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HomeMy WebLinkAbout2001-02-12 City Council Summary Minutes Regular Meeting February 12, 2001 1. Appointment to Fill Council Vacancy ........................375 2. Appointments to Library Advisory Commission ...............379 3. San Francisquito Creek Joint Powers Authority Status Report 379 ORAL COMMUNICATIONS..............................................382 APPROVAL OF MINUTES..............................................382 4. Amendment No. 10 to Contract No. S3036240 Between the City .382 5. Authorization to Vote and Return Downtown Parking ..........382 6. Request to Authorize The City Manager To Pay Up To $400 in Building Permit Fees for Rebuilding Together (Formerly Christmas in April) for Rehabilitation of Community Association for Rehabilitation Facility ....................382 7. PUBLIC HEARING: The Palo Alto City Council will consider an applicaion for a Zone Change from Downtown Commercial (Service) Pedestrian Overlay (CD-S) (P) District to the Planned Community (PC) Zone for property located at 800 High Street ................................................382 8. Adoption of Ordinance Authorizing the City Manager to Enter Into Long Term Contracts for the Sale and Purchase of Electric Commodities .......................................387 9. Council Comments, Questions, and Announcements .............398 ADJOURNMENT: The meeting adjourned at 11:42 p.m. in memory of Bonsai Master Kenneth Sujimoto, and Patricia Carrasco, mother of Architect Tony Carrasco. .........................398 02/12/01 91-374 The City Council of the City of Palo Alto met on this date in the Council Chambers at 7:10 p.m. PRESENT: Beecham, Burch, Eakins, Fazzino, Kleinberg, Lytle, Mossar, Ojakian SPECIAL ORDERS OF THE DAY 1. Appointment to Fill Council Vacancy Mayor Eakins stated that the Council interviewed for this several hours on February 10, 2001, and another hour and one half prior to this regular meeting. The field of candidates was extraordinary. Karen Kang, 535 Patricia Lane, was concerned about Palo Alto’s future. The hope for the future for a better quality of life and a more united community lied in large part with the elected leadership of the city. She had great admiration for the time and effort that each Council Member gave the community. The outcome of the Council’s hard work should reflect the desires of the community, and she felt that was a failing. Many Palo Altans felt disenfranchised. She applauded the Council Members who listened to new voices and encouraged the Council Members to expand beyond their trusted network of friends and seek more diverse opinions. New faces on the Council were needed in order to invigorate the Council’s thinking but would also help restore confidence that the Council was willing to listen and consider other points of view. The Council had an opportunity to demonstrate its openness by creating a more diverse Council, bringing viewpoints from different economic backgrounds, age groups, and ethnicities. The City’s future depended on the quality and diversity of the Council. The people of Palo Alto voted for term limits for a reason. The residents valued new blood and new thinking in the City’s leadership. Hillary Freeman, 627 Channing Street, mother of two children, member of the Jordan Middle School PTA, the PTA Council, and facilitator for the Duvenek Site Council, said she felt immediately optimistic when she heard about the opportunity for the Council to fill its vacant seat. Council Members who took public and private actions to try to ensure worthy goals were applauded. Her trust in the Council began to wane when she was told that each Council candidate would receive 10 minutes for their interview It was important to make the best selection based on the goals stated at the onset of the race and those that existed, such as term limits. The Council was urged to carefully evaluate the options by taking the time necessary to listen to the candidates’ ideas. Civic minded, ethnic, 02/12/01 91-375 religious, chronologically diverse candidates with strong intellectual and emotional quotients were to be found in the City. Council Member Lytle said was Palo Alto at a significant juncture in City politics and government history at this time of appointment. The number of qualified applicants was wonderful. She was in awe of how fortunate the City was to attract such civic talent. One of the most significant challenges the Council faced in the 21st Century was how to effectively engage all members of the community, including youth and children. The government structure was not well positioned for the 21st Century, the Council was an unruly size, and the term-limit rules were almost indefensible. Something was not right with term limits when a former Council member could return to the Council within a short period of time. The best reason she heard from colleagues the previous year, for tabling a motion to consider reducing the Council size, was that nine members led to additional diversity of perspectives in membership and a broader spectrum of participation in government. Her vote was not related to her opinions about Lanie Wheeler, who was undoubtedly the most qualified candidate. Appointing a recently term limited Council Member back to the Council was not the message she felt the Council should send to the community. She nominated Wing-See Leung who had the academic, community service, and life experience credentials to add depth and diversity to the ranks. Ms. Leung indicated she would not seek reelection but did have ties to youth in the community and to the people in the Ventura neighborhood and would be a tremendous benefit to the Council during the year as the Youth Master Plan and City/School Joint Master Plan were developed. Ms. Leung would be a valuable asset as long-term proposals were examined to redevelop the Ventura Community Center. Council Member Burch said he would vote for Lanie Wheeler because the public should have the right to decide who would fill the open seats in the fall. The incumbent seemed to have an advantage. By appointing someone who would not run for reelection, two open seats were guaranteed. The candidates interviewed by the Council on February 10, 2001, were inspiring in their effectiveness, experience, youthfulness, and willingness. With Ms. Wheeler, it was not a case of getting around term limits. His view was that Ms. Wheeler served the community well, knew what it took to do the job, and was willing to come forward for a short term. He agreed with the speakers’ comments about the desire to find diversity, but that was a decision left to the people of Palo Alto. Candidates for the November election had the opportunity to appear on forums and television and go before editorial boards. 02/12/01 91-376 Council Member Kleinberg said if she were looking for someone who had the closest political positions to her own, she would vote for Lanie Wheeler. The spirit of term limits was to bring in new blood. The issue of how someone would get up to speed to be a valuable member of the Council was a consideration. There were others who had that background. She appreciated the issue of not giving someone an advantage in the election but, on the other hand, the Council had the opportunity to get someone started. The candidates were outstanding members of the community, and she hoped those not appointed would find a way to be engaged and involved. Chris Kelly offered incisive thinking, dedication to the community, and was devoted to school/city relations. Wing-See Leung brought the voice of younger people. Leannah Hunt contributed in nonprofits, charity efforts, and schools. She urged a vote for Andrew Pierce who resided in south Palo Alto, was in an interracial family, was a business attorney, and was knowledgeable about some of the critical challenges such as affordable housing, escalating rents, social and community service issues, infrastructure issues, and nonprofit challenges. Mr. Pierce was a member of the Human Relations Commission and had experience with the City budget through his work on the Human Services Resources Allocations Process (HSRAP) Committee. Vice Mayor Ojakian thanked the City Clerk for arranging the interviews. Most of the candidates were very positive and were willing to work with the public to make the community better. His vote was for experience, and he would vote for Lanie Wheeler. Council Member Beecham agreed that the Council needed to be concerned about letting the voters speak. Appointing someone who would run in November would be improper action by the Council. Based on the five priorities, he would look for assistance and completion, and Lanie Wheeler would be able to help do that efficiently in a short time. Council Member Mossar said she would cast her vote for Lanie Wheeler because she valued her in depth knowledge of the community and issues, her incredible ability to bring clarity to issues and to the public’s voice. Council Member Fazzino said the group of candidates was outstanding. He hoped that many of the candidates would run for election in November, apply to serve on commissions, or seek to head a neighborhood or civic organization. Lanie Wheeler demonstrated outstanding leadership as Mayor and was ready to step forward to do the job immediately. From the start of the process, he said it was extremely important to select a senior 02/12/01 91-377 statesperson such as Lanie Wheeler or support someone completely different who would not run for election. Chris Kelley was a young businessperson with a strong legal background. Andy Pierce was experienced and would demonstrate that he was able to move beyond human resource issues and provide real leadership in other areas. Leannah Hunt was a community leader and represented a point of view that was badly needed on the Council. He would vote for Wing-See Leung. He wanted people to believe in the process and believe that the Council generally cared about attracting new and different people. He encouraged the candidates to run for Council in November. Mayor Eakins said the Council had the advantage of an extremely stimulating dialogue with candidates and the public. There had not been such an interest in an opening in the past. The five finalists met the criteria of interest and base level knowledge of the community. Many talked of their commitment to the community and some demonstrated that commitment clearly. The process was stimulating and valuable. She would send letters to all the candidates encouraging them to apply for boards and commissions. Andrew Pierce was the only one who was currently a member of a board or commission, and that was a good training ground to get better known in the community and establish experience. Special attributes she looked for were the ability to adapt to the tasks at hand quickly, balanced outlook, and proven demonstration of capacity to handle issues. She supported Lanie Wheeler. FIRST ROUND OF VOTING FOR CITY COUNCIL MEMBER VOTING FOR WING-SEE LEUNG: Fazzino, Lytle VOTING FOR ANDREW PIERCE: Kleinberg VOTING FOR LANIE WHEELER: Beecham, Burch, Eakins, Mossar, Ojakian City Clerk Donna Rogers announced that Lanie Wheeler received five votes and was appointed 5-3 on the first ballot. MOTION: Council Member Kleinberg, seconded by Fazzino, to change the votes of Council Members Fazzino, Lytle, and Kleinberg in order to make the vote for Lanie Wheeler unanimous. MOTION PASSED 8-0. City Clerk Rogers administered the Oath of Office to Lanie Wheeler. 02/12/01 91-378 2. Appointments to Library Advisory Commission Vice Mayor Ojakian said the Mayor appointed a special committee made up of Council Members Burch, Kleinberg, Lytle, and himself to interview candidates for the Library Advisory Commission. The committee recommended the three incumbents be re-appointed specifically because they helped write the Library Master Plan. FIRST ROUND OF VOTING FOR LIBRARY ADVISORY COMMISSION VOTING FOR ANTHONY ANGILLETTA: Beecham, Burch, Eakins, Fazzino, Kleinberg, Lytle, Mossar, Ojakian, Wheeler VOTING FOR JOHN KAGEL: Beecham, Burch, Eakins, Fazzino, Kleinberg, Lytle, Mossar, Ojakian, Wheeler VOTING FOR TINA KASS: Beecham, Burch, Eakins, Fazzino, Kleinberg, Lytle, Mossar, Ojakian, Wheeler City Clerk Donna Rogers announced that Anthony Agilletta, John Kagel, and Tina Kass received five or more votes and were unanimously reappointed on the first ballot. 3. San Francisquito Creek Joint Powers Authority Status Report and Update Cynthia D’Agosta, Executive Director, San Francisquito Creek Joint Powers Authority (JPA) said the background on the JPA was formulated in May 1998, and they began officially meeting in September 1999. The cities of Palo Alto, East Palo Alto and Menlo Park, County of San Mateo’s Flood Control District, and the Santa Clara Valley Water District were voting members of the JPA. Associate members were Stanford University and the Coordinated Resource Management Planning Group (CRMP). There was a need for the JPA Board to communicate with the member agencies. A summary highlighting actions or interest issues would be provided to the member agencies on a bi-monthly basis. Issues included flood management planning, gathering data and background for the Army Corps of Engineers Study, and coordinating the discussion of multi-regulatory agencies, such as the Environmental Protection Agency, the State Water Resources Agency, and the various agencies that needed to be brought to the watershed and engaged in the conversation of the long-term plan. New members were being addressed such as the Towns of Woodside and Portola Valley and the MidPeninsula Regional Open Space District. A levy restoration project 02/12/01 91-379 downstream of Highway 101 was being worked on. A draft work plan was being developed, and a work group studied cost allocations for general administrative purposes as well as short- and long- range planning efforts. The JPA recently joined the Watershed Management Initiative of Santa Clara Valley. The budget included hiring new staff members. A work group, made up of staff from the member agencies, looked at some specific issues. Council Member Mossar said Ms. D’Agosta was in her position for only six months and was able to take a Board of Directors that was struggling to define its mission and pull it together. Under the leadership of Ms. D’Agosta, the JPA would continue to do good things. Council Member Fazzino asked what actions needed to occur for the City to accelerate the timetable in order to look at construction in 2004-2005. Ms. D’Agosta said various steps could be taken to expedite the timetable. She wanted people to be aware of typical timeframes for engaging the Army Corps of Engineers and federal agencies in the process. Council Member Fazzino clarified the JPA would look at alternative timetables and evaluate actions that needed to occur to accelerate the timetable. Ms. D’Agosta agreed. Recommendations would be made to the City to help out. The typical timeframe for walking through a process, whereby the Army Corps of Engineers was engaged, was determined in preliminary studies after the 1998 flood, and the project would be of a magnitude that would require federal match. Initial discussions were underway to begin a reconnaissance study in October 2001 with the Army Corps of Engineers. That would identify the project study and the cost share for the local sponsor. The process would typically take 12 months, but because of the work that had occurred in the Watershed and the way the stakeholders were organized, the process would be expedited. The project would move into the feasibility phase, and a cost share of 50-50 with the federal government was needed. The average cost of a feasibility study for the watershed was approximately $3 million. Up to 25 percent of the 50 percent share could be contributed as an in-kind service. Once the feasibility phase was completed, the preliminary engineering and design phase would begin and take 2 to 3 years. Construction would begin after the preliminary engineering and design was done. Mayor Eakins asked for an explanation of “cost share.” 02/12/01 91-380 Ms. D’Agosta said cost share, with the federal project, meant the local sponsors needed to match the funding that the federal government would contribute to the project. If flood damage was looked at, the share of the total cost was 35 percent that the local sponsor needed to come up with. Eco-system restoration was the same. The areas of recreation involved a 50-50 share. Council Member Mossar said the JPA was in the process of determining the formula that would specify how the member agencies should pay equitably. Ms. D’Agosta said the dedicated staff of representatives engaged in conversations with the consultant who was coming up with the methodologies. The JPA would present opportunities for different methodologies. Council Member Mossar said the issues included whether Palo Alto should pay the most because it suffered the most damage in a flood or whether San Mateo County should pay the most because it had the largest landholding in the watershed. East Palo Alto had no mechanism for payment. Santa Clara County historically paid for flood control projects through a parcel tax. San Mateo County had different mechanisms that provided some flood control money for the cities in San Mateo County to the north but not for East Palo Alto. Ms. D’Agosta said progress was made. The process started before March 2000. The Santa Clara Valley Water District engaged the Army Corps of Engineers in the watershed. The JPA addressed the office of Congresswoman Eshoo whose assistance was needed to carry forward a resolution to the Committee on Transportation and Infrastructure to put funding in place for the Army Corps of Engineers to commence studies in September or October 2001. Council Member Kleinberg said according to the timeline, the cost share portion would not be for four or five years into the future. She asked whether there would be incremental, interim agreements that the Council could look at, to prevent an agreement in the year 2005. Ms. D’Agosta said the timeline went into a cost share in the feasibility phase which was anticipated to start in the autumn of 2002. That was a 50-50 cost share, and the local sponsor would be required to come up with approximately $1.5 million. Milestones were being made toward the agreements. The JPA would not put aside the cost allocation methodology that needed to be developed for the engineering, design and construction. No action required. 02/12/01 91-381 ORAL COMMUNICATIONS Larry Hassett, 875 Alma Street, spoke regarding a solar electric project. Mark Kousnez, 2475 South Court, spoke regarding 2750 Middlefield Road/Retail Ordinance for Ground Floor Uses. Sally Probst, 735 Coastland Drive, spoke on behalf of the League of Women Voters regarding the SOFA Coordinated Plan. Sophia Dhrymes, 483 Hawthorne Avenue, spoke regarding ‘etc.’ Peter Wang, 275 Ventura Avenue, spoke regarding rent increase. Alex Edelstein, 355 Santa Rita Avenue, spoke regarding the Council appointment. APPROVAL OF MINUTES MOTION: Vice Mayor Ojakian moved, seconded by Kleinberg, to approve the Minutes of January 8, 2001, as submitted. MOTION PASSED 9-0. CONSENT CALENDAR MOTION: Council Member Mossar moved, seconded by Beecham, to approve Consent Calendar Item Nos. 4 - 6. 4. Amendment No. 10 to Contract No. S3036240 Between the City of Palo Alto and Geodesy Consulting Services in the Amount of $42,000 for Development Support of New Computer Applications Linked to The Geographic Information Systems (GIS) 5. Authorization to Vote and Return Downtown Parking Assessment District Ballots for City Parcels 6. Request to Authorize The City Manager To Pay Up To $400 in Building Permit Fees For Rebuilding Together (Formerly Christmas in April) for Rehabilitation of Community Association for Rehabilitation Facility MOTION PASSED 9-0. UNFINISHED BUSINESS 02/12/01 91-382 7. PUBLIC HEARINGS: The Palo Alto City Council will consider an application for a Zone Change from Downtown Commercial (Service) Pedestrian Overlay (CD-S)(P) District to the Planned Community (PC) Zone for property located at 800 High Street, to allow demolition of an existing 17,632-square-foot manufacturing building and construction of a new 48-foot-high, three-story mixed use building, including 26 residential units, 48,030 square feet of office space, 2,379 square feet of retail space, a subterranean parking garage and related site improvements; and a variance for a portion of the third floor residential area that exceeds the City’s height requirement Council Member Beecham stated he would not participate on the Agenda item due to a conflict of interest because a client had a financial interest in one of the properties. Director of Planning and Community Environment Ed Gawf said there were two basic questions before the Council concerning the proposal. The first question was whether the project, as proposed, was the right project for the location. If the answer was yes, the second question was whether the public benefits were appropriate. The existing site consisted of 42,000 square feet with three lots. The three lots included 800, 810, and 820 High Street. A proposal had been submitted to the Planning Department in December 2000 for development under the current CD-S zoning for 810 and 820 High Street. In that particular request, the applicants asked for approximately 8,400 square feet of office commercial on 820 High Street and 5,000 square feet of office commercial on 810 High Street. The applicants did not include 800 High Street in that proposal. A question arose concerning the base zoning allowed for office commercial on the property. Approximately 21,500 square feet was allowed. The 800 High Street property included the Peninsula Creamery building which staff felt was eligible for designation as a Category I or II property. If the applicant developed the property under the existing zoning, retained the building, and nominated it for inclusion as Category I or II, the applicant would be eligible for a 2,500 square foot bonus. Under the existing zoning, the office commercial base would be approximately 24,000 square feet. Another zoning provision applied in the CD-S zone that said 24,000 square feet could be office commercial but only 15,000 square feet for the three lots could be offices. The existing zoning said, “No lot shall have more than 5,000 square feet of office.” The remaining square footage of the 24,000 square feet had to be retail or business services. The proposal was for an 80,000 square foot building with 48,000 square feet of office space proposed. The Architectural Review Board (ARB) and Planning and Transportation Commission (P&TC) reviewed the 02/12/01 91-383 proposal approximately one year previously. The applicant and staff had agreed that the larger project was too big for the location and recommended an alternative. Staff asked the Council to look at the major policy issues involved in the project and give policy direction to staff and the applicant. Any revised proposal would be reviewed by the ARB and P&TC prior to final Council review. The key policy issues were the total size of the project, the jobs/housing balance, the design consideration, the Below Market Rate (BMR) units, and the public parking. Discussions by the South of Forest Area (SOFA) CAP working group had to do with the floor area ratio (FAR); for instance a 1:1 ratio to 1:5 ratio, with the understanding that Alma Street would take a higher intensity than would proximity to the existing residential area. The base zoning allowed a FAR of 1.0, but because there was an existing building on the 800 High Street property, a slightly higher FAR would be allowed. Zoning under the CD-S for the 800 High Street property was approximately 1.16 FAR. The applicant proposed to increase the FAR to 1.67. The staff report (CMR: 135:01) had a different FAR and the intent was to show there was an approximate range. Size was one of the issues the Council needed to look at. If the office square footage and residential square footage were reversed, he would be more supportive of the larger size. Looking at the increased number of residential units was important to avoid a significant impact on job/housing balance over the base. The base zoning, using a 4 per thousand ratio, would generate 96 jobs. The housing need would be 60 units. The number of residential units provided would vary because under the CD-S zoning, there was no requirement to provide residential units as part of an office development. Council Member Fazzino asked whether there would be an increase in the housing deficit under base zoning. Mr. Gawf said staff’s assumption was that there was a base zoning that did not require residential to be attached to the office use. Any increase in office square footage over and above what the base zoning allowed should not occur without a concurrent housing component. The staff recommendation was to increase the number of residential units or decrease the commercial square footage so there was no significant impact on job/housing balance over the base. Jobs and housing in the community were important. Additional work needed to be done with the plans that were submitted. Any new building in the area needed a strong relationship to Homer Street, a smaller scale sense, and BMR units designed to work for affordable housing. Sixteen of the 26 units were originally designed as work/live units. The jobs/housing balance and design considerations were major policy direction for the Council. The Council needed to 02/12/01 91-384 look at size, scale, design, and mix of use. The applicant proposed to provide a minimum of 26 BMR units, given permanently to the City to manage. That was a major, positive public benefit. Public parking was a public benefit. Two hundred and seventy five parking spaces were proposed to be provided on the project. The applicant proposed that one level of underground parking spaces, 135 spaces, be managed by the City as public parking. The parking would be short or long term, as determined by the City and based upon demand in the area. The proposal, at 38,000 square feet, included 72 extra parking spaces that were over and above the zoning requirement. Through aggressive management and an aggressive Transportation Demand Management (TDM) program on the part of the applicant, 130 parking spaces on one level would be available for public parking. As part of the public benefit, staff indicated to the applicant that the parking lot should be available to the general public after hours. The Council was asked for direction toward any revisions to the plan in five areas: 1) size of the project; 2) mix of use or jobs/housing balance; 3) design issues; 4) BMR units; and 5) public parking. Council Member Lytle asked where the 1.6 jobs per unit factor was generated. Mr. Gawf said 1.6 was the general ratio in Palo Alto and also used by Association of Bay Area Governments (ABAG). Staff tried to use established numbers. Council Member Lytle asked whether 1.6 was used in prior projects regarding jobs/housing. Mr. Gawf said 1.6 was used with the SOFA I Plan. Lee I. Lippert, 580 Hawthorne Avenue, Architectural Review Board (ARB) Member, said the project was reviewed approximately one year previously, and all the ARB members who reviewed the project were enthusiastic about it. The SOFA area would go through significant changes during the next several years. The project would be a leader in the area in terms of setting the general tone, the character, and the quality of the built environment for SOFA II. Concerns were raised with regard to the building; for instance, some people characterized it as too big. The building provided many needs to the community with regard to offices and housing. The project should be looked upon as an incredible opportunity. ARB member Cheryl Piha was convinced that the project was in alignment with the concepts in the Plan and supported it. The late ARB Vice Chair Francisco Alfonso felt the project was an important prototype for the area to review, study, and learn what could be done in the area. The project was 02/12/01 91-385 an opportunity to take a leadership role in Phase II of the SOFA area. Council Member Burch asked whether the statements made by the ARB members were in reference to the original 80,000 square foot building. Mr. Lippert said yes. The ARB had concerns with the management of the parking and the massing of the building. The developer and architect subsequently addressed the issues in a satisfactory way. Council Member Mossar recalled that the ARB reviewed the 80,000 square foot project and looked for parity with the SOFA study, before the Summerhill proposal went to the Council. The Summerhill proposal changed some of its tenants upon the review. Mr. Lippert said the proposal was reviewed prior to the Summerhill project. Council Member Lytle asked whether there was discussion about the dimension of the project, noting it would be the longest building in Downtown. Mr. Lippert said consideration was given to the length of the building. The ARB felt that issue was mitigated by the undulating front of the building. The majority of concerns with the front of the building were addressed by Architect Peterson. Council Member Lytle clarified the ARB thought a 400-foot long dimension building met the pedestrian scale requirements. Mr. Lippert said the requirements were met because of the arcade nature of the building which created horizontal and vertical ins and outs on the buildings. City Attorney Ariel Calonne said the ARB had not reviewed what was before the Council at the current meeting. Should the Council go forward with the staff recommendation or something different, the project needed to come back to ARB for a fair and unbiased hearing Mr. Lippert agreed. MOTION: Council Member Mossar, seconded by Burch, to move Item No. 8 forward for discussion before completing Item No. 7. City Manager Frank Benest said the Director of Utilities report would take approximately 15 minutes for Item No. 8. The Council 02/12/01 91-386 could take public comment, close the public hearing, and decide whether to make a decision or continue the decision on Item No. 8 to February 20, 2001. Council Member Mossar said Item No. 8 was a $2 million decision that needed time for consideration. Council Member Kleinberg said the public needed to be heard on Item No. 7. She would be out of town for the next meeting but felt strongly about the proposal. MOTION PASSED 4-3, Fazzino, Kleinberg, Lytle, “no,” Beecham “not participating,” Ojakian absent. 8. Adoption of Ordinance Authorizing the City Manager to Enter Into Long Term Contracts for the Sale and Purchase of Electric Commodities City Manager Frank Benest said Item No. 8 authorized the City Manager to enter into long term contracts to purchase electrical power. In recent dialogues in the community, Palo Altans told staff to focus on the basics with an emphasis on infrastructure. Four key issues were highlighted. The first issue was risk, that is, there was a risk in the case that the City acted and approved the recommendation, and there was a risk in the case that the City did not act. Staff believed that having the ability to move quickly gave staff the best opportunity to maximize benefits and minimize risk. The second issue was rates. Rates would increase in Palo Alto regardless of which scenario occurred, but the City expected rates to remain below Pacific Gas and Electric’s (PG&E) rates as they had in the past. The third issue was long-term contracts. Providing the City Manager authority to secure new long-term supply contracts gained an advantage for the City if the City intended to contract swiftly for power supplies in a tight market. Stable rates would be maintained over the long term. The last issue was conservation, a critical strategy for the Palo Alto city government, for the business community in Palo Alto, and for the community in general. Because of a significant rise in short-term costs, the value of conservation was high. The City would accelerate the expansion of efficiency programs. Director of Utilities John Ulrich said the California energy market was in a crisis. Palo Alto was fortunate to remain relative unscathed, but that appeared to be ending. The City purchased approximately 85 percent of its power needs from the Western Area Power Administration (Western) on cost based rates that were significantly below current market prices. He and his predecessors talked about the fortunate situation in which the 02/12/01 91-387 City was able to partake in 1964 to sign up for energy from Trinity Dam. With the advent of the current crisis, staff believed there was likelihood that PG&E, due to its significant amount of debt caused by charging rates that were lower than the cost to purchase power, might go bankrupt. A few months previously, the City would not have thought that was possible. A further possibility was that PG&E would attempt to go to the Federal Energy Regulatory Commission (FERC) to ask for emergency relief from the rates currently charged Western and ask for the rates to increase dramatically, which might go to market rate. The market rate was significantly higher than what the City currently paid. Staff believed the City’s contract with Western went through 2004. The City planned on going out into the market to look for replacement power at the end of 2004. The current factors caused the City to take a grimmer look at the situation. Due to the uncertainty and the probability of a draconian effect taking place, the City believed the cost impact of Western prices going up to the market was worse than looking and purchasing energy on a long-term contract basis. The staff report (CMR:141:01) included many factors. The current prices were in the two-cent range but could increase to 22 cents. The staff recommendation was to give authority to the City Manager to purchase a contract, looking at terms and conditions, for up to 10 years. That would give the City the ability to buy power at a leveled cost. The City’s belief was that residents would appreciate a leveled and more reliable price than to let the supply costs go up to the market and ride with it as the market changed. Staff forecasted that the price on the wholesale market would go down but not for some time. Rather than be subjected to that market, staff believed the appropriate strategy was to take the risk and purchase energy on a ten-year contract basis. The risk could be offset to a certain degree if the City was able to continue the contract with Western without change. Any surplus not needed would be sold back to the market. The ability to sell the surplus would offset the cost at the end of the 10-year contract. Use of reserves and the type of contract negotiated would affect the staff recommendations for residential and commercial/ industrial rate increase. Whether the City took action or did not take action, there would be a risk of increase in rates and a commitment to an energy supply that would be for up to a 10-year period. The best approach was to do something in between and cushion the shock of the rate increase going up to the market. Flexibility to maximize the benefits and minimize the risks was needed. Rates would increase in Palo Alto, but should remain below PG&E rates. Changing the long-term contract policy allowed flexibility in a volatile market place and would allow surplus to be sold. Customers in Palo Alto would be encouraged through innovative ideas to do more conservation. 02/12/01 91-388 Money would be saved, and the need to go to the market for electricity at a higher price would be eliminated. Council Member Wheeler said the recommendation in the staff report (CMR:141:01) was to authorize the City Manager to enter into contracts for up to 75 megawatts. She clarified that the examples presented by Mr. Ulrich were predicated on 25 megawatts. Mr. Ulrich said staff wanted the flexibility to negotiate up to 75 megawatts. The more likely scenario would be 25 megawatts. Council Member Wheeler asked for an indication on the impacts to commercial users. Mr. Ulrich said commercial customers included small stores or businesses with many employees. Staff wanted to develop rates and encouragements that would give commercial customers incentives. Council Member Lytle understood the request was to delegate authority for a large amount of money to purchasing of supplies. She asked for the advantages and disadvantages to the Council of delegating authority to the administration. Mr. Ulrich said much money was currently spent on electricity. The City had fiscal responsibility and ability to evaluate various proposals. The primary reason for the delegation was that it allowed staff to meet with parties that had energy for sale and say the City had the authority to negotiate in earnest for the best terms and conditions. Risks were built into getting price quotations. The commitment he and the City Manager would have was to have an oversight to allow them the ability to articulate the analysis prior to signing papers. Council Member Beecham suggested the Mayor appoint a subcommittee to work with staff in detail, with flexibility, and speed. Richard Carlson, 4126 Donald Drive, Utilities Advisory Commission (UAC) Member, urged the Council not to provide the recommended level of authority to staff. His opposition was for reasons of process and substance. For reasons of process, the decision was the largest single financial one faced by the Council. There was no newspaper coverage of the issue. The question was whether an issue of such incredible magnitude was worth the degree of a panic action. In substantive terms, the only reason providers were willing to give six-cent power under a ten-year contract, was that the suppliers were almost certain 02/12/01 91-389 they would be unable to obtain anything close to that level of power three, four, five years on through ten years. The market would be a buyers’ rather than sellers’ in a few years. Taxpayers of the community should not take the risk for billion dollar corporations. He recommended limited authority to contract. Dexter Dawes, 350 Santa Rita Avenue, UAC Member, had significant concerns about the authorization. He estimated $427 million at the likely amount of six and one half cents per kilowatt-hour. There was no need to take action at the current meeting. He was a major proponent of the governance procedures of the utility and believed it was ponderous and slow. The amount of ten-year power should be severely restricted, and he suggested three to five years. Council Member Fazzino asked whether Mr. Dawes suggested the matter be sent to the UAC for discussion. Mr. Dawes said the matter was under discussion at the meeting of February 14, 2001. Council Member Fazzino clarified Mr. Dawes wanted the Council to postpone action until after discussion by the UAC. Mr. Dawes said that was correct. He saw no reason for the Council to take action at the current meeting. Mr. Carlson agreed that there was no reason a contract had to be signed in the next three days. Herb Borock, P.O. Box 632, believed the UAC should review proposals. The examples in the staff report (CMR:141:01) indicated the expected price was shown as 5.5 cents, and the chart shown to the Council indicated 6.5 cents which seemed to be a more likely cost. If there was an urgency, someone had to know what the contract and price was. The State faced the same issue about buying power. If the need for long-term contracts was for the large users to have some stability in price, there should be a linkage if the large users agreed to a price based on the commodity price in the ten-year contract. The commercial users were the ones that created the need for the larger amounts of power, but everyone would pay the higher rates. Chris Kelly, 435 Sheridan Avenue #208, said one of the major commentaries on the electric prices in California was put up through the Berkeley Manifesto which recommended not entering into contracts that were too long term. To the extent authority 02/12/01 91-390 needed to be delegated, the time frame should focus on two to three years. Mr. Ulrich said staff was not in the business of signing or asking for approval to sign a contract if staff did not believe there was a major financial problem or crisis. Staff looked for the ability to negotiate and look for the best price. He did not expect the City would be able to consider signing a contract during the next few days or weeks, but staff needed the authority and ability to do that type of negotiation. With the unprecedented crisis in the energy situation with PG&E, staff felt it was in the best interest of residents and businesses to allow staff the ability to negotiate. The risk of not negotiating a contract was that it was not possible to buy a contract for two or three years at a price significantly less than the current market. Going out for ten years allowed the rates to be more stable. The intent was not to have a lower rate or something subsidized for the commercial/industrial customer. Treating all customers equally was important. Mr. Benest recommended discussions with the UAC and bringing the item back to the Council the following week. MOTION: Council Member Beecham, seconded by Fazzino, to continue the item until the February 20, 2001, City Council Meeting to give staff time to work with the UAC. Council Member Wheeler said in addition to the major purchase subject to be discussed by the UAC, she hoped they would spend time discussing the governance issue, that is, how the Council can behave less like a municipality and more like a business model, while protecting the fiduciary responsibilities that the Council had. MOTION PASSED 9-0. RESUME DISCUSSION OF ITEM NO. 7 City Manager Frank Benest said the applicant requested Item No. 7 be continued for two weeks. Mayor Eakins said there was no meeting scheduled in two weeks. Council Member Mossar appreciated the applicant’s concern but noted the project had been before the Council several times, and the Council needed to make a decision as to how to proceed with the project. 02/12/01 91-391 MOTION: Council Member Fazzino, seconded by Wheeler, to hear testimony for one hour tonight and to let individuals speak at 7 p.m. on Tuesday, February 20, 2001. MOTION PASSED 9-0. Council Member Kleinberg wanted to be sure that individuals who were unable to stay at the current meeting would be notified about their ability to come back to the meeting the following Tuesday. Mr. Benest said the City Clerk had the oral communication cards and would notify the individuals. RECESS: 10:20 a.m. to 10:25 p.m. Roxy Rapp, Applicant, recalled attending a pre-screening with the Council on May 26, 1998, at which time the Council gave him specific direction. The Council liked the concept of a mixed use and wanted to see more housing. The Council asked him to add more retail to make the project more vibrant and to reduce the office space. An Environmental Impact Report (EIR) was done in May 1999, which indicated no significant impact for the area. The Historic Resources Board (HRB) supported the project on June 16, 1999, and the Architectural Review Board (ARB) unanimously approved the project on June 29, 1999. The Planning Commission unanimously approved the project on August 25, 1999. In September 1999, he asked for approval to pull the project due to the upcoming election. The project did not come back to the Council in 2000. The project was still mixed use. In 1988, the project was at 84,000 square feet, and the current proposal was for 69,800 square feet. The commercial space was 62,000 square feet and currently was 36,500 square feet. The retail was changed from 1,450 square feet to 2,500 square feet, and the living space was changed from 16 units to 30 units. The FAR was lowered from 2 to 1.6, and public parking was increased from 68 spaces to 112 spaces. He asked for approval of an extra 11,000 square feet of commercial space, 152 public spaces, 30 housing units dedicated to teachers and emergency service workers, and a 3,000 square foot public plaza. The property consisted of 42,000 square feet with three lots and an existing structure of 17,000 square feet. He had 21,000 square feet at .4 of commercial, which gave him 8,400 square feet, and added to the 17,000 square feet, would amount to 25,400 square feet. He asked to build 36,500 square feet. The project would provide more housing than he was creating in jobs. 02/12/01 91-392 Bob Peterson, Architect for Project, said the building had a layered look with setbacks between 8 and 30 feet. The plaza was approximately 3,000 square feet. Council Member Mossar recalled being co-author of a colleagues’ memo that brought the project to the Council in May 2000. She said the Council agendized the project and was willing to hear it, but Mr. Rapp pulled the item from the agenda. Mr. Rapp said he was ready to bring the project back to the Council in January 2000, but staff was not ready. The item was pulled in May because a buyer stepped forth. Council Member Mossar asked how a guarantee could be made that the housing would be dedicated to teachers and public safety workers. Mr. Rapp said the City would get the housing for life. The deed of the property would state that the housing belonged to the City of Palo Alto. He wanted the housing dedicated to teachers and public safety workers. John Barton, 360 W. Charleston Road, Vice President of Palo Alto Unified School District (PAUSD) Board of Education, said the PAUSD employed 714 teachers and more than 150 teachers were expected to be hired in the fall. Many of the new teachers would replace teachers who were leaving the area because they could not afford to live in the area. The PAUSD and community faced a crisis. The PAUSD’s long history of excellence was based on two facts: a committed community and extraordinary teachers. The current proposal could house many teachers. The Board of Education knew the proposal was more complex than only teacher housing, and knew there were other issues the Council needed to consider in making a determination. He asked that the Council consider that the project provided in perpetuity at least 30 units of housing for teachers and emergency workers and provided parking for the Downtown. The applicant provided real public benefits. Solving the current need for affordable housing was more important than maintaining a tally sheet on jobs and housing units in the future. David Bubenik, 420 Homer Avenue, was interested in the project because of his membership on the SOFA Working Group and as a nearby resident. As a Working Group member, he advocated that two-thirds of the SOFA Study area be designated primarily for housing. That included the six-block zone bounded by Homer Avenue, Alma Street, Addison Avenue, and Ramona Street. The vision was high-density residential development to yield many small, relatively low-cost dwelling units throughout the area. 02/12/01 91-393 The proposed Creamery Project was near the center of the six-block residential zone. He believed that preempting the SOFA Plan for the large office complex set an unfortunate precedent for the area and Plan. Efforts of the Working Group to try to realize every housing opportunity would be undercut. Regarding the jobs/housing imbalance, he did not believe 33 units could be counted as a mitigation against jobs. The occupants of the units would not take the jobs in the building. He estimated a total of 146 jobs. The housing component was subordinate to the commercial element. He questioned whether Palo Alto needed more offices. Yoriko Kishimoto, 251 Embarcadero Road, President of University South Neighborhoods Group, said the Group was open to innovative solutions with lasting benefits, but said the benefits should not drive the decision. The major components of jobs/housing balance, mass, density, height, and traffic did not go away. Taking away the benefits, the project was a massive three-layer building. She asked whether the Council, in good conscience, could allow any new jobs without adequate housing and whether the Council supported the SOFA area’s becoming a larger scale office center than the University Avenue business corridor. The Group liked the staff alternative outlined in the staff report (CMR:135:01), and asked that a subcommittee of the Council and staff work closely with the developer to design a project with more housing and less office. Elaine Meyer, 609 Kingsley Avenue, said the publicity barrage for the project was extraordinary, and she was pleased that the Planning staff was able to separate the actual project from the publicity. She did not know how the Council could be expected to make an intelligent decision because the numbers constantly changed. The City recently approved two large parking garages, and one would be two and one half blocks from the project, in the 500 block of High Street. That garage would hold approximately 200 cars which should have an impact on the parking problem in the neighborhood. Joette Farrand, 724 Bryant Street, followed the project since Mr. Rapp first presented it to the neighborhood meeting in 1993 or 1994. Mr. Rapp was repeatedly told by the neighborhood, Council Members, and Planning Commissioners that the project was too large, and out of scale with the neighborhood. Parking and housing were City and regional problems. The neighborhood had to swallow the density from the Summerhill/SOFA I process, and the neighborhood endorsed and supported the affordable housing in SOFA I. Mr. Rapp offered housing but added to the problem with more jobs. Increased jobs equaled a need for more housing and created more traffic, noise, and smog. The project, if approved, 02/12/01 91-394 set a precedent for SOFA II that the City could be bought at the expense of the neighborhood residents. Carol Kiparsky, 800 Cowper Street, said a major priority was to provide housing to teachers and emergency workers in Palo Alto, but 30 units was not the answer. Ian Irwin, 800 Cowper Street, said many people suggested that the project be carefully examined and reevaluated. The Council heard promises from the developer such as free housing for teachers. The history of the project had changed many times and included office space that exceeded the zoning. The Council needed to say that housing was necessary for teachers and that the area be zoned for housing. The neighborhood had shown tremendous ability to take up changes in development and managed to include a park and more housing. The City appeared to try to solve all its problems in SOFA. Larry Hassett, 875 Alma Street, said the area had been “burned” in the past with the PC zoning tool. Two benefits of the project included parking and housing. The area had a chronic parking problem for businesses such as the Palo Alto Weekly, REACH, Peet’s Coffee, and Whole Foods. There was no easy way to solve the parking crisis because the lots in the area were small, and the area was not in a parking assessment district. Council Member Kleinberg asked whether Mr. Hassett was in the SOFA Working Group. Mr. Hassett said he was Co-Chair of the Working Group. Council Member Kleinberg asked Mr. Hassett to clarify whether the proposed development was within what the Working Group was working towards. Mr. Hassett said the Working Group talked about retail along Homer Avenue and the parking and housing issues in the area. Rick Klein, 853 Alma Street, said many people in the neighborhood supported the project and thought the project was a good idea for Palo Alto. Stephanie Munoz, 101 Alma Street, Apt. 701, said favoritism was an unsatisfactory precedent. The Council should listen to what the Planning Commission agreed to and not consider changes. Mr. Rapp’s project requested 24,000 square feet of office space and 24,000 square feet of housing. The fact was that doubling commercial property on a lot meant a large profit. Mr. Rapp’s idea of offering housing was a good idea and mitigation. 02/12/01 91-395 Philip Schultz, 426 Palo Alto Avenue, said Mr. Rapp’s plan to provide housing for teachers and emergency service employees was a good idea. He was convinced that many of the objections and fears related to the project would be reduced, if not voided, once the plan became a more visible and viable reality. Ken Alsman, 1057 Ramona Street, was a strong advocate of the project. The project was not a massive structure. Retail and housing would be seen at the street level. The project would not look and feel like an office. Parking was a critical situation, and the project would be a major benefit. He calculated approximately $5 million of benefit to the City, and it might eliminate the need in his neighborhood for a $1 million per year parking permit program. Tony Spitaleri asked the Council to keep the commitment it made two years previously to teachers, firefighters, and police officers when the Council passed a resolution to help provide affordable housing in the City. Mr. Rapp’s project would not fix all the housing problems, but it was a first step. The benefit was that teachers would stay in the area, and the community would be safer because firefighters and police officers would be able to respond in times of emergency. Mayor Eakins announced that no more speaker cards would be accepted on this item. The public testimony for the people who had submitted speaker cards would be heard on Tuesday, February 20, 2001. Council Member Burch asked how many people remained in the audience who submitted cards and would still like to speak. Bob Moss, 4010 Orme Street, recommended the Council adopt the staff recommendation Alternative 3 in the staff report (CMR:135:01), with a modification. The only legally binding option before the Council was the 80,000 square foot project which Mr. Rapp said was not really on the table. He recommended denying the official proposal and opening up another possibility which was a combination of recommendations 3 and 4, for instance, look at something with a build out potential of between 55,000 and 68,000 square feet, but have all housing units reserved for public safety employees and teachers. He did not consider a lot of parking spaces to be a major public benefit. Emily M. Renzel, 1056 Forest Avenue, said the job/housing balance was not new. Many Councils, since 1975, continued to erode progress that was made with housing with increased development of nonresidential uses. The Council would have been 02/12/01 91-396 well served to put an interim zoning on the entire SOFA I/II area of a housing zoning. The subject site could have been creatively planned for affordable housing. The City should stop building nonresidential and start planning for housing where there were opportunities. Karen Holman, 725 Homer Avenue, could not believe that the HRB supported the project. The majority of the Working Group supported the preservation of National Register as well as California Register buildings which included 800 High Street. There was much interest in retaining the historic corridor on Homer Avenue. The building was 48 feet high and 1.6 FAR. The Summerhill project was 45 feet high and 1.5 FAR, which was large and out of character with the neighborhood. Sandra Martignetti, 1018 Cowper Street, PAUSD teacher, encouraged the Council to support the Peninsula Creamery project. The public benefits were resoundingly appropriate. Many young, vibrant teachers were leaving because of the high cost of living. The proposed project was a step in the right direction. She found the project aesthetically pleasing. Steve Reyna, 840 Kipling Street, asked the Council to be careful about what it was deciding. His concern was the type of constraints that might be placed on the review boards of the projects. In the SOFA I projects, the issue of constraints was strongly felt by the ARB and HRB members. The review boards needed to retain the ability to provide a full and proper review of what came before them. The project proposed 140 workers who would be in serious competition for housing. The housing planned was approximately 1,000 square feet per unit which would be housing for teachers but not teachers with families. Michael Griffin, 344 Poe Street, favored staff’s compromise plan listed in the staff report (CMR: 135:01) because it increased the public benefit of the applicant’s PC zoning request, as well as scaled back the traffic generating aspects. At a meeting the previous week, the Council discussed the pros and cons of approving a trial program of traffic calming measures for his neighborhood, Downtown north. Council Member Kleinberg read a list of possible consequences, one of which was that other parts of town might want to have their own areas protected from traffic. If Palo Altans realistically wanted to deal with the traffic problems, the City had to come to grips with the new planned community projects which, by their nature, were large and caused traffic increases. There had to be a way in Palo Alto to accommodate new PC developments that provided a valid public benefit such as housing, while at the same time dealt creatively with the traffic impacts generated by the projects. 02/12/01 91-397 Council Member Lytle asked whether it was possible for staff to share with the Council the pro forma analysis that was shared with staff for the proposal and whether or not the staff recommendation (CMR: 135:01) would be buildable under a conservative, projected, and reasonable rate of return for the developer. Mr. Benest said he would discuss Council Member Lytle’s questions with Mr. Gawf. MOTION: Vice Mayor Ojakian moved, seconded by Mossar, to continue the item to the February 20, 2001, City Council Meeting. Council Member Mossar said the Council had questions of staff on this item when it returned and there would be discussions among the Council Members prior to deciding what to do. She hoped that the rest of the February 20, 2001, agenda items would honor the time needed to complete the discussion. Council Member Fazzino reminded the Council Members during the previous three years, the Council had attempted to restructure Council meetings to move items such as Oral Communications on the agenda. Public hearings should be held at the beginning of the meetings. Vice Mayor Ojakian suggested Council Members provide written questions to staff prior to the next meeting. MOTION PASSED 8-0, Beecham “not participating.” COUNCIL MATTERS 9. Council Comments, Questions, and Announcements ADJOURNMENT: The meeting adjourned at 11:42 p.m. in memory of Bonsai Master Kenneth Sujimoto, and Patricia Carrasco, mother of Architect Tony Carrasco. ATTEST: APPROVED: City Clerk Mayor 02/12/01 91-398 NOTE: Sense minutes (synopsis) are prepared in accordance with Palo Alto Municipal Code Sections 2.04.180(a) and (b). The City Council and Standing Committee meeting tapes are made solely for the purpose of facilitating the preparation of the minutes of the meetings. City Council and Standing Committee meeting tapes are recycled 90 days from the date of the meeting. The tapes are available for members of the public to listen to during regular office hours. 02/12/01 91-399