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HomeMy WebLinkAbout2018-10-15 City Council Summary Minutes CITY OF PALO ALTO CITY COUNCIL FINAL MINUTES Page 1 of 25 Special Meeting October 15, 2018 The City Council of the City of Palo Alto met on this date in the Council Chambers at 5:03 P.M. Present: DuBois, Filseth, Fine; Holman arrived at 5:06 P.M., Kou, Scharff, Tanaka, Wolbach Absent: Kniss Palo Alto Youth Council Present: Agarwal, Ashoke, Cheng, Ganesan, Goetz, Kao, Martinson, Razdan, Sales, Shetty Absent: Study Session 1. Joint Study Session With the Palo Alto Youth Council. Council Member Kou had enjoyed working with the Palo Alto Youth Council (PAYC) as the Council liaison. PAYC members were enthusiastic and creative and had insightful ideas. The City engaged and empowered youth voices in the community through PAYC. Staff was instrumental in engaging and fostering PAYC. Alyssa Sales, Palo Alto Youth Council President, reported PAYC was comprised of 17 Palo Alto teens, nine from Gunn High School, five from Palo Alto High School, two from Castilleja School, and one from Kehillah Jewish High School. Claire Cheng, Palo Alto Youth Council Vice President, advised that the goal of PAYC was to identify needs within the youth community and to design events or projects that address those needs. PAYC wanted to have better communication with the City. The City funded PAYC with approximately $5,000 per year. Maximilian Goetz and Jonathan Kao, Palo Alto Youth Council Members, described PAYC events such as the multicultural fair, the teen survey, the City Council meet and greet, and the intramural basketball tournament. Divya Ganesan and Trisha Razdan, Palo Alto Youth Council Members, explained the reasons for PAYC not utilizing a theme for the year. FINAL MINUTES Page 2 of 25 City Council Meeting Final Minutes: 10/15/18 Anshika Agarwal, Sohini Ashoke, and Sarah Martinson, Palo Alto Youth Council Members, shared PAYC's goals of positively influencing the teen community, improving communications between PAYC and City Council, hosting more small events, and collaborating with the Teen Advisory Board. PAYC sought Council assistance with advertising, publicity, and finding venues for events. PAYC had instituted school liaisons for Palo Alto High School, Gunn High School, Castilleja School, and Kehillah Jewish High School. Council Member DuBois inquired whether PAYC members thought teens would be interested in a City intramural sports program for high schools. Mr. Kao suggested teens would be interested in playing sports with their friends if a program could offer friendly competition. Council Member DuBois asked if the basketball tournament was co-ed. Mr. Kao answered no. Council Member DuBois asked if a City program should be co-ed. Ms. Cheng remarked that some sports did not attract female participants. Perhaps the next intramural sports tournament could be volleyball or dodgeball to include both male and female participants. Council Member Holman suggested PAYC consider a small community art project to build community and bring attention to PAYC. She hoped PAYC would send representatives to the public meetings for the Cubberley Community Center Master Plan, the North Ventura Area Plan, and other City planning efforts. Perhaps PAYC had some ideas as to how the City and Palo Alto Unified School District (PAUSD) could collaborate to better serve teens' needs. Council Member Fine concurred with comments regarding an City intramural sports program and PAYC involvement in City planning efforts. He encouraged Staff to utilize City resources to increase awareness of PAYC. He asked how PAYC spent its budget and how PAYC might spend additional funds. Ms. Sales reported funds supported PAYC events. PAYC was considering holding an event around careers and a slam study session during the current semester. Council Member Scharff expressed interest in PAYC providing ideas for afterschool sports or activities that could fill unmet teen needs. The Council would welcome PAYC input regarding topics before the Council. He requested PAYC's intention for the goal of involvement with school-wide decisions. FINAL MINUTES Page 3 of 25 City Council Meeting Final Minutes: 10/15/18 Ms. Cheng advised that PAYC members had mentioned having more frequent or better publicized meet-and-greets with the City Council and providing the Council with reports of teen opinions regarding Council agenda topics. Ms. Martinson added that PAYC's main goal was communication, whether with the City Council or the community. Ms. Ganesan indicated PAYC wanted to engage teens with the PAUSD Board of Education (Board). One of PAYC's ideas was preparing a newsletter which contained information for upcoming meetings and possibly meeting agendas. Vice Mayor Filseth asked if PAYC had a website with that type of information. Ms. Ganesan understood the PAYC website was inactive. Mr. Kao related that minutes of PAYC meetings and photos of PAYC events were posted to the website. Tyler Stetson, Community Services Department, reported PAYC had a subpage on the City website. The page would highlight upcoming events and projects. Ms. Cheng felt the main concern from the prior year was the lack of publicity. Activating the PAYC website would be helpful, but utilizing social media would be better. Personally, she wanted a single resource that would list grants, internship and employment opportunities, scholarships, and gap-year programs that would help her execute her ideas. Ms. Sales stated the PAYC newsletter would be similar to the newsletter provided to Castilleja students. Council Member Wolbach remarked that the PAYC had really great ideas. PAYC should lobby the Council and educate their peers about Council topics. He inquired about teens' attitudes towards driving and biking. Ms. Martinson advised that Palo Alto High School students preferred to drive if they had a car. However, they would bike if they could not obtain a school parking permit. At Kehillah Jewish High School, the majority of high school students drove to school. Most Gunn High School students biked because getting there by car was difficult. Ms. Ashoke added that driving to Gunn High School was practically impossible because of the number of bikers on the road and the number of commuters to nearby businesses. Ms. Cheng suggested the implementation of a bus route solely for schools. FINAL MINUTES Page 4 of 25 City Council Meeting Final Minutes: 10/15/18 Ms. Sales noted most Castilleja School upperclassmen drove because they lived outside Palo Alto. Mr. Goetz, as a biker, appreciated traffic congestion because it motivated drivers to bike. Ms. Ashoke remarked that biking and electric cars benefited the environment. The primary concern should be maintaining a safe environment for both drivers and bicyclists rather than adding more bike lanes. Council Member Wolbach inquired about long-term issues or opportunities that teens discussed. Ms. Ganesan related that a new climate report from the United Nations had been a big topic of discussion. There was a lack of information regarding daily changes individuals could make that would reduce the effects of climate change. An upcoming discussion would be the effects of climate change on people's daily lives. Mr. Goetz commented that he bicycled because it was good exercise and good for the environment. The City should add more bike boulevards and make biking more convenient. Ms. Sales advised that academic stress was a topic of concern. More teens were attempting to balance fun with academics. Ms. Razdan agreed that academic stress was a big topic within the youth community. The subliminal messages for students were taking the hardest courses, getting the best grades, and doing the most extracurricular activities. Students needed support systems. Ms. Ashoke reported many teens who chose not to pursue science, technology, engineering, and mathematics (STEM) classes felt the community did not support their decision. Ms. Cheng indicated PAYC had spoken to the Board multiple times about providing more non-STEM classes and encouraging students to try non-STEM classes. She commented on polarization around race and immigration status and support for East Palo Alto students who attend PAUSD schools. Ms. Agarwal concurred with schools offering more humanities courses. Council Member Holman suggested PAYC participate in Canopy plantings in East Palo Alto and Make a Difference Day and partner with students in other communities. FINAL MINUTES Page 5 of 25 City Council Meeting Final Minutes: 10/15/18 Council Member Tanaka requested PAYC's input regarding the reduction in Valley Transportation Authority (VTA) bus 88 service. Vice Mayor Filseth suggested PAYC participate in discussions regarding VTA service. Ms. Cheng understood students were initially upset about the reduction in service. Complaints had ceased as students became accustomed to the new service. PAYC could follow up on the issue if needed. Council Member Tanaka asked how many of the PAYC members present biked and counted approximately half. He asked the non-bicyclists if protected bike lanes would motivate them to bicycle. Ms. Razdan probably would not bike because she lived approximately two miles from school and had volleyball practice after school. Ms. Sales also would not bike because of her school and extracurricular schedule. Mr. Goetz felt protected bike lanes would encourage more people to bike. Ms. Ashoke concurred. Ms. Agarwal believed activities and schedules rather than bike safety determined students' mode of transportation. Ms. Ganesan remarked that a protected bike lane would have a greater impact on drivers because drivers would be more confident that they would not hit a bicyclist. Council Member Kou advised that the Council would appreciate PAYC's opinions. Perhaps PAYC events could be included in the Mayor's Message. She requested PAYC be listed on the government page of the City website. Vice Mayor Filseth asked if the PAYC survey covered a noteworthy topic that had not been discussed. Mr. Goetz reported a large majority of teens did not know who the Mayor was. Ms. Razdan added that a majority of teens expressed concerns about housing. Mr. Stetson advised that another concern expressed in interviews with PAYC was technology addiction and its consequences. Vice Mayor Filseth suggested PAYC could hold an event on the topic. FINAL MINUTES Page 6 of 25 City Council Meeting Final Minutes: 10/15/18 Closed Session 2. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION Government Code Section 54956.9(d)(2) and (e)(1) Five Potential Cases. MOTION: Council Member Scharff moved, seconded by Council Member Wolbach to go into Closed Session. MOTION PASSED: 8-0 Kniss absent Council went into Closed Session at 6:01 P.M. Council returned from Closed Session at 7:59 P.M. Vice Mayor Filseth announced no reportable action. Study Session 3. Request for a Pre-screening of a Proposal to Rezone the Property at 788 San Antonio Road From Service Commercial (CS) to Multiple-Family Residential (RM-40) and to Redevelop the Site With a Four-story, Approximately 53,000 Square Foot, 54-unit (Including Eight Below Market Rate Units) Residential Project and a Below-grade Parking Garage. Environmental Assessment: Not a Project; any Subsequent Formal Application Would be Subject to the California Environmental Quality Act (CEQA) (Continued From September 17, 2018). Graham Owen, Planner, reported the prescreening was intended to provide the applicant with guidance to prepare a formal application. An automotive services store, a martial arts studio, and an electrical wholesaler occupied the two existing buildings on the one-acre site. The buildings were built in the 1950s and 1960s and contained approximately 18,000 square feet. On the east side of San Antonio, parcels were zoned Service Commercial (CS). On the west side of San Antonio, parcels were zoned General Manufacturing (GM) and Planned Community (PC). The applicant proposed rezoning the site from CS to Multifamily Residential with 40 units per acre (RM-40). The project would be 54 ownership units and would utilize the State Density Bonus Law by providing eight low-income-restricted units. The project would be four stories with an underground parking garage that provided the required parking of 130 spaces. The project would comply with CS and RM-40 site coverage requirements. Based on the size of the project and provisions of the State Density Bonus Law, the applicant would be entitled to two "by-right" concessions. With eight low-income units, the applicant would be entitled to an additional 8 feet of height; the applicant proposed a total height of 47 feet. FINAL MINUTES Page 7 of 25 City Council Meeting Final Minutes: 10/15/18 The applicant would also be entitled to a maximum 25 percent increase in the total floor area ratio (FAR) of the site; the applicant proposed a 24 percent increase. The applicant would take advantage of the State Density Bonus Law, which allowed a 35 percent increase in the number of units over base zoning. In this case, 35 percent of 40 units was 54 units. The existing CS uses located on the site were considered protected retail. If the Council chose to rezone the site from commercial to multifamily residential, the two existing protected retail uses would become nonconforming uses and would not be considered protected. A residential project could provide four affordable units under CS zoning and eight affordable units under the proposed zoning. Any Council comments were not binding on the City or the applicant. Ted O’Hanlon, Applicant, advised that the timing of the residential project was appropriate given the Council's discussions of housing production. Since the property owner obtained the site, two tenants had moved to other locations leaving the martial arts studio as the only tenant. The applicant would request a zone change, which would allow the applicant to build 54 units, eight of which would be low-income Below-Market-Rate (BMR) units. A residential development would offer great proximity to existing services such as the future San Antonio Center, Caltrain, Valley Transportation Authority (VTA), and community services. Eugene Sakai, Architect, shared a concept rendering for the project to depict massing and parking. The building could be L-shaped with strong frontages on San Antonio and Leghorn. This concept would reinforce the street wall and create an open space or courtyard behind the building. A partially below- grade parking garage could extend above grade approximately 30 inches. Stackers would be utilized in the garage, and an abundance of bicycle parking would be available. Given the desired mix of one and two-bedroom units, the building profile could be stepped to provide shorter street frontages, a partial fourth floor, and an artistic entry. The rear courtyard would offer both private and common open space. To activate the street wall and to screen the garage, ground-floor units could have walkways from the sidewalk to the front porches. Lavinia Branden, Studio Kicks owner, believed the City should balance housing and small businesses. She was having difficulty finding a new location for her business. She hoped to collaborate with the City and developer to find a solution that supported everyone. Ellery Carlson shared the many benefits he received from taking classes and being employed at Studio Kicks. FINAL MINUTES Page 8 of 25 City Council Meeting Final Minutes: 10/15/18 Ethan Gadekar related a few of the many benefits he received from taking classes at Studio Kicks. Keith Bennett, Save Palo Alto's Groundwater, expressed concern about the temporary impacts of construction dewatering and the permanent impacts of underground construction on stormwater management. He requested the City stipulate the use of deep cut-off walls. The City should adopt enhanced regulations for underground construction dewatering for projects greater than 10,000 square feet. Joan Larrabee appreciated the developer proposing a residential building and hoped Studio Kicks could find an alternate site. The proposed project contained several defects, including multiple users of parking lifts, the lack of an elevator, and a single stairway accessing all floors. L. David Baron supported housing production in Palo Alto and encouraged the Council to allow more housing. Pamela Harter voiced concerns about the level of development in the area and its effects on traffic, parking, and noise. Kris Lowe shared her family's positive experiences with Studio Kicks and encouraged the Council to find a way to keep Studio Kicks in its current location. Bob Moss stated the project's density, height, traffic impacts, massing, setbacks, and number of units violated almost every policy and principle of the Comprehensive Plan, the Zoning Ordinance, and City Council policies. Earlier in the year, the City Council adopted a policy to eliminate housing on San Antonio. The project would eliminate ground-floor retail and cost more in City services than it would pay in taxes. Kelsey Banes supported the project because it would create more housing in Palo Alto and hoped the Council and the developer would look for ways to assist Studio Kicks with relocation. Stephanie Downey supported the project because it would provide more housing in Palo Alto and encouraged the Council to find a solution for Studio Kicks. Council Member Holman inquired about the number of units that would result from the Density Bonus Law being applied to the CS zone. She asked why rezoning the site would not be considered spot zoning. FINAL MINUTES Page 9 of 25 City Council Meeting Final Minutes: 10/15/18 Molly Stump, City Attorney, indicated Staff reviewed the project and determined site-specific zoning was appropriate, if the Council chose to do so. Council Member Holman requested the basis for the determination. Ms. Stump explained that the connotations of spot zoning were not accurate and were not based on court decisions that described spot zoning. If the Council and the property owner favored RM-40 zoning for the site, rezoning the site to RM-40 was permissible and did not violate the legal principles around zoning. If the Council wished, Staff could prepare a briefing memorandum concerning the parameters of the spot zoning doctrine. Council Member Holman asked if a change in zoning was a discretionary act. Ms. Stump answered yes. The Council would need to find that rezoning the site to RM-40 was in the public interest, and rezoning the site would need to be consistent with the Comprehensive Plan. The proposal included an amendment of the Comprehensive Plan. Council Member Holman noted that the Council could condition a project through the discretionary review. If the site was rezoned to RM-40, the Council could require retail and retail-like uses at the ground floor and more affordable housing units. She inquired whether the Council could require the property owner to provide or find space for Studio Kicks during construction if Studio Kicks wanted to return to the site. Ms. Stump indicated the Council was providing general feedback during the prescreening process. Council Member Holman hoped the applicant and Studio Kicks could resolve the issue. If the City Attorney indicated, the Council could condition the project for bargaining and cooperation between the two to relocate Studio Kicks. She inquired whether construction began at 6:00 a.m. on the nearby hotel project. Mr. Graham would provide information at a later time. Council Member Holman inquired about the accuracy of the public comment regarding removal of street parking along either San Antonio or Leghorn. Mr. Graham reported if street parking was to be removed, it would not occur in conjunction with the project at hand. He would provide additional information. Council Member Holman commented that removing street parking was tantamount to widening the street, which was inconsistent with the FINAL MINUTES Page 10 of 25 City Council Meeting Final Minutes: 10/15/18 Comprehensive Plan. While she appreciated the applicant reducing the intrusion into the street setback, compliance with the setback requirement would result in smaller units, which was more consistent with the Council's goals. The common and private open spaces needed to be addressed. The elimination of retail was not appropriate. In the past, the community had not responded well to monolithic buildings. The structure would benefit from different rooflines and breaking up the facade. Council Member Wolbach believed the proposal brought into focus the Council's need to discuss the housing goal stated in the Comprehensive Plan. A housing project for the site was possible if the applicant worked with the community to resolve community concerns. Perhaps the applicant could incorporate retail or nonprofit space into the project or help Studio Kicks find a new location. He requested Staff follow up on the amount of money the Marriott Hotel project agreed to use for improvements to San Antonio Road. Perhaps the applicant could provide seed funding for a shuttle along the San Antonio Corridor. The structure should provide good access for people with kids, people with disabilities, and seniors. The rooflines of the building should be softened. Council Member DuBois asked if the applicant planned to install elevators in the building. Mr. O’Hanlon reported the Fire Marshal reviewed the project and had no comments because the project included an elevator and two stairwells. Council Member DuBois inquired whether the partially below-grade parking garage caused an area of the courtyard to be raised. Mr. O’Hanlon replied yes. The raised area could be a common area for barbecues or reading. Council Member DuBois requested the rationale for the raised area not being considered open space. Mr. Owen indicated it was considered common open space. Council Member DuBois asked if the applicant considered making the project market-rate senior housing or including retail in any portion of the ground floor. Mr. O’Hanlon stated he did not consider senior housing because this was a good opportunity for market-rate housing for all ages. He did study the possibility of including retail space but wanted the Council's feedback on an FINAL MINUTES Page 11 of 25 City Council Meeting Final Minutes: 10/15/18 all residential project during the prescreening. He could explore opportunities for ground-floor retail space. Council Member DuBois inquired whether the applicant would consider retail space in the corner of the building. Mr. O’Hanlon advised that a couple of spaces would be good for retail on the ground floor. Council Member DuBois requested the name of the prior project Mr. O'Hanlon developed in Palo Alto. Mr. O’Hanlon responded the Maybell project. Council Member DuBois liked the proposal for ownership housing and the prospect for stepping back the building. He asked if the project met open space requirements. Mr. Owen reported the project met the requirement for common open space. Currently, the size of the balconies did not meet the requirement for private open space. Council Member DuBois remarked that the site was zoned CS because it was a car-centric part of town. He wanted to see more detail for the use of parking stackers, electric vehicle charging stations, a design with the building inverted so that open space was located at the front of the parcel, street trees, and aspects of the project that justified rezoning the site. His two main concerns were retail space within the building and a bike path from the property to Middlefield Road. Perhaps the applicant could provide a good traffic report that included all projects between the site and El Camino. Council Member Scharff did not recall seeing a condominium project during his tenure as Council Member. He encouraged the applicant to move forward with the project because condominiums were the more affordable option in ownership housing. The project should be really attractive. Visitor parking should not have stackers. Some retail space in the project and cooperation with Studio Kicks would be positive. The applicant should work with Staff to meet the private open space requirement. Council Member Holman inquired about the Architectural Review Board's (ARB) policy for bird-safe glass. Mr. Owen advised that the use of or recommendation for bird-safe glass was discussed during ARB review. FINAL MINUTES Page 12 of 25 City Council Meeting Final Minutes: 10/15/18 Council Member Holman stated the proposed project should use bird-safe glass. Council Member Fine disclosed that nonprofit and market-rate developers had approached him due to the shift in the Council's discussion of housing. The project followed the Council's direction to move away from commercial developments to housing developments. The Housing Element map showed prime residential sites along El Camino. He inquired about the parking ratio for the project under the Planning and Transportation Commission's (PTC) recent recommendations Mr. Owen would provide the information. Council Member Fine asked if there was a reason for the 50-foot height limit in CS zones and the 40-foot height limit in RM-40 zones. Mr. Owen would have to review the minutes for the meeting wherein the Council imposed the standards. Council Member Fine commented that the project was reasonably close to San Antonio station and a few other transit services. Design issues would be resolved with the ARB. Council Member Kou asked if Staff had been tracking the use of parking stackers. Jonathan Lait, Planning and Community Environment Acting Director, advised that the Council recently enacted Code changes to allow stacked parking. A couple of projects had proposed the use of stacked parking, but none of the projects had been constructed. Staff could review projects that were constructed prior to adoption of the new standards. Council Member Kou had heard that stacked parking required parents to remove children from the car before placing the car on the stacker. Street trees and a traffic report were important. She asked if children in the area attended Los Altos or Palo Alto schools. Mr. Owen believed children attended Palo Alto schools as the area was located within the city limits. Council Member Kou recommended the applicant provide justification for rezoning the site and offer Studio Kicks the opportunity to return to the site. Council Member Tanaka asked if the low-income units would also be ownership. FINAL MINUTES Page 13 of 25 City Council Meeting Final Minutes: 10/15/18 Mr. Owen replied yes. Council Member Tanaka inquired about the impact of a low-income owner exceeding income restrictions after purchase of the unit. Mr. Lait understood an owner was required to meet income restrictions. Upon the sale of the unit, the subsequent owner had to meet the income restrictions. The restrictions may recognize that the owner could have some enhanced income. Ms. Stump explained that the low-income unit was deed restricted; therefore, the unit had to sell at an affordable rate. She seemed to recall Palo Alto Housing advising the Council that Council Member Tanaka's hypothesis rarely occurred. Council Member Tanaka preferred units be rental rather than ownership so that units could turn over when tenants' incomes exceeded income limits. Ground-floor retail adjacent to a busy street would be an appropriate use of the space. Vice Mayor Filseth concurred with having some retail space in the project, finding a solution for Studio Kicks, and providing a safe route for children to travel to school. Agenda Changes, Additions and Deletions None. City Manager Comments Ed Shikada, Assistant City Manager, reported Staff had provided the Council with a letter regarding negotiation of a Development Agreement for the Stanford University General Use Permit (GUP). He would attend the Board of Supervisors' meeting the following day to communicate the City's interests. Based on community feedback, the Bol Park stormwater retention proposal would likely be re-designed. The Los Trancos and Costanoan Trails at Foothills Park had been repaired and opened to the public. The resurfacing of Alma Street between Addison and Melville would occur between October 17 and October 20. The deadline to apply for the Architectural Review Board, Parks and Recreation Commission, and the Planning and Transportation Commission was October 17 at 4:30 P.M. A Cubberley community meeting was scheduled for November 1. Staff would provide updates regarding construction of the bike bridge during Council meetings. The prior Friday, Staff submitted 100- percent plans and specifications for the bike bridge to Caltrans for review. FINAL MINUTES Page 14 of 25 City Council Meeting Final Minutes: 10/15/18 Staff was obtaining right-of-way agreements with Google and the Santa Clara Valley Water District. Oral Communications Stephanie Munoz expressed concern about the change in leadership of the California Public Employees Retirement System (CalPERS) because of the plan to invest funds in gun manufacturing. Winter Dellenbach thanked City Staff and Council Members for listening to Barron Park residents' concerns about Bol Park. She questioned the feasibility of stormwater retention in Bol Park given the soil and groundwater contamination in Bol Park. Ken Horowitz reported the Governor had signed legislation that would prohibit cities' implementation of a soda tax for 13 years. The California Medical Association and the California Dental Association were preparing a 2020 ballot measure for a statewide soda tax that could raise almost $2 billion. He hoped the Policy and Services Committee would continue Healthy City Healthy Community initiatives to reduce the consumption of sugar and the new City café would offer healthy food and beverage choices. Andrew Boone remarked that building parking garages would cause long-term damage to the environment and to the community. The City should institute the Bicycle and Pedestrian Transportation Plan at a much faster rate. Housing should be located on El Camino Real because of the availability of public transit along El Camino Real. EV Ellington wanted access to a bikeshare system in Palo Alto. The Council approved a pilot program, but a permit had not been issued. Consent Calendar MOTION: Council Member Scharff moved, seconded by Council Member DuBois, third by Vice Mayor Filseth to pull Agenda Item Number 13 - QUASI- JUDICIAL: 567 Maybell Avenue [15PLN-00248] … to be heard as Agenda Item Number 15A. Vice Mayor Filseth inquired whether Agenda Item Number 13 could be the first action item. Ed Shikada, Assistant City Manager, responded yes. Council Member Kou registered a no vote on Agenda Item Number 6 - Approval and Authorization for the City Manager to Execute the Electric Overhead Construction Services … . FINAL MINUTES Page 15 of 25 City Council Meeting Final Minutes: 10/15/18 Council Member Tanaka registered a no vote on Agenda Item Number 4 - Approval of Contract Number C18170648 With Salas O'Brien … . MOTION: Council Member Tanaka moved, seconded by Council Member Kou, third by Council Member Holman to pull Agenda Item Number 6 - Approval and Authorization for the City Manager to Execute the Electric Overhead Construction Services … to be continued to a date uncertain Vice Mayor Filseth suggested Agenda Item Number 6 be continued to a date uncertain. Mr. Shikada concurred. Stephanie Munoz, speaking regarding Agenda Item Number 13, recalled the attempt to build senior housing on Maybell Avenue. The City could build small affordable housing units on other sites in the City. Jason Oberman, speaking regarding Agenda Item Number 15, advised that Blox Ventures was the new owner of College Terrace Centre. The Khoury family would open a market at College Terrace Centre. Council Member Holman asked about the timeframe for Staff to return with Agenda Item Number 6. Mr. Shikada indicated the timing would depend on upcoming Council agendas. Council Member Holman withdrew her third. MOTION FAILED DUE TO THE LACK OF A SECOND Council Member Tanaka registered a no vote on Agenda Item Number 6 - Approval and Authorization for the City Manager to Execute the Electric Overhead Construction Services … . Council Member Kou registered a no vote on Agenda Item Number 6 - Approval and Authorization for the City Manager to Execute the Electric Overhead Construction Services … . MOTION: Vice Mayor Filseth moved, seconded by Council Member Scharff to approve Agenda Item Numbers 4-12, 14-15. 4. Approval of Contract Number C18170648 With Salas O'Brien in the Total Amount Not-to-Exceed $267,872 to Provide Design Services for the Medium Voltage Electrical Distribution Network (12kV Loop) Rehabilitation (WQ-80021) at the Regional Water Quality Control Plant. FINAL MINUTES Page 16 of 25 City Council Meeting Final Minutes: 10/15/18 5. Annual Review of Williamson Act Contract Renewals Within the City of Palo Alto. 6. Approval and Authorization for the City Manager to Execute the Electric Overhead Construction Services Contract Number C19172366 With Hot Line Construction, Inc. for a Total Not-to-Exceed Amount of $4,500,000 Over Three Years. 7. Approval of the Primary Sedimentation Tanks Rehabilitation and Equipment Room Electrical Upgrade Project Preliminary Design, Capital Improvement Program Project WQ-14003, at the Regional Water Quality Control Plant; and Finding the Project Exempt Under the California Environmental Quality Act (CEQA) Guidelines Sections 15301(b) and (e)(1). 8. Policy and Services Committee Recommendation to Accept the Continuous Monitoring Audit: Green Purchasing. 9. Approval of Revisions to the Palo Alto Field and Tennis Court Use Policy. 10. Adoption of an Ordinance Amending Chapter 4.62 (Citywide Minimum Wage) of the Palo Alto Municipal Code to Correct and Clarify That the First Consumer Price Index (CPI) Adjustment to the Minimum Wage Will Occur in 2020. 11. Authorization to Increase Legal Services Agreement With the Law Firm of Conrad & Metlitzky, LLP in the Amount of $180,000 for a Total Not- to-Exceed Amount of $265,000 for Litigation Defense Services. 12. Approval of a Professional Services Contract With the Municipal Resource Group (MRG) for Transportation Support Services, Operational Review, and Staff Coaching in an Amount Not-to-Exceed $150,000 Through December 30, 2021; and to Amend the FY 2019 Budget Appropriation to Decrease the Non-departmental Budget by $150,000 and to Increase the Transportation Division Budget by $150,000. 13. QUASI-JUDICIAL: 567 Maybell Avenue [15PLN-00248]: Adoption of a Resolution Authorizing the City Manager to Execute an Agreement Regarding Applicant's Request for Deferral of Affordable Housing In-lieu Fees for a Project That Includes the Development of 16 Single-family Homes. Environmental Assessment: Not a Project. Zoning Districts R-2 and RM-15. 14. Approval of Contract Number C19173185 With Siemens Industry, Inc. in an Amount of $1,600,753 for the Colorado Power Station Transformer FINAL MINUTES Page 17 of 25 City Council Meeting Final Minutes: 10/15/18 Replacement; Authorization to Negotiate and Execute Related Change Orders in the Amount of $240,113, for a Total Not-to-Exceed Amount of $1,840,866, and Approval of an Electric Capital Improvement Fund Budget Amendment. 15. Approval of a Proposed Grocery Store Related to Planned Community Ordinance Number 5069 (College Terrace Centre) Based on the Finding That the Proposed Grocery Tenant Would Likely be Comparable in Quality of Produce and Services as JJ&F as it Existed and Operated on December 7, 2009 at 2180 El Camino Real. MOTION FOR AGENDA ITEM NUMBER 4 PASSED: 7-1 Tanaka no, Kniss absent MOTION FOR AGENDA ITEM NUMBER 6 PASSED: 6-2 Kou, Tanaka no, Kniss absent MOTION FOR AGENDA ITEM NUMBERS 5, 7-12, 14-15 PASSED: 8-0 Kniss absent Council Member Tanaka remarked that the City received only one bid in the amount of $4.5 million. It was important to receive several bids, especially for large contracts. Vice Mayor Filseth noted the bid package was sent to 228 contractors. Council Member Kou felt the Council should discuss such a large bid. Action Items 15A. (Former Agenda Item Number 13) QUASI-JUDICIAL: 567 Maybell Avenue [15PLN-00248]: Resolution 9794 Entitled, “Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Execute an Agreement Regarding Applicant's Request for Deferral of Affordable Housing In-Lieu Fees for a Project That Includes the Development of 16 Single-family Homes. Environmental Assessment: Not a Project. Zoning Districts R-2 and RM-15.” Council Member Scharff explained that he believed the 3-percent amount did not reflect the City's actual costs. A market interest rate would be 5 percent per annum compounded the same as any other loan. Ted O’Hanlon, Applicant, had expected the agreement to provide for compounded interest. He felt 3 percent was a reasonable premium based on the return on public funds published quarterly, which was 1.9 percent. The FINAL MINUTES Page 18 of 25 City Council Meeting Final Minutes: 10/15/18 project had been under review for 4.5 years, and he wanted to build the houses. He could agree to a 4-percent compounded rate. MOTION: Council Member Scharff moved, seconded by Council Member DuBois to adopt a Resolution authorizing the City Manager or designee to execute an Agreement between the City of Palo Alto and Golden Gate Homes, LLC, creating a lien to secure payment of deferred affordable housing in-lieu fees that will accrue interest at four percent (4 percent) annually, compounded. Council Member DuBois was interested in some market-rate language where the interest rate was tied to an actual rate. If applicants were deferring payment, the Council should change the Ordinance to have a market-based interest rate and provisions for compounding interest. Molly Stump, City Attorney, advised that Staff would develop some options for revising the Ordinance and return to Council. Vice Mayor Filseth stated that having an interest rate greater than the City's cost of capital was logical given that construction costs were increasing faster than the City's cost of capital. MOTION PASSED: 7-1 Wolbach no, Kniss absent 16. Resolution 9795 Entitled, “Resolution of the Council of the City of Palo Alto Authorizing the Delivery and Sale of Certificates of Participation (COPs) in a Principal Amount Not-to-Exceed $50 Million to Finance the Construction of the California Avenue Parking Garage; Declaring the Intention to Reimburse Expenditures Related to the California Avenue Parking Garage From Proceeds of the COPs; Approving, Authorizing and Directing the Execution of Certain Lease Financing Documents; Approving a Preliminary Official Statement; and Authorizing and Directing Certain Related Actions.” Tarun Narayan, Treasury Manager for Debt and Investments, reported the bonds were referred to as Certificates of Participation (COP). Staff sought Council approval to issue COPs in an amount not to exceed $50 million. Staff was evaluating the costs and benefits of issuing a portion of the COPs as taxable securities to allow flexibility over the next 30 years for private use of a portion of the garage. The financing structures under consideration included all tax-exempt COPs or a mix of tax-exempt and taxable COPs. If the Council adopted the Resolution and related documents, Staff would work with the City Manager to determine whether financing a portion of the California Avenue parking garage construction on a taxable basis or selling the COPs on a comparative and/or negotiated basis was in the City's best interest. Tax- FINAL MINUTES Page 19 of 25 City Council Meeting Final Minutes: 10/15/18 exempt COPs tended to have the lowest financing cost, but they limited the private use of the garage. Tax-exempt COPs could be refinanced with taxable debt. Taxable COPs had a higher financing cost, provided greater flexibility in the facility's private use, and could be refinanced with a tax-exempt issuance at any time. Issuing 75-percent tax-exempt bonds and 25-percent taxable bonds would increase costs by 1.5 percent. Issuing tax-exempt bonds would add 0.13 percent to the interest rate of a taxable/non-taxable mix of bonds, which would cost approximately $40,000 per year or $1.1 million over 30 years in additional debt service. The City needed approximately $42.6 in COP proceeds to fund $39.5 million for garage construction, $2.7 million for capitalized interest, and $0.4 million for COP issuance costs. If the Council approved the Resolution, it would give the City Manager the authority to determine whether a competitive or negotiated sale would be in the best interest of the City. The City's rating for COPs was AA+. The COPs would mature in 30 years. The financing schedule included receipt of construction bids in late October, awarding of a construction contract in late November, completion of the COP sale in early or mid-December, and commencement of construction in early January 2019. Rinconada Library and the California Avenue parking garage would be used as collateral. The project was consistent with the Council's 2014 Infrastructure Plan. The debt service would include a standard ten-year call protection. A Debt Service Reserve Fund was no longer necessary for highly rated entities such as the City, which would save the City more than $5 million over a 30-year period. The revised Resolution was provided with the at-places memorandum. Vice Mayor Filseth cautioned the public to speak to the financing structure rather than construction of a parking garage. Kelsey Banes did not support the City financing or constructing the garage. The City should explore other parking solutions. Currently, parking in the garage was less expansive than taking public transit. Andrew Boone opposed the City's use of bond financing for a new parking garage. The total cost would be $72 million. The cost of constructing the garage had risen from $35 million to $50 million. The cost of each parking space would be $160,000. The project violated the City's Comprehensive Plan and State climate change law. Council Member Fine would not support financing a parking structure. He asked if the City currently had any private uses in any of the garages. Perhaps the valet programs qualified as a private use. Kiely Nose, Interim Chief Financial Officer, clarified that private uses could occupy a maximum of 10 percent of facilities. FINAL MINUTES Page 20 of 25 City Council Meeting Final Minutes: 10/15/18 Ed Shikada, Assistant City Manager, added that the solar Power Purchase Agreements were considered a private activity because they involved a third party leasing a portion of the garages. Council Member Fine inquired whether revenue from the 2014 Transient Occupancy Tax (TOT) increase covered the debt service estimates. Ms. Nose indicated the 2014 2-percent TOT increase and TOT revenue from hotels opened after 2014 totaled approximately $8 million. Staff leveraged approximately 70 percent of current TOT revenue estimates in anticipation of an economic downturn. Council Member Fine emphasized that the total cost of the garage would be $72 million. The garage would incentivize people to drive to California Avenue. Financing would require the City to collateralize Rinconada Library. The City had better uses for its money and land. MOTION: Council Member Scharff moved, seconded by Council Member DuBois to: A. Adopt a Resolution (included in the At-Places Staff Memorandum) approving, authorizing, and directing execution of certain lease financing documents, approving a Preliminary Official Statement, declaring the intention to reimburse expenditures, and authorizing and directing certain actions with respect thereto; and B. Authorize execution and delivery of one or more series of Certificates of Participation (COPs) in an amount not to exceed $50 million to finance the California Avenue Parking Garage construction. Council Member Scharff remarked that the Infrastructure Plan had been in place for several years. The Council had promised the community a parking garage. Council Member DuBois requested the number of City properties that served as collateral for COPs. Mr. Narayan answered Fire Station 1 was the only City property serving as collateral. Council Member DuBois verified that the City received the highest credit rating possible. Mr. Narayan replied yes. FINAL MINUTES Page 21 of 25 City Council Meeting Final Minutes: 10/15/18 Council Member Wolbach requested the impact of the Council not adopting the Resolution. Ms. Nose reported Staff would develop a new funding plan for the garage project and determine the impact on the Infrastructure Plan. Council Member Wolbach had supported construction of the parking garage as parking in the California Avenue area was congested. He inquired whether the parking garage was designed such that it could be converted to a different use in the future. Matt Raschke, Senior Engineer, explained that the garage contained four levels. The levels fronting Sherman Avenue were flat and theoretically could be converted to small housing units. Council Member Wolbach asked if payment could be collected upon entry to the garage or through a parking permit. Mr. Raschke stated the design included infrastructure for future gates and a ticket system. The garage would have a camera-based automated guidance system that could be utilized for revenue collection based on a license plate reader system. Council Member Wolbach requested information regarding electric vehicle charging infrastructure and the ability to charge for use of charging stations. Mr. Raschke related that the Building Code required the installation of charging capacity for 25 percent of the number of stalls. Staff had selected a charging unit that allowed the City to charge for use of the charging stations. Mr. Shikada requested clarification of the number of charging stations that would be available as soon as the garage opened. Mr. Raschke responded approximately 46. Mr. Shikada understood ultimately 160 spaces would be capable of charging electric vehicles. Council Member Wolbach requested a comparison of the $160,000 cost per parking space with the effectiveness of Transportation Demand Management (TDM) programs. Mr. Raschke clarified that the current construction cost was estimated at $35 million. With a 10-percent contingency, the construction cost rose to approximately $39 million. FINAL MINUTES Page 22 of 25 City Council Meeting Final Minutes: 10/15/18 Council Member Wolbach wanted to know the cost of the garage at the end of the day. Ms. Nose noted the City had not received bids on the construction of the garage; therefore, the actual construction cost was not known. The cost of the garage over a 30-year term would include all construction, interest, and debt costs. Council Member Wolbach was not comfortable with the financing plan and would vote against it. It was extremely important to charge for parking in the garage, at least on the upper floors. Council Member Scharff noted the City would charge for monthly parking. Council Member Wolbach wanted to ensure the parking fees increased over time. Council Member Holman inquired about the impact of issuing the COPs on the City's credit rating. Mr. Narayan reported the City's rating for COPs was AA+ and for General Obligation (GO) bonds was AAA. Council Member Holman asked how the Downtown garage would be funded. Ms. Nose advised that the Downtown garage would be funded through impact fees and the Stanford University Development Agreement. Council Member Holman asked if Staff was planning to issue COPs for the Downtown garage. Ms. Nose was not certain. Council Member Holman requested the circumstances under which the City would lease an entire floor of a garage. Mr. Shikada did not believe leasing a floor of the garage was viable. Staff had not discussed and would not consider leasing a floor of a garage. Council Member Holman would support the financing structure. She had different perspectives on the California Avenue garage than on the Downtown garage. Council Member Kou asked if Staff explored formation of an assessment district. FINAL MINUTES Page 23 of 25 City Council Meeting Final Minutes: 10/15/18 Mr. Shikada did not recall Staff considering an assessment district. Council Member Kou asked if Staff settled on issuing COPs rather than exploring other funding mechanisms. Ms. Nose explained that the 2014 Infrastructure Plan adopted by the Council included funding mechanisms. Council Member Tanaka asked if the interest was variable or fixed. Mr. Narayan advised that the rate would be fixed, but the fixed rate for each coupon tranche would be different. The rates would be fixed upon issuance of the bonds. An increase in interest rates would not affect the bond interest rates. Council Member Tanaka inquired whether the Capital Improvement Program (CIP) budget allocated funding for the construction project. Ms. Nose indicated the CIP budget contained funding for the project, but it contemplated that funding would be provided through a debt issuance. Staff assumed the debt issuance would be COPs based on the 2014 Infrastructure Plan. Council Member Tanaka asked if the cost for debt service would be $2.4 million. Mr. Narayan replied yes. Council Member Tanaka requested the consequences of the 2018 TOT increase not being approved. Ms. Nose advised that the Council would probably need to reprioritize the Infrastructure Plan. If the bonds were issued, there was sufficient revenue within existing TOT streams to meet the obligations of the debt. However, the City's ability to leverage revenues for additional projects would be questionable. Staff would need to reevaluate funding strategies. Council Member Scharff noted failure of the TOT increase to pass would not affect construction of the Public Safety Building (PSB). The City had sufficient funding to construct the PSB. Ms. Nose clarified that the five-year CIP anticipated leveraging debt for the California Avenue garage and the PSB. Staff would need to reprioritize funding for the remaining Infrastructure Plan projects. FINAL MINUTES Page 24 of 25 City Council Meeting Final Minutes: 10/15/18 Council Member Tanaka wanted to know the priority of Infrastructure Plan projects. Mr. Shikada explained that the Infrastructure Plan did not reflect prioritization among projects other than what had previously been reported to the Council. Ms. Nose was not suggesting that there was a priority within the Infrastructure Plan. The question was the source of funding, whether incurring debt or using cash on hand, for projects. The CIP assumed debt financing for the garage and the PSB. Council Member Tanaka reiterated his request for a prioritized list of projects. Vice Mayor Filseth indicated the list of projects was not the agendized item. Council Member Tanaka wanted to understand the source of funding. Molly Stump, City Attorney, understood Council Members had a variety of concerns, but the topic before the Council was the debt issuance. Vice Mayor Filseth noted the Council could authorize Staff to issue the bonds rather than authorize the issuance of bonds. Staff could choose not to issue bonds. Council Member Tanaka requested Staff's opinion regarding interest rates rising or falling over the next year. Ms. Nose had no prediction for interest rates. The Federal Reserve Board of Governors (Fed) had increased rates three times in 2018 and anticipated a fourth increase in December or later. Council Member Tanaka did not like the garage design, but now was the appropriate time to issue debt for its construction. Vice Mayor Filseth asked if the ten-year call protection prevented the City from refinancing the debt if interest rates decreased. Mr. Narayan explained that the ten-year call protection guaranteed that the bond purchaser would hold the bond for ten years. The City could refinance the debt, but new restrictions limited how the bonds could be refinanced. Within the ten year period, the City could refinance a tax-exempt bond with a taxable bond. Vice Mayor Filseth remarked that the City could refinance in a year with a taxable GO bond but would probably lose the benefit of the interest rate change. To impede the implementation decision in an attempt to reverse the construction decision was undisciplined and not a good process. FINAL MINUTES Page 25 of 25 City Council Meeting Final Minutes: 10/15/18 MOTION PASSED: 6-2 Fine, Wolbach no, Kniss absent MOTION: Council Member Scharff moved, seconded by Vice Mayor Filseth to temporarily adjourn the City Council’s meeting to allow the members of the City Council, in their capacity as the members of the Board of Directors of the Palo Alto Public Improvement Corporation, to consider approval of the proposed financing. MOTION PASSED: 8-0 Kniss absent Council Meeting temporarily adjourned at 10:43 P.M. Palo Alto Public Improvement Corporation meeting convened at 10:43 P.M. Council Meeting reconvened at 10:45 P.M. State/Federal Legislation Update/Action None. Council Member Questions, Comments and Announcements Council Member Holman noted Staff had not presented the Council Procedures and Protocols, vehicle habitation, review of Staff Report procedures, and Board and Commission standards to the Policy and Services Committee. Council Member Wolbach reported he attended the Cities Association of Santa Clara County meeting, where the formation of a Roundtable regarding airplane noise and of an Association of Bay Area Governments (ABAG) subregion were approved. Council Member Scharff remarked that both items were significant achievements. San Jose and a couple of other cities had indicated they would join the Roundtable only if changes were made to the Bylaws. Adjournment: The meeting was adjourned at 10:49 P.M.