Loading...
HomeMy WebLinkAbout2025-01-13 City Council Summary MinutesCITY COUNCIL SUMMARY MINUTES Page 1 of 18 Regular Meeting January 13, 2025 The City Council of the City of Palo Alto met on this date in the Council Chambers and by virtual teleconference at 5:30 P.M. Present In Person: Burt, Lauing, Lu, Lythcott-Haims, Reckdahl, Stone, Veenker Present Remotely: None. Absent: None. Call to Order Mayor Lauing called the meeting to order. The clerk called the roll with all present. Agenda Changes, Additions and Deletions Ed Shikada, City Manager, communicated there were no changes. Mayor Lauing provided a recap of Council process and guidelines for public comment. Public Comment 1. Helene G. on behalf of 6: Tim H., Aaron H., Andrew H., Shahani T., Tracy F. and Pooja M. (presentation), provided a slide presentation about traffic safety in Palo Alto including pedestrian and cyclist fatality rates, incidents that have occurred in the community, her safety premise, traffic design standards, encouragement of citizen input, her traffic and safety experiences in Palo Alto, intersections that do not meet MUTCD guidelines, issues with rolling curbs, the California Daylighting Law, themes and her asks. 2. Sarit S. on behalf of 5: Deborah G., Sarith H., Estee G., Giora T. and Rotem P., antisemitic comments made by a public commenter at the prior City Council meeting that were called out by Councilmember Stone as hate speech. Her group was disheartened by remarks made by Councilmember Lythcott-Haims at the last HRC meeting expressing doubt as to whether the comments qualified as hate speech. They requested Councilmember Lythcott-Haims issue a public apology to Mayor Lauing, Congregation SUMMARY MINUTES Page 2 of 18 City Council Meeting Summary Minutes: 01/13/2025 Beth Am and the community at large, identify her comments as antisemitism and undergo antisemitism awareness training and meet with Jewish community leaders to understand and address the issues. 3. Ward T. discussed the ongoing construction at Boulware Park requesting the City to hold the contractor accountable to the new end date of February 1, 2025, and hold them liable for liquidated damages that are in the contract if that date is not met. 4. Winter D. wanted clarification about who would qualify for Palo Alto Transitional Housing. 5. Robin M. discussed his shock that Councilmember Lythcott-Haims used time at the last Human Resources Commission meeting that the antisemitic comments made at the prior Council meeting were hate speech. He questioned her ability to live up to the mission of the HRC. 6. Hugh L. concurred with the presentation on traffic safety and design standards. He also wanted to see traffic enforcement by the City. 7. Carol G., producer of 3rd Thursday California Avenue Music Festival, described an upcoming event entitled “Wellness Reset”. She announced the theme for 2025 would be “Local and Live in 2025”. She remarked information could be found at carol@3rdThursday.fun, Instagram or Facebook. 8. Julia Z., freshman at Stanford University and co-founder of the Palo Alto Student Climate Coalition, urged the Council to reaffirm addressing climate change, implement the S/CAP as a top priority for the city and adopt a priority to address the ongoing and future threats extreme heat poses to the community. 9. Mark E. asked for a fair offer for the provide services to clear the drains and provide safe and clean tap water, power to houses and gas. 10. Lisa A. described the duties of public safety dispatchers and asked that they be appropriately compensated. 11. Val P., City of Palo Alto employee, urged Council to recognize the vital role of all departments in the City’s success and invest in them to create a stable, productive workforce with fair wages, affordable healthcare and suitable contracts. 12. Henry E. called on Council to take immediate steps to put aside the plans for downtown and reconsider the plans for the periphery. He offered sustainability urban design as consulting services to address the oncoming crises in wake of the wildfires. 13. Tom H. alleged being declined a position as a paid coach for the City due to retaliation for his critiques of the middle school athletics program. He asked Council to address and SUMMARY MINUTES Page 3 of 18 City Council Meeting Summary Minutes: 01/13/2025 remedy the hiring decision to ensure fair practices and prioritize the best interest of the students. 14. Weifeng P. spoke to support Coach Tom Haxton. He alleged mismanagement of the middle school athletics program by the City. He indicated Chris Roman and Kristen O’Kane needed be held accountable for the blatant retaliation and gross mismanagement. He declared it was up to Council to take immediate action. 15. Oscar H., JLS Middle School student, described how Coach Tom motivated him in his efforts to be a runner and how he managed to unite the team in a unique way. 16. Vinitha K. described how Coach Tom had been an extremely supportive athlete coach. She saw the City’s decision to reject his offer to work with the MSA program as retaliation. 17. Ryan K. echoed the comments of Vinitha K. He opined the team would be different and better with Coach Tom. Council Member Questions, Comments and Announcements Councilmember Lythcott-Haims described how remarks she made at the prior Human Relations Commission meeting created the misimpression that she was indifferent to the hateful words said about Mayor Lauing at the January 6 Council meeting by a member of the public. She apologized to the Mayor and spoke in response to all who were offended by her comment. She condemned the personal attacks made against Mayor Lauing and at prior meetings by a member of the public. She called on all to be civil in dialog about difficult topics and to agree to disagree when a compromised could not be reached. She next welcomed Detective Sean Allen to the role of president of NAACP. Finally, she announced an MLK and Inauguration Eve multifaith community gathering being held at the First United Methodist Church of Palo Alto on the following Sunday at 5:30 PM. Councilmember Burt requested the City Manager provide an update on the hold up on Boulware Park. City Manager Shikada indicated he would be happy to follow up. Mayor Lauing announced that he would be off to the U.S. Mayor's Conference in D.C. the following Wednesday through Sunday night and may not be as fast responding to messages. He was going to do a one-on-one appointment with their new representative, Sam Liccardo, to set the stage on how they could work together. He announced some of the key standing committee assignments. He indicated it was agreed to hold off on probable ad hocs until after the retreat. SUMMARY MINUTES Page 4 of 18 City Council Meeting Summary Minutes: 01/13/2025 Consent Calendar Councilmembers Stone, Burt and Reckdahl requested to pull Agenda Item Number 7. City Manager Shikada recommended Council hear Agenda Item Number 7 be heard immediately after the Consent Calendar and that the mayor suggest members of the public hold comments on that item until it has been specifically called. Mayor Lauing requested members of the public hold comments on that item until it had been specifically called. MOTION: Councilmember Burt moved, seconded by Councilmember Veenker to approve Agenda Item Numbers 1-6, 8-10 and to pull Agenda Item Number 7 off of the consent calendar. MOTION PASSED: 7-0 1. Approval of Minutes from December 9, 2024 and December 16, 2024 Meetings 2. Approval of recommendations on process for the priority setting 2025 Council Annual Retreat as recommended by the Policy & Services Committee 3. Review and Acceptance of Annual Report on Development Impact Fees for Fiscal Year 2024 and Adoption of a Resolution Making Statutory Findings for all Development Impact and In-Lieu Fee Funds; CEQA status - Not a Project. 4. Adoption of a Resolution Extending the City Manager’s Authority to Execute Transactions Under Master Renewable Energy Certificate Agreements with Pre- Qualified Suppliers in an Amount Not-to-Exceed $5,000,000 per Year During Calendar Years 2025-2030; CEQA Status: Not a project 5. Approval of Contract Amendment #5 to Contract C17164727 with Professional Account Management, LLC, dba Duncan Solutions, for Parking Enforcement in the Amount of $132,000 to extend the term for one additional year; CEQA Status - Not a Project 6. Approval of Contract Amendment Number 2 to Contract Number C23183770 with Townsend Public Affairs, Inc. to Extend Term for an Additional Year of Service (the second of four (4) annual options to renew) for State and Federal Legislative Advocacy and Grant Consulting and Compliance Services; CEQA Status - Not a Project 7. Retail Committee Recommendation to: (1) Revise the Fiscal Year 2025 Budget Appropriation at Mid-Year to Enhance Cleanliness Efforts in Both Downtowns; (2) Revise the Ongoing Parklet Regulations to Require Consent to Expand Beyond Own Frontage; and (3) Refer Staff to Follow-up on Revising the Temporary Use Zoning Rules and SUMMARY MINUTES Page 5 of 18 City Council Meeting Summary Minutes: 01/13/2025 Exploring Improvements to Downtown Infrastructure and Experience Pulled from Consent Calendar 8. SECOND READING: Ordinance of the Council of the City of Palo Alto Amending Sections of Title 2 (Administrative Code) of the Palo Alto Municipal Code to Move the Appointment of Members to the Public Art Commission, Human Relations Commission, and Parks and Recreation Commission to November of Each Year and Extending Existing Terms Accordingly (FIRST READING: December 2, 2024 PASSED 7-0) 9. SECOND READING: Adoption of an Ordinance Approving a Plan for Park Improvements at the City’s Baylands for Santa Clara Valley Water District's Palo Alto Flood Basin Tide Gate Structure Phase 1: Seismic: Retrofit and Rehabilitation Project; Approval of Addendum to the Mitigated Negative Declaration for the Project Prepared by Santa Clara Valley Water District (SCH # 2020090237). (FIRST READING: December 9, 2024 PASSED 7-0) 10. SECOND READING: Adoption of Interim Ordinance of the Council of the City of Palo Alto Amending Various Chapters of Title 16 (Building Regulations) and Title 18 (Zoning) and Title 21 (Subdivisions and Other Divisions of Land) of the Palo Alto Municipal Code to Implement Recent State Housing Laws (FIRST READING: December 16, 2024 PASSED 7-0) City Manager Comments City Manager Shikada provided a slide presentation about PAFD deployment to SoCal fires, emergency preparedness and safety reminders, volunteer opportunities and upcoming events, Eleanor Pardee park restroom survey and notable tentative upcoming Council items. Action Items 7. Retail Committee Recommendation to: (1) Revise the Fiscal Year 2025 Budget Appropriation at Mid-Year to Enhance Cleanliness Efforts in Both Downtowns; (2) Revise the Ongoing Parklet Regulations to Require Consent to Expand Beyond Own Frontage; and (3) Refer Staff to Follow-up on Revising the Temporary Use Zoning Rules and Exploring Improvements to Downtown Infrastructure and Experience Steve Guagliardo, Assistant to the City Manager, offered context to the item being discussed and Council direction being sought. Councilmember Lythcott-Haims recalled that the Retail Committee was formed in order to determine how to best revitalize the City’s downtown. Their key learnings boiled down to making the downtown cleaner and more attractive, filling the retail vacancies with pop-up businesses to operate in the interim as longer-term tenants are found and determining whether SUMMARY MINUTES Page 6 of 18 City Council Meeting Summary Minutes: 01/13/2025 parklets that extend beyond the frontage of the business in front of them might be harming the vitality of that neighboring business. She opined it was logical they needed to allocate more at the mid-year to enhance cleanliness efforts. She advised there was an appetite for a pilot program to figure out a set of rules to complement or augment the temporary use permit to support the notion of pop-up businesses to help bring vitality to storefronts and windows that are currently empty or and papered over. She discussed how retailers were struggling with parklets encroaching into their frontage bringing them to the point of recommending the owner of the adjacent frontage ought to be able to consent to whether the frontage in front of their store is used by an adjacent restaurant. Councilmember Burt recollected having expressed concern in advance of the November meeting that the panel did not include any food and beverage retailers. He clarified that they did not hear from the retailers that the parklets were obstructing their storefronts but from property owners and a single retailer who was concerned that parklets could obstruct the storefront who made those assertions. One argument presented was about obstruction of storefronts and signage. He made the point that an SUV parked in front of a business provided a greater obstruction than people sitting at a table without a wall or ceiling. Another argument made was the property’s owner belief that they should have control over what happened on the public street in front of their property. He thought the degree this should be a City community interest decision versus what was a private property right was a legitimate discussion to have. He looked forward help from the city attorney in clarifying that from a legal standpoint. Repeated claims by property owners that the tables on a platform in front of properties adjacent to the restaurant preventing new retailers from coming in was compelling. It had been asserted that there were 20 vacancies on University and wanted that to be verified by staff. He added none of them were in front of parklets adjacent to a food and beverage house. Out of the six parklets, there were no vacancies. He was interested in whether they would grandfather in the existing ones and not allowing additional proliferation to address the apprehension that they might grow and what would be the timeframe. He wondered if they would want to align the longevity to the anticipated reconstruction of the streetscape. He mentioned the significant financial investment restaurants had made in anticipation that this would be part of the permanent parklet program and they were looking at changing it months after it was enacted. Vice Mayor Veenker wanted to know what would happen if there were two restaurants next door. Mr. Guagliardo pointed out a couple of examples of people that worked well together findings solutions to that situation. Ms. Boyd remarked applications had been received from restaurants who had to remove their parklets because of street resurfacing and were now showing interest in putting parklets in front of their business and they had been operating as a first come first served. If a business wants to put a parklet in front of another business, they have to make sure the other business does not want to use that space first. SUMMARY MINUTES Page 7 of 18 City Council Meeting Summary Minutes: 01/13/2025 Mr. Guagliardo added when the parklet renewal comes up, they would be required to scale back to allow the original operator to install their parklet if they so desired. If the second space was vacant, the building owner would have no right of refusal or ability to say they wanted to get something in that space right now. Councilmember Stone had questions about the letter of consent, the original motion allowing roofless parklets to extend, how many parklets on University Avenue extended beyond their store's frontage and total vacancies in downtown. Mr. Guagliardo replied that based on the discussion at Retail Committee, staff was proposing a letter of consent signed by the neighboring landlord. They would be able to continue through the term of their permit. The original motion was passed by Council last year and was part of the ongoing parklet program that was implemented starting November 1. He stated many people had to retrofit and come into compliance. He indicated five parklets on University Avenue extended beyond their frontage. He mentioned having had a discussion with a tenant going into one of those spaces who voiced reluctance about the uncertainty if having a parklet persist in front of them or not even if they opposed it. Based on the current program, they would not have the right to contest a parklet extending in front of them. He would confirm the total vacancies downtown. Ms. Boyd remarked there were two or three built new since regulations went into effect. Four on University and two others not on University had to retrofit. Council made that decision on March 23. Public Comment: 1. Nancy C. stated that parklets do not obstruct the view of a business and take less visual space than a parked car and there was no statistical validity that they were the reason for vacancies in Palo Alto. She advised they stop wasting time and effort pushing back on what was already decided. 2. Clayton A., CFO of Local Union Restaurant on University Avenue, explained why he wanted Council to pull Item Number 7 and keep the permanent parklet guidelines as stated. 3. Elizabeth W., property owner of 532-536 Ramona Street, remarked that Councilmember Burt’s comments about SUVs being equivalent to parklets was untrue because not all cars were SUVs. She also alleged there was extreme favoritism to Coupa Café and requested the current Council make their own independent decisions. She felt the parklets were limiting the parking space downtown. 4. Herb B. remarked that parklets take up parking space and the cost of creating those parking spaces someplace else was greater than the amount of a fee paid for the parklet. The proportion of any assessment district payments for a business to have additional retail space would include that new space and they would be paying a higher SUMMARY MINUTES Page 8 of 18 City Council Meeting Summary Minutes: 01/13/2025 share of parking assessment district payment than they are now, which means others would be paying less than they are now. It was his belief that the parklet owners should be paying to cleaning the sidewalk, including reimbursing the City for the amounts being paid to the Downtown Streets Team. 5. Faith B., Bell's Books at 536 Emerson Street, commented that if the proposed parklets are put in on Emerson Street there would be no parking. She stated she needed storefront frontage visible from the street. 6. Claudia, owner of Café Venetia on University Avenue, advised that it was imperative to convert public spaces for public benefit instead of the use of cars. It was her opinion that a handful of property owners had undue influence in the city and represented their own narrow self-interests and those of cars. She supplicated City Council members to represent the needs of the general public. 7. Roxy R. indicated retail and not restaurants were the vacant places. 8. Hugh M. (Zoom) asked Council to consider the public value of the outdoor seating company in parklets. He said parklets were not much different than parked car. He pointed out there were many empty businesses that did not have parklets. He asked if there was a change in the program to allow objections to neighboring businesses and grandfather in existing parklets and they would provide compensation for the money businesses had invested. He encouraged going to wider sidewalks, a more pedestrian friendly street and move parking onto adjacent streets. 9. Rebecca (Zoom) remarked that the retailers and restaurants had been clear that the ones that had left was because of raising rents. She added when the rental market softens, Council continues to unfairly prop up the commercial developers by giving them unfair enrichment. She thought it was appropriate and fair to tell the landlords that if they want to fill the spaces, they need to lower the rent and to impose a vacancy tax. 10. Brad E. (Zoom) supported the staff recommendations. He pointed out one of the main issues raised was the need for parking. He advised that allowing tenants to expand their parklets in front of other tenant storefronts obstructed the visibility to that retailer and took away paying customers. 11. John S., Thoits Bros. (Zoom), remarked the threat of parklets being built in front of a retailer storefront was a significant issue in filling retail spaces. He asked Council to proceed with the Retail Committee and staff's recommendations as it would benefit the entire retail market on University. He advised limiting parklets to the restaurant's own frontage was equitable and appropriate. He opined the 12-year rule seemed like the right period of time to have changes for the new policy implemented. SUMMARY MINUTES Page 9 of 18 City Council Meeting Summary Minutes: 01/13/2025 12. Lydia K., former Council Member and Chair and former Chair of the Retail Committee (Zoom), aligned her comments with Brad E. John S. and Faith B. She did not agree with pulling this item. She hoped Council would listen to the property owners. Councilmember Stone spoke about his appreciation for the pilot program for the popups. He expressed his frustration that they were continuing to move the goalpost and retell people who can put up parklets. He did not agree with punishing those who followed the rules and invested into the new program by making them change. He claimed the argument that parklets were causing vacancy rates in downtown was just not supported by the evidence. He believed the vacancies were caused by high rent and the slow rate of people returning from working from home. He was open to a compromise to allow those to be grandfathered in. Regarding the policy question about whose decision it is, he opined Council and the residents should be in control of determining the fate of public spaces. Councilmember Lu expressed concern that the way this was agendized did not bring all the voices in the room. His primary goal was getting people on the street. He wanted to hear his colleagues’ perspectives on balancing competing interests of parklets deterring tenants versus the dynamism of people sitting on the street to people watch. He advocated existing parklets being given a grandfathering with a grace period of more than one year to avoid undue burden or cost to restaurants or merchants that have or might want a parklet. Councilmember Reckdahl thought the pros of parklets outnumbered the cons. He supported the current policy. Mayor Lauing opined peaceful coexistence was the issue. He did not see that saying the vacancies were due to parklets was a data-driven decision. He was also no persuaded by saying some cars are not as big as SUVs because signs on stores are up high. He iterated they should be looking at some balance of the number of parklets versus the number of parking spots on a given street. He pointed out that the City was not ignoring the need for parking as there were underutilized parking lots and others being built. He aligned with Councilmember Stone’s comments about having credibility and respecting decisions of other Councils. He thought a compromise was in order. He was sensitive to the folks that were grandfathered in not having to tear down their buildings. He was open to a limitation of more parklets. Vice Mayor Veenker remarked that while she cared about the vacancies downtown, she thought it was a separate issue in this decision. She concurred with grandfathering in those had already made significant investment in this. It was her belief that outdoor dining played a huge role in helping the City come back from the pandemic and performed a big function in vitalizing the downtowns. She felt there was a question of fairness and when public space was being used in front of someone else’s business, it should be done thoughtfully and carefully. She was interested in knowing generally what practices are outside of Palo Alto. She thought she was hearing from the community that there was a comfort with the next door business having the ability to put the investment at risk but not the next door building owner. SUMMARY MINUTES Page 10 of 18 City Council Meeting Summary Minutes: 01/13/2025 Mr. Guagliardo explained that the program had changed and evolved since its inception in the pandemic. At one time, a letter of consent was required from both the neighboring property owner and tenant. Council then reversed that and reaching the current status where they were allowed to extend uncovered beyond. Neighboring jurisdictions typically require consent for extending beyond a frontage into their neighbors and a few do not allow it at all. He stated he would be happy to reengage on that topic with his colleagues through the Silicon Valley Economic Development Alliance. His understanding was that there were no other jurisdictions that allow expansion beyond the frontage without a letter of consent. The ongoing parklet program allowed both retailers and restaurants. He noted the parklet program uniquely benefitted restaurants. Ms. Boyd added that other jurisdictions limit parklet sizes to two parking spaces max. City Manager Shikada explained that retailers do not staff in the same manner a restaurant would in a way that would maintain the presence both with patrons as well as with staff in order to ensure security of their goods on the street. Councilmember Lythcott-Haims was in favor of the grandfathering concept. She wanted to understand the scale and scope of what the investments in parklets meant to a business’ bottom line. She asked if a retailer could pay to protect the parklet space but not use it. Mr. Guagliardo replied that the annual fee scaled to the size of the parklet. The mean amount spent by tenants on a parklet permit would be between $3500 and $4500 for the annual rent portion. He explained that applying for a parklet but not putting it into place would preclude someone else from being able to use that space. He said it was a policy discussion of what they were trying to facilitate. There would need to be a discussion about how to enforce the terms of the permit if someone wanted to build it or chose not to build it and then how to proceed from that point forward. He thought the idea of getting into making people pay to preserve their frontages seemed like a thorny policy discussion. Councilmember Burt mentioned that having additional people active and dining on University was an economic development benefit by contributing to the vibrancy and the customers. He recalled surveys reiterated that the public valued the vibrancy and experience of outdoor dining. He thought some of the response from property owners was a feeling that they should have control in front of their property whether they can show the facts that support the claim that it effects retail or not. Mayor Lauing requested clarification on what was meant by the downtown area. Mr. Guagliardo replied the ongoing parklet program would apply to the commercial cores of University Ave and Cal Ave excluding the car-free street portions of Ramona and California Avenue. Councilmember Burt wanted a distinction of the permanent and the ongoing parklet program. SUMMARY MINUTES Page 11 of 18 City Council Meeting Summary Minutes: 01/13/2025 Mr. Guagliardo indicated the nomenclature change that was discussed in spring of 2024 shifted to the ongoing parklet program to reflect that it was an ongoing program. City Manager Shikada added that to a certain extent parklets were not permanent. An unknown speaker noted it was important not to use the word permanent because this Council or another Council would always have the ability to pass a new ordinance. It was fine to state an intention for duration but it would not be mandatory and binding on future Councils unless it got into the charter. Councilmember Reckdahl wanted to know if low-rise parklets could be renewed and was problem was seen with the current policy. Mr. Guagliardo replied renewals would be able to persist until the streetscape was reconstructed. Councilmember Burt wanted to respect the investments that had already been made. He explained the dilemma of the arguments that had been made on the parklets. He was concerned about existing retailers who saw the potential of a major proportion of the on-street parking being lost whereas he did not think the few spots that had been lost on the length of University were consequential. The intention was to try and strike a balance. Councilmember Lu did not believe they needed to grandfather businesses in that had not submitted applications or plans for preliminary review. AMENDMENT: Councilmember Stone moved, seconded by Mayor Lauing to change the language in 3a. of the main motion to replace the consent of the adjacent “property owner” with consent of the adjacent “tenant”. AMENDMENT PASSED: 6-1, Burt no AMENDMENT INCORPORATED INTO THE MOTION MOTION: Councilmember Burt moved, seconded by Councilmember Stone to direct to staff to: 1. Revise the Fiscal Year 2025 Budget Appropriation at Mid-Year to enhance cleanliness efforts in both downtown areas, as outlined in attachment A included with this report. 2. Refer staff follow-up on the below items recommended by the Retail Committee: a. Developing a revision to the temporary use permit rules b. Exploring a plan for improvements to downtown infrastructure and experience SUMMARY MINUTES Page 12 of 18 City Council Meeting Summary Minutes: 01/13/2025 3. Allow the “low-rise” parklet policy to continue for existing parklets who have been permitted (or approved by staff) and that we retain this policy until City reconstructs streetscape (or until further Council action). a. Any additional low rise parklets beyond those that are in existence or have already been approved can only be obtained with the consent of the adjacent tenant. If the property is vacant then the applicant can proceed without such consent for the duration of the permit. MOTION PASSED: 7-0 11. Discussion regarding State and Federal Legislative Advocacy and Adoption of the Policy and Services Committee Recommendations on the 2025 State and Federal Legislative Guidelines. Christine Prior, Deputy City Clerk, provided a slide presentation outlining recommendations and a background of the legislative guidelines. Carly Shelby, Senior Associate Townsend Public Affairs, Inc., discussed slides including a presentation overview, an overview of the Advocacy Program, examples of advocacy efforts for the City, recap of 2024 key state issues, 2025 legislative session key dynamics, the governor’s January Budget Proposal, looking ahead at key issues for 2025 and 2025 key federal issues, Advocacy Program. Alex Gibbs, Grant Director Townsend Public Affairs, Inc., provided an update on the Grants Advocacy. Mayor Lauing asked what was best in terms of how often they were updated. Ms. Shelby answered they were happy to be there as often as needed. Chantal Cotton Gains, Deputy City Manager, added in the past if there were more contemptuous bills, they were brought for discussion to the Committee or the full Council depending on the nature. The legislative guidelines allowed them to move fluidly working directly with the mayor in the meantime but if there were bills on the border line, they would not move forward without further consultation. Councilmember Lythcott-Haims asked for an update on where RHNA reform stands. She supported accepting the guidelines with the exception of finance bullet 5 in which she wanted to keep as is. Ms. Shelby replied the big reform that came last year was in the bifurcation of the very low income category within the regional housing needs determination process. It was currently a 0 to 50 percent AMI. That was bifurcated to a 0 to 15 to 15 to 30 percent to account for those SUMMARY MINUTES Page 13 of 18 City Council Meeting Summary Minutes: 01/13/2025 within the acutely low income categories that may not be able to achieve an income basis and those in the 15 to 30 percent AMI category. The goal with that legislation was to create additional guidance from HCD on how to advise and best fund some programs within various cities. They were not engaged in the sense that they were opposing or supporting the legislation but were there as a voice for the City of Palo Alto. Vice Mayor Veenker queried to what extent staff could help sort out if and when there is tension between what is in the best interest of the City and consistent with the legislative guidelines versus some of the positions other entities might be advocating. She questioned if they would want to know if a Council member was speaking directly with policy makers. Deputy City Manager Cotton Gains remarked NCPA was one that Townsend wanted to work in partnership with those advocating for NCPA. Having their own utility was unique and being able to use any other partners that could help advance their local interest was entirely aligned between both of those organizations. She did not think they had seen tension between NCPA and Palo Alto. She remarked it would be great if she or staff could be kept informed if a Council member was speaking directly with policy makers. City Manager Shikada indicated that as they tend to be greener than some of the other agencies in NCPA, that might be the best example of where there might be disagreement on some language. Ms. Shelby thought that as advocates with this Sacramento sphere her firm worked closely with Cal City’s Advocates. That did not mean that their position encompassed the best interests of the City. That was why the City had advocates like them who work within the interest of the City. When they approach issues that would be an easy coalition with a larger group of cities, that is something they will collaborate with them on. However, they offer individualized comments on things they differ from them on in certain situations that elevates their voice as a city independent from them. Councilmember Stone wanted to hear thoughts on the impacts of the costs and ripple effects associated with recovery from the fires in Los Angeles. He asked if they were hearing anything that might bring into question the current or future RHNA cycles and how the state was responding to that audit and if the language within the legislative guidelines for housing provided for that direction if the opportunity came up for the City to weigh in on changes to HCD and the RHNA process given the findings of that audit. Ms. Shelby replied that they did not yet know. Those impacted by the wildfires would have a tax return delay which would impact the modeling tools at the state budget process. It would be a hardship that the state would have to face. She stated that as they approached the cycle seven process, there was a lot of focus from the legislature on trying to ensure that communities would have an easier time with compliance and do not face the hardships and confusion that happened during the cycle six process. She thought there would be a focus from the legislature this year to try to mitigate that and the more they continue to communicate this SUMMARY MINUTES Page 14 of 18 City Council Meeting Summary Minutes: 01/13/2025 to the representatives would improve the process altogether. They had language to support local autonomy and transparency over the planning processes. Deputy City Manager Cotton Gains added the legislative guidelines and the local control was enough of a conversation starter for Townsend to engage but if it came to actually opining on something, she thought they would bring that to the City Council to ensure the opportunity to factor in all perspectives. Councilmember Lu asked if meaningful opportunities for advancing safety, walking or cycling was deliberately excluded. Deputy City Manager Cotton Gains explained the all-encompassing piece aspect was the deferring single occupancy drivers and alleviates local traffic congestion. They could be more explicit with that if Council desired. Councilmember Reckdahl queried if they foresaw getting funding for the Palo Alto Intermodal Train Station in the future. Ms. Shelby indicated that project was put forward to Congresswoman Eshoo for a federal earmark request. She did not pick that out of the provided menu of requests. Her rationale was that she wanted more of a public safety focus. The vetting process used to put these requests forward deals with how shovel ready they are, how much funding there is and how much community investment has already been ingratiated into the project. Mr. Gibbs explained that four years ago the incoming administration had eliminated previous requirements for competitive grant programs that involved demographics such as social equity that the current administration put into place including CEJST requirements. One benefits of that being removed would be that projects in Palo Alto might be more competitive for grant programs over the next four years than they were under the previous administration. That would depend on how much money was allocated to said grant programs. Projects Councilmember Reckdahl had mentioned could be more competitive under grants that had been authorized legislatively where the funding would be there over the next couple years that were not subject to the political whims of an administration. There may be more grant funds available over the next two to four years for projects like that as well as the community project funding requests which were still available. Councilmember Burt commented that as the year progresses, they may have a clearer concept of what they were proposing and asking for and the funding source for that may include regional, state and federal. Public Comment: 1. Jennifer (Zoom) suggested that Council provide residents a more transparent view of the City’s positions and advocacy resources for FAA and all issues and provide ways to track the outcomes or conflicts in advocacy efforts. SUMMARY MINUTES Page 15 of 18 City Council Meeting Summary Minutes: 01/13/2025 MOTION: Councilmember Lythcott-Haims moved, seconded by Councilmember Burt to adopt the 2025 State and Federal Legislative Guidelines (Attachment A) with the following changes or additions: 1. Financial subsection: a. Bullet 5 to remain unchanged to read “Supports the lowering or maintaining of voter thresholds for local revenue measures.” 2. Transportation subsection: a. Additional language to read, “Supports local, regional, state, and federal policies that would reduce aviation noise and emissions impacts over communities, including passing noise ordinances and creating incentives for reducing impacts.” b. Amend the language in bullet 1 to read “Deters single occupancy drivers and alleviates local traffic congestion, promote active transportation safety infrastructure”. c. Add language that reads “Supports coordination among transportation agencies regionally.” 3. Housing subsection: a. Add language that would support property insurance availability and affordability initiatives. b. Add language to support RHNA reforms to promote fact-based standards that would further support goals of social and economic housing balance. 4. Climate and Environment subsection: a. Bullet 1 to read “Reduces GHG emissions and supports an equitable and just transition toward GHG reduction, and carbon neutrality goals, and electrification.” 5. Public Safety subsection: a. Include supporting legislation for increased resources for crime victims including victim support services and victim compensation processes. b. Support measures that protect immigrants from unlawful or inhumane deportation efforts. SUMMARY MINUTES Page 16 of 18 City Council Meeting Summary Minutes: 01/13/2025 6. In the Foundational Principles number 2 Support Funding Opportunities, add "Climate Action" after "but not limited to," MOTION PASSED: 7-0 12. Review and Accept the FY 2026-FY 2035 Long Range Financial Forecast (LRFF) and FY 2026 Budget Development Guidelines as Recommended by the Finance Committee, CEQA Status – Not a Project Lauren Lai, Chief Financial Officer, provided an overview of the LRFF and asked Council to provide direction for developing the FY26 budget. Paul Harper, Budget Manager, provided a slide presentation with an overview of the LRFF, fiscal year 2026-2035 base case forecast, BSR and recommended FY24 surplus allocation, alternative scenario A: economically sensitive revenue in FU26, alternative scenario B: compensation adjustment in FY26, FY26 budget development guidelines (Attachment A), assumptions not included in forecast (Attachment E), Finance Committee discussions and recommended action. Councilmember Burt provided context about the purpose of the uncertainty reserve and why it was being used to bridge a shortfall the last year and going forward the next couple of years. He instructed they would need to discuss what would happen if all vacancies were filled, if all those positions were actually needed, how they use outside consultants and what functions should be done in-house. Councilmember Reckdahl queried if most of the vacancies had been the same position that had been open for a long time. City Manager Shikada remarked there were some areas that were traditionally hard to fill and even when they were able to fill them there was a high level of turnover so it was not the same vacancy but a recurring vacancy. He stated there were priorities in areas to fill and that is where the capacity of the recruiters was spent. There was also time required from each of the operating departments in order to work through the recruiting process, preparation and updating position descriptions. Vice Mayor Veenker wanted to hear about how they would plan to address the factors on slide 8. CFO Lai explained the long-range financial forecast was a planning tool that encompassed current service level. That was why additional service increases or known unknowns were not incorporated. As a part of the Council budget development and Council's priority setting, various known unknowns, priorities and investments would be prioritized and funding opportunities would be sought locally, through new tax revenues or through external sources. SUMMARY MINUTES Page 17 of 18 City Council Meeting Summary Minutes: 01/13/2025 Mayor Lauing commented they had already built in more salaries were reducing the vacancy rate and putting more police and fire on the job. That was an example of a priority that they have to fund. They had to look annually at the gas tax transfer. That would go to full Council. He mentioned utility rates were going up and was a sensitive variable. That had to be cautious about the tolerance level of the residents and what they could do about that. He stated they would direct staff to cautiously use this forecast as the base case. Councilmember Reckdahl referenced packet page 159. He asked if the rising property tax was assuming a certain turnover and discussed his concerns. He wanted information about the difference in rate of the TOT general fund. He asked what percentage of the sales tax projections on top of page 160 were collected locally or what were online. CFO Lai answered they worked directly with the county and HdL, who supplies property tax information. The attachment showed an exhibit of property tax that showed the major assumptions. The property tax section showed the trends being assumed. The proportion of the revenue that came out of the online purchases was about 15 to 20 percent. She explained that was something they had been monitoring and working closely with HdL who helps them on the compliance, collection and forecasting of sales tax. Mr. Harper replied the TOT general fund and infrastructure were based on different types of hotels. The TOT infrastructure was based on hotels that were built after a certain year. All of that funding previously went into the general fund. The ratio changed over time because the hotels that come online now go into that infrastructure line whereas the ones that were built previously were in that general fund piece. Councilmember Burt added in 2012 or 2013 a policy decision was made to increase TOT dedicated to the infrastructure plan and all new hotels that came online after that date would be dedicated to it. Councilmember Lythcott-Haims wanted a layman’s example of a COP as mentioned on packet page 133. She asked how many they were still in debt service toward. She would like to see an analysis on expenses handled that way. CFO Lai explained this proposal would relate to whether they wanted to finance some of the improvements versus paying with existing cash as they had in the past. The community had been financially capable of funding improvements, projects and repairs with fund balance and savings. As a debt ratio, the community benefitted from having very low amount of debt outstanding. The Finance Committee spoke about the opportunity to potentially leverage debt to fund some repairs and improvements versus using cash. That could reduce the annual cash outflow because they would be borrowing. It was not necessarily a COP as a financing mechanism versus other debt instruments but the concept considering financing certain spending versus using fund balance. Councilmember Burt supplied an example of the bond that was voted on for the libraries which was a common way of financing debt. They had a AAA rating because they did not have a great SUMMARY MINUTES Page 18 of 18 City Council Meeting Summary Minutes: 01/13/2025 deal of encumbered debt. Part of the issue going forward would be when they did the public safety building COP, interest rates were low. Borrowing would make less sense from that standpoint as they are higher but they still had a lot of capacity. Mr. Harper indicated they also had the California Avenue garage and a number of projects that had that service. There was a section in the budget that talked about that service and how much the City owed on an annual basis. Councilmember Lu queried if there was a specific concentration where one sales tax payer was 5 percent of the sales tax revenue and if there were any specific risks there. He wondered if the anticipated housing growth be a net negative or positive on the long range finances. CFO Lai answered each avenue that provided sales tax support did an analysis that showed the ratio of all the retailers. She said there was no concentration of risk. She thought they would have to do an economic impact study on the housing growth and it would depend on the type of growth and services related to the housing development. MOTION: Vice Mayor Veenker moved, seconded by Councilmember Reckdahl to accept the General Fund Long Range Financial Forecast (LRFF) for Fiscal Year 2026-2035 (Attachment I) and the FY 2026 annual Budget Development Guidelines (Attachment A in Attachment I) and direct staff to use this forecast as the starting point for the initiation of the FY 2026 budget process. MOTION PASSED: 7-0 Adjournment: The meeting was adjourned at 10:44 P.M.