. City Manager Shikada added the
surveillance ordinance questions such as how the equipment will be used, who will have the
data, who will have access to the data and how to ensure that access is protected. Assistant
Chief Reifschneider explained the surveillance ordinance has a list of technologies that are
defined as surveillance equipment and drones are expressly called out. The ordinance requires
drafting a policy with an analysis for Council to assess and approve or not. It is an impact report
that articulates the intended uses and guardrails. City Manager Shikada added the city manager
is responsible for ensuring those policies are adhered to on an annual basis. Chair Burt
supported continuing to adopt these technologies and bringing it back to Council for
confirmation it is consistent with policy and asked about the budget for this. Assistant Chief
Reifschneider indicated the possibilities for funding includes funding received through the
Organized Retail Theft Grant or COPS money. Chair Burt envisioned as it could be used for
utilities inspection and fire, it could be a shared cost.
Councilmember Reckdahl asked what was on the police department’s wish list. Chief Binder
expressed need to add personnel back to the detective bureau and other specialized spots.
Chair Burt inquired what abilities the department has to increase enforcement in the
downtown area problems. Chief Binder replied businesses and residents are encouraged to call
911 when there is any issue that needs police attention and patrol officers are sent out. That is
supplemented by Organized Retail Theft, foot and bike patrols and Special Problems Detail. The
potential of adding personnel to the police department will provide more options to address
those things. Overtime could also be utilized for that purpose but the majority of overtime goes
toward patrol and dispatch to address minimum staffing and approved absences. Chair Burt
questioned if there was the ability to address drug dealing downtown. Chief Binder remarked
the Special Problems Detail, Organized Theft Retail and patrol officers make rounds downtown
but there is activity that goes on that officers do not always have the ability to address.
In response to Councilmember Lythcott-Haims’ questions about the unhoused population,
Chief Binder commented that the officers become familiar with community members including
the unhoused. One of the niches of the Special Problems Detail is addressing the needs of the
unhoused. The majority of communities in the public are law abiding.
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Geoffrey Blackshire, Chief of Fire, provided a Fire Department slide presentation including FY
2026 proposed budget, community impact, major proposed changes in general fund, FY 2026
department outlook and supplemental memo: Revenue, single-role recommended phase in
proposal and alternatives.
Councilmember Reckdahl wanted to know the timetable for Fire Station 4. Stephen Lindsey,
Deputy Fire Chief, answered the plan is to move into the temporary fire station at Cubberley
early summer and start demolition hopefully in early fall. The project is anticipated to take
about two years to final completion. Councilmember Reckdahl asked about the timetable of
getting the single role department up and running. Chief Blackshire commented if going with
the single role model starting with sworn personnel, the ambulance would be staffed with
overtime in October. Recruiting for the single role would then start. Administrative support
would start in November. The single role 12-hour positions would start sometime in February
and carry through to the end of the fiscal year. April would be the go-live date. Kiely Nose,
Assistant City Manager noted there are components the in the timeline out of the department’s
control.
Councilmember Reckdahl inquired if the department can over staff if there is an announced
retirement in process. Chief Blackshire replied the greenlight to hire is not typically given until
the announcement is received. Retirement generally happens in December. Getting that two-
week notice puts the department behind because the fall academy has already started. Hiring
goes through OMB and HR. The confirmation is received about two weeks before someone
plans to retire.
Councilmember Reckdahl asked if there is an engine in Fire Station 4 at the time. Chief
Blackshire answered as of May 5, a fire engine and ambulance has been cross staffed at Fire
Station 4.
Councilmember Lythcott-Haims asked for information about the hiring costs for entry level
firefighters. Chief Blackshire indicated the costs include personal protective equipment and the
academy.
Councilmember Reckdahl inquired what was on the Fire Department’s wish list. Chief
Blackshire’s wish list included an engine in every station and an extra ambulance.
Chair Burt wanted information about the fee schedule increase for the transport fees.
Administrative Services Director Lai stated for the existing transport fee not considering the
first responder, the $700,000 on the slide would be additional revenue.
Councilmember Reckdahl asked if the numbers on the bottom three are in addition or
replacement to the baseline. Assistant City Manager Nose explained the proposed budget has
the three captain positions. The single role phase in, 12-hour peak ambulance and continued
cross staffing of station 64 are in addition to what is currently in the FY 2026 proposed.
Revenues could be discussed to offset. Councilmember Reckdahl wanted to know how much
revenue would be accrued by reducing the county calls from 300 to 100 times a year. Chief
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Blackshire stated it would provide about $70,000. Councilmember Lythcott-Haims asked how
much was being brought in by the muni fee to which Chief Blackshire responded it is $700,000 a
year.
Kenneth Dueker, Director of Office of Emergency Services, provided a slide presentation for the
Office of Emergency Services including FY 2025 proposed budget, community impact,
department priorities and long-term projects and FY 2025 department outlook.
Chair Burt mentioned the gas sensors integrated with AI to pinpoint locations of fire breakouts.
Nathan Rainey, Office of Emergency Services Coordinator, remarked the sensors are
strategically located to operate as a mesh to sense anything not normal. The sensors are
integrated into a network system that can be logged into from any computer. Cameras are also
located across the state to confirm where smoke originates from.
Councilmember Reckdahl queried if there was a robot to send in in the case of an active
shooter. Chief Binder replied a robot was readily available from the sheriff’s office. There have
been a couple of incidences when the department borrowed drones in the past.
Councilmember Reckdahl asked if there were needs in the case of an active shooter. Chief
Binder replied the Offices of Emergency Service has policy, training and the appropriate
equipment in place and the police department responds. Chief Dueker added all City staff is
trained on a periodic basis and non-city entities as requested. Councilmember Reckdahl asked if
there is technology needed for things such as earthquakes and floods. Chief Dueker stated the
UAS would be a benefit. The OES coordinates with OES in surrounding areas.
Councilmember Lythcott-Haims asked if it was anticipated to be in the new Public Safety
Building construction by the time the Super Bowl happens. Chief Dueker confirmed that would
be the case. Councilmember Lythcott-Haims encouraged using the opportunity to tell the story
about what Palo Alto is up to, why and how it is manifested in the new building.
Chair Burt asked if there were coordinated training scenarios comparable with San Mateo
County agencies. Chief Dueker confirmed the OES routinely works with San Mateo County’s
EOC, sheriff’s department and fire and police agencies. Chief Blackshire explained the county
exercise is run by Cal Fire Santa Clara Unit in sync with Cal Fire in San Mateo. The training is
compatible. Chair Burt inquired if mutual aid agreements were needed with the other
departments in the Woodlands to be able to help each other. Chief Blackshire replied there are
auto aid agreements with the districts that border Palo Alto. Anything outside of that area
would be mutual aid and would go through county comm.
Councilmember Reckdahl queried if the City had experience coordinating with other cities
about prescribed burns. Chief Blackshire answered there was one being done this year in early
June in the county as part of the Wildland Fire exercise. It is dependent on weather and who
has the certifications and resources to run the exercise. Chair Burt was interested in hearing to
what degree controlled burns are looked at as an essential component. Councilmember
Reckdahl asked how the City would plan that. Chief Blackshire replied the City would reach out
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to those who would facilitate that such as Cal Fire. The Fire Department Operation Division
would lead it. Chair Burt wanted to know if Arastradero and Foothills are involved in prevention
efforts. Chief Blackshire answered Arastradero and Foothills participate in the countrywide
exercise but not specifically with Palo Alto. Chair Burt expressed interest in adding them to the
coordination mix.
Chair Burt had concern about there being no plan for flood protection following a wildfire and
risk assessment of fatalities from wildfires.
Public Comment
Chris J., former fire captain for Palo Alto, appreciated the addition of Engine 64 but expressed
the need for a full service Medic van to provide service for the north part of the City.
Joe P., president of the Palo Alto Firefighters Local 1319, urged the Committee to follow
through on the direction given to the city manager’s office and fire chief in April to bring back a
budget to restore Engine 64 to full service.
Daniel F., representative of Palo Alto firefighters and citizens, urged the Committee to move
forward with the plan to fully staff Engine 64 as a standalone engine as soon as possible and
stated options 2 and 3 listed in the alternatives offered healthier solutions.
Sunny J., captain on Engine 61, echoed the previous comments supporting fully staffing and
funding Engine 64.
The Finance Committee unanimously agreed to tentatively recommend that the City Council
approve Agenda Item #3, Police and OES, excluding Fire.
4. Community and Library Services
a) Community Services (O: 205-226)
b) Library (O: 281-292)
Budget Manager Harper and Director O’Kane provided a slide presentation about the
community and library services including a service area summary, FY 2026 budget summary,
community impact, proposed changes in general fund, FY 2026 department outlook and FY
2026 nonprofit workplan. City Manager Shikada added clarification that YCS and Project Safety
Net would be competing as a part of the overall call for requests for funding.
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Chair Burt advised determination was needed for which non-profit partner belong under the
General Human Services contract and whether additional funding is being sought to open up to
other community non-profits that do not fall under HSRAP or the second button. City Manager
Shikada shared that the proposal brought forward through P&S from Staff to Council for the
non-profit workplan was intended to capture any request City budget funding that was not
already captured in a multi-year agreement or an existing program. The funding amount was
carried forward from the prior year. It is expected to be up to the Finance Committee in terms
of setting the funding amount as well as ultimately the Council in terms of how many
organizations can be funded. City Manager Shikada shared Council’s direction was to be clear
on scopes of work, performance measures and expectations in what is set through non-profit
partnerships.
Chair Burt suggested adding PSN and YCI to the General Human Services contract. The question
remained whether Magical Bridge, Third Thursday, UNAFF and Environmental Volunteers would
be ongoing, if they would be asked to compete and what would be an appropriate dollar
amount for the open-ended solicitation for community partners that do not fall under HSRAP or
the general human service contracts. Councilmember Lythcott-Haims struggled with the role of
the Finance Committee versus Policy and Services.
Councilmember Lythcott-Haims inquired why LifeMoves was not funded the full amount.
Director O’Kane shared some of the members of the committee that reviews the applications
felt the application was incomplete. The full HRC identified the value of LifeMoves and gave
them funding which meant funding was taken from other grantees. Chair Burt added there was
also ongoing funding of LiveMoves to the transitional housing. Councilmember Reckdahl asked
if it was for safe parking or to use as they wished. Assistant to City Manager McDonough
described a variety of services LiveMoves does for the City of Palo Alto. Their outreach was set
up as pilot about two years prior. It is paid for by the permanent local housing allocation from
state HCD, some money from Stanford, and a little bit of money from the general fund. Minka
Van Der Zwaag, Manager of Human Services, explained the HRC subcommittee felt like the
application as it was submitted was not completed sufficiently for them to make any type of
funding decision. It was missing multiple budget sheets and up-to-date information. When it
got to the full Human Relations Commission, they acknowledged the review work that the
subcommittee had done but also stated that due to the value of the services that LiveMoves
provides to a vulnerable population, there should be a type of funding recommendation. They
looked at the budget information that was submitted and it was only the staffing request. They
gave them the lowest level of funding any other grantee got as far as in review. That was
around the 70 to 80% category. Because allocation recommendations had already been made
to other grantees, they had to cut all the other grantees by 5% to be able to get that level of
funding.
Administrative Services Director Lai advised sending this item to the Parking Lot by the
Committee to bring back to Council the following week for a broader conversation.
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Chair Burt had questions about CASSY. Manager of Human Services Van Der Zwaag explained
CASSY is not longer the mental health provider for PAUSD. They submitted a proposal to
provide mental health services to a small non-profit school that serves mainly low-income
children in the community and also to the children that are in the alternative high school, Alta
Vista.
Councilmember Reckdahl wanted to know if the demands and offerings of the summer camps
and classes have been sufficiently balanced. Director O’Kane replied there is a wait list on a lot
of the camps and classes throughout the year. A lot of that is due to limited space. As of last
year, additional funding was put into recreation to do more camps. Recreation camps are done
through contracts and contract dollars are limited. More were added last year which helped but
the space issue is a problem. When 445 Bryant opens, a lot of those will be able to be expanded
into that location. Chair Burt noted there is a yearning for South Palo Alto to have more of
those camps out of Cubberley and expressed interest in hearing that as a follow-up and
wondered if there are ones that are not space constrained and could be out Mitchell. Director
O’Kane replied there is now one at Mitchell so the parents do not have to go as far.
Library Services Director Kanth provided a slide presentation about libraries including FY 2026
budget summary, community impact, department priorities and long-term projects and FY 2026
department outlook.
Councilmember Lythcott-Haims had questions about expanding the OWL. Library Services
Director Kanth thought the demand had been within 12 people. Manager of Human Services
Van Der Zwaag replied the OWL was operational about 19 nights during the year. It was at full
capacity for some of those nights but most of them was about one person under. If more space
was available, it could be filled. People have a sense of what the capacity is and they were able
to meet the need of the ones that came to the door.
Councilmember Reckdahl had question about the library hours. Library Services Director Kanth
stated it was observed a difference in the evening shift versus morning and afternoon, the need
for more days at College Terrace and a difference in staffing determined the hours of Rinconada
Library. It was recognized that people might want at least one evening so that is why Thursday
was moved to 12 to 8. Rinconada hours is different than Mitchell as a result of a difference in
the visitor count. Rinconada is a place people go to study and has a different vibe. It is close to
the children’s library so has two locations in the same area whereas Mitchell Park has both the
children’s and adult library combined and is an active learning space. There are plans to have
more open hours for teens at Rinconada once the vacant positions are filled. Chair Burt added
that Mitchell serves youth and families more so because of the demographic shift.
Chair Burt asked about the trends at the Downtown Library in recent years. Library Services
Director Kanth replied the Downtown Library is picking up after COVID. Story Time gets 100 to
120 kids. Senior technology programs have been added along with Avenidas. The business
owners have not come back fully since COVID. There are still staffing positions vacant. Chair
Burt acknowledged that libraries have an economic development role that is underappreciated.
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The Finance Committee unanimously agreed to tentatively recommend that the City Council
approve Agenda Item #4, excluding Community Services Department
5. Citywide Internal Support and Administration (Part 1)
a) City Attorney’s Office (O: 137-146)
b) City Auditor’s Office (O: 147-154)
c) City Clerk’s Office (O: 155-166)
d) City Manager’s Office (O: 171-184)
e) City Council (O: 167-170)
Alyssa Ching, Administrative Assistant, provided a slide about the Council Appointed Officers
Service Area summary. Molly Stump, City Attorney presented slides about the City Attorney’s
office including FY 2026 budget summary, community impact, major proposed changes in
general fund and FY 2026 department outlook. Kate Murdock, City Auditor, provided slides
about the City Auditor’s office including FY 2026 budget summary, community impact, major
proposed changes in general fund and FY 2026 department outlook. Mahealani Ah Yun, City
Clerk, presented slides with an overview of the City Clerk’s office including FY 2026 budget
summary, community impact, department priorities and long-term projects and FY 2026
department outlook. City Manager Shikada provided a slide presentation about the City
Manager’s office including FY 2026 budget summary, community impact, no proposed changes
in general fund and FY 2026 department outlook. City Clerk Ah Yun provided a slide
presentation about City Council FY 2026 budget summary, community impact and no major
changes in the proposed budget.
Councilmember Reckdahl inquired about the emergency broadcasting services. City Clerk Ah
Yun remarked it is still currently implemented but coming from different funding. City Manager
Shikada explained it had been funded by Utilities but needs to move to the general fund.
Chair Burt queried what expenditures have occurred from the contingency fund this year.
Administrative Services Director Lai replied in the current fiscal year $10,000 has been
appropriated for the Joe Simitian Years of Service event.
Councilmember Lythcott-Haims wondered if the notion of having an administrative position
added to the City Clerk's or City Manager's office to support Council was on the radar. City
Manager Shikada replied it is on the radar. It is not included in the recommendations
recognizing the fiscal constraints. If the Finance Committee wants to include that among the
potential proposals Staff could cost that out and follow up. Chair Burt pointed out the Clerk’s
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office is fully staffed for the first time in years and posed the question if there was some
capacity to serve some or all of those functions. City Clerk Ah Yun agreed to look into what
assisting the Council's needs for that level of administrative support would look like and was
open to explore that. It would require a lot of Staff time to track calendars for seven different
Council members. City Manager Shikada noted that the greatest interest was calendar
coordination which could be challenging when dealing with seven individuals who have
individual preferences in systems. Councilmember Lythcott-Haims described the significant
administrative tasks associated with being effective on Council and thought it was worth
additional conversation. Chair Burt noted that other cities Council members and county
supervisors have staff.
Councilmember Lythcott-Haims inquired why the Cal Ave Free Streets Management and
Economic Development Management Support had been removed. Assistant City Manager Nose
explained those funds were moved to the specific capital improvement projects since they were
moving into physical investments. The staffing associated with Cal Ave is in the capital Cal Ave
budget as well as staffing associated with University is in the University Streetscape CIP. City
Manager Shikada noted they are staffed with time-limited staffing.
Councilmember Lythcott-Haims asked for a comparison in the administration associate III and
assistant city clerk positions. City Clerk Ah Yun agreed to bring that information back.
Public Comment
Nicole D., executive director of DreamCatchers, hoped when thinking through the buckets,
where funding should go and what is fair and transparent, the Committee would think of that
for the long term for stability, future funding and understanding the process.
The Finance Committee unanimously agreed to tentatively recommend that the City Council
approve Agenda Item #5.
Future Meetings and Agendas
Adjournment: The meeting was adjourned at 5:12 PM