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HomeMy WebLinkAbout2017-08-21 City Council Summary MinutesCITY OF PALO ALTO CITY COUNCIL TRANSCRIPT Page 1 of 62 Regular Meeting August 21, 2017 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:00 P.M. Present: DuBois; Filseth arrived at 6:02 P.M.; Fine, Holman, Kniss, Kou, Tanaka; Wolbach arrived at 6:15 P.M. Absent: Scharff Closed Session A. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his Designees Pursuant to Merit System Rules and Regulations (Ed Shikada, Lalo Perez, Eric Nickel, Rumi Portillo, Molly Stump) Employee Organization: International Association of Fire Fighters (IAFF), Local 1319 Authority: Government Code Section 54957.6(a) CONFERENCE WITH CITY ATTORNEY—POTENTIAL LITIGATION Significant Exposure to Litigation Under Section 54956.9(d)(2) (One Potential Case, as Defendant)–Palo Alto-Stanford Fire Protection Agreement Vice Mayor Kniss: We are convened. If I could now have a Motion to go into Closed Session. Council Member Holman: I'll do that. Vice Mayor Kniss: And a second? Council Member DuBois: Second. MOTION: Council Member Holman moved, seconded by Council Member DuBois to go into Closed Session. Vice Mayor Kniss: All those in favor just say aye. Any dissent? With that, we are going into Closed Session. For all of you who are waiting, we may have a longish Closed Session, so we hope you'll be patient. Thanks. TRANSCRIPT Page 2 of 62 City Council Meeting Final Transcript: 8/21/17 MOTION PASSED: 6-0 Filseth, Scharff, Wolbach absent Council went into Closed Session at 6:02 P.M. Council returned from Closed Session at 7:52 P.M. Vice Mayor Kniss: Good evening, everyone. The Council is reassembling slowly. I apologize that we have been in a very long Closed Session tonight. You've been very patient. I'm Liz Kniss; I'm the Acting Mayor tonight. Next to me is Adrian Fine, and he is the Acting Vice Mayor tonight. I asked him to do that for a particular reason. This is his last week as a single man. As of Sunday, he will be married. Congratulations to you, Adrian. Thank you for filling in. Heading into tonight's agenda, we've already done our Call to Order. Let's go on to Agenda Changes, Additions, and Deletions. Agenda Changes, Additions and Deletions Vice Mayor Kniss: Are there any? Looking at the board, I'm not seeing that there are any. City Manager Comments Vice Mayor Kniss: That takes us to City Manager Comments. James Keene, City Manager: Thank you. I'll try to zip through these, Madam Mayor, just since folks have been waiting, I know, for the regular part of the agenda. First of all related to County Measure A funding. Last Tuesday, the County Board of Supervisors authorized $250 million in General Obligation bonds consistent with Measure A, which was approved by the voters this past election. The Board also adopted guidelines for the support of housing loan program that focuses on units for people with disabling conditions, those needing short-term rental assistance and services to find or maintain permanent housing, and for those within a range of income levels from extremely low income to 80 percent of area median income, which would be about $84,750 for a family of 4. Thanks to our Planning Staff who reviewed drafts of the program guidelines and will continue to coordinate with the County's Office of Supportive Housing about potential opportunities to fund projects here in Palo Alto through the Measure A funding approved by voters for affordable housing. A second item is the summer camps program 2017. I think we've got some little pictures up there. Another successful summer came to an end on August 4th. We offered 292 camps for kids and teens on a variety of topics such as ceramics, photography, metal working, science and zoo camps, theatre and recreation camps up at Foothills Park. New this summer at the Art Center was 5 days in the art world where teens traveled around the Bay Area visiting museums and artist studios. The teens also TRANSCRIPT Page 3 of 62 City Council Meeting Final Transcript: 8/21/17 created a cool new mural at the Mitchell Park Community Center. Later, Teen Week Out went on adventures such as beach trips, hikes, adventure parks, and more. This is our second year running the Teen Week Out, and it has grown to be one of our most popular summer camps. Finally, Palo Alto Swim and Sport, the City's new aquatic service provider, also had a successful summer serving 714 students for a total of almost 7,200 splashes. Splashes are where kids get in the pool to take a lesson. Lastly, Palo Alto will be recognized for receiving the Age Friendly City designation from the World Health Organization at the upcoming Seniors Agenda Network Summit on Wednesday, August 30th, at 1:30 P.M. That'll be in the city of Campbell, Campbell Community Center. The event will recognize six cities that have received the designation since January 2017. Categories for the criteria include outdoor spaces and buildings, transportation, housing, social participation, respect and social inclusion, civic participation and employment, communications and information, and community and health services. Once all 15 cities and the County—this is from a countywide perspective—receive the designation, we will be the first county in the United States with all cities being age friendly. Currently, 11 cities have the designation, and the other four plus the County submitted their applications to the World Health Organization by the July 31st deadline and were awaiting official response. We're expecting there will be a countywide celebration for all 15 cities in the county in early 2018. That is all I have to report. Thank you. Vice Mayor Kniss: Thank you, City Manager Jim Keene. Appreciate that. Oral Communications Vice Mayor Kniss: That takes us now to Oral Communications. I have six cards. I'm going to read all six of them, and I'd really appreciate it if you'd get close to the front. We can bring you forward one at a time. Jolie Kemp, Heather—I think it's Lineberger or I'm getting close, Karen Porter, Stephanie Munoz, Sea Reddy, and the last one is Justine Burt. Starting with Jolie Kemp, and the rest of you are welcome to come sit down in the front and be ready to go. Greetings. Jolie Kemp: Hi. Hi, everyone. My name is Jolie Kemp. I graduated from Castilleja in June of this year, and I'm about to head off to college, attending Dartmouth this fall in New Hampshire. I just wanted to talk briefly about my experience at Castilleja, especially as someone who has lived in Palo Alto for her entire life. It's been a great and long 7 years. Some of the amazing opportunities that Castilleja has given me include 7 years of training in a foreign language, a chance to travel to India and form bonds with girls there who are my own age, and an ability for me to help shape school policy, and so much more. I walk away from Casti a confident and intellectually curious TRANSCRIPT Page 4 of 62 City Council Meeting Final Transcript: 8/21/17 person, ready to take on my next chapter. As I said before, I have lived in Palo Alto my whole life, just in the Midtown neighborhood. I have a brother who is currently a sophomore at Paly and a sister in 5th grade at Ohlone. This is actually not my first time here speaking to the City Council. In my sophomore year, I came here as part of the Palo Alto Youth Council (PAYC) to present our year's work. PAYC really gave me an opportunity to get involved and make a difference in my local community my sophomore through senior years. I found that almost every other Casti student gives back in some shape or form to the local community, whether they volunteer at the Brentwood Academy in East Palo Alto, work at their local synagogue, or mentor kids at a tutoring center. In short, Castilleja really does care about being present and positive contributors to the Palo Alto community. As it relates to expanding Castilleja, there is no doubt in my mind that it would make a very positive contribution to students and to the quality of life at school. The small class sizes have really allowed me to thrive. I find myself participating frequently and developing close relationships with teachers and peers. However, when you're only in a class of 56 students—that was our senior class this year— there are certainly drawbacks. Certain history and science electives cannot be offered if there are only two or three students interested in a class. The same goes for APs like econ or environmental science or psychology. The same is even true for many sports. I've played varsity softball all 4 years, and we have struggled to form a varsity team each year. That is difficult and frustrating for students who really want to play and really want to participate in all of these different activities. It's hard to specialize if there aren't electives or higher-level courses available in these areas. I think it's vital that students have the opportunity to pursue a wide range of extra-curriculars and subjects. This is not something we can currently do at the number we're at right now. When it comes to Castilleja expansion in the Palo Alto community, I've already talked about how Casti students give back. Adding 15 more students per grade also means more students getting involved with the Palo Alto community and the surrounding areas. Beyond that, I think it's about fit. Not every girl can thrive in a large, co-educational environment like a JLS or a Paly. I know I wouldn't have, and that's why I chose to attend Casti. As I would like to say and what I learned from PAYC is that it's great when you have a diversity of educational backgrounds. You really get to talk to people and share experiences to really make this great improvement in the community. I would just say let's give more girls in our community a chance to share in the great experience that I've had at Castilleja. Thank you. Vice Mayor Kniss: Thanks very much for coming. Next speaker is Heather, and you say your last name. Heather Linebarger: Heather Linebarger. I've been a Palo Alto resident for 18 years, a physician at the Palo Alto Medical Foundation for the last 15, and TRANSCRIPT Page 5 of 62 City Council Meeting Final Transcript: 8/21/17 a homeowner in College Terrace for the last 10. I just want to speak in support of and give my thanks to the new College Terrace Market, which has been a great addition to my neighborhood. I'm going to give you quickly my top three. Number one, Isabella's eggplant rollatini is delicious. Wrapped up with goat cheese, marinara, baked, breaded. I eat this like three times a week. Number two, the salad bar is keeping me from getting scurvy, which is really important as a medical need. Before, I would have to drive down El Camino and wait to turn left at the light to get to Molly Stone's. Now that I can pull right into the College Terrace Market, I can get my fresh produce and vegetables there. Plus, I don't have to face the creepy, singing, plaster vegetables at Molly Stone's anymore. Number three, they have a wonderful ice cream bar. Their scoops and cups of ice cream are only 2.50. Because College Terrace Market is located right in my neighborhood, I can actually walk there with my dog, which defrays some of the calorie and fat intake from eating the ice cream in the first place. If I get in my car and drive to somewhere else like Tin Pot, that's completely defeated. I just want to express that this has been a wonderful addition to our neighborhood. We hear that some of the prices are high. I have found some are high; some are lower. The quality is definitely better. Love having this as part of the neighborhood. I would love to see extra signage so that other people know where it is. Other people can celebrate in the eggplant rollatini and can help keep this market Thriving. With that, I'm leaving because I have an hour overdue date with a twice-baked potato from the deli. Vice Mayor Kniss: Sounds delicious. Thank you for coming. Karen Porter, greetings. Karen Porter: Greetings, hello again. I'm here to talk about a topic that doesn't quite lend itself to as much humor, which is jet noise. The FAA Phase II response issued last month. I'm disappointed that the response contains little improvement for Palo Alto while including some actions that could further harm the City. The main solution many residents have been seeking is that the FAA establish alternatives to Menlo waypoint to divert some of the 70 percent of SFO arrivals that currently fly over the City. The agency says this is "currently under evaluation." My fear is that a resolution seems questionable and a long way off, if at all. In the meantime, we are stuck indefinitely with a disproportionate share of low-flying, loud jets and accompanying noise and emissions. Therefore, the City absolutely needs to keep the pressure on the FAA to resolve this problem. The FAA's response does contain some potentially helpful proposals, but these are vague and, again, the City needs to keep the pressure on the FAA to follow through. The main proposal the FAA is acting on was pushed by Santa Cruz. This involves moving the Surfer route back to the Big Sur track, which is just slightly to the west. We need to make sure that this does not put Palo Alto in an even worse TRANSCRIPT Page 6 of 62 City Council Meeting Final Transcript: 8/21/17 position. Here are six things that I would ask the City to do now to protect our interests. First, reply to the FAA as soon as possible in consultation with neighboring cities also impacted by Menlo waypoint and with the input of our experts. Second, secure a position on the South Bay Cities' Association Council recently proposed by our local Bay Area Congressional representatives, which can provide criteria for changes that the FAA has requested. Third, secure a position on the proposed temporary commission to address San Jose reverse flow issues. Fourth, obtain a seat on the SFO Roundtable especially since most of the actions the FAA is pursuing came from that body or require additional input from the Roundtable. Fifth, continue emphasizing to Representative Eshoo the unfairness of the status quo. Sixth, hold a community meeting for the Mayor and Council to provide an update and address questions. Thank you very much. Vice Mayor Kniss: Thank you. I should remind people that these are items people are speaking to, which are not on our agenda, so we do not respond. If there is something that Staff can deal with while you're here, they will do so. Just to let you know that's why you don't get a response back from us. Stephanie. Stephanie Munoz: Good evening, City Council. I just heard us being praised as being age friendly. I do think that if the standard of the United States is that older people who have worked all their lives at their (inaudible) carriers or whatever job and they're going to get $858 a month, I don't see how we can be called age friendly if there isn't any place, not one single place, in the whole town where you could rent something like a space on the floor for that amount, for $600. I would like to propose that we could achieve a place for elderly people to be. We have to recognize that we need to take the homeless problem in different chunks at a time. Palo Alto Housing Corporation has done a wonderful job with families with children by making them fit in, by making them acceptable to the neighbors. That has been a big success, but we need something different for older people. I believe if you would change your definition of acceptable density to be in terms of people rather than units, we would be really well advanced. Back in the Maybell day, you were going to have 600 square feet apartments for some lonely, old, retired person. His friends are dead; he spends most of his time with his computer. You could have three times as many if you cut down the space to a third and worked it like a hotel. I have been working up a room with a balcony because it seems to me that what you have in SROs is something—the newest one looks to me like the Maginot Line. It doesn't really look like a lovely place that you'd like to be. I'm thinking if you had every single unit in one of these places with a big, big, room-sized balcony so that you could have a green wall on all sides of the building, that would be not only acceptable to the people but it would be very desirable. It would be also desirable for the people who have to live TRANSCRIPT Page 7 of 62 City Council Meeting Final Transcript: 8/21/17 there. If you would then go a little bit farther and ask yourself—these people can do without cars. They have to because the DMV won't let them. You might consider having a place only for people who can't drive. Because then you could use the space from the cars to house more people Thank you very much. Vice Mayor Kniss: Thank you, Stephanie. Sea Reddy. Last speaker will be Justine Burt unless there are any more cards that have come in. Thanks. Sea Reddy: Good evening, Vice Mayor. Congratulations, Adrian, on upcoming wedding. First things first, I want to commend the City for having the event at Mitchell Park this morning for the eclipse. There were about 1,000 people. Sure, there were some City workers, City Staff that helped have the fun of watching one in a hundred-year event. I want to call a spade a spade. I think the City did a great job. I do also want to take this opportunity to apologize for my outburst last week about the same time about the Baptist Church eviction notices. I did personally mention to Cory that I didn't feel good about the way I communicated my anger. I sincerely apologize. I think Jim's Staff was trying to do something they thought was right. Maybe that isn't the way it needed to be done. I felt that they needed more discretion in dealing with the community. I hope they'll continue. Jim had said even before the meeting that there are other options that are being considered. I sincerely apologize on my own behalf, how I burst with anger. One other thing is that we just heard President Trump talk about the plan in Afghanistan and how he was going to deal with the evil of ISIS. I think it's a wonderful plan. First time recognizing that Pakistan has some elements that are very criminal. Firmly he states that he's going to deal with that. He puts India as a partner to deal with it. Time will tell. I would like you all to consider and support the President on that activity. Thank you. Vice Mayor Kniss: Thank you for coming tonight. Last speaker, Justine Burt. Justine Burt: Good evening, City Council Members. I'm excited to show you 11 pictures from Europe, from our family trip to western Europe this summer. This City has done a great job building out the bicycle infrastructure in town, but there's more that could be done. Those green stripes are nice, but they don't protect bicyclists from drivers. I'm hoping these 11 pictures will inspire you about what to do next. The first city we were in was Copenhagen. One thing you'll notice about most of these pictures is almost nobody is wearing a bike helmet. You'll see why in a minute. In Copenhagen, the bike lanes are wide enough for two bicyclists, a slower lane and then a passing lane. It's 4 inches higher than the roadway. In Copenhagen, the bike lanes are between the pedestrian walkway on the sidewalk and the street traffic, again about 4 inches higher than traffic so distracted drivers can't accidentally drive into a TRANSCRIPT Page 8 of 62 City Council Meeting Final Transcript: 8/21/17 cyclist. Here's another in Copenhagen, again between the road, 4 inches higher than road traffic. In Berlin, the bicycle lanes are generally these dark red bricks. They're separated by either traffic signs or metal bollards. Again, nobody's wearing a bike helmet because they feel safe. In Paris, the bike lane is also about two people wide and 4 inches higher than the roadway. Another picture, on the right you can see the bike lane I felt safest in the entire time. It was a good 6 inches of solid concrete; no one was going to drive into me. Every city we were in, we rented bicycles for the whole day and just rode around the city. I just can't tell you how wonderful it was. In northern Spain where we were, they had the bike lanes two-lane, two-way bicycle traffic on one side. Cars could only park on the other side, and then they had these plastic bollards that kept road traffic from entering into the bike lanes. Bilbao, the same thing, two-lane traffic for the bikes separated from the cars with traffic signs and lights. Finally in Madrid, they had bikes you could check out. They had electric bikes there. Madrid's pretty hilly. Not only did they have a few stations, they had 165 electric bike stations. Since I was studying there in college for a semester, they closed off the downtown, a huge area downtown, to all pedestrian traffic. They don't want people driving. Here's what Europe's doing to protect bicyclists and address the main issue that most of my friends give for why they don't bike around town for errands, why they don't bike to work. "I don't feel safe. I've had to many close calls. I don't do it anymore." Protected bike lanes can help people feel safer and address the fact that transportation is two-thirds of Palo Alto's greenhouse gas emissions. We need to make it safer for people to bike around town. Thank you. Vice Mayor Kniss: Thank you very much. Those were terrific pictures. That's the end of Oral Communications and takes us now to Consent Calendar. Consent Calendar Vice Mayor Kniss: Are there any comments from those of us sitting up here about what's on Consent? If not, I think we have someone—am I right, Jim? James Keene, City Manager: Yes. Vice Mayor Kniss: You've got someone who's going to speak before we get to the Consent Calendar, correct? Beth Minor, City Clerk: You've got the cards up there. Vice Mayor Kniss: We have two people to speak. Bob Wenzlau and Jeannet Kiesling, please come forward. They're going to be speaking on Item Number 8. Hey, Bob. Bob Wenzlau, speaking regarding Agenda Item Number 8: Hey. TRANSCRIPT Page 9 of 62 City Council Meeting Final Transcript: 8/21/17 Vice Mayor Kniss: You're speaking in your official role as head of Neighbors Abroad, correct? Mr. Wenzlau: Yes. My name is Bob Wenzlau. I'm the President of Neighbors Abroad. I'm joined here this evening by Jeannet Kiesling, our future Vice President for Sister City Relations with the City of Heidelberg, Germany. What we wanted to do tonight was just very briefly speak to Heidelberg as you work on this—as you consider this on the Consent Calendar. There's a few things. First, we wanted to get you in the spirit of what we've come to love with Heidelberg through this short video, and then we'll talk just very briefly about the program that we have in mind as we go forward. Vice Mayor Kniss: Thank you. [video shown] Mr. Wenzlau: Sister Cities, isn't this—[foreign language]. Sister Cities are an incredible part of Palo Alto's tradition. We've had our Neighbors Abroad organization for 60 years. Tonight, we're so pleased to be bringing forward to you creating Heidelberg as our seventh Sister City. One of the things that I wanted to—that's sort of befitting of becoming a Sister City. This isn't just a relationship of a month or a year. This is a relationship that's ongoing and something that actually has grown out of probably at least 5 years of work, work on the City, work of our committee. The Neighbors Abroad members that are here, at least you can raise your hands. It's been hard work on Heidelberg's side and on Palo Alto's side. As our Mayor goes to Heidelberg this September and as our Vice Mayor goes to Heidelberg this September and our City Manager on September 28th to celebrate this new relationship, I wanted to at least give one gift and share one gift that we can give. This is a gift made by our Palo Alto High School glass program. What's special about this is—I'll pass it around—it's a redwood tree. We certainly are the tree city. It represents education, but there's something else that's sequestered in this tree. This tree was made by Palo Alto green gas, so it also stands for our story of sustainability because it's fired by the gas that we've created in our offset program. As our Mayor gives this to the Mayor of Heidelberg, there's a story of art, there's a story of culture, there's a story of sustainability. Those are the main tenets of Neighbors Abroad and our Sister City relationships. It's an honor to be here tonight. I wanted Jeannet to spend just a moment touching base on what our program might be, and then we'll allow you your moment. Jeannet Kiesling, speaking regarding Agenda Item Number 8: Thank you very much. I'm very honored to speak tonight here. I'm from Heidelberg. My name's Jeannet. I moved here last year. If Palo Alto wasn't such a great place, I would be really homesick seeing this video. I'm really happy that this event takes place tonight, and I hope that you all vote for Heidelberg. I was TRANSCRIPT Page 10 of 62 City Council Meeting Final Transcript: 8/21/17 there when Heidelberg voted for you. We're really excited. Neighbors Abroad helped to form a program which we hope to start very soon. It will encompass four different areas. We will try to find some kind of business exchange, hopefully get our businesses in Heidelberg and Palo Alto closer together. I should say Silicon Valley and the region around Heidelberg that is sort of the same. As Bob already mentioned, we have a second big issue, which is sustainability. Of course, we have youth exchange and cultural exchange. If you look closely to the City of Heidelberg, cultural exchange will be a wonderful thing to do. I'm delighted to work on both sides. I'm really looking forward to this. Thank you very much. I made this for you by the way. Vice Mayor Kniss: Very nice. Thank you so much. Thank you, both. I think you're probably all headed somewhere for a celebration. Am I right? Mr. Wenzlau: Yes. Vice Mayor Kniss: I think I heard about that from the Gordon Biersch folks this afternoon. Enjoy your celebration. I don't think there are any other comments on the Consent Calendar. Could I have a Motion to approve. Council Member Filseth: So moved. Council Member DuBois: Second. MOTION: Council Member Filseth moved, seconded by Council Member DuBois to approve Agenda Item Numbers 1-8. 1. Resolution 9702 Entitled, “Resolution of the Council of the City of Palo Alto Determining That a Target for the City of Palo Alto Utilities to Procure Energy Storage Systems is not Appropriate due to the Lack of Cost-effective Options.” 2. Approval of a Professional Services Agreement With Electrical Consultants, Inc. in the Amount of $196,330 for the Maybell Electric Substation Protection/Control Upgrade Project Design, and Authorization for the City Manager to Negotiate and Approve Additional Related Services in a Not-to-Exceed Amount of $39,266. 3. Resolution 9703 Entitled, “Resolution of the Council of the City of Palo Alto Approving the Standard Form Verified Emission Reduction (VER) (Carbon Offset) Purchase and Sale Agreement;” and Resolution 9704 Entitled, “Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Approve VER Master Agreements With 3Degrees Group, Inc. and Element Markets, LLC.; and Authorizing the City Manager to Purchase VERs From 3Degrees Group, Inc. and Element TRANSCRIPT Page 11 of 62 City Council Meeting Final Transcript: 8/21/17 Markets, LLC. Under Specified Terms and Conditions During Calendar Years 2017 Through 2026, Inclusive, Subject to Limitations.” 4. Accept the Stanford University Medical Center (SUMC) Annual Report for Fiscal Year 2015-2016 and Find the SUMC Parties in Compliance With the Development Agreement. 5. Approval to Name the new Printmaking Studio at Cubberley Community Center as the Paula Kirkeby Press. 6. 3972, 3980, and 3990 El Camino Real [17PLN-00265]: Approval of a Final Map for a 6.19-acre Site That Includes the Buena Vista Mobile Home Park Site (3980 El Camino Real) and two Adjacent Commercial Properties (3972 and 3990 El Camino Real), for Lot Reconfiguration and Lot Line Removals to Reduce Five Parcels to Three Parcels and Provide Access and Utilities Easements, Subject to Conditions of a Tentative Map Considered by the City Council on August 14, 2017. 7. Approval of a Professional Services Agreement With The Shalleck Collaborative, Inc. for Design Services to Upgrade the City of Palo Alto Council Chambers for a Total Not-to-Exceed Amount of $123,708. 8. Resolution 9705 Entitled, “Resolution of the Council of the City of Palo Alto to Establish a Sister City Relationship Between Heidelberg, Germany and Palo Alto, California, United States.” Vice Mayor Kniss: Would you vote on the board? There's been a Motion and a second. Thank you for being here. You're right; we're really looking forward to that. As somebody told me today, Heidelberg is just the perfect city to be Sister City with because you have so much in common. I certainly wish I spoke German, however. MOTION PASSED: 8-0 Scharff absent Action Items 9. PUBLIC HEARING / QUASI-JUDICIAL: 3877 El Camino Real [14PLN- 00464]: Adoption of a Mitigation Monitoring and Reporting Plan and Approval of a Site and Design Review for the Demolition of the Vacant 5,860 Square-foot Commercial Building and Construction of a new Mixed-use Project. The Project Includes a 4,027 Square-foot Commercial Building and 17 Dwelling Units (Flats and Townhouses). Parking for the Project is Provided in a Basement. The Applicant Also Requests Approval of a Design Enhancement Exception to Allow the Basement to Encroach Into the Required Rear Yard Setback Below TRANSCRIPT Page 12 of 62 City Council Meeting Final Transcript: 8/21/17 Grade. Environmental Assessment: A Mitigated Negative Declaration was Circulated Between March 6, 2017 and April 7, 2017. Both the Planning & Transportation Commission (March 8, 2017) and Architectural Review Board (May 18, 2017) Have Recommended Approval of the Project. Zoning Districts: CS and RM-30 (STAFF REQUESTS THIS ITEM BE CONTINUED TO AUGUST 28, 2017). 10. Approval of a Letter of Intent With Pets In Need to Develop a Financing Study Including Public and Private Financing for a new Animal Shelter Facility and Commit up to $60,000 for the Study, and Outline a Process and Timeline for Negotiating an Operating Agreement and Interim Improvements for the Current Animal Shelter. Vice Mayor Kniss: That is going to take us to Number 10, which is the first thing on our agenda tonight after Consent. Tonight we are going to be talking about the letter of intent with Pets In Need. This is looking for the approval of a letter of intent to develop a financing study including public and private financing for a new animal shelter facility and to commit up to 60,000 for that facility—for the study, not the facility—and outline a process and a timeline for negotiating an operating agreement and interim improvements for the current animal shelter. We're going to have a Staff Report on this. I think this is coming from you, Rob de Geus. Correct? Rob de Geus, Deputy City Manager: That's correct. Thank you … Vice Mayor Kniss: Thank you. Mr. de Geus: … Vice Mayor Kniss. Rob de Geus. I'm reporting from the City Manager's Office. I'm fairly new to the Animal Services program, but it's part of my duties as I transition to the City Manager's Office. I do want to start with just a word of thanks for the many people that have been working on this over many years, Cash Alaee in particular. He's here and may have to help us out. He's done a tremendous amount of work trying to get us to a sustainable path forward for the Animal Services shelter but also are the folks in the City Manager's Office and the Police Department in particular, Animal Control Officers and the Staff at the animal shelter. It's been a long and sometimes challenging journey for all and our partners as well. That makes this an important milestone as we have a letter of intent to discuss tonight. We're not there yet in terms of a sustainable program, but we think this is a really important next step. I have a brief presentation. As Vice Mayor Kniss mentioned, we have the letter of intent for you this evening. We're really asking for two primary things here, that allocation of $60,000 to do a public- private financing study to see what the market will likely pay for should we have a financing campaign for a new shelter, and then outline a process and TRANSCRIPT Page 13 of 62 City Council Meeting Final Transcript: 8/21/17 timeline for negotiating or completing negotiations of an operating agreement. That also includes some amount of improvements to the existing shelter. Just by way of background, this all began in 2012 when Mountain View discontinued their contract with the City of Palo Alto. At that time, efforts were made to increase fundraising and streamline our costs, increased cost recovery. Many people put a lot of effort into that. I think it's fair to say as we reflect on that ultimately we were not successful. The City Auditor did a report in 2015. There were a number of findings, chief of which was the facility inadequacies and the need to consider some alternative models for running the shelter for it to be successful. In fiscal year 2016, the Council directed Staff to seek alternative models for the animal shelter. We put out a Request for Proposals; that took some time. We had to go out twice to solicit enough input on that. In the end, in fiscal year 2017 Pets In Need was selected as the best path forward and the best option, so negotiations began. We really spent most of fiscal year '17 negotiating with Pets In Need to try and come up with an operating agreement and a capital plan for the current facility and a new facility. The City was most interested in an operating agreement, getting someone to help out and manage the shelter. As we went through negotiations, tried to put that operating agreement together, it became clear that Pets In Need really needed to see a path to a new facility. The facility is inadequate. They did not want to come in and don't want to come in unless there is a clear path forward to build a new facility. That's where we turned our attention to this letter of intent that, of course, is just a letter of intent and is not a commitment by the City and the Council. It is a significant step in the direction with the intention to build a new facility with the help of Pets In Need. That brings us to today. In the Staff Report and the letter of intent, should the Council approve it, are the things that will occur next. We'll continue to develop and review preliminary programmatic and conceptual designs for a new animal shelter. We'll conduct a capital fundraising campaign study. We'll complete the draft operations and management agreement with PIN to operate the existing shelter. We will draft an initial proposed funding plan for a new shelter, and we'll evaluate interim capital improvements needed for Pets In Need to begin operations. Should we be successful in the next 6 months in doing those things, we'll be back to the City Council in the January- March timeframe for Council consideration of an operating agreement for Pets In Need to begin managing the shelter. We would also at that time envision initiating environmental review on our proposed capital improvement plan for a new facility. Should Council approve the operating agreement, PIN would then begin preparing to assume operations in the existing shelter. The City would then in collaboration with Pets In Need complete the interim capital improvement projects that are yet to be determined. In March-July, the last quarter of the fiscal year, we envision that Pets In Need would begin operating the shelter, and we would begin our capital campaign for a new shelter in the future. That brings the end to my remarks. This is the title of the Staff Report TRANSCRIPT Page 14 of 62 City Council Meeting Final Transcript: 8/21/17 that represents the Staff recommendation. I did want to mention that the Executive Director of Pets In Need, Al Mollica, is unable to be here today. He did write a letter of support that I have here. I want to read a portion of it. It says should the feasibility study for a capital campaign findings make it evident that the fundraising campaign for a new animal shelter has potential to be successful—we suspect that it will—Pets In Need is prepared to plan and execute a fundraising effort that will give residents of the greater Palo Alto community a state of the art animal shelter that will serve them well for years to come. We're excited about that vision as well. As I conclude, I want to give an opportunity to two of our very important partners, Palo Alto Humane Society and the Friends of Palo Alto Animal Shelter, to say a few words. I'll ask Carole Hyde of the Palo Alto Humane Society to come up first. Vice Mayor Kniss: Welcome. Carole Hyde, Palo Alto Humane Society Executive Director: Vice Mayor Kniss and members of the Council, I'm Carole Hyde. I'm Executive Director of the Palo Alto Humane Society. The Palo Alto Humane Society supports the exploration of a partnership between the City and Pets In Need to manage the animal shelter. We support the proposed feasibility study and hope that you will authorize the requested funding. In crowded Council Chambers 5 years ago, the community made clear its desire to keep an animal shelter in Palo Alto. We believe that a public-private partnership offers a path forward. Over the past several years, Palo Alto Humane Society worked with Friends of the Palo Alto Shelter and with City Staff to develop the RFP with a vision for an animal shelter. Pets In Need shares this vision and responded positively. Collaboration between Palo Alto and Pets In Need could produce a shelter that is a community center, that takes care of Palo Alto's animals, and also provides education for the wellbeing and care of animals and expanded veterinary and spay/neuter services, a vibrant, holistic center that pulls the community and its nonprofit resources together to care for its animals, a great place for people and animals to go. We believe that this idea would be very exciting to the Palo Alto community. In the Council packet, you will find our letter specifying our desired involvement in the project. Palo Alto Humane Society is ready to help and is excited to see how this project develops. Thank you. Vice Mayor Kniss: Thank you very much. Was there somebody else, Rob, you wanted to have speak? Mr. de Geus: The Friends of the Palo Alto Animal Shelter. We have Scottie Zimmerman. Vice Mayor Kniss: Welcome. TRANSCRIPT Page 15 of 62 City Council Meeting Final Transcript: 8/21/17 Scottie Zimmerman, Friends of the Palo Alto Animal Shelter: Hello. I'm Scottie Zimmerman. I'm on the Board of Directors of Friends of the Palo Alto Animal Shelter. We have a weekly booth at the Palo Alto Downtown farmers market near the Post Office on Saturdays if anyone wants to come by. We've been following this for years. It's taken a while. It's great to have it now coming to a point where we can see the light at the end of the tunnel. Some great stuff happening. I'm very pleased with the idea of the feasibility study. I've read their document about how they plan to approach the process, and I'm impressed with who they are and what they've got to do. They will help us a lot with getting our foundation right for fundraising, which is a big thing in the future. That's millions of dollars we're going to be going after for our shelter. I loved all the things Carole had to say. It's going to be a wonderful place. It's going to be a place where families who can't afford vet bills at the posher vets can go to get some veterinary care for low cost, where we'll do spay and neuters all the time for free to get the animals off the streets. No more kittens and puppies that nobody wants. It's just going to be great. We're really pleased with the way Rob described it. I'm pleased. Very sensible, logical steps. We're moving forward. I think it's going to be great. Vice Mayor Kniss: Thank you very much. Was there anyone else, Rob? James Keene, City Manager: If I just might make a comment and then, of course, you may have other speakers who wanted to speak. The Staff Report that Rob and the team put together is a good update on the threads of the different issues that have been involved in this matter. Like a lot of things in our town, it takes a long time to move down the track to resolution of something we want to achieve. This is no different than that. I do think it's worth repeating to put in perspective what we're asking the Council tonight. That is, at its essence, to allow for the expenditure of these funds in the amount of $60,000. We set aside $250,000 originally to support this work in the transition. We had spent an earlier $50,000 doing some schemas for a potential new facility. This would be $60,000 for a total of $110,000. I think it's very clear that, without this component, we're not in a position to move forward or move ahead with Pets In Need. This really is a critical next step down the road. The Staff Report does identify the fact that we have some other follow-up work on the capital plan and those sorts of things that we'll need to do to come back to the Council. Again, this moves us down the road. This doesn't get us the final answers that we need. I would just ask that the Council keep that in perspective; although, I'm sure you'll have a lot of questions and comments. Thanks. Vice Mayor Kniss: Was there anyone else that wanted to speak on this, Beth? Beth Minor, City Clerk: You should have cards. TRANSCRIPT Page 16 of 62 City Council Meeting Final Transcript: 8/21/17 Vice Mayor Kniss: The first card I have is from Judith Fields. You're still here, good. Mary Sylvester: She left. Can I make comments for her? Vice Mayor Kniss: Yes, you can. Just fill out a card. Just come down, and then you can fill out the card. Ms. Sylvester: Hello. My name is Mary Sylvester. Vice Mayor Kniss: You have 3 minutes. Ms. Sylvester: Judith had to leave, and I said I would make comments for both of us. We're both long-term Palo Alto residents and animal advocates. Judith would like it known that for many of us we consider our pets part of our family. For those who live alone, animals can often be their family. Those family members need to be kept front and center in our community's considerations of how we take care of the vulnerable that exist among us. I personally have always thought of our animal shelter as a true jam in the 39 years that I've lived here. I've been proud of this service and that the community I chose home would support this level of care for animals. I brought my Girl Scout troops here. I've enjoyed the education and volunteer opportunities it provides to the community at large. It gives some children their first experience of domestic animals. I'm sorry that Palo Alto can no longer remain the operator of the facility but am encouraged that our City Staff has put so much time and energy into working out a possible compromise where Pets In Need would become the operator and manager of the facility. In the feasibility study, I would like to encourage that services be expanded, that that be researched for rabbits, reptiles, and other animals, that the hours be expanded particularly to weekends, and that we continue to value City employees who have committed their professional lives to this program, many of them, and that they not be asked to work for less than a living wage. Thank you for your time. Vice Mayor Kniss: Thank you, and thank you for speaking on behalf of your friend as well. Second card, Flexer, do I have that right? Let me read the rest. Rita Vrhel and then Polly Ziegler. You're first. Welcome. Reline Flexer: Hello. My name is Ren Flexer. I'm known as the feral cat lady. Just for your understanding, prior to being the person who goes to rescue cats, I was teaching at UC Berkeley, and I was a software engineer. I'm not a bum. I'm glad that the City has understood that the people in Palo Alto want to continue having a shelter in Palo Alto. I agree with thanking the people from Palo Alto Animal Services for their continuing good services, excellent services. Now, I'm not here to discuss if the management of the TRANSCRIPT Page 17 of 62 City Council Meeting Final Transcript: 8/21/17 City shelter should be done by Pets In Need or by the City. This is not my purpose. My purpose is I would like to call your attention to the spay and neuter clinic. I want to make sure that things are spelled out in your documents and that money is allocated for that. By law, a city shelter must have some spay and neuter for the animals that are going to be adopted out. Further than that, the clinic has been open to the general public and had provided real services to the various groups that do rescue like (inaudible) Cat Work, Palo Alto Humane Society, and on occasion Community Cat Rescue. I am a member of all of that. I wish that Joe Hamilton from Companion in Waiting would be here or Deborah Buck who also rescue many cats would be here, but they are both on vacation. I would like the clinic to continue to be operated in such a way that the public could bring their cat for spay and neuter and that rescue group could use your services. Dr. Bonnie Yoff in a letter to (inaudible) a few days ago estimated that at least half of the animals that are brought to the clinic are brought by rescuers or brought by party who bring feral cats. This contribute to the money of the funds for operating the clinic. It's not a drain to the City; it's money added to the clinic. Pets In Need is also aware that cats and dog continue to be spayed and neutered here. That program with the van is not enough to satisfy the high demand in the Mid-Peninsula. Their van situation cannot accommodate our feral traps in van. Thank you for making sure there are funds and precision for the building of the new shelter and for continuing the programs. Thank you. Vice Mayor Kniss: Thank you for coming. Rita Vrhel and then Polly Zeigler. Rita Vrhel: Good evening. I just wanted to follow up on some of the thoughts that have already been stated. I would hope that you would require that the animal shelter stay at its current location. It seems to have worked well in the past, and I think it's a beautiful location and should continue. Second, I would hope that you would continue and expand the low-cost or free neutering clinic not only for Palo Alto residents and their pets or whatever they bring from any other location but also encourage other areas to bring feral cats or dogs and cats that they find so that the idea of just these animals continuing to have puppies and kittens and just have a horrible life is ended. If the shelter is not a no-kill facility, I would hope that would be looked into. Every animal deserves the chance for a good life to, I guess, echo Melinda and Bill Gates. I would like a clear accounting of the City funds that are being spent now during the process and once the transfer to Pets In Need is completed. I think this offers the community and all those who want an animal shelter in Palo Alto to come forward and work towards that goal. That would include volunteering their time and donating money. Thank you. Vice Mayor Kniss: Thank you. Our last speaker is Polly Ziegler. TRANSCRIPT Page 18 of 62 City Council Meeting Final Transcript: 8/21/17 Polly Ziegler: Good evening. I just am probably reiterating a lot of points that have been brought up already. For reference, I am a volunteer for the Homeless Cat Network. I help to feed feral cats so they don't do harm on the bird population as well as trap/neuter/release so that they hopefully do not continue to procreate and take over neighborhoods. Mostly I just wanted to communicate to you that I would hope, wherever this project goes, there would still be a program for feral cats and dogs so that we could keep their population under control and not let it get out of control and make people's lives worse, as Rita mentioned. That's about. That's all I have. Thank you for your time. Vice Mayor Kniss: Thank you all for coming. This is going to bring it back to us for some questions and then for a motion. Just a reminder, we are being asked to allocate $60,000. Would one of you remind me what the current operating budget was that we voted on in June? Mr. de Geus: I don't have that on the top of my head. I can try and find it as you ask other questions. Vice Mayor Kniss: I think it'll give us something to wrap some of our comments around. You have just heard from some of the audience. Quite clearly, if we are going to have a new shelter, there's going to be a funding issue. I would look down at Karen because I remember going through this 4 years ago now, 5 years ago. Council Member Holman: Five. Vice Mayor Kniss: Where we talked about this and where to go next. I think we're at a good spot tonight. We have Pets In Need that is indicating their support. You read the letter about that. Secondly, there seems to be enthusiasm in the community. Thank you, both of you, who came from the supporting groups for the animal shelter. That makes a big difference. We'll probably be calling on you from time to time. I think it's a big undertaking, but one that's an important undertaking. When the time comes, I will certainly support us going forward. Did you get a number? Mr. de Geus: I did get a number, not precise. We operated at a loss at the shelter as one would expect. It's in the neighborhood of $700,000-$800,000. Vice Mayor Kniss: That's our line item? Mr. de Geus: That's the General Fund impact or subsidy to operate the animal shelter. Vice Mayor Kniss: That's the subsidy. What's the overall? TRANSCRIPT Page 19 of 62 City Council Meeting Final Transcript: 8/21/17 Mr. de Geus: The overall is approximately $1.2 million. Vice Mayor Kniss: Of $1.2 million, more than half of that is being subsidized. Correct? Mr. de Geus: Yes. Mr. Keene: More than half, yep. Vice Mayor Kniss: I think it's important for us to have a general sense of just what the situation is. With that, questions from Council. Mr. Filseth? Council Member Filseth: You just want questions now, not Motions? Vice Mayor Kniss: If you want to go with a motion, it's fine. We can talk to a motion as well as we can talk to questions. Council Member Filseth: First, I had a question. One of the discussions is location, should we keep the existing location. Is an animal shelter an authorized use of PF zoning? We have PF land in a few places around the City. Is that something we should consider? Mr. Keene: I'm not sure. It probably is. It's a municipal service. Council Member Filseth: In that case, I'd like to move the Staff recommendation. Council Member Kou: Second. MOTION: Council Member Filseth moved, seconded by Council Member Kou to authorize the City Manager or his designee to sign a Letter of Intent to Pets In Need to commit up to $60,000 for a Capital Campaign Planning Study for a new Animal Shelter and outline a process and timeline, subject to subsequent Council approval, for making interim improvements to the current Animal Shelter, negotiating an operating agreement for the new shelter, and planning for construction and operation of a new shelter. Vice Mayor Kniss: In that case, we have Motion and a second. Would you like to speak to your Motion? Council Member Filseth: Yeah, just briefly. First of all, Pets In Need. I was at Pets In Need last year together with an outside third party, who knows something about animal rescue and shelter operations. We were really impressed. We found Pets In Need to be high energy, knowledgeable, passionate about the field, and well organized. To the extent that Palo Alto is going to look for partners on this and it feels like we need one, we thought TRANSCRIPT Page 20 of 62 City Council Meeting Final Transcript: 8/21/17 they would be great. Palo Alto ought to have an animal shelter. There aren't really any full service ones any more between Burlingame and the South Bay. That's a long way, and Palo Altans are right in the middle of that. I think there ought to be one in the mid-Peninsula, and I think we're the right place for it. A healthy community takes care of its animals. I think we ought to have a shelter. The major challenge obviously is the facility and the capital costs. Nearly all successful shelters do a lot of charitable fundraising and so forth. We don't have all the answers tonight on how we're going to fund this. As we look for those answers, the $60,000 is a good investment on our time. Our mission as government is to serve the community. Just aside from the facility issues, we have an opportunity here to actually increase services to the community without increasing costs and potentially decreasing them somewhat. We don't get a lot of opportunities like that. As costs of everything the City does and the Bay Area does continue to escalate, opportunities like this are going to be rare. We've got one here, and it's an opportunity to do some real good. I wholeheartedly support this. I thank the Staff for what you guys have done and invested in this. I think we're all eagerly waiting to see how this turns out. I hope everybody will support it too. Thanks. Vice Mayor Kniss: Lydia, were you the second on this? Would you like to speak to your second? Council Member Kou: Basically what Council Member Filseth has said. Also, I'm very encouraged because reading the Staff Report Pets In Need actually has the same fundamentals as the City of Palo Alto, and it's a no kill. Also, they have free spay and neuter if I understand that correctly. Female: Not anymore. Council Member Kou: In our Staff Report, that's what it says currently. Will you find out? Mr. Keene: These are the kind of things in the operating agreement that we'll actually negotiate, we'll have to look at. Council Member Kou: I think that's what we're going to be looking at. They also have not only Palo Alto, since we're keeping the facility, but also they were offering it at Redwood City. They have a mobile service that will go around and do the spay and neuter too. Whether there is a charge or not, which is to be determined by this, it's very encouraging that they're going to help with decreasing the population of animals that are not taken care of. As someone said, pets are like our family nowadays. I can't see not taking care of them. Having a location here in Palo Alto is important since the closest ones are going to be in Burlingame and the other, I think, is in San Martin or Santa Teresa. It's pretty far. I am encouraged that we're working towards TRANSCRIPT Page 21 of 62 City Council Meeting Final Transcript: 8/21/17 keeping it. It's time to take this to a next step rather than just letting the facility continue to deteriorate. I'm encouraged by this, and I wholeheartedly support it too. Vice Mayor Kniss: Thank you. I'm not exactly sure when these lights when on. I'm just going to call them in order. Karen, you were next, then Cory, then Tom. If I'm slightly off, my apologies. Council Member Holman: Thank you for the Motion. Very much and heartedly support it. You can see there are a number of people here this evening. It looks like this whole section here, except for a little bit over here is for fiber, is here in support of this action. Vice Mayor Kniss will perhaps recall that in 2015 at the Policy and Services Committee, which I've never seen such an outpouring at a Committee meeting, these chambers were standing room only all the way back to the windows—Rob de Geus is acknowledging that—with people who were absolutely committed to keeping a shelter in Palo Alto. With that kind of outpouring, I'm not really terribly worried about the ability to fundraise in this community for a new animal shelter. I agree with Council Member Filseth that it's not very often that we have a chance to increase services to our residents and, in this case, to our neighboring communities of Los Altos and Los Altos Hills as well and potentially at a reduced cost for what we're providing now while also providing added services and certainly the weekend hours, which Pets In Need will be opening the shelter on Saturdays and Sundays. That's critical because those are really high adoption times. It's also important to keep a shelter here locally because the percentage of pets and owners that get reunited is much greater the closer to home that those activities happen. That's another advantage of keeping the shelter here. I'm very enthused that pets In Need has come forward and is part of the negotiations for this. I have really just one question for the Staff. Council Member Filseth actually asked it in a different manner. The letter of intent mentions in a couple of locations about the site. I can't imagine that there's another site in Palo Alto that would be available for a shelter. I'm just a little bit confused. If Staff could clarify what is intended by that. Mr. Keene: If the Council recalls when we went through the potential design schemes for the site, that analysis looked at, one, what would it take to rebuild on the existing site. Secondly, it said continuity of operations at the existing site might be something that is preferred. What's an alternative? We did look at options on the LATP site, just south of the existing site. We did consider how you could site a facility on that particular site. That's in the same neighborhood. Council Member Holman: That's really helpful to understand that. I appreciate Staff working toward getting this to a conclusion, getting us with a TRANSCRIPT Page 22 of 62 City Council Meeting Final Transcript: 8/21/17 new operator in place. Much gratitude to the Staff that have been operating this the last many years, but it is time that we have to adopt a different model. That time has come. Much appreciation to the Staff for working towards this. Much gratitude for the Friends of the Shelter and Palo Alto Humane Society and the community members who have supported this all along and certainly to Pets In Need for stepping forward, and to the motion this evening, which I will be enthusiastically supporting. Vice Mayor Kniss: (inaudible) Holman and next is Council Member Wolbach, followed by Council Member DuBois. Council Member Wolbach: I'm somewhat less enthusiastic about this. There are, for me, still some open questions, and perhaps those will be able to be resolved this evening. Otherwise, I hope they'll be able to be resolved after this moves forward. I do think this will be moving forward tonight, but I think there are important questions to really think about. First one, there is not clarity in my mind about whether we will be potentially limiting intake of animals, whether that will be a non-negotiable requirement of any agreement, that animal intake is not limited in any way. Mr. de Geus: That's a good question and a difficult one to answer. The goal is to have an open shelter that the public can visit at greater hours, not just be focused on dogs and cats but be focused on the number of animals and different types of animals that we receive today. It comes down to the quality of the facility and capacity of the facility. I think Pets In Need want to be sure that they can handle the capacity that comes in. That's what we're working with them on. They understand our position is to have as close as possible the current services or better for intake of animals. We're working on that. We don't have a conclusion on that just yet, but that'll be part of the operating agreement that will be forthcoming. Council Member Wolbach: Perhaps you can help me understand this better. My understanding is that the current—correct me if I'm wrong. Our current shelter tries to take all sorts of animals. Pets In Need's current model is not as broad of a zoo … Mr. de Geus: I appreciate your bringing up that. Council Member Wolbach: … of possible animal types. I'm curious how they will learn to handle the broader types of animals that we expect in this community. Mr. de Geus: Thank you, Council Member Wolbach. It's a very good question. The model that Pets In Need has in Redwood City is really different than what we're asking for here. They understand that. It's not Pets In Need bringing TRANSCRIPT Page 23 of 62 City Council Meeting Final Transcript: 8/21/17 the Redwood City model to Palo Alto. It's quite different with different expectations, all sorts of different animals. They understand that; that's how we wrote the scope of services when we put it out to bid. That's how they responded to that. They're clear about that. Council Member Wolbach: Did I understand that also spaying and neutering services will not be free or it's not determined yet? Mr. de Geus: It's determined. They'll certainly continue, and we want to expand them. It's a question in the end—a big part of the question is how do we make this pencil out, that the revenues and the expenses are going to work for both Pets In Need and for the City. It's one of those things that we're trying to keep the cost of a contract with Pets In Need to be close to what we're paying for now or less. That's one of the those decisions where the Council may want to limit the fees further, but there will be a cost associated with doing that if we wanted to do that. Council Member Wolbach: I should be clear. Just as a comment before I return to my questions. I absolutely think we need to improve the facilities at our animal shelter to provide good care to the animals and to have a good working environment for the people working there, whether they're City employees or contract out. Improving the facilities there is imperative. For me, the question is—on the facilities side, there's two issues we're addressing. One is the operation; the other is the facilities or as you call it the project. The project to me is very important. The operations, I'm still on the fence. I'm open to seeing how those negotiations can play out. Can you explain to us a little bit more for us and the public what's entailed in the shift that's happened in the strategy since the last time we saw this? As you described it in your Staff Report, a shift from contracting out as a model to a public-private partnership as a model. Can you explain what that shift really entails? What does that mean? Mr. de Geus: The way we're thinking about this is very much where the public is still involved. It's not a turnkey, contract out, "thank you very much we'll check in every few months" sort of thing. It's a public-private partnership where the public piece, the City and our Friends groups and the Palo Alto Humane Society, are very much a part of the program, the thinking about the design of the facility and what we have there, the inclusion of their input and even access to the facility is what we envision ultimately when we design it. It's not quite a public program; it's not quite a private program. It's that balance, that bridge. Council Member Wolbach: Jim, do you want to weigh in on this? TRANSCRIPT Page 24 of 62 City Council Meeting Final Transcript: 8/21/17 Mr. Keene: If I could just add something to that. I think the basic model on the operational side is still the same. We were going to keep animal control services directly provided by the City but contract out the operations of the animal shelter to a not-for-profit Pets In Need. That's the situation. The difference, though, is also driven by one of the factors in looking at a not-for- profit coming in. We had some long discussions about their greater ability to fundraise for capital to be able to provide the shelter. The one difference, as Pets in Need has dove deeper into this, and even consideration of the kinds of expectations we would have about the services, is that they got clearer that their ability to provide 100 percent of the potential capital costs for a new facility was unlikely. That's the purpose of this fundraising study, to see what their capacity is and this expectation that there will be some City role. That being the case, the City is going to actually put capital money in this. We also thought clearly we need to be assured that there is more direct City policy input on design and operational factors in an ongoing way, since we literally have a direct investment in the facility. Council Member Wolbach: If I'm hearing you correctly, the shift from a contract out model to a public-private partnership model actually increases the public participation, our participation as the Council, the Staff. Mr. Keene: That would be accurate. Council Member Wolbach: That's actually very reassuring. Mr. Keene: Of course, it would increase our potential costs too. Council Member Wolbach: There's that, but I understand it now. That's important to understand. That actually increases my confidence in the direction that Staff is recommending in this motion. On a tax measure, this isn't really a question. There are a number of possible sub-regional, regional, state, and local tax measures that are being contemplated for the next couple of years. My guess is that, as important as this is—this is very important as a service for our community—this is not the top priority for our community when it comes to where people are going to sign up on a ballot measure to increase their taxes. As much as I think the fundraising is important, I'm curious to see what Pets In Need and the Friends can do to help us fundraise to improve the facilities where we provide animal services in Palo Alto. I'm very skeptical that this is something we should be sending to the ballot. I could be wrong. We may poll and decide that's different at some point in the future. I saw that mentioned in the Staff Report, and I just want to warn that at least I'm very skeptical about that being a likely revenue source. As far as animal education and community center being contemplated, that sounds like that adds a lot of additional costs. I'm not sure it's necessary. We are working TRANSCRIPT Page 25 of 62 City Council Meeting Final Transcript: 8/21/17 on a new and excellent upgrade to our Children's Museum and Zoo. Unless I hear differently, I don't think that's something that needs to be part of this. Providing the services for animals, whether they're pets or wild or whatever, is our goal. I don't think creating another community center, unless we saw it as being revenue positive and being a revenue source, is the direction we should go. I did see that addressed in the Staff Report, and I don't think that's a priority unless Staff has any other thoughts on that. Mr. de Geus: Again, I'm still coming up to speed on Animal Services and animal shelters. That seems to be the future, new model thinking about animal services, sheltering, that makes it a much more welcoming place to visit and understanding what it means to care for animals. It's something the Palo Alto Humane Society has been doing for many years. We would see them likely to be even housed there and be part of that education program. We would hope that it wouldn't add a lot of costs. That would not be something that we would hope to do. We're seeing that as the cutting edge. Animal shelters are much more like (crosstalk) community center. Council Member Wolbach: I guess I'll just emphasize that if our partners, Pets In Need and the Humane Society, can come up with the funding for it, sure. I don't think it's our top priority for funding on this because we do have the Children's Museum and Zoo. There might be opportunities to increase the relationship between the animal shelter and the Children's Museum and Zoo. Sorry, the Junior Museum and Zoo. I didn't see in our Staff Report—I'm sorry I didn't ask Staff for it in advance of the meeting. On packet page 319, the second page of the letter talks about the facility programs needs assessment that was completed on May 24th. We've already paid Pets In Need $50,000 for this. Was it in our report and I didn't see it? That's something I would have (crosstalk). Mr. de Geus: No, we didn't include their report. It was really something that Pets In Need did. It's preliminary; it's not at all complete in the sense of giving direction of what kind of facility we would build. Council Member Wolbach: Is that something that is available to us in the public? Mr. Keene: Yes. Council Member Wolbach: It is. I'll follow up with Staff offline so we can take a look at that. The greater services and programs that others have alluded to, that are talked about on Packet Page 315, help me understand what are the expanded services and program that we would see from this, that would be better than what we have right now. TRANSCRIPT Page 26 of 62 City Council Meeting Final Transcript: 8/21/17 Mr. de Geus: You'll see that when we come back with the draft operating agreement in greater detail. Some of the things that we've seen with Pets In Need are things like a much more rigorous and robust adoption program with foster families and more activities Downtown and things like that. They're pretty creative in that regard. That's one thing we'll see more of. I'm sure there are other things. It sounds like maybe Council Member Kou had an example. I can provide more details when we come back. Council Member Wolbach: I'll be supportive of this with an Amendment. I'll offer an Amendment that's hopefully friendly. In moving forward with this— let me phrase it shorter. Ask Staff to prioritize as conditions of an agreement not limiting animal intake and making spay and neuter services available for free or minimal cost. That's really two parts there; I'm happy to break them up if one is amenable to the maker and seconder and the other is not. I'm also open to tweaks on the language. Council Member Filseth: I'm not sure exactly what that means and how restrictive that is. I think we're going to negotiate and discuss all that stuff going forward. I assume we'll see that in the operating plan that comes forward, which we'll either thumbs up or thumbs down. I wouldn't feel comfortable locking those in as conditions at this point. I think it's premature, so I'm not going to accept that as a friendly amendment. We can discuss it if you can get a second. Council Member Wolbach: I'll make it as an unfriendly Amendment if I have a second for it. I see none. AMENDMENT: Council Member Wolbach moved, seconded by Council Member XX to add to the Motion, “direct Staff to prioritize as conditions of an agreement, not limiting animal intake and make spay and neuter services free or at a low cost.” AMENDMENT FAILED DUE TO THE LACK OF A SECOND Vice Mayor Kniss: I don't see any support for that. I'm going to presume that the spay and neuter would continue to be provided. Correct? Mr. Keene: I just can't imagine given the variables that are at play and the fact that there are two parties at least negotiating that we're going to bring back a perfect, de facto agreement. We may have a range of issues to discuss with the Council and have more feedback when the time comes. Council Member Wolbach: I will simply end my comments with a warning that if those aren't included, I would expect less community support for this agreement when it comes forward again. TRANSCRIPT Page 27 of 62 City Council Meeting Final Transcript: 8/21/17 Vice Mayor Kniss: Council Member DuBois. Council Member DuBois: Just quickly here. I support the Motion. I do think we need to accelerate the process. It's been a while since this has come to us. I just want Staff to know that I'd definitely like to see it move a little quicker if we can. A quick question. Don't Friend groups usually conduct the capital fundraising on their own without really City participation? Are we getting more involved here than is normal or is this typical? Mr. de Geus: Thank you for the question, Council Member DuBois. I don't know if it's typical; everyone's different. We work with a lot of different Friends group. Depending on how they're coming to the table, sometimes we've helped pay, sometimes it's 50/50. Other times—you're right—the Friends group does do the study initially themselves. It really depends on the situation and circumstances. Council Member DuBois: I agree with Council Member Wolbach that I don't really see this as an item to be put on as a tax in front of voters. I do think we have a lot of other large issues like the rail grade separation, transportation funding, a potential business tax. We should look for other ways to help fund this. The Senior Center building on Bryant Street, the City contributed to their capital campaign. This would be another City facility and City land. When the time is right, if we can help contribute, maybe even in the form of a matching challenge or something, I definitely think the City should participate. I'm just not sure putting something on the ballot is the right way to go. That'll be a future discussion. I support the Motion as it is today. I do appreciate Pets In Need for working with us on this. Hopefully, we can bring it to a conclusion. Vice Mayor Kniss: I'd like to say a couple of things before we actually vote. One is I've just googled where the animal shelters are. It looks to me as though between Burlingame and San Jose there aren't any other shelters. Am I correct? If somebody knows, you … Female: There's a shelter in Santa Clara, which is Silicon Valley Animal Control. Vice Mayor Kniss: In southern Santa Clara? Female: In northern Santa Clara. In the city of Santa Clara. Vice Mayor Kniss: In the City of Santa Clara. Thank you. It's a long way between those two. With today's traffic, it's even a longer way. I think there are any number of good ways to look at supporting this. Somebody said earlier pets are a part of your family. Dreadful to say, but in some families TRANSCRIPT Page 28 of 62 City Council Meeting Final Transcript: 8/21/17 pets have more value than anyone else. Look at Leona Helmsley who left— what—$7 or $8 million to her dog, which was pretty impressive. Council Member Filseth: She'd make a great fundraiser. Vice Mayor Kniss: She'd make a great fundraiser, exactly. As a community— Council Member Holman would agree—we greatly value our pets, but also how we treat our pets and how we view them is a part of our community. I would like to suggest adding one thing to the motion, a very friendly amendment. I would like to consider asking the Mayor, who's not here tonight—even better— if he would appoint an ad hoc committee of three of the City Council Members in order to follow this and also perhaps get into the fundraising aspect of it. Council Member Filseth: I'll accept that. Vice Mayor Kniss: Okay with you, Lydia? The maker accepted it. Council Member Kou: The function of the ad hoc is to oversee the efforts. I just don't want to have more committees included. AMENDMENT: Vice Mayor Kniss moved, seconded by Council Member XX to add to the Motion, “consider asking the Mayor to appoint a City Council ad hoc committee to oversee this effort and potentially be involved in possible fundraising efforts.” Vice Mayor Kniss: This is ad hoc, so it will be quick and easy, but I think it will support any fundraising efforts that go on. This is going to take a lot of fundraising. This is not an expensive—at least this morning we had a discussion about perhaps putting out $5-$10 million. Not inconsequential. I would hope we could support this. Council Member Filseth: Can I make a suggestion on the—would you consider "support this effort" as opposed to "oversee this effort"? Vice Mayor Kniss: It's fine. Whatever word fits in there. My intent … Council Member Filseth: I don't want to imply that this entity is in control of the whole process. Council Member Kou: I think that's my main concern. Vice Mayor Kniss: This is a supporting group. I know what we will do is meet with all of you who are here, which I have done before. It's really important that you have a group that you can interact with and that we begin to take some real responsibility for actually building this facility. I don't think it will be easy, but I think it can be done. That's what's really important. I'm TRANSCRIPT Page 29 of 62 City Council Meeting Final Transcript: 8/21/17 delighted we're going forth with this. It's been a long time. As we said earlier, it's been 5 years. While the number of people aren't here tonight that have been a couple of other times, I know this community is enormously enthused and absolutely will come to the fore when we begin to put this together and to fundraise. Thank all of you for being here tonight from the pet standpoint. With that, could we vote on the board? What did I forget? Council Member Holman: My light's on. Vice Mayor Kniss: Sorry, Karen. Council Member Fine. Male: (inaudible) Vice Mayor Kniss: The amendment was, yeah. Council Member Kou: I didn't say anything. Since you changed the overseeing to support, then I will support it. I just don't want this to take longer than is necessary. We need this facility. Vice Mayor Kniss: Hopefully, this will speed it up. Council Member Kou: Thank you. Vice Mayor Kniss: Hopefully. Council Member Kou: Yes, I accept. AMENDMENT RESTATED AND INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “consider asking the Mayor to appoint a City Council ad hoc committee to support this effort and potentially be involved in possible fundraising efforts.” Council Member Holman: I have a question about the Amendment. I appreciate the intention of it, but I don't know what "support this effort" really means. If it's an ad hoc committee, is it going to be Brown acted? Are the efforts of an ad hoc committee going to be conducted in public so that everybody can see what that support is? Involved in potential fundraising effort, what if someone, maybe all of the Council Members, want to help with fundraising but we're not on that committee? It seems like we could be working ultimately at sixes and sevens with each other. I don't know why we're limiting—the Council, I think, is indicating its support for wanting to move this forward. I'm hoping it's going to be an 8-0 vote; at least it's going to be close to that. I'm not understanding what we're getting from this and wondering if actually it's complicating things procedurally. TRANSCRIPT Page 30 of 62 City Council Meeting Final Transcript: 8/21/17 Vice Mayor Kniss: I'll let the maker speak to it as well. I don't see it as complicating things. I see it as putting together enough impetus from us—it's now been 5 years, and we haven't raised any money in 5 years. A group that can have a conversation with those in particular who might be here tonight among others about actually raising funds. I think it should be our responsibility as well as responsibility of Staff. In fact, I think that's the only way it's going to happen. I certainly know that's the way it happened in Milpitas, lots of outside involvement especially on the part of the public. Molly, any problem with an ad hoc group that might meet a very few times? Molly Stump, City Attorney: The Brown Act allows for small committees that consist only of Council Members, that are organized for a short period of time and a discrete purpose. This would fit under that rule to be a non-Brown Act body. I assume that's what was meant by this proposal, by the use of the words ad hoc. No Brown Act. Vice Mayor Kniss: Good. Thanks very much. Mr. Keene: Can I add a comment, Madam Mayor? I appreciate Council Member Holman's comments, but I also think this is a pretty harmless Amendment. You've got a lot of potentials in there. I mean potential fundraising. Two, we're going to—the core work we're initially going to be doing is a fundraising analysis piece of this. I would be really surprised if the ad hoc committee would be diving into that issue until we've gotten that work back. I think there will be some feedback to the Council as a whole. I do think the ad hoc committee—speaking to Council Member DuBois' concern and others about timeliness, if you're going to have a committee, it needs to be ad hoc so we can move right along. Lastly, in one sense, even though you appoint an ad hoc committee, it really doesn't have a lot of power, I would say. Number one, I wouldn't have any hesitation if I thought the ad hoc committee was moving in a direction contrary to the overall direction of the Council to say, "No, we have some other direction." It does provide some representative perspectives on an issue that has some different issues that could actually even help nudge things alone. Vice Mayor Kniss: it's not that I don't think anyone on the Council couldn't meet with potential funders in some way. This identifies at least two or three people on a committee. I'll leave it up to the Mayor to decide who that should be. Council Member Holman: I'm just a little bit concerned about—like I say, I absolutely appreciate the intention. I think that's pretty clear. I'm just a little concerned about us tripping over each other. TRANSCRIPT Page 31 of 62 City Council Meeting Final Transcript: 8/21/17 Vice Mayor Kniss: Do you want me to separate it out so you can vote against it? Would that be better? Council Member Holman: No because I'd like to volunteer for the committee. If we're going to do it, I'd like to be on the committee. I don't think it's the best way to go. Vice Mayor Kniss: We'll hand it on to the Mayor and say, "You've got one member already." You'd be good at it. Council Member DuBois: Just a quick clarification. If any of us want to be involved in fundraising, does this preclude us from doing that? Mr. Keene: Not at all. Vice Mayor Kniss: Go and good luck. Council Member DuBois: It's just the way it's worded, like some subcommittee will be involved in the fundraising. Vice Mayor Kniss: I don't think they're involved in the fundraising. I think they're involved in trying to identify where there are sources. For example, one of the things I said today is I would go to the County right away. I would say, "Is there any way that you could fund us?" There are also some grants that are out there for funding. There are lots of different ways, but I'm not sure Staff doesn't need some support as they go forward with this. We're really talking about a public-private partnership and looking for a way to streamline that at least at the very beginning. MOTION AS AMENDED RESTATED: Council Member Filseth moved, seconded by Council Member Kou to authorize the City Manager or designee to sign a Letter of Intent to Pets In Need to commit up to $60,000 for a Capital Campaign Planning Study for a new Animal Shelter and outline a process and timeline, subject to subsequent Council approval, for making interim improvements to the current Animal Shelter, negotiating an operating agreement for the new shelter, and planning for construction and operation of a new shelter and consider asking the Mayor to appoint a City Council ad hoc committee to support this effort and potentially be involved in possible fundraising efforts. Vice Mayor Kniss: Could I encourage you all to vote? If so, would you vote on the board? Except for Council Member Wolbach, that passes unanimously and with the Mayor missing this evening. MOTION AS AMENDED PASSED: 7-1 Wolbach no, Scharff absent TRANSCRIPT Page 32 of 62 City Council Meeting Final Transcript: 8/21/17 11. Staff, Utilities Advisory Commission, and Policy and Services Committee Recommendation That Council Direct Staff to: (1) Pursue a Municipal Fiber-to-the-Node Network (FTTN) for Fiber and Broadband Expansion; and (2) Expand Wi-Fi to Unserved City Facilities and Discontinue Consideration of City-Provided Wi-Fi in Commercial Areas. Vice Mayor Kniss: That takes us to our last item, which is a work plan for fiber to the premises and wireless network. For those of you who will know what I'm talking about, this is about as déjà vu as any item I can ever think of. This tonight is going to talk about the Staff, UAC, and Policy and Services' recommendation that we pursue a municipal fiber to the node network for fiber and broadband expansion and expand Wi-Fi to unserved City facilities and discontinue consideration of City-provided Wi-Fi in the commercial areas. I see that we have our illustrious group approaching us including Jon Reichental. I imagine you might kick us off. Am I correct? Jonathan Reichental, Director of Information Technology/CIO: You are correct, yes. Vice Mayor Kniss: Thank you. Mr. Reichental: Thank you so much. Thank you, Vice Mayor Kniss and Council Members. My name is Jonathan Reichental. I'm the IT Director. I want to recognize a few folks. We have members of the Citizens Advisory Committee who helped us work through these complex issues of fiber to the home. We have Christine Moe in the audience, Richard Brand, and Bob Harrington. It's great to have their help and the rest of the team too. I want to recognize the core team who did a lot of the hard work behind the scenes at the City. That's Todd Henderson, Jim Fleming right here, Dave Yen, and Josh Wallace. I recognize the importance of the decision tonight and also recognize that for some of you this is the first time we're presenting this. Jim and I have had the pleasure of presenting for multiple times over multiple years, but we want to be sure that you get the thoroughness of this complex topic. There's no more important service that I can provide than being an advisor to all of you and our City Manager. I take tonight's comments and recommendation very seriously. It seems like about 4 years ago that you asked me and the team to start to explore this again. It seems that after several detours we may be coming to the end of the journey and a clear direction is required. We can't continue to exhaust every angle when the economics and the environment have fundamentally changed. As time passes, more of the incumbents will offer gigabit internet, and the City will have extreme difficulty succeeding as a third, fourth, or fifth provider in our community. When we started this effort 4 years ago, there was no AT&T fiber. Comcast was not offering a technology called DOCSIS 3.1, which I'll talk about in a moment. There was no Google TRANSCRIPT Page 33 of 62 City Council Meeting Final Transcript: 8/21/17 Fiber, no Facebook Terragraph, no 5G, no millimeter wave technology, and other innovation. A lot has happened in 4 years. Now, if you fast forward to August 2017, Comcast is now offering 1 gigabit and 2 gigabit service in Palo Alto. That was the DOCSIS technology I was referring to earlier. In fact, this cable offering is so compelling that, according to recent reporting, traditional telcos are concerned about playing catch-up and may lose market share to Comcast. AT&T fiber is coming in January we're told. It's likely they won't need new boxes to be installed around the community. They'll just have to change the tech inside the boxes, so it should happen relatively smoothly without having to go through a significant permitting process. Perhaps this is not without controversy. I've said it many times to many audiences at the City and many of the committees. The future of internet connectivity will increasingly be wireless. However, I always caveat that by saying to have really good wireless, you have to have a ton of fiber. They're not one without the other. You have to have a lot of fiber backhaul. I want to stress that. The future appears to be wireless. Let me give you some data around that. Back in 2013, one in ten American households who accessed the internet did it only wirelessly. Fast forward 3 years to 2016, now one in five Americans, 20 percent of U.S. households, only access the internet wirelessly with a mobile device. That's doubled in 3 years, and we would anticipate to see that continuing. As you know, smartphones dominate how people access the internet, not laptop computers, not desktop computers, smartphones. In homes, Wi-Fi enabled devices are exploding from security cameras to Amazon's Alexa, all wireless. Smart homes, smart cities, wearables, fitness devices, connected cars, the internet of things, next generation of healthcare, it's all going to be wireless. There's a new generation of cellular technology and other wireless called fifth generation. You all know about 4G because most of us use 4G on our phones. 5G is coming; it's not ready yet. The people who are involved in developing it say it won't be until about 2020 until it goes mainstream. However, that's only a couple of years to go. When we talk about wireless, we're not just talking about smartphones. We're talking about something called fixed wireless, accessing the internet from your home through a wireless device. It's kind of fun just to understand the speed here real quick, because I think it gives you some nice background. Most of us use 4G on our smartphones and our tablets. That is approximately 5-12 megabits of download, about 2-5 megabits of upload. The International Telecommunications Union, ITO, has specifications for 5G, 20 gigabits for download and 10 gigabits for uplink. By the way, that's best case scenario. It's probably never going to get that fast in terms of 5G, but that's the best case scenario. If we do some quick math, if you round up 4G speed to 10 megabits, 5G will be 2,000 times faster. That's all you need to remember. In the average home, the average American gets 50 megabits into their home of broadband. FiveG is 400 times faster than that, 400 times faster than the average broadband speed in America. When I was in Dubai last year, Etisalat TRANSCRIPT Page 34 of 62 City Council Meeting Final Transcript: 8/21/17 who is the common carrier there was experimenting with 5G, and they reached speeds of 36 gigabits. That's just really, really fast. The problem is to roll out the next generation of cellular is going to require a lot of small cells, a lot of the cellular devices you're familiar with but in a lot of density. In fact, that's the reason why State Bill 649, which is moving through Sacramento, we're told will likely pass; although, the City is opposed to it with regard to City control. One of the main motivating factors for that is to enable 5G, to have a lot of density of cells. I'll get to the final comments here. Verizon, AT&T, and T-Mobile are all in U.S. tests. As I mentioned in prior meetings, Google who left us may return with a wireless to the home solution. Verizon is currently experimenting with 5G fixed wireless in 11 geographies in the U.S., using urban and suburban settings. AT&T is testing in Austin and Indianapolis. Just to make it international, Turin, Italy, is set to become the first 100 percent 5G community by 2020. These are exciting times for high- speed internet. Now, if you choose Option 2 tonight, to explore the business case or explore the business cases and design options for fiber to the neighborhood—explore only, not build but explore—it's my bet that some form of last mile wireless will be features of several of the options. What I've shared with you tonight is not at odds with our potential wireless future. I would like you to think and consider this information as you debate the City's long-term internet strategy. Thank you for that. Now, I'll just go to the summary of what we'll do tonight. As you can see, there are a number of options. You're going to be selecting one of the fiber expansion options, one through three. After that, we'll discuss two recommendations around wireless. I'm going to hand you over to Jim Fleming, who's going to talk us through those. Thank you. Jim Fleming, Senior Management Analyst, Utilities: Good evening, Vice Mayor Kniss and Council Members. My name is Jim Fleming. I'm a Senior Management Analyst with Utilities. This evening, we'll review recommendations for fiber expansion and City Wi-Fi additions to support high- speed broadband connectivity in Palo Alto. Here's some background. In April and May, Staff presented three fiber expansion options in addition to two wireless recommendations to the Utility Advisory Commission and the Council Policy and Services Committee. Both the UAC and the Policy and Services Committee recommended recommending to the Council pursuit of Option 2, the fiber to the node option, in addition to supporting the wireless recommendations to expand Wi-Fi to unserved City facilities and to discontinue consideration of commercial Wi-Fi. I'll present a brief summary of each option to provide some background and to put these options and recommendations into context. Option 1 is to explore potential funding models to build a municipally owned, Citywide fiber to the premises network based on an open access network model. An open access network is defined as an arrangement in which a network is owned by the City but will be open TRANSCRIPT Page 35 of 62 City Council Meeting Final Transcript: 8/21/17 to multiple internet service providers to offer gigabit speed connectivity and broadband-based services dependent on high speed, high bandwidth networks. The City's 2015 Fiber to the Premises Master Plan indicated that, assuming the network achieves the 72 percent take rate required to positively cash flow the enterprise, the City will require an estimated overall capital investment of approximately $78 million to build and operate a Citywide fiber to the premises network. Take rate is defined as the number of homes passed by the network, that choose to connect and pay a subscription fee. In terms of potential funding models for fiber to the premises and for fiber to the network, a key consideration for network implementation is how to fund both capital construction costs and ongoing operational expenses. Acknowledging the capital and operating costs associated with a full-scale, City-wide buildout will be significant, the City would have to seek outside funding and/or internal subsidies to support construction and startup costs. Potential funding models for construction and startup costs include bond issuances such as General Obligation or Revenue Bonds, use of the Fiber Optic Fund Reserve, and ongoing internal subsidies. Option 2 is a municipally owned fiber to the node network that would bring fiber infrastructure closer to residential neighborhoods and commercial zones for private, last-mile connections to provision of broadband services to homes and businesses. Last-mile technology is the final connectivity leg between the telecommunication service provider and the individual customer premise. A Fiber-to-the-Node Network would enable an incremental approach to City-wide fiber to the premises. The estimated one-time fiber to the node costs are in the range of $12-$15 million, but at this point ongoing operations and maintenance costs are unknown. The recommended action item for Option 2 was to develop a business case for a fiber to the node network for the purpose of providing a platform for Public Safety and Utilities wireless communication in the field, supporting Smart Grid and Smart City applications, and to develop new dark fiber licensing opportunities. Option 2 also includes a recommendation to engage an engineering firm to prepare a preliminary design of a fiber to the node network with an expansion option to build City-wide fiber to the premises. On a parallel path, Staff would reach out to the community to determine interest in fiber to the premises in addition to identifying potential partners and/or service providers and last-mile funding models. A fiber to the node network would provide the City with a phased and economically viable deployment approach to push fiber infrastructure closer to residential neighborhoods and business areas and to create a potential jumping off point to bring fiber to the individual premises, in other words building the last mile. Potential funding models for the last mile include user financing. User financing is an approach that relies on homeowners that pay on a voluntary basis for some or all of the costs to build out the City's existing dark fiber backbone network into residential neighborhoods and commercial areas. Homeowners and businesses would voluntarily finance system buildout costs by paying a one-time, upfront TRANSCRIPT Page 36 of 62 City Council Meeting Final Transcript: 8/21/17 connection fee that could range from several hundred dollars to several thousand dollars. Another potential funding model is to create assessment districts, which may be used to finance new public improvements or other additions to the community. Generally speaking, an assessment district is formed with property owner mail ballot proceedings involving each property that will be assessed in the district. Owners vote yes or no, and the votes are weighted by the assessed amount. Another last-mile approach is to explore the potential for a public-private partnership with a City and a private entity would work together to achieve mutual goals for a fiber to the premises network and complement one another by developing a partnership that could take advantage of each entity's strengths, which may significantly reduce the cost and financial risk of a Citywide buildout in a competitive market. Option 3 is to pause municipal fiber to the premises work and increase transparency and predictability for internet service providers. This would involve identifying additional resources to streamline third-party network upgrades where feasible, for example, permit inspection processes and also make available useful information about City assets and facilitate access to City infrastructure. For example, public rights-of-way, utility poles, utility routes, conduit and real estate, and also to streamline and publicize local processes. There are two Staff recommendations for wireless. The first recommendation is to expand Wi-Fi to unserved City facilities. The expansion of Wi-Fi technology at unserved City facility and public areas was evaluated by the Community Services Department. Most City facilities already have Wi-Fi access. The areas of the City where the Community Services Department recommends Wi- Fi deployment are at common areas in City facilities such as Cubberley, Lucie Stern, the golf course pro shop and café, and Lytton Plaza. A high-level cost estimate for the recommended sites is $165,000 for installation and $6,200 for monthly recurring charges. Funding for the project is available in the fiscal year 2017-2018 operation and capital budgets for the Fiber Fund. The monthly recurring charges will be allocated to the respective departments consistent with the City's existing chargeback model. The second wireless recommendation is to discontinue consideration of City Wi-Fi in commercial areas. There is already widespread commercial Wi-Fi coverage in high-traffic commercial areas. There's a lack of demand for City-branded Wi-Fi services. To recap the two recommendations in the Staff Report, Staff, the Utility Advisory Committee, and the Council Policy and Services Committee recommend pursuing Option 2 for fiber to the network and is requesting the Council to direct Staff to develop a business case for a municipal provided fiber to the node network for fiber and broadband expansion including engaging an engineering firm to design a preliminary fiber to the node network with an expansion option to build a Citywide fiber to the premises network and to work to identify potential partners and/or service providers including identifying last-mile funding models. The recommendations for wireless branding are to expand Wi-Fi to unserved City facilities and to discontinue TRANSCRIPT Page 37 of 62 City Council Meeting Final Transcript: 8/21/17 consideration of City-provided Wi-Fi in high-traffic, commercial areas. That concludes my remarks. Mr. Reichental: Thank you, Jim. Thank you very much. If I could, Vice Mayor Kniss, City Manager Jim Keene asked me to add a little bit more insight on Option 2, which we're recommending, about cost and timeline. Of course, cost is something that's unknown at this time, but we can speculate based on prior work. It probably will be in the hundred thousand range; it could be a little bit more with the design elements. We would know that as we proceed through the process. Timeline has two considerations. We've consulted with procurement and, if this was an amendment to an existing contract or a sole source, we could get to the actual work quicker. If procurement says, given the nature of the work, we have to do another RFP, it's lengthier. To go through an RFP to select a vendor and then do the work, we would be returning with an actual set of recommendations and business cases and the various design elements likely by next summer. It's not a trivial exercise to get there, but that's the realistic timeline. Thank you. Vice Mayor Kniss: Thanks. I just want to acknowledge Jim Fleming, who is the first person I went to Kansas City with—I think it was in 2013—to study how we could do this, what Google was doing with it, and so forth. I asked somebody today whatever happened to the fiberhoods that Google was putting in, in Kansas City. Did that ever come to anything or not? Mr. Fleming: Yes. They did build out parts of Kansas City; although, they're a little bit stalled with their so-called pause in the last year. They did build out to some extent in Kansas City and parts of Austin, Texas, and a little bit in Atlanta and in the Raleigh-Durham and Charlotte, North Carolina, area. Vice Mayor Kniss: Interesting. That's 4 years ago now, 5 years ago. With that, we have two people from the public. I have Bob Smith and Richard Brand. Bob Harrington, could I encourage you to say a word or two? Would you be willing? Bob Harrington: Sure. Vice Mayor Kniss: Bob's been involved with this for a long time also as one of the experiments in the Community Center area. What is it now? Eight years ago, 10 years ago? Let's start with Bob Smith. Greetings. Bob Smith: Greetings. Bob Smith, career in Palo Alto. I don't share all of the assumptions that have been common here with the City, just to state that. A couple of assumptions I've been making. One, the amount of bandwidth a family of four in Palo Alto presently needs to get the best of the internet, to be able to access it and get everything that is reasonable for them to be TRANSCRIPT Page 38 of 62 City Council Meeting Final Transcript: 8/21/17 getting is about 150 megabits a second download speed. Comcast today offers speeds over 200; although, most people buy lower priced tiers than that. What that really says is our current incumbent companies are doing a better job, if my assumption is plausible, than we think they are. We keep talking about—fiber has been the constant word. I'm glad we're starting to talk about wireless. The constant word has been the necessity, the utter imperative character of fiber. Fiber is just another method of transmission, like coax, like wireless. I think we've given that too much attention, and we've given recently these high speeds, like a gigabit, too much attention. I don't think the internet really needs it today. It will, but it doesn't today. The other thing that I find myself in disagreement about is the whole idea of a fiber overbuild with existing incumbents, which has been the basic thread for 20 years. We want to build something to compete with the cable company and the phone company. The fact is it may well not be economically possible, bringing to this FTTN, a new letter on the end of that proposal. I don't really see this does much. If we build the thing, we will need somebody to come in and do something for it. We should have that as the focus. Who's going to want to come in and make that kind of investment? The easy part is the FTTN, I think. The hard part is all the things that Google had such a hard time doing in the last several years and the places where the failures will occur. I think you're really headed in the wrong direction with the FTTN. Of course, this is just thinking about it and planning and so on, but you're going to be spending the money on this. In a few months or years, we'll be back here talking about building the thing. I don't have a lot of faith that it's really going to help us. Thank you. Vice Mayor Kniss: Thanks for coming. Richard Brand and then Bob Harrington. Richard Brand: Good evening, Council Members. How much time to I have? This is a very complex issue. Do I have 3 minutes? Vice Mayor Kniss: You have 3 minutes. Mr. Brand. I am a member of the Citizens Advisory Committee, been the member for 3 or 4 years. I think most of you know my credentials in terms of fiber optics. Eric and I worked on fiber optics 15 years ago. We were doing innovative stuff. This is the City of innovation. FTTN stands for fiber to nowhere, and I'll tell you why. I was a technology leader for Nortel Networks after I left National and went on. Fiber optics was my area. I went to the ITUT meetings because Nortel was doing 4G. In fact, they were a leader in 4G until they went bankrupt. Also, I was doing GPON, and now we have XGPON, which is what AT&T is talking about. I agree with Bob, but I disagree with his comment. Fiber media is unlike wireless. Wireless is a shared TRANSCRIPT Page 39 of 62 City Council Meeting Final Transcript: 8/21/17 network. It's like a piece of pie, and you cut up the slices. Soupy Sales got the whole pie in his face. The neighborhoods get the pie sliced up into multiple issues. You say, "I got 100 gigabits of bandwidth." That gets sliced into 1,000 slices, and pretty soon it's limited. Wireless does not do this. I'm talking about either fixed wireless, still shared, or cellular. FiveG, we worked on antennas at Nortel Networks for 5G; the patents were sold off. FiveG has its place, but fiber really is the ultimate solution. Liz, you know this. You've heard this so many times from your husband. The fact is, if we're going to be an innovative, leadership City, we need to push this program. I think Staff has given up. We've had a lot of meetings. I think you're saying fiber to the node is the easy way out. You know what happened? We'd have fiber to the home in Palo Alto if SBC, which became AT&T, went ahead with the projects they did along with Verizon and BellSouth. Verizon did FIOS. It's recognized as the best internet connection in the U.S. AT&T decided—they were sold by their marketing fiber to the node, and then they went XDSL. Now, we know how AT&T is doing with DSL because Comcast is outselling them. Fiber to the node is a dead end. I'm telling you don't let them do this. I don't want to work on fiber to the node. If that's the way we go, then I'm out. Thank you. Vice Mayor Kniss: Thanks, Richard. Bob Harrington. Both Richard and Bob have been on the Advisory Committee for a number of years now. Mr. Harrington: Yes. I'm Bob Harrington. I've been on various advisory committees for fiber since 2001 and started an interest in fiber in 1999 when we had an opportunity to get fiber into our neighborhood as a test. The test was successful. They decided they'd call it a success and stop our fiber access. That hurt. Fiber, in my mind as a non-technically adept guy, is the backhaul. We especially need a ton of backhaul in Palo Alto, California. Is fiber to the node the answer? It makes some sense to me. The part I really like about it is it's affordable. The Fiber Fund was mentioned without the number. The number is north of $25 million now in our reserve. We've got the capital on hand, provided by users. This is not tax money. This isn't any budget from the City. This is money that users have provided to our Fiber Fund enabling us to make some sort of wise investment. Some sort of wise investment is needed. Time is still on our side. Google is likely to come back and want to go from essentially nodes like we might be putting in and maybe out with wireless from there. I wouldn't count on Google, however. Faith in Google being cooperative with the City government is very low ebb. The other providers have the reputation that the industry group of telecommunications is the least liked industry group in America. The companies that are providing services are the least liked companies in America. We need to find some way to get independent of that in Palo Alto. TRANSCRIPT Page 40 of 62 City Council Meeting Final Transcript: 8/21/17 Vice Mayor Kniss: Thanks a lot. Our last speaker, I think, is—is it Mike Francis? Mike Francois: Mike Francois. Vice Mayor Kniss: Do I have the name right? Mr. Francois: Yes. Vice Mayor Kniss: Greetings. Mr. Francois: Hello there. My name is Mike Francois. I work for AT&T. We put in a lot of fiber. In fact, we're doing a lot of San Francisco, San Jose. SBC is pushing it. They have a guy who's pushing cell towers. I'm sure you know about the cell tower thing. Fiber is cheap. It's not as expensive. Copper is a little more forgiving. When you have power outages, the phone still works on the copper line. A piece of fiber like this probably carry 40,000 regular for telephone lines. One cut and all those people are gone. All those people in an emergency are depending on the fiber guy. If you're going to do it yourself, you're going to have to have people on call 24/7 in case they get cut. When the poles get hit or something happens in the ground, they've got to be there. It's small. In other countries, they use bigger fibers, 6 inches round or so. If it's related to any—if you hook up fiber to the node, that's great. It's fine. You get it there fast. Everybody gets all this fast speed. Everybody wants to go faster, faster, faster, faster. The problem is if it's hooked to any cell towers, that's a problem. If you study cell towers, which AT&T is pushing and I work for them, bad thing. The radiation it gives off, you guys have studied it. It is bad. If you're going to be the leader in this, you have too many intelligent people that sit up there and that surround you not to research this. If you're going to be the leader, run a grass-root city, do it the right way. If the radiation is coming off, you don't want it. Make them change the radiation levels. They have gone up. People can communicate more, but the radiation goes up. There's a reason why they keep electricity away from schools. There's a reason why you keep them away from the crowds. Protect yourself. Demand that they do it the right way because they can do it. Thank you. Vice Mayor Kniss: I want to just ask a question or two and then go to the rest of my colleagues. My recollection is we currently have about 42 miles of fiber laid. Am I correct? We laid that in the late '90s. That fund now is, as I think Bob just said, south of $28 million. Mr. Fleming: It's approximately $28 million. Vice Mayor Kniss: We've done well with that, I think. It's made a big difference. The comment I would make is that money, as I recall, can only be TRANSCRIPT Page 41 of 62 City Council Meeting Final Transcript: 8/21/17 used very narrowly. This is not anything we can pull out and put in the General Fund and use for some other expense. As we talk about it tonight, that's one of the things I would keep in mind, what we have on hand. Molly Stump, City Attorney: Just to clarify. This fund is not governed by the narrow constitutional requirements that apply traditionally to the gas and electric funds and the water funds, for example. Because the fiber program is not a utility, the City does not have a monopoly. It's not a resource that citizens are, in fact, required to obtain for basic life, health, and safety. It is not governed by those requirements in that narrow way. The City does have a greater level of flexibility with how to use those funds. Vice Mayor Kniss: Thank you for the clarification. I appreciate it. I see lights from Council Member DuBois, Council Member Filseth, and Council Member Tanaka. I don't know if they're quite in that order, but I think close. Tom. Council Member DuBois: Thanks, and good to see you guys back. It's been a while. A couple of questions. What is the plan to develop the business case for fiber to the node? How are we going to go about doing that? Mr. Fleming: It would include a definition of fiber expansion objectives and the project scope including services and applications the network could support. It would identify business models and the preferred business model including evaluating public-private partnership opportunities; identifying fiber network technologies and the preferred technology, doing cost/benefit analyses, financing options, and return on investment projections. An implementation plan would also be done that would include required operational resources and cost to execute the preferred business model and confirming buy-in from the community. Council Member DuBois: What is the process we would use to create it? Just internally generate it? Mr. Reichental: No. We would want to seek expert advice. We have some ideas internally, and we would solicit a lot of ideas internally, but we would seek a firm that would help us look at options, that would help us explore what has worked in other cities in the United States. We'd add both the advantages and challenges of the Palo Alto community in doing it. Together with the variety of business models would be the different potential designs because they accompany the business models very closely. Council Member DuBois: That's my next question. You call out an engineering firm. Why start with an engineering firm? How soon do we need an engineering firm, I guess, is the question. TRANSCRIPT Page 42 of 62 City Council Meeting Final Transcript: 8/21/17 Mr. Fleming: Kind of chicken and egg. Do the business case and then do a preliminary design based upon the business case. At this point, there are a lot of unknowns in relation to the business case. I think that's the real reason. What problem are we trying to solve here by building a network? We've speculated to some extent that it can improve Public Safety communication. It would perhaps provide a communication platform for Smart Grid and Smart City applications that are coming forward in the future. Also, it would create licensing opportunities for dark fiber perhaps for the cellular industry. We have a basic business model now that works really well. We've got this $28 million reserve, and it would be an opportunity to expand on that. The wireless carriers are going to need fiber for backhaul. That's another aspect of it. Also, the business case would determine is there a legitimate last-mile partnership opportunity. The last mile in a network is the most expensive part to pass individual premises. I'm not sure if that answers your question. Council Member DuBois: I think it gets there. Mr. Reichental: Do you mind if I added a little bit … Council Member DuBois: Sure. Mr. Reichental: … just to what Jim said? Part of doing both the business models and the conceptual designs is to be efficient. As we went through the different committees prior to this, it seemed that doing a business model and coming back, getting some guidance, going away, doing some design, coming back really doubles or extends the effort. It would be really helpful when we come back to you, should you choose this direction, that we can tell you here are the different business models, here are the tradeoffs between the design. Then, we can get a thumbs up or thumbs down on a particular design and go straight for that. Key to this was efficiency. Council Member DuBois: Almost 2 years ago, we approved almost $700,000 for project management work. Is that money still allocated in the budget, still approved? Mr. Reichental: For the individual, for a person for 3 years, yes. We can still use that. Council Member DuBois: That already has Council approval. Mr. Reichental: I clarified last time, yes. Council Member DuBois: We've been hearing about AT&T fiber for a couple of years now. I'm still not sure I can order it. I'm not sure how much it costs. I don't think it's really available. Google got a new CFO who really pulled the TRANSCRIPT Page 43 of 62 City Council Meeting Final Transcript: 8/21/17 company to focus on a lot of its core businesses. This is one of the ones that's been publicly announced, that Google's really shifting its focus. I think when that happened a lot of the competitors also slowed. I think AT&T has dramatically slowed their roll out. They seemed a lot more motivated when Google was coming to Palo Alto. We've discussed before that focusing on speed is kind of a red herring. This isn't really a policy decision about speed. It's really a policy discussion about who owns the physical infrastructure, whether it's public or private. If it's private, if it's owned by a monopolistic company, are we going to continue to have bad customer service or pay exorbitant rates? City-owned infrastructure provides the City an opportunity to help its residents have great service and great pricing. That's really the policy discussion we're focused on. In general, the U.S. is behind a lot of parts of the world as Jonathan mentioned. In the U.S., now over 200 cities have some publicly owned broadband service. Since Google has pulled out, San Francisco and San Jose have both started moving plans for their own municipally owned fiber. There are cities right in California that we can learn from and steal ideas from. Staff's recommending this fiber to the node approach. It will expand our dark fiber network out of just the commercial areas into the residential areas, and then we would, through this business plan process, figure out how we connect to homes through public-private partnership or even exploring the full FTTPs included in the motion. There are a lot of questions about how big that network would be. We talk about the last mile. That's really shorthand. Does FTTN literally stop on major streets a mile from homes? Does it go down streets, and it's really the last 50 feet, which is a much different problem? That's what we need to figure out in the business plan analysis. I do worry that we're still—I don't know—not moving forward quickly enough with an inspired vision on this. I do think we need focus, and we need to start to move quicker if we're going to do this. As I thought about tonight, I boiled it down to four decision points. It echoes what the Staff did, but we maybe can provide a little focus. What business model should we pursue is number one. What are the next steps to really create a fundable strategy and a construction plan? Who should lead the effort, like how do we manage this thing? What can be done to impact construction costs? We did issue an RFI recently. It wasn't clear if we learned anything from that. I hope we can start to leverage information as we go along. It does seem like there's some creative financing options available. That should be a key part of this business plan. We have over $25 million in the fund; most cities don't have that. I think we could probably bond that money and include future revenue for dark fiber in neighborhoods as well as dark fiber to residences and potentially fund most of this without any public money. We're also talking about a lot of Smart Grid projects. It's feasible that utility funds could pay portions of this that would be used for Smart Grid projects. I think we really need some financial expertise applied soon. As I said, when we do this analysis, I'd really like to see some sensitivity analysis. If we spent a TRANSCRIPT Page 44 of 62 City Council Meeting Final Transcript: 8/21/17 little more money to extend deeper into the neighborhoods, what's the ROI on that? I don't think it's going to be an either/or analysis. The Staff Report mentioned $11-$15 million. What would we get if we spent $20 million? Would it be worth it? I think that's an important question. I expressed concerns at Policy and Services; I'll express them again about public outreach and marketplace interest. It was in the report here. I think we should ask the public if they're willing to pay several thousand dollars directly for a connection. I don't know of any city where that's worked. We don't ask residents if they want to pay $5,000 to repave the section of road in front of their house. I think we're going to amortize this somehow. Almost every city has a subscription model. You would pay a monthly fee, and we'd recoup the construction costs. I really urge us to just drop the user financing option and discuss it no further. The other thing with public outreach is we really need to think about that messaging. San Francisco is spending several million dollars just on their communication plan. I'm not suggesting we do that, but that's how important it is. We will get pushback from incumbents. We need to explain the benefits to residents, the benefits to the City. It's a real communications challenge. I do think we should put up some kind of outreach to determine market interest. There are ways we can do that. Until we know what the business model is, I don't think we should be throwing out high price points. I'm very interested in the discussion about revenue models with 5G providers and others. That was the other part missing from the report. This is not just an expense; this is a potential revenue opportunity for the City. A lot of my interest is I think it could be a money-maker for the City the way the dark fiber fund has been. Sorry to talk so long. That was my first two points, the business model and the thing about the funding strategy. The third one was really who should lead the effort. I'm glad to get some of the clarification, reading the Staff Report and looking at an engineering consultant. It really seems to me what we need is a financial and business consultant, almost like a management consultant. Ideally it's somebody who has built a network. Engineering should follow along, but I'm concerned about the business strategy decision. I really think an external consultant could help us here. We authorized that money; it's still there. I think we should move forward and use it. The last point I want to get to is what can be done to reduce costs. Again, 2 years ago, I talked about a dig once/string once ordinance. A lot of the focus was on dig once. I do think we should also look at how we can leverage costs on our City-owned poles. If somebody's stringing fiber, the City could take advantage of that. The real focus of whether it's a large-scale project or small projects is how can we lower our City's cost to put conduit into the neighborhoods. I'd really like to see us complete that project. San Francisco before moving forward passed a micro- trenching ordinance. Again, that dramatically reduces the cost assumptions. I'd really like to see us pursue micro-trenching. The other thing that was very creative was San Francisco passed one of the first laws for multiunit buildings TRANSCRIPT Page 45 of 62 City Council Meeting Final Transcript: 8/21/17 for commercial or residential to allow ISPs to use existing wiring. Some of the incumbents have been using wiring in apartment buildings as a way to keep out competition. San Francisco basically said, "You can't do that." That dramatically lowers the cost of bringing broadband into apartment buildings and office buildings. At a high level, Staff, Policy and Services, UAC, we all agreed that Option 2 was the way to go. I actually emailed a Motion, which I put out there for discussion. I know it's early, but just as a reaction point. It's largely the same as the Staff motion. I'd love to get feedback from Staff. One of the tweaks was in Part A to suggest that we hire a management consultant to develop the business case funding plans and also engage an engineering firm. The second point is word-for-word from the Staff recommendation. The third point was just to return to Council with Ordinances that will lower the City's construction costs. These are "such as," so they're examples. Again, the real focus here is to not hamstring ourselves and have higher construction costs than we need. That's my Motion. Council Member Fine: I'll second that. MOTION: Council Member DuBois moved, seconded by Council Member Fine to direct Staff to: A. Develop a business case for a municipal-provided Fiber-to-the-Node (FTTN) network for fiber and broadband expansion (“Option 2”); engage a management consultant to develop the business case, funding plans, identify potential partners and/or service providers, and high level network design; and engage an engineering firm to design a FTTN network including an expansion option to build a citywide Fiber-to-the- Premises (FTTP) network; and B. Expand Wi-Fi to unserved City facilities and discontinue consideration of City provided Wi-Fi in commercial areas; and C. Expediently return to Council with Ordinances that will lower the City’s FTTN construction costs such as a Dig Once, String Once Ordinance; a Multi-unit housing Ordinance; and a Micro-trenching Ordinance. Council Member DuBois: Thank you. I've talked for quite a while. I hope it's clear. I may ask to talk again if there are questions that come up in the discussion. The only thing I want to say again is we need to also think about the revenue piece of this. This is not just an expense. Vice Mayor Kniss: Thank you. A good start. Adrian, do you want to speak to your second? TRANSCRIPT Page 46 of 62 City Council Meeting Final Transcript: 8/21/17 Council Member Fine: Thank you. As many have mentioned, this is something that's been floating on the City's radar for 10, maybe 20 years now. I think we're at a bit of an inflection point where we have to choose whether to do something or not. I'm supporting this motion because I think Council Member DuBois set it up pretty well in terms of making the business and financial case to figure out if we would do that. I think he highlighted a few of the main areas. There's the business case about what kind of network would we operate, who's going to manage that within the City, how do we pay for it, what revenue opportunities are there. I completely agree there's some kind of topographic problem here about how much delivery we're doing and where. That gets the question of is it just down El Camino or is it really going down little neighborhood roads and what does that mean for folks. Finally, there's some policy stuff around lowering our costs of digging and construction this service as well as who can run their services on it. I think this motion speaks to most of those concerns and will come back to us with another decision point if we want to invest some of this money. I just had a quick sidebar with the Acting Mayor that we have this Fiber Fund sitting there. We would like to use it. This seems like an appropriate purpose for it. A couple of quick questions. I was trying to play devil's advocate with myself. The two questions that came to my mind is, one, how much rush do we have around this versus the incumbents? What's worst case for the City of Palo Alto as an operator here? One, could somebody else come to market? Mr. Reichental: I'll make an attempt at the answer. Comcast does offer gigabit today. We have the pricing on that. I think it's $110 per month if you sign for a year and $120 if you don't have any contract. AT&T tell us they will come in January with their fiber solution. We're anticipating the mobile companies will come with varying speeds, 5G as that starts to roll out about 2020. There will be at least two incumbents offering gigabit within 18 months with a promise of several more 18 months after. The City potentially is a, as I said in my opening comments, third, fourth, or fifth provider at that point. That has inherent risks to it. Council Member Fine: Given some of the comments here too, we either need to act quickly or get out of the market. That speaks to my second question. On Option 3, you had a number of items that we could pursue to make this an easier process for these operators. I don't know if this is the right way of phrasing this. One, why wouldn't we or why haven't we done those streamlining already? Two, if we do decide to go in as our own operator, is there anything—this may be to the City Attorney—we can legally and perhaps morally do to make it harder for our competitors? If we can make it easier for these operators, why haven't we done it? If we can make it easier, can we make it harder? TRANSCRIPT Page 47 of 62 City Council Meeting Final Transcript: 8/21/17 Mr. Fleming: I think what's developed over the last 3, 4 years, particularly when Google decided to enter into this industry, was one of the complaints that the incumbents have is how difficult it is to get access to rights-of-way and pole attachments and permitting and inspections, kind of nuts and bolts stuff. In fact, the recommendation from our consultant, not to just to us but to all cities, is to work a little bit better to streamline processes so it'll incentivize the incumbents to do their upgrades. One of the primary motives that Google had in terms of moving forward was we'll build if you make it not easy for us to build but if you make it less difficult to get access to rights-of- way and poles and so forth. That's the school of thought about it. Right now, our City processes are very good in terms of dealing with this, but there hasn't been any kind of large-scale build. Google would have been a large-scale build. It would have been very, very complicated for a variety of reasons. One in particular in Palo Alto is that we co-own the poles with AT&T, and there would have been a lot of work around making the poles ready to accommodate a new attacher. The expense of that and the time to do that and also a level of disruption in terms of doing all that make-ready work. One number is roughly 30 percent of the poles in Palo Alto would have had to be replaced. A lot of them are in backyard easements. They were too short, and so forth. Think about the amount of disruption that would have occurred to replace those. In terms of our regular City processes, they're fine. The thought is if you want to attract another builder, an over-builder, to come in and take on the incumbents, streamline your processes to some extent to incentivize them to come to your community. That's what Kansas City did. They streamlined their processes, and that's what attracted Google to build in Kansas City. Council Member Fine: The question would be—maybe this is something, if we move forward with this, for the business consultant to look at. If we were to go to the extreme end of that policy, really streamlining it and making it as easy as possible, then figure out what are the benefits and impacts there. With that, I would encourage my colleagues to support this. I may have a few more questions in another round. Vice Mayor Kniss: Thank you. Eric and then Greg Tanaka. Council Member Filseth: Thank you. I actually wanted to ask a question about Option 1, but it's really Option 1 and Option 2. If I understand it right, the difference between Option 2 and Option 1 is 1 builds to the neighborhood, and the other continues on from that point to your house. It's not really a mile. Tom was getting at this. Is it 50 feet, 100 feet, or something like that realistically? Mr. Reichental: it's all over the place. The last mile is sort of a metaphor, like the last part of the network. TRANSCRIPT Page 48 of 62 City Council Meeting Final Transcript: 8/21/17 Council Member Filseth: It could be some distance or it could be pretty short. Mr. Reichental: It could be very close; it could be about a mile or so. Council Member Filseth: If I look at the estimated cost of these, for Option 1 which goes all the way to everybody's house, it's $75 million. Option 2 is maybe $15 million. Am I right in thinking that to get from the last mile is $60 million? Am I reading that right? Mr. Reichental: It's the most expensive piece (crosstalk). Council Member Filseth: That's the cost difference? It's laying fiber for that last mile? Mr. Fleming: The last mile is the most expensive part. Last mile is a term of art. There's aerial construction in some neighborhoods. There's underground construction in others. It would be very different and depends upon the neighborhood and the street conditions and so forth. Council Member Filseth: I don't think anybody is seriously arguing in favor of Option 1, and I think we're probably going to put it completely to bed tonight. The challenge with Option 1, as you point out, there may be much better and more efficient ways of solving the last mile problem than putting in fiber. If we chose to proceed with Option 1, there's a substantial risk that we're going to be left with a $60 million Commodore Amiga, so we're not going to do that. The interesting one to me is Option 2 versus Option 3. We've been discussing what's the motivation to do this. It's not obvious to me; although, with the discussion on this, it's not obvious to me that the City ought to be in the residential broadband business just for the sake of the City being in it. At some level, you look at this and go, "Why would the City want to compete with AT&T and Comcast and all these other folks?" It seems to me it's not so much a reason to be in it as there's a reason to avoid not being in it under some scenarios. If the economics evolve such that it can only support one broadband provider because it's so expensive to lay the infrastructure, only one person can do it and everybody else has to pay rent to them, then the possibility is that the City's broadband infrastructure—we might be beholden for that to a single monopoly, which was not benevolent. Some of the companies we've discussed and some well-known cable companies have developed a well-deserved reputation for not being benevolent. It seems to me that the reason to consider Option 2 is if we think that scenario is a realistic possibility, that's one we want to avoid as a City. If we think that the economics are going to evolve such that there's a half dozen viable competitors to deliver broadband through whatever combination of technologies, then my inclination would be to look pretty seriously at Option 3 if several private companies are vying to deliver high-quality broadband TRANSCRIPT Page 49 of 62 City Council Meeting Final Transcript: 8/21/17 services to Palo Alto residents. There's other stuff that we could do. There are other ways we could use portions of that 28 million, some of which we discussed earlier this evening. That would be my inclination. I like Council Member DuBois' suggestion. It's probably worth spending a little more money and time to see a couple more cards on the table. If we think that there's going to be a half dozen gigabit broadband suppliers, we ought not rule out Option 3. Other than avoiding the non-benevolent monopoly scenario, it isn't obvious to me why—maybe there are other reasons—the City would want to be competing in such a cutthroat market with the private sector. Mr. Reichental: Excellent points. One thing I would say is if you look across the U.S. landscape, most markets have one provider, and then there are others that have two. You don't really see three or four. It's really unusual. Most of America is supplied by two, three tops, major players. One of the dynamics that's worth sharing, that as time passes sometimes get lost, is 4 years ago when I was invited to help explore options here, there was no gigabit offering in Palo Alto. I could sit here and hear the frustration with Council about how can we be the birthplace of Silicon Valley and the heart and not have gigabit. Now, when I sit with you 4 years later, we have two providers that will do it at world-class level. We might have had a third if Google had followed through. The dynamics in my view have changed considerably in 4 years, and certainly we weren't talking about 5G. The debate has to evolve too. I think that's right. Thanks. Council Member Fine: Council Member Tanaka. Council Member Tanaka: I'm finding all this discussion really quite interesting. My basic take is that despite—it's basically that so little has happened despite so much time and so much effort. It's incredible. It's been decades that we've been talking about this. It's been very difficult. In order to move this forward, the first thing we have to figure out is what is our goal. I want to propose a goal for what I think we should do. I think we should try and make sure that Palo Alto has the fastest, cheapest broadband that we possibly can. Most people would probably generally agree with that. I was looking at this PBS article that's fairly recent. It talked about even though (inaudible) was invented in the United States, Americans pay the most in the world for broadband access. That's actually true. I've worked with some colleagues from South Korea or from Hong Kong, and they have blazing fast internet for much, much less. They get almost 10x the amount for maybe half the rate. We're going like, "What's going on?" People say it's because Hong Kong is super dense or because Seoul is super dense. That's partially true, but the main reason why it's super cheap is because of competition. In South Korea, there's not just two ISPs. To my house, there are two ISPs; there's AT&T and Comcast. I just looked it up. Comcast, the fastest I can get is 200 megabit TRANSCRIPT Page 50 of 62 City Council Meeting Final Transcript: 8/21/17 today. Not gigabit, 200 megabit. AT&T, the fastest that goes to my house right now is 50 megabit. To my office which is on El Camino in Palo Alto, there's only one provider, and that's AT&T. That goes 20 megabit. Maybe one day we'll get 1 gigabit, but we're not there yet. I'm talking about today. Maybe next year, it'll just suddenly go to 1 gigabit but don't know. The crux of the issues that we have here—all these options are definitely well considered—is there's not competition. We have a duopoly at best. Depending on where you are—I just happen to live in an old part of Palo Alto, so maybe the wires aren't as good. There's just not much competition versus other parts of the world, which creates incredible competition. The first question is why does South Korea, why does Hong Kong have incredible competition. We have eight to ten—they have a tremendous number of people vying for their business, not just two. That's the fundamental question we should be asking ourselves. Why in Palo Alto do we have one or two competitors versus in other parts of the world they have a ton of competitors. I've actually looked at this issue quite closely. The main driver for this is the concept called open access. What open access means is that the first person to lay the fiber to the house—for this discussion, I'm going to be technology agnostic because it might be fixed wireless, it might be (inaudible) laser, it might be fiber. Who knows what it is, but it doesn't really matter. The basic idea is open access is if you—the person that lays the infrastructure, whatever it might be, basically needs to make it open to other people, so any ISP can use it. That's why in Hong Kong or South Korea you get dozens of competitors. It's because it must be open to anyone. Then comes the question of why the heck would someone do this then? Why would AT&T or Comcast lay the fiber if they have to keep it open to everyone else? There are two reasons. The first reason is they get a subsidy. I actually don't believe that Palo Alto is necessarily really good at laying fiber or maintaining fiber or maintaining the infrastructure. I'm actually a little bit with Council Member Filseth on this. What we're better at is creating a competitive environment that hopefully will encourage a ton of competitors to come in here, hopefully by the dozens, to provide services to our businesses and residents at a really low price. The basic idea of open access is that we have a $28 million Fiber Fund. There's about 20,000 parcels. That works out to be $1,400 per parcel. Let's say we subsidize the installation of some sort of high-speed internet, whatever, fiber, laser, whatever you want to use to parcel. In exchange for this subsidy, to actually subsidize AT&T or Comcast or whoever wants to go there first, they must leave the access open. The way they do it in terms of open access is basically—it's not like some other ISP coming in and using it for free. What happens is there's an auction. Whoever pays the highest gets access. It's not like Comcast or AT&T doesn't get paid for this. They will get paid for it. In fact, they get the highest bid on it. What it means is that there's competition selling it maybe not at the physical layer. Somebody's doing it. They get a subsidy from Palo Alto, maybe from our Fiber Fund. Then, there's TRANSCRIPT Page 51 of 62 City Council Meeting Final Transcript: 8/21/17 competition. That means AT&T or Sonic or some guy in a garage can provide internet service to any Palo Alto resident by just paying that access fee. This is what—if you look at other parts of the world, which has intense competition for internet service, this is what they've done. They've mandated open access. We're blessed here to have 42 miles of fiber, a $28 million Fiber Fund. We can say a condition to getting access to our dark fiber loop, for getting access to a subsidy for laying the high-speed internet to the parcel, you get money, you get access to the node or whatever the nearest access point is. In exchange, you have to keep it open. You have to now enable competitors to come in. I believe if we set up a competitive environment, this will encourage a lot of ISPs to provide services to Palo Alto. It defrays some of their capital costs. What happens with internet access or doing this broadband rollout is that it gets cheaper and cheaper the more people that do it. If 90 percent of the people do it, it gets way cheap. If it's 15 percent, it's pretty expensive. What this does is it acts as a catalyst to get more and more installations of high-speed internet. By doing that, it actually makes it cheaper. The right thing is actually what Council Member Filseth said, which is—I don't know. I think Option 3 is probably the right thing. I don't think we should build or maintain it ourselves. I don't think we're necessarily good at that as a City. It's better to encourage everyone and their uncle to come in as an ISP, some enterprising Stanford student to come in as an ISP provider, and have open access going so that we get this faster and sooner than everyone else at a more economic rate. Despite the fact I do like Option 1 and Option 2 in terms of the basic concept. I just don't think we're going to be very good at it. I don't think it's going to be very cost effective. We should go with what other cities have done that have created really dirt-cheap high-speed internet, which is open access versus us trying to build ourselves. I definitely don't think we should make it harder for people to come in here to provide access to high- speed broadband. I think that rather than us spending more money trying to find a business case, let's use what works. Let's use what Hong Kong has done. Let's use what Seoul has done. Let's use what cities that have been able to get these dirtball low prices for gigabit ethernet going, and let's create real competition. Let's not have a duopoly. Let's not have—I have a monopoly in my office. I have no choice but 20 megabit. That's it unless I do (inaudible) or something funky like that. There's no choice. If we take advantage of the fact that we have this Fiber Fund and 42 miles of fiber and create this open access law, which is similar to what Council Member DuBois is talking about but a little bit more so, where basically you must give physical access to that fiber or whatever that connection is, this creates real competition. This allows just about anyone to be an ISP. I hope my Council Members will take this into consideration. We've had this discussion for decades, ever since I've been in Palo Alto, and I've been here for a while now. People who have been here longer have been telling me about this goal that we've never really achieved. I think the fundamental problem is the business model. I think the open TRANSCRIPT Page 52 of 62 City Council Meeting Final Transcript: 8/21/17 access business model is one we should go with, which is actually kind of Option 3 but maybe a little bit of a spin in terms of—a little bit of what Council Member DuBois talked about, a little bit about what I talked about in terms of subsidizing it. This is the right direction for Palo Alto. This is proven; this has worked. Versus let's try to figure something funky out. I actually like what Council Member Filseth said, but he didn't make a motion yet. I can make a substitute motion too if that … Mr. Keene: Could I make a comment? Vice Mayor Kniss: (inaudible) Karen or Cory and then Karen or Karen and then Cory, one way or the other. Council Member Wolbach: I just heard the City Manager say he wanted to weigh in. I will give him a chance to do that by setting up two questions and then turning those questions over to Staff. The first is how transferrable is the money in the Fiber Fund. Can it be used for other things or must it be used for fiber? Must it be used for telecommunication purposes? That's my first question. Ms. Stump: We have looked at this issue. As I think I stated earlier, the Fiber Fund is not a closed enterprise fund in the same way that the City's other utilities are. We have looked at questions about using those funds on communication-related activities and have found that that meets legal requirements. If there are other proposals, then we would look at those in detail as well. Council Member Wolbach: I ask because Council Member Filseth pointed to there are a lot of things we could use this money on. We mentioned some of them earlier. I'm just not clear on whether the things we talked about earlier tonight were the kinds of things this money could be used for. It sounds like that's an open question. My next question will probably turn it more over to the City Manager. Before an amendment or substitute motion is proposed, would Option 2 preclude the open access business model that Council Member Tanaka just discussed? More importantly, would this motion enable us to explore that or would an amendment be required in order for any further discussion of that business model to be conducted? Mr. Fleming: I'll start. Option 2 would not preclude an open access model. In fact, one of the reasons for the business case is to look at the different types of model including an open access model. Council Member Wolbach: It looks like Staff is huddling on this issue. Here's where I'm coming from. I'm intrigued by—I'm generally supportive of the motion, was planning to support it. I'm intrigued by what Council Member TRANSCRIPT Page 53 of 62 City Council Meeting Final Transcript: 8/21/17 Tanaka just discussed. If that can be fit into this with no amendments, great. I'm curious what Staff's thoughts are in response to what Council Member Tanaka just discussed. Mr. Keene: If I can just jump in. I'm way out of my league here on this. Number one, the Staff's response to Option Number 2 about being open access is a little bit easier to answer since this is a network that we're talking about the City designing itself and providing it. Our ability to set the requirements or how it's going to be used are within our purview. I don't know if you've had a chance to look at the authority that a local entity would have to a private telecom to require open access or whether—there are some companies that may choose to be doing that on their own. I would just wonder to what extent the FCC is really a big player in this, in national policy in the United States in comparison to these other countries. Council Member Wolbach: That's, for me, one of the questions. Would we be able to do less of the FTTN layout but incentivize others to do it and require the open access of whatever technology they lay rather than laying it ourselves, again potentially in pursuit of an open access model or would federal or state law limit our ability to do that, which would then lead us back to the other kinds of FTTN models that we had been previously conceiving of? If there's a way to include a discussion or exploration of open access including checking on what our legal rights are as a local municipality within this motion, that would be interesting, and I'd encourage it. Vice Mayor Kniss: Council Member Filseth and then Tanaka. Council Filseth: That's sort of what I was wondering. I'd like to hear Tom respond to this too. What I was thinking as Greg was talking was Tom's motion is basically to convene an assessment group to go assess technical feasibility and business models for a fiber infrastructure that doesn't go all the way to a home. What Council Member Tanaka has suggested seems to me like a business model. I wonder if there's an avenue, as Cory suggested, which is maybe this is one of the business cases that a consulting team could consider as they look at options like this. You've asked some questions about regulatory environment and so forth that I don't know the answers to. With that end in mind, I agree with Greg that if we can have an environment with multiple and more than one, ideally more than two private entities competing to deliver high-quality broadband, that's the environment that you'd like as opposed to being tied to a single monopoly that you don't have any control over. Your suggestion is it is a monopoly, but we've got control over it, which ends up with the same thing. That's what I was wondering. Greg's going to talk, but I'd like to hear Tom's thoughts on whether those things actually make sense in a larger strategy. TRANSCRIPT Page 54 of 62 City Council Meeting Final Transcript: 8/21/17 Vice Mayor Kniss: Tom, why don't you go first. This is your Motion. Before we get to a substitute or something, do you have a way you could tweak it? Council Member DuBois: This is a very complicated issue. If some of the new Council Members haven't seen some of the reports that were done in the last 2 years, you should probably take a look through those. Open access has definitely been a business model we've been looking at for quite a while. I just want to say I've been trying to order gigabyte fiber for the last 60 minutes. I can't find it anywhere. Comcast has business class service that seems to be the way to go. Sonic has some, but it's very address dependent as far as I can tell where you can get it. Just some responses to some of the comments I heard. Council Member Filseth, the City does have a lot of assets. We own these poles. That's a very valuable asset. I just really think we should figure out how to leverage it to the benefit of the City. The high option one cost was a complete buildout with expensive construction techniques to everywhere. The $10-$15 million for fiber to the node, I'm not sure the difference there at $60 million for the last bit, I think that depends on what kind of coverage we're going to have throughout the City. Open access is one business model among many. I think it's on Staff's radar and would be part of this business case analysis in Option 2. Again, if you look at open access in the U.S., it threatens the incumbents. They're not necessarily going to adopt it. I don't think we can just offer Comcast money to build an open access network for Palo Alto. That would threaten their business in the rest of the United States. We did ask Staff to talk to Google about a subsidized buildout because Google was moving forward with that in Huntsville, Alabama. It is something we've explored. I believe San Francisco is working on a hybrid approach. I think it's basically a franchise model where the city would own the fiber and the conduit. There would be a network management company that would own the electronics and manage ISPs. There would be several ISPs, so it's partially open access. The city would have the ability, if those ISPs don't perform, to replace them with other ISPs. They kind of ensure performance. That's another model that we should explore. I think that could work. It's a way to start down more of an open access path. We have been laying fiber and conduit for some time. That's something the City can do. I think we minimize our risk through this business plan by just having the City lease out that resource, be it on poles or in the ground, and then have these companies compete for consumer business. It takes some creativity, it takes some financial engineering. That's the point of the motion. Let's do that and see what we get. We keep waiting. We keep saying there's all this competition. The competition keeps waiting to see what the City is going to do. Again, we pay far more for far worse bandwidth than most of the world. Council Member Tanaka: In terms of regulatory, this is a pretty simple matter in that what we're saying is for a subsidy and for the fiber access to the Palo TRANSCRIPT Page 55 of 62 City Council Meeting Final Transcript: 8/21/17 Alto fiber, here are the conditions of the contract. It could be done on a parcel- by-parcel basis. Not a gigantic contract just for Comcast or just for AT&T. If Tom DuBois signs up for AT&T, AT&T could get a subsidy to drive that fiber to your house, get the $1,400 for your parcel. In exchange, any other ISP in the future that wants to get access to Tom DuBois' fiber to his house could get access. That's part of this auction process. That's typically how it works. The business model I'm talking about is not a new business model. It's one that cities around the world have been using. We could use a lot of creativity, but let's use a proven business model, one that's proven to get lots of competition. That's the only way we're going to get better service and lower prices. I largely agree with what you have here, except for the fact that if we sink our money in Option 2, extending the fiber, that is not as good as using the money for a subsidy to actually get ISPs to provide fiber to the different parcels. What I'd like to do is offer a friendly amendment that I'd like you to consider. Instead of just Option 2, consider Option 3 and an open access business model. What we want to do here is—the goal should be clear. We want the fastest, cheapest internet in Palo Alto possible. Really the only way we could do it, unless we want to subsidize the hell out of this, is to get competition, to get lots and lots of competition. We've got to make it very easy and very compelling for people to put internet here. One of the easiest ways to do that is to lower the cost of doing it. We have a $28 million Fiber Fund. Let's use that to do some subsidies, incentivize people. If they want our subsidy, if they want access to our fiber, it's got to be open access. What are you saying, Vice Mayor? Vice Mayor Kniss: I said it didn't sound like an amendment to me. Council Member DuBois: Just to be clear, Greg, I don't think we're that far apart. To me, Option 3 is do nothing and enable private … Council Member Tanaka: Not so much do nothing. Council Member DuBois: That's the way it's written. It enables private networks. They have redundant networks right now. They don't work with each other. It's not the same as Hong Kong or Korea. If you look at those structures, they're not multiple private networks. Again, I actually think Option 2 captures what you want, which is to leave open the business case. Whether the subsidy is used for a small ISP to offer service or it's to pay somebody to build a network, part of that business case is who owns that network and how do they work together. I think that's all part of Option 2. Council Member Tanaka: One of the speakers said something; FTTN stands for fiber to nowhere. That's what I worry about, that we build this and, unless an ISP is going to do the last mile to someone's parcel, it's not going to matter. TRANSCRIPT Page 56 of 62 City Council Meeting Final Transcript: 8/21/17 Most open access models I've seen basically requires a direct connection to your house before they get the subsidy. They can't just go halfway and get a subsidy. They have to actually light it up. Council Member DuBois: Right, but they're connecting to their own network all the way. Council Member Tanaka: They could connect to our network. For us, it shouldn't matter who they connect to. What we want is action; we want something to happen. Council Member DuBois: Again, I think we're open to the business model. It does matter which network because AT&T is not going to let some third party use their private network all the way up (crosstalk). Vice Mayor Kniss: Guys, wait a minute. We're debating back and forth here. Tom, are you accepting this suggestion that's been made by Council Member Tanaka? Council Member DuBois: No. I think I'd like to see it as a separate amendment. Vice Mayor Kniss: If not, then you need to make it into—I don't know what you're going to call it, a different motion, a different amendment. That which is in red is not being accepted. Am I correct? Council Member DuBois: Right. I would say that my original motion includes open access, just to be clear. Vice Mayor Kniss: Take that out. Greg, do you want to try something different? Council Member Tanaka: I'll propose that "B" and "C" stay, because those are generally good ideas. I would say that for "A" … Vice Mayor Kniss: This is a new Motion. Council Member Tanaka: We can make it a new Motion, sure. Vice Mayor Kniss: You're making a new Motion? Council Member Tanaka: Yeah. I'll copy "B" and "C" because those are probably good ideas. Option A needs to revolve around open access. It could be Option 2, but it's more likely Option 3. The basic premise here is we use the Fiber Fund to help subsidize the buildout to the last mile, to parcels, as well as the fiber loop to incentivize ISPs to provide high-speed internet to the TRANSCRIPT Page 57 of 62 City Council Meeting Final Transcript: 8/21/17 City. It still includes consultant to develop the business case and funding plan. It still needs all that. The main difference here is that it may not just be a pure Option 2. It may not be doing fiber to the node. It may be just Option 3 plus everything else I said that's on this, on "A." To do fiber to the node for the sake of doing fiber to the node without having an ISP who's going to finish it is like what one of the speakers said, which is fiber to nowhere. That worries me. It means we spend $15 million, and we're like … Vice Mayor Kniss: Greg, get your Motion out because I want to see if there's a second. Is that it there? Council Member Tanaka: I tell you what. Why don't you go to "A" and copy— that's some good language. Let's copy some of the stuff from "A." Let's copy everything from—there you go. It's develop a business case using the Fiber Fund plus the existing fiber to incentivize the ISPs to provide the last-mile connection using an open access business model. The rest of it seems fine to me. It may be parts of Option 2 and parts of Option 3, but the main part of it is to use a proven business model that other cities have done. Mr. Keene: Could I ask a question? I'm trying to help clarify. Vice Mayor Kniss: That's what I'm asking for. Is there a second? Council Member Holman: Jim's maybe going to (inaudible). Mr. Keene: (inaudible) Vice Mayor Kniss: I don't see a second, Greg. Good try, but I don't see a second. AMENDMENT: Council Member Tanaka moved, seconded by Council Member XX to add to the Motion Part A, “and develop a business case including subsidies for Internet Service Providers (ISPs), requiring open access” after “expansion (“Option 2”).” AMENDMENT FAILED DUE TO THE LACK OF A SECOND Council Member Holman: I would second with some clarification. I would have seconded your earlier amendment to Tom's Motion. I wish I could see both the "As" at once. SUBSTITUTE MOTION: Council Member Tanaka moved, seconded by Council Member Holman to direct Staff to: A. Develop a business case using the Fiber Fund and existing fiber to subsidize Internet Service Providers (ISPs) to provide “last mile” TRANSCRIPT Page 58 of 62 City Council Meeting Final Transcript: 8/21/17 connections providing open access, engage a management consultant to develop the business case, funding plans, identify potential partners and/or service providers, and high level network design; and engage an engineering firm to design a Fiber-to-the-Node (FTTN) network including an expansion option to build a citywide Fiber-to-the-Premises (FTTP) network; and B. Expand Wi-Fi to unserved City facilities and discontinue consideration of City provided Wi-Fi in commercial areas; and C. Expediently return to Council with Ordinances that will lower the City’s FTTN construction costs such as a Dig Once, String Once Ordinance; a Multi-unit housing Ordinance; and a Micro-trenching Ordinance. Mr. Keene: Tom's Motion does not—I don't even read it the way it's worded right now as precluding a study of open access as part of the alternatives in a business case. What it does do, of course, is anticipate a fiber to the node approach. Council Member Holman: I think that's what Council Member Tanaka is trying to get away from as a foregone conclusion. Do I understand correctly? Yeah. I did second this as much for discussion as anything else and getting some clarification. If this is going to go, it has some issues in it too. It also references engage an engineering firm to design a fiber to the node network including an expansion option to build a City-wide fiber to the premises network. As Council Member DuBois said earlier, this is really complex and complicated. In the next to last line of Tanaka's substitute motion, if you take out "firm to design a," you just need a network. Take out the FTTN on the next to last line. On the last line, I'm okay with including an expansion option for the FTTP network. That's good. With this, I would second this. Council Member Tanaka: (inaudible) Council Member Holman: "C" needs the FTTN City's construction costs. It might be somebody else's construction costs. The word City's comes out. INCORPORATED INTO THE SUBSTITUTE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to remove from the Motion Part A, “Fiber- to-the-Node (FTTN)” and remove from the Motion Part C, “the City’s FTTN.” Mr. Keene: I'm trying to understand the logic here. The Fiber Fund has $28 million, so roughly this would suggest that we could look at using up to the full $28 million to essentially try to incentivize private companies including the two main ones here to take a subsidy in exchange for making basically their monopoly of the moment open access. That's what the concept is. One, are TRANSCRIPT Page 59 of 62 City Council Meeting Final Transcript: 8/21/17 there a proliferation of American cities who are doing this? I'm just concerned that both FCC regulations and the culture and the way the market has been carved up in this country makes this a challenging situation. We'd be happy to do a little more research on this as an option, even separate from whether this Motion passes and "2" is there. Council Member Tanaka's concern is at this point the fiber to the node direction in Option Number 2 doesn't answer the last mile question and how that's going to be happen. That being said, I think the recommendation on the business case anticipates doing enough analysis that it gives you a better picture as to whether that happens or not. I wouldn't wonder if you—that seems to me, I'm sorry to say, a better next stage motion that even ancillary could ask us to at least look at is there some potential viability to an incentive-based system that would close that last mile. That's sort of what … Vice Mayor Kniss: We have a new Motion. Greg, have you spoken to your motion? Council Member Tanaka: I think I did. We're not the first American city to do this. I think Chattanooga, a few other cities have done this as well. I might be getting that wrong. If you google it, there are a few other cities that have done this. Mr. Keene: Chattanooga spent a whole bunch of money basically building a city. Council Member Tanaka: Maybe not them, but I did read about a few others that have done it. We will not be the first; I know that. Certainly in the world, there are a lot of cities that have done this. Council Member Kniss: Karen, do you want to speak to your second? Council Member Holman: Just a little bit. I appreciate all the work that's been done on this. I don't think we're throwing that out by any means. The Substitute Motion gives a little bit more latitude in what we want to consider than does the original Motion, not limited to but including the option that Council Member Tanaka was proposing and talking about. Mr. Reichental: Can I ask a couple of clarifying questions? One of the concerns I have—one is a point and a question. "A" looks a little bit like work we've already done. We know the answer to it. We've sort of designed a network; it's $78 million. That actually takes us back. We've actually gone out to the market and looked for business partners to operate it too. We didn't get any viable plans for that. I'm concerned that you'd send us off to do something we've done already. The other question I have, just so I understand, is the point that the City would subsidize a company like AT&T to TRANSCRIPT Page 60 of 62 City Council Meeting Final Transcript: 8/21/17 bring high-speed internet to a house that they wouldn't typically be bringing it to, to incentivize them. SUBSTITUTE MOTION AS AMENDED RESTATED: Council Member Tanaka moved, seconded by Council Member Holman to direct Staff to: A. Develop a business case using the Fiber Fund and existing Fiber to subsidize Internet Service Providers (ISPs) to provide “last mile” connections providing open access, engage a management consultant to develop the business case, funding plans, identify potential partners and/or service providers, and high level network design; and engage an engineering firm to design a network including an expansion option to build a citywide Fiber-to-the-Premises (FTTP) network; and B. Expand Wi-Fi to unserved City facilities and discontinue consideration of City provided Wi-Fi in commercial areas; and C. Expediently return to Council with Ordinances that will lower construction costs such as a Dig Once, String Once Ordinance; a Multi- unit housing Ordinance; and a Micro-trenching Ordinance. Vice Mayor Kniss: Unless you want to go on, Jonathan, at this point I think we have sufficient information that I'm going to ask that we vote. We could be debating this for another hour, and it's after 11:00. Council Member Tanaka: Vice Mayor, can I respond to his questions first? Vice Mayor Kniss: The what? Council Member Tanaka: Can I respond to his questions? Vice Mayor Kniss: No. I'm just going to have us vote. Otherwise, we're debating back and forth. With that, would you vote on the board. At this point, you are voting for the substitute motion, which has to be voted on before we can vote on the regular motion. You're now voting on the Substitute Motion. That loses on a 6-2 with Council Members Holman and Tanaka voting yes. With that, the Substitute Motion has failed. SUBSTITUTE MOTION AS AMENDED FAILED: 2-6 Holman, Tanaka yes, Scharff absent Vice Mayor Kniss: Could we vote on the main Motion? You're now voting on the main Motion, which I am not going to read all over again because we've now seen it for about an hour and a half. I think it's time to vote. Once again, this passes on a 6-2 vote. The Mayor is missing, and we have noes from Council Members Tanaka and Holman. Thank you so much. TRANSCRIPT Page 61 of 62 City Council Meeting Final Transcript: 8/21/17 MOTION PASSED: 6-2 Holman, Tanaka no, Scharff absent Vice Mayor Kniss: I know we could have gone on with this for a long time. Many of us have expertise in this, but I think it's time that we move forward in some direction. I know that Jonathan will keep us informed. Greg, I hear your concerns. I know where you would have headed on this. The direction we're headed in is actually going to be—at least it's going to get us in a direction, Jonathan, that will give us a lot more information. Inter-Governmental Legislative Affairs Vice Mayor Kniss: I don't think we have any Intergovernmental Legislative Affairs. Council Member Questions, Comments and Announcements Vice Mayor Kniss: I would just briefly report to you in my other role as Chair of the Bay Area Air Quality Management District that cap and trade passed. I urge you to take a look at it. It was very complicated. Essentially, Air Boards didn't come out ahead on it, which was unfortunate. Any Council Member Questions, Comments, and Announcements? Cory. Council Member Wolbach: Just a couple of comments. It's been alluded to a couple of times recently. There's something we ought to clear up. Obviously, I can only speak for my own position. The question about whether to continue to explore over the next year or so a potential transportation funding mechanism, possibly including some kind of ballot measure. We agreed with Staff that Staff was overloaded and acquiesced to the request to put a citizens advisory committee on hold and put that process on hold. I was myself open to not having a citizens advisory committee but return to Council for discussion about that. I don't think we wanted to kill that discussion. I think that discussion is still open. I look forward to Staff bringing that back when Staff has the bandwidth to do that so it's not too late to still pursue a potential 2018 option for transportation funding. On a separate note. Something else that I'm hoping that we see moving quickly is planning for at least a couple of town halls this year. We've given clear direction over the last couple of years that we'd like to see those planned further in advance than they have been the last couple of years and dispersed, of course, throughout the community. That's come to Policy and Services; it's come to Council. I do look forward to more advanced planning and outreach to the community on our town halls. We had a great start the last couple of years, and I'd like to see them be even more successful this year and the following one. Vice Mayor Kniss: Thank you. Council Member DuBois. TRANSCRIPT Page 62 of 62 City Council Meeting Final Transcript: 8/21/17 Council Member DuBois: Just real quick. Council Member Tanaka, Kou, myself and Marc Berman were at a potluck for peace last night at the JCC's multidenominational dinner. It was a very nice affair; it was well attended. Vice Mayor Kniss: I hadn't realized there was something this morning at Mitchell Park. How many people made it to Mitchell Park for the eclipse? Anybody? We saw it out the window upstairs. That's the best we could do. Council Member Holman: Baylands. Vice Mayor Kniss: Who's got their light on? Karen. Council Member Holman: I went to the Baylands and watched the solar eclipse. Anyway, neither here nor there. Vice Mayor Kniss: With glasses? Council Member Holman: Absolutely with glasses. Vice Mayor Kniss: We couldn't see it with glasses. Council Member Holman: Really? It was really pretty interesting because there were not as many people out there as I'd anticipated. There were a number of people, and people were very generous in sharing their glasses. That was pretty cool. Council Member Wolbach, isn't there a—I guess I'll look to Jim. Isn't there a town hall scheduled? I had one on my calendar. There was one earlier, and then it was canceled. I thought we had one now. James Keene, City Manager: We were targeting one for the 7th or so of September, but that has been canceled. There were conflict issues. Council Member Holman: I guess the only other thing is should we be concerned that the Mayor's missing. You kept saying the Mayor is missing. Vice Mayor Kniss: I'm hoping somebody can find him. I don't think the Mayor would mind me sharing that he's been in South Carolina watching the eclipse. It was part of delivering his son to Duke for college. It was all in the same trip. The last child has left for school, so I'm sure we'll have his undivided attention. Anything else? Thank you all. It's not quite 11:30, but … Adjournment: The meeting was adjourned at 11:13 P.M.