HomeMy WebLinkAbout2010-03-08 City Council Agenda Packet
1 03/08/10
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Agenda posted according to PAMC Section 2.04.070. A binder containing supporting materials is available in the Council
Chambers on the Friday preceding the meeting.
Special Meeting
Council Chambers
March 08, 2010
6:00 PM
ROLL CALL
CLOSED SESSIONS
Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker.
THE FOLLOWING CLOSED SESSION WILL BE HELD WITH THE CITY LABOR NEGOTIATORS.
1. CONFERENCE WITH LABOR NEGOTIATORS
City Designated Representatives: City Manager and his designees
pursuant to Merit Rules and Regulations (James Keene, Kelly Morariu,
Russ Carlsen, Lalo Perez, Sandra Blanch, Marcie Scott, Darrell Murray,
Joe Saccio)
Employee Organization: Local 521, Service Employees International
Union (SEIU) - SEIU Hourly Unit
Authority: Government Code Section 54957.6(a)
CONFERENCE WITH LABOR NEGOTIATORS
City Designated Representatives: City Manager and his designees
pursuant to Merit System Rules and Regulations (James Keene, Kelly
Morariu, Russ Carlsen, Sandra Blanch, Darrell Murray, Marcie Scott,
Lalo Perez, Joe Saccio)
Employee Organization: Local 521 Service Employees International
Union
Authority: Government Code Section 54957.6(a)
2 03/08/10
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER
DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS.
CONFERENCE WITH LABOR NEGOTIATORS
City Designated Representatives: City Manager and his designees
pursuant to Merit Rules and Regulations (James Keene, Kelly Morariu,
Russ Carlsen, Lalo Perez, Sandra Blanch, Marcie Scott, Darrell Murray,
Joe Saccio, Dennis Burns)
Employee Organization: Palo Alto Police Managers’ Association (Sworn)
Authority: Government Code Section 54957.6(a)
7:00 PM or as soon as possible thereafter
STUDY SESSION
2. Study Session to Provide the Status of Implementation of Council
Direction on Composting and to Present Recent Information Regarding
Possible Regional Composting Opportunities
ATTACHMENT
SPECIAL ORDERS OF THE DAY
3. Appointment to the Planning and Transportation Commission for One
Unexpired Term Ending on January 31, 2012
ATTACHMENT
CITY MANAGER COMMENTS
ORAL COMMUNICATIONS
Members of the public may speak to any item not on the agenda; three minutes per speaker. Council reserves the
right to limit the duration or Oral Communications period to 30 minutes.
APPROVAL OF MINUTES
January 25, 2010
February 1, 2010
February 8, 2010
February 22, 2010
CONSENT CALENDAR
Items will be voted on in one motion unless removed from the calendar by two Council Members.
3 03/08/10
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER
DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS.
4. Approval of a Three-Year Extension to the Agreement with the United
States Geological Survey in the Amount of $186,000 for San Francisco
Bay Monitoring
CMR 146:10 & ATTACHMENT
5. Approval of Utilities Water, Electric and Gas Enterprise Fund Contract
with Enernex Corporation in the Total Amount of $140,000 for
Consulting Services to Develop a Smart Grid Strategic Plan
CMR 148:10 & ATTACHMENT
6. Adoption of a Resolution Committing $2.5 Million In-Lieu Fees from
SummerHill Homes to Tree House Apartments, L.P. for the
Development of the 35-Unit Affordable Housing Tree House
Apartments Project at 488 W. Charleston Road
CMR 155:10 & ATTACHMENT
7. Approval of a Water Enterprise Fund Contract with URS Corporation in
the Total Amount of $482,392 for Professional Engineering Services for
the Assessment, Design and Construction Management Services for
Coating and Seismic Upgrades of Six Existing City Reservoirs and
Rehabilitation of Three Receiving Stations Project WS-07000, WS-
08001 and WS-09000
CMR 139:10 & ATTACHMENT
8. 2ND READING Adoption of an Ordinance Amending Section
21.04.030(a)(30) of Title 21 (Subdivisions) of the Palo Alto
Municipal Code to Revise the Definition of “Private Streets”
(First reading February 01, 2010—Passed 9-0)
9. Recommendation to Direct the Utilities Advisory Commission to
Consider the Fiscal Year 2011 Wastewater Collection Fund Budget and
Rates
CMR 144:10
10. Adoption of Budget Amendment Ordinance for Fiscal Year 2010
to Provide Additional Appropriation of $89,196 Within the
4 03/08/10
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER
DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS.
General Fund for the County of Santa Clara Registrar of Voters
November 2009 Election Costs
ATTACHMENT
11. Confirmation of Appointment of Pamela Antil as Assistant City Manager
and Approval of At-Will Employment Contract
CMR 167:10 & ATTACHMENT
12. Confirmation of Appointment of Gregory Betts as Director of
Community Services and Approval of At-Will Employment Contract
CMR 168:10 & ATTACHMENT
13. Adoption of a Resolution to Consent to the City of Palo Alto Being
Included Within the Boundaries of the San Mateo County Tourism
Business Improvement District and Direction to Terminate Destination
Palo Alto Contract
CMR 154:10 & ATTACHMENT
AGENDA CHANGES, ADDITIONS, AND DELETIONS
HEARINGS REQUIRED BY LAW: Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and put up to three minutes for concluding remarks after other members
of the public have spoken.
OTHER AGENDA ITEMS: Public comments or testimony on agenda items other than Oral Communications shall be
limited to a maximum of three minutes per speaker.
ACTION ITEMS
Include: Public Hearings, Reports of Committees/Commissions, Ordinances and Resolutions, Reports of Officials, Unfinished Business and Council Matters
14. Designation of City Manager as Google Fiber to Communities Project
Point Person and Approval of and Delegation to the City Manager to
Provide Answers to Google’s Request for Information for its Fiber for
Communities Plan
CMR 159:10 PUBLIC COMMENT
15. Policy and Services Committee Recommendation to Direct Staff to
Perform a Study Evaluating the Impact of Prevailing Wage on City
Capital Construction Projects
CMR 151:10 & ATTACHMENT
5 03/08/10
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER
DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS.
16. Colleague’s Memo from Council Member Yeh, Holman, and Scharff
Requesting Council to Refer to Policy & Services to Return with a
Recommendation for 1) an Amendment to City Policy to Require
Release of CMRs and Supporting Documents (The Packet) at an Earlier
Date and 2) Amend Council Policy Regarding Late Submissions for
Planning Projects
ATTACHMENT
17. Colleague’s Memo from Vice Mayor Espinosa and Council Members
Klein, Scharff, and Schmid Requesting the City Council to Appoint an
Infrastructure Blue Ribbon Commission (IBRC)
ATTACHMENT
18. Public Hearing: Consider the Approval of Water Supply Assessment to
Stanford Medical Center Facilities Renewal and Replacement Project
(APPLICANT REQUESTS ITEM TO BE CONTINUED BY COUNCIL MOTION TO
3/15/10)
ATTACHMENT PUBLIC COMMENT
COUNCIL MEMBER QUESTIONS, COMMENTS, AND ANNOUNCEMENTS
Members of the public may not speak to the item(s).
ADJOURNMENT
Persons with disabilities who require auxiliary aids or services in using City facilities, services, or programs or who
would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact
650-329-2550 (Voice) 24 hours in advance.
2
CITY OF PALO ALTO
Memorandum
March 3, 2010
TO: City C6uncil
SUBJECT: Study Se§si6n t6 Pr6vide the Status 6f Implementati6n 6f Council Direction
IOn Comp6sting and t6 Present Recent Inf6rmati6n Regarding P6ssible
Regional C6mp6sting Opp6rtunities
On March 8, 2010, staff will make a presentation to Council summarizing the following items in
regards to the subject referenced above:
1) the results of the Final Report of the Compost Blue Ribbon Task Force (Task Force)
dated September 2009;
2) the request for further staff analysis by Council on October 19,2009; and
3) a preliminary summary of staff's response to October 19,2009 Council directive.
Staff's response to Council is now scheduled to go to Council on April 5, 2010. The Study Session
on March 8th is designed to prepare Council (and especially the four new Council members) for the
Council Meeting on April 5, 2010.
ATTACHMENTS
Attachment A: Compost Task Force Final Report, dated September 2009
Attachment B: Council Minutes of October 19,2009
PREPARED BY: Phil Bobel, Manager Environmental Compliance Division
PALO ALTO
COMPOST TASK FORCE
Steve Albertolle
Cedric de La Beaujardiere
Bryan Long
FINAL REPORT
SEPTEMBER 2009
Task Force Members
Craig Barney
Jeremy Eddy
Emily Renzel
ATTACHMENT A
Maria Coladonato
Hilary Gans
Bob Wenzlau
TABLE OF CONTENTS
I. Executive Summary ................................................................................................... 1
II. Background ................................................................................................................ 3
III. Mission and Criteria ................................................................................................... 4
A) Mission .............................................................................................................. 4
B) Criteria .............................................................................................................. 4
IV. ApprQach of the Task Force ..................................................................................... 11
V. Findings and Conclusions ........................................................................................ 11
A) Acreage Requirement ...................................................................................... 12
B) Composting Technologies .............................................................................. 13
C) Advanced Technologies .................................................................................. 13
D) Ranking Tool .................................................................................................. 15
E) Greenhouse Gasses ......................................................................................... 16
F) Economic Impacts ........................................................................................... 16
VI. Recommendations and Next Steps ........................................................................... 17
A) Short Term Recommendations ....................................................................... 17
B) Recommendations for 2012 ............................................................................ 19.
C) Recommendations for 2015-2021 ................................................................... 19
D) Next Steps ....................................................................................................... 19
VII. Alternatives and "Pros and Cons" ............................................................................ 20
A) Short Term (Operational) Alternatives ........................................................... 20
B) 2012 Alternatives ............................................................................................ 20
C) 2015-2021 Recommendation .......................................................................... 21
Appendix
A) Short Term Recommendations of the Task Force and Palo Alto Staff Response
B) Airport/Compost Issues
C) Integrating Airport and Compost Facilities
D) 2021 Location Screening (Task Force)
E) Task Force Activities
F) Greenhouse Gas Impacts (Bryan Long)
G) 2012 Cost Analysis (Aerobic Subcommittee)
H) Further Analysis
I.
Palo Alto Compost Task Force
Final Report
September 2009
Executive Summary
Palo Alto's Compost Task Force was initiated by City Council on January 12,2009
and operated from March through September 2009. Its Council-assigned objective
was to "evaluate and recommend alternatives to address Palo Alto's composting
needs." Possible short-term m ------------.
improvements to existing I GHG Reduction Opportunity: 3% or more of Palo Alto Emissions
operations were evaluated, as Metric Tons CO,e
well as longer-term 100.000
technology projects that 90.000
might reduce greenhouse gas land~lIed ,Highesti""'''' 80,000
Foadwasle & emISSIOns, generate clean Campallables
energy, and lower rate-payer
costs. The Task Force found
that very substantial
greenhouse gas (GHG)
reductions can be achieved
by diverting food and other
wet organic wastes from
landfill disposal, and by
moving to advanced energy-
recovery technology for our
sewage, food, and yard
wastes.
Wastewater
Incineration "-
"
Yard waste
Compolling
2008
Baseline
With commerc:ial
foodwasle &
yard waste
composting
With locol
Anaerobic:
Digestion
70,000
60,000
50,000
<10,000
30,000
20.000
10,000
The Task Force employed an initial screening to establish recommendations for
implementation by 2012. The Task Force subsequently used a software based
ranking tool to evaluate twelve potential locations and thirteen potential
technologies that could be implemented longer term, directed at 2021. The results
are somewhat grouped, resulting in five locations and five technologies showing the
greatest promise. With a desire to keep parkland as a distinctly secondary option,
the Task Force decided to link its short and long term recommendations into a
phased approach at a non-parkland site adjacent to the Water Quality Control Plant.
Accordingly, the key recommendations of the Task Force are:
A) Implement the Short Term Recommendations of the Task Force with respect to
current Palo Alto compost operations (Appendix A).
B) Begin work to establish an Anaerobic Organics Processing Facility at the
Embarcadero Road! Airport Site, with the expectation of bringing it online
between 2015 and 2021.
C) Install an Aerated Static Pile Compost Facility at the Embarcadero Road/Airport
Site by 2012 or as soon thereafter as possible.
D) Cease composting at the current location when the Aerated Static Pile facility is
ready, or upon cessation of acceptance of yard trimmings due to landfill closure
(2012), whichever is sooner.
E) Take yard trimmings to the Z-Best facility (Gilroy area) for composting if the
Aerated Static Pile facility is not completed by cessation of acceptance of yard
trimmings.
Corollary recommendations of the task Force are:
F) While the Embarcadero Road/Airport is the most promising site at this time,
other sites adjacent to the Water Quality Control Plant should also be
considered.
G) The City should determine, in the near term, the availability of the current
commercial sites adjacent to the Water Quality Plant.
H) The City should utilize the upcoming Master Planning process for the Water
Quality Plant to continue to help analyze the long term (2015-2021) options for
organics material management within Palo Alto.
I) The City should add residential food scrap collection to the GreenWaste
contract as soon as practical.
J) The City should include small-scale pilot demonstration projects as part of the
process in selecting a long term (2015-2021) technology or technologies.
K) City staff should maintain the compost email list and webpage and continue to
notify Task Force Members and interested parties of proposed and final actions
and activities regarding organic materials management in Palo Alto.
While, in the long term, anaerobic processing appears preferable, a final technology
selection should depend upon an evaluation of responses to a Request for
Information (RFI) and, ultimately a Request for Proposals (RFP). Ultimately, the
selection of a suitable solution is an iterative process. Vendors require detailed
information regarding potential sites before they can provide accurate cost or design
estimates.
The Embarcadero Road/ Airport site has a number of issues which were identified
jointly with the Airport Community and are contained in Appendix B. Should
Council decide to have this site fully considered, the next steps would be to:
~ Develop sufficient preliminary design details to request FAA approval, and
~ Prepare a companion plan for airport improvements to mitigate compo sting
facility impacts. A rough example of such a plan from several Task Force
Members is in Appendix C.
2
Available land is very limited and substantial challenges exist for all studied sites.
Because the Task Force evaluated sites and technologies in parallel, acreages and
site specific details could not be provided to assist vendors. The Task Force
envisions the City soliciting Requests for Proposals to obtain more specific
information pertinent to the decision-making process once the location has been
selected. Final site selection cannot occur now. Many challenges exist with the
Embarcadero Road! Airport Site which must be addressed. The overriding
recommendation of the Task Force is to select a technology which minimizes the
escape of methane currently occurring, and maximizes the extraction of energy
from Palo Alto's organics.
II. 8ackg rou nd
Palo Alto's landfill is scheduled to cease waste acceptance in 2012. The current
compost facility is located on the landfill site, and is required to cease yard
trimmings acceptance shortly thereafter. The current plan, should nothing change,
is to transport yard trimmings to Z-Best's compost facility near Gilroy. Many
community members were very reluctant to see this option become reality because
of the greenhouse gas emissions generated in transporting material there, and the
would be failure of the community to deal with its own residuals. Many of those
same community members did not want dedicated parkland (the current site) to
continue to be used for composting. This dilemma led to the formation of the
Compost Task Force. Finding a suitable site and a suitable technology has proven
to be extremely difficult.
The City of Palo Alto generates roughly 21,000 tons/year of segregated yard
trimmings, 12,000 tons/year of food scraps and 24,000 tons/year of sewage
biosolids. All three categories and other unsegregated organics are shown in Figure
1 below.
Sources of Organics
67,000 Tons Per Year
3
I Figure 1 I
1%
Composition of
Disposed Organics
III. Mission and Criteria
A) Mission
The Task Force established the following Mission for itself:
"The Compost Task Force mission is to evaluate and recommend
alternatives, in accordance with the Council's 1112/09 Compost
Action, to address Palo Alto's organics material management needs,
within approximately six months. Short term improvements,
environmental impacts, economic impacts, permitting, .location and
energy generation will be addressed. Locations on Palo Alto parkland
would be considered as a second priority after all other non-parkland
options have been pursued."
The Mission summarized a more detailed directive Council approved when it
created the Task Force. In its directive, Council stated that the Task Force shall
"evaluate and recommend alternatives to address Palo Alto's composting needs
... " The Task Force was specifically directed to evaluate the following:
1. Short Term Improvements to Current Operations
2. Environmental Impacts of Alternatives
3. Economic Impacts of Alternatives
4. Permitting of Alternatives
5. Prospective Locations of Alternatives
6. Energy Generation of Alternatives
The Council further directed: "that when the pnonties are set for the
composting facility locations that parklands will be considered as a secondary
priority after all other non-parkland options have been pursued." Council also
requested that the Task Force consider all three of the major types of organic
residuals: yard trimmings, food scraps and sewage biosolids.
B) Criteria
The following screening criteria were developed to eliminate alternatives for
which further analysis would not be produCtive:
1. Demonstrated Technology The process should have been demonstrated,
preferably in the United States, at a large enough scale to insure success.
2. Permitability There should be a reasonable possibility of success m
obtaining all needed permits.
3. Diversion Credits Obtaining credit for diversion from landfilling under
AB939 should be possible for the process.
4
4. Acceptable for Yard trimmings -The process should, at a minimum, be
effective for yard trimmings. It is highly desirable that it also be effective
for food scraps and sewage biosolids.
5. City-Wide Scale -The process should be able to manage yard trimmings at
a city-wide scale, approximately 18,000 tons per year.
The Task Force researched various options with the goal of recommending a
class of alternatives, while refraining from specifying a particular technology.
Ultimately, the selection of a suitable solution is an iterative process. Many
vendors require detailed information regarding potential sites before they can
provide accurate cost or design estimates. Because the Task Force evaluated
sites and technologies in parallel, acreages and site specific details could not be
provided to assist vendors. The Task Force envisions the City soliciting
Requests for Proposals to obtain more specific information pertinent to the
decision-making process once the location has been selected.
Alternatives were evaluated for two time frames: 2012 and 2015-2021. The
first one coincides with Palo Alto Landfill closure. The second one allows
enough time for emerging technologies to be vetted and constructed. The above
Screening Criteria was used for the 2012 recommendations. To use it for the
2015-2021 recommendations would have screened out alternatives which may
well be viable by 2015-2021 as the processes are more fully demonstrated,
developed and permitted.
Another criteria used for 2012 was timing. If the process could not be
developed, permitted and installed by 2012, it was initially screened out.
With respect to 2015-2021, criteria were developed based upon Council
direction, stakeholder interests, and resources to be protected. These are shown
in Figure 2. The criteria were then re-categorized to relate to a) Location
(Where?) and b) Type of Process (What?). The "Where" and "What" criteria
are shown in Figures 3 and 4 respectively.
5
Compost Interests & Criteria
Attachment A 3/18/09 F" 2
,
< T-: ,:",,/'~" "~t<1~t::1 ~, '''"',' ,'</i .\C\','/ ~n erel:) '~"'." E;}S0I.lrC?eS\;;"X,1 ",,<' ntena ',',
I. Short term improvements to -neighbors -short term impacts -minimize impacts
current composting -city staff -short term cost -minimize net costs
-compost users -compost aualitv -improve compost quality
II. Environmental impacts of • minimize space
alternatives: • space • minimize odor
• odor • minimize dust
• Footprint • dust • minimize noise
• Odor • noise • minimize energy
• Dust -community • energy • minimize GHGs
• Noise -environmental advocates • GHGs • minimize air contam.
• Energy use/generation • air contam. • minimize water use
• GHG emissions • water use • minimize water contam.
• Zero Waste • water contam. • minimize unused residuals
• unused residuals • diversion from landfill
• maximize soil enrichment
III. Ability to handle: -effective for yard trimmingsorganic
• Organic materials • Reduce source generation materials
• Food scraps • Promote home composting -effective for food scraps
• Sewage solids -effective for sewage solids
• Other solid organics -effective for other organics
-proven effectiveness
IV. Economic viability -rate payers -product marketability -minimize net cost
-General Fund -money -minimize cost fluctuations -financial certainty
-Open Space advocates -regulatory agencies -maximize Byxbee Park creation
V. Locations -affected land users -park land -maximize buffer zone
-nearby park users -infrastructure land -minimize park use
-habitat (environmental impacts from above) -minimize neighbor impacts
-minimize traffic impacts
VI. Permitting/Timing -minimize permit problems
-minimize implementation time
-Civic engagement -maximize local operations
VII. Other -regulatory agencies -business expansion and reuse
-local elected government -local self sufficiency -minimize risks
-organics materials manage. -liability -degree of education -professionals -education -amount of free compost
-free compost
6
No wastes to
other "-
communities ".
Educational
Opportunities
c~ . Fleet maantalns Cost Parkland
Use
/ / /Wsb
-~~
Demonstrates ~\ ! I ~/ ~.Spa~ leadership____ ! ./ ~
_____ ! I ~ _______ I I ,/ ___ Security
Invests --------....:Keeps I Resou~s -.-----. __________ . ' Difficu ----In land ----It ~ (Ity ---._._._-Elect --ty Local to provide>________ -, nCI
GHG Emissions \ / / / --------Natural
(Transportation)__ __~JI~ Gas
Environmental
utter----Impacts on ---
Neighbo~
Air ~ i Em_ns~1 \
N*/// \ T~C I I \
I \
Visual Public Wa!er. Safety EmiSSions
Version 7f2J09
~re?"in20V
-'\~~ Conflicting
\ ~ _--'Uses-
i Availabil~---
I \'\~ FOO~rint \' '''''''. ---_Lead
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Size Shape ~ CEQA
Issues '''''"" Permitting
\ Issues
Commitment
1
7
Figure 3
Capital Operations Staffing ~ \ CO .... ;nts Fluctuatio~ ~~\
Construction ~\ related~ "---~I~
Yard
Waste
Food
Scraps
!
Other Biosolids organics /MSW
Process the
Emissions.---_ ~~, \ I I GHG? " . /' Is it et __ Doesit I
ansporlatian_----m'nmoze '" \ I~. Fie Tr -" • .
, ~\" filS it,l I / elligible /services
Litter Odor 0.... ,~.,;~,/' ~Ian // Water
"" eXlble / for
Air ------= ~ ~waste dds' -Use
Emissions _~ _ :---.... __________ types ~ Non-GHG __ ~Ooes H wei? \ // Space
No • ...--------------'-mln"'~e o1her Doe. H /. ~ _~~nYin>nmental '" mmlmize _~ __________ Security Traffic------------------~~ ~,,"pacIs' ------'-----. '" reso ..... ;c---~ // /. use' ~ ______ Electri 'ty
Visuar-----~ :/: I -C'Whatrln2~21 ~ a
"/ ~ ~ ____ Na1u .. 1
SoIl/'./ Doe, H //jT-Does ft Ga. .."... I ----; hard-", .. ,. and use'
Enrichment // /' """1m,, :"n;mIze PubIc / proJucIs?\ Can H be \ ~ Wastewa1e ~ / I~ ~d \~ r ~ \ ~L -
mdUdIan / ume e '-.. ~
/
Quality \ ~ Shape
W81er "-... COn1amlnation M_~ Helgh1 ." "'-..
I Residuals
Version 712109
Other
Risks
Amount Certainty
of Free of \ Compost approvals
Conflicting ~
Uses· \ "" "'-Permitting Public "'-
Process Construction
Figure 4
Cumulative Where
O.S
0.7
0.6
0.5
0.4
0.3
0.2
0.1
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Contributions to "Where?" in 2021
O.S
• Are Resources Available
I I 10.7
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• Is It Available
0.6 • Is it a Useful Size and Shape
0.5 • D,oes It Minimize Environmental Impacts
0.4 Does it Minimize Cost of land
0.3 • Does it Minimize GHG Emissions
0.2 • Does it Keep it local
• Does it Minimize Parkland Use
0.1
0.0
Note: Description of Locations 1-12 are
found in Appendix D.
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
Cumulative
Contributions to "What?" in 2021
~--~--~--~--~--~--~--~--~--~--~--~--~--.0.7
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en ~ III
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• Does it minimize hard.to-dispose products?
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i 'i! 1:
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. • Does It minimize land use?
1 I 1 0.5 • Is the cost loW?
~
c .e '1li .!I !! l
0.4 • Can it be permitted and constructed in time?
• Is it elligible for diversion credits? 0.3 D Does it minimize other environmental impacts?
0.2 • Does it minimize resource use?
0.1 • Is it flexible to handle waste types well?
0.0 • Does it minimize GHG?
IV. Approach of the Task Force
The City established a website to make available to the public informational
documents which were prepared or used by the Task Force. The group met
regularly every two weeks for six months. The Task Force was coordinated by
Steve Emslie, Assistant City Manager and Phil Bobel, Environmental Compliance
Manager. There were no significant consultant resources available so the Task
Force divided into three research groups to study the available technologies -
aerobic, anaerobic, and high technology. The lack of consultant resources dictated
that most of the analysis be qualitative and not quantitative. This limited the extent
to which the Task Force could implement the Council directive to conduct analysis.
The Task Force held a half day Technology Seminar at which several experts
presented information and at which each of the subcommittees reported its findings.
In addition the entire Task Force toured the compo sting facility at Byxbee Park and
the Aerobic Subcommittee toured the Z-Best facility.
Staff Member Ken Torke provided a decision support software program through
which each Task Force member could rank sites and technologies. The output
from this exercise helped focus the Task Force and expedite decision making.
As the Council did not provide broad consulting support to augment the Task
Force's analysis, this resource limitation caused the Task Force's efforts to be
developed from a more principled approach than a rigorous analytic approach.
Given that the resources were not available for rigorous analysis, the Task Force's
approach was to become informed of technologies, attributes of locations, and
considerations that informed the criteria that were applied. The Task Force enjoyed
a broad skill base that included knowledge of Palo Alto's land use, solid waste
management, finance and accounting and greenhouse gas emissions. As such, this
principled approach allowed examining and ranking alternatives drawing upon
understandings gained across the term of the Task Force's service. Only when a
recommendation was made toward the Embarcadero/Airport Site did the level of
analysis shift to consider more detailed site specific elements.
A chronology of Task Force activities is found in Appendix E.
V. Findings and Conclusions
This section presents a chronological review of the results of the Task Force's work
and serves to answer some of the questions that may arise while reading the overall
report. During the Task Force's six months together, numerous studies have been
performed and findings indicate there are many facets, most of them intertwined, to
be considered. For example: preservation of natural resources and parkland, the
need and desire to reduce green house gas (GHG) emissions, and the potential for
harvesting more useful by-products, beyond compost, from processing our organic
materials such as capturing gasses emitted by decaying matter to produce biofuels
or electricity to power vehicles or buildings.
11
An important realization was that "sequestering" carbon, or storing carbon in solid
forms so that the carbon molecules do not escape into the air, can take many forms.
(See Appendix F). For example, 30% of the carbon contained in yard trimmings is
lost as CO2 to the atmosphere as the plants decompose during the composting
process. Over time the finished compost applied in the soil decomposes further and
emits more CO2. However, regular application of compost increases the total
carbon sequestered in the soil, making composting a way to reduce total C02
released to the atmosphere. If any of the organic materials is missed during the
collection process it ends up in landfill and the closed, oxygen-free environment
turns it into methane, an even worse outcome (See Appendix F) with respect to
GHG.
Upon further study, the Task Force realized that organic materials from food scraps
(vegetable scraps, fruit rinds, coffee grounds, oily pizza boxes, etc.) present an even
greater problem of methane generation in the landfill. Diverting food scraps from
the landfill would add volume to local composting operations to improve economies
of scale, and would increase both the amount of carbon sequestered and methane
avoided. The new GreenWaste Management contract requires that they begin
picking up food scraps from multi-family dwellings and commercial enterprises that
enroll in this program. While this commercial portion could represent
approximately two thirds of the food scrap volume, it may require additional
promotion to get 100% participation. Many cities are now offering single-family
collection programs which greatly increases the effectiveness of diversion of carbon
based materials away from the landfill and subsequent conversion into methane.
Based on discussions with Z-Best, food scraps can add complications to composting
such as vector control and eliminating some potential commercial uses. This issue is
greatly mitigated by utilizing covered static piles which protect and cover the
composting material throughout the conversion process, limiting vectors, particulate
matter being released into the air, and odors. We recommend the city consider
amending the Green Waste agreement and add this service for pick up in residential
green bins as soon as possible.
By increasing the potential volume of compostable material stream with residential
food scraps and biosolids from the sewage plant, the higher volume (in tons per
year or TPY) was then supplied to vendors representing different technologies for
determining Palo Alto's potential use of various technologies for composting. As
detailed elsewhere in this report, three sub-committees were formed that studied
publicly available consulting studies prepared for other cities, websites, articles and
contacting vendors to determine if they met our criteria and what their processes
might be. While the process and outcome are detailed elsewhere in the report, the
following are some findings and conclusions related to "What" we do:
A) Acreage Requirement
The acreage requirement for almost all technologies is about 4-6 acres. They
require space for trucks to dump the material, for grinding and loading, for
removal of the finished product and reloading into trucks. Some advanced
technologies claim to use less than 4 acres; however the Task Force did not see
clear evidence to support this. An outside expert consultant (Jim Binder)
12
pointed out that cost minimization and efficiency maximization result when the
site supports a straight path from beginning to end as opposed to having to
create artificial turns to fit a smaller or oddly shaped location.
B) Composting Technologies
Research on the state of composting technologies indicated that current
operations could be significantly improved both in terms of quality of output
and diversity of materials processed, by changing to an enclosed system.
Enclosing the operation speeds the decomposition process, minimizes odor and
release of particulate matter into the air and vector issues while improving the
quality of the final product. This can range from open aerated static piles where
forced air is used to speed decomposition, to enclosed static piles where the
organic matter is covered to capture the water and heat produced to speed the
process and minimize exposure of dust, odor and access to vectors. The cost of
aerated static piles is also much lower since it involves a simple cement floor,
aeration pipes, blowers and biofilters and covering material. For Palo Alto's
organics stream an aerated static pile system would cost approximately $2.5
million.
C) Advanced Technologies
There are few commercial facilities with operating permits in North America for
advanced technologies such as wet anaerobic, low heat carbon cracking
technology for bio char production, or higher heat incineration called pyrolysis
or gasification. Bio char was identified early in our process as a very promising
because the carbon sequestering capability is very high. Using low heat
incineration, wood and trimmings are effectively turned into charcoal which can
then be ground and used as a soil amendment. The charcoal sequesters the
carbon for a much longer period of time than compost and is very beneficial as a
soil amendment. All of these technologies, while very promising, are still in the
early adoption phase where multiple vendors seems to have a unique approach
and standards are not widely accepted. Comparing the technologies involves
comparing vendors which makes the process dependent on individual vendor
cooperation. Presently, large city operations such as New York, Los Angeles,
Sacramento and Santa Barbara are getting much attention as they evaluate these
technologies. However, no final decisions have yet been made for these
jurisdictions.
For example, San Jose has announced that Harvest/Bekon may build an
anaerobic compost operation on Zanker Road in San Jose. The outputs of the
process will be compost, gas for combustion to generate electricity or for
liquefaction for use in cars. Bekon is an experienced German company that has
operations throughout Europe and other parts of the world. It is important to
note that Europe's cost of energy and electricity are significantly higher than
current US costs and thus the return on investment is much greater. The Task
Force expects US oil prices to increase driving energy and transportation costs
higher. This would make the economics more similar to Europe and anaerobic
composting would become more attractive over the next several years.
13
Other advanced high temperature technologies are beginning to come on line
and were also evaluated. These technologies involve incineration at higher
temperatures and use the heat from burning the resultant synthetic gases to
generate electricity. The heat is high enough to change the molecular structure
of the waste so that the byproduct is a non-toxic ash that can be used in road
beds or disposed of in landfills. These technologies are only efficient if used to
incinerate the whole spectrum of municipal waste that presently ends up in
landfill including non-recyclable pla,stics, rubber, tires, medical waste and other
waste streams that currently end up in landfill. Adoption of these technologies
as a way to reach landfill diversion goals has been further complicated by
competing bills in the California legislature regarding the types of technologies
that qualify for diversion credit. One legislative proposal states that once a city
is recycling more than 50% of potential materials, it can use advanced
technologies to process municipal solid waste (trash and organic materials) and
receive diversion credits. The second proposal requires a minimum of 75%
recycling before advanced technologies qualify for diversion credit.
Once this debate is finalized there may be a way for Palo Alto to work
independently or with surrounding cities to utilize its entire municipal waste
stream for diversion credit which would greatly increase the contribution of
composting and waste disposal to the city's goal of 100% GHG reduction.
Given the state of this industry, and the timing of the GreenWaste Management
contract, significant developments in this area are likely to be 7-10 years out.
However, given permitting, contracting and implementation timing this is an
area that Palo Alto needs to begin studying soon.
The logical progression of technology usage over time could flow as follows:
1. Yard trimmings plus the addition of food scraps and possibly biosolids in a
simple covered aerated static pile operation
2. Increased recycling efforts to reach 75% or greater of waste stream
3. Anaerobic digestion of organic materials
4. Use of advanced gasification technologies to mlllllllize landfilling and
generate significant power for the City using the municipal waste stream
currently being sent to landfills.
An additional consideration, and part of the theme "What we do is more
important than where we do it", is working with San Jose, Oakland or another
regional municipality and take our compostable stream to their anaerobic
facility. This would provide an opportunity to move the technology forward and
support development of the Task Force's recommended anaerobic processing.
14
For example, the geographical center of Palo Alto from a garbage collection and
transportation perspective (See GreenWaste Management Contract) is Silva
Avenue. Relevant distances for hauling follow:
~ Distance to San Jose Zanker and Los Esteros Road locations: 12.5
miles
~ Distance to Embarcadero Road site: 4.7 miles
~ Net additional miles: 7.8
The downsides to teaming with San Jose could be the loss of long term control,
the loss of negotiating power (i.e. small fish -big pond), and the loss of
leadership that historically has benefitted Palo Alto.
DJ Ranking Tool
As for the "Where" side of this discussion, the tool for the Task Force's ranking
process are described and the output are included in this package. While no tool
is perfect, the Task Force considered the tool a significant decision making aid
and considered the following important factors:
I. Personal values: The Task Force members came with a set of core values
that consciously or unconsciously would be included in the process. The
decision making tool acknowledged this and allowed people to express their
values so that they would be both visible to all but also weighted equally for
each person. Thus the loudest voice or the most stubborn had no more
weight than the quietest.
2. Breadth of choices: The tool allowed unlimited choices for selection. Thus
several meetings were spent debating the precise definition of what
"adjacent to the Water Quality Plant" meant or whether the old Los Altos
treatment plant was a viable option for selection and so on. Adjacency to the
water treatment plant was discussed throughout the months because there
was appealing vacant land around it. City staff indicated it may be easier to
secure permits in this area. Further, the Water Quality Plant would be a
ready consumer of any power produced from any of the advanced
technologies and has a ready supply of recycled water which could be used
without the use of any incremental GHG's to produce water if needed for
the composting process.
3. The outcome of the ranking process reinforced a choice near the Water
Quality Plant and gave it credibility among Task Force members. The
locations surrounding the water treatment plant clustered very clearly at the
top. Locations utilizing parkland did not do as well. Locations which
seemed unfeasible or impractical compared to others came out lower,
increasing confidence in the ranking tool.
15
E) Greenhouse Gasses
Substantial greenhouse gas (GHG) reductions can be achieved first by diverting
food and other wet organic wastes from landfill disposal, and then by moving to
advanced anaerobic digestion technology for our biosolids, food scraps, and
yard wastes. Non-local transport of our organic wastes contributes to GHG
emissions, but as can be seen from the chart below, how we process our organic
wastes matters much more than where that processing occurs.
Food scraps and other
moisture-rich
compostable wastes
quickly decompose in
landfills, releasing
substantial methane gas
long before methane
recovery systems are in
place. Achieving the
contract collection
target of our new
commercial,
institutional, and multi-
family residence
(C/IIM) food scraps
program will reduce
methane emissions by
GHG Reduction Opportunity: 3% or more of Palo Alto Emissions
landfllled
foodwaste &
Compo"obles
Wastewater
Incineration
Yard waste
Composting "..
2008
8aseline
High estimate
LoweSlimate
With oommer<;ial
foodwaste &
yard waste
oomposling
Metric Tons CO ..
With 10001
Anaerobic
Digestion
100,000
80,000
70,000
60.000
50,000
"'0,000
30,000
20,000
10,000
at least 6,000 and as much as 15,000 metric tons (mT) of C02 equivalent,
depending on emissions model assumptions. Surpassing our collection target or
implementing a single-family foodwaste collection program would reduce GHG
emISSIons even more.
The use of Advanced Anaerobic Digestion (AAD) facility to process our
wastewater sludge, CIIIM foodwaste, and collected yard wastes would reduce
C02 emissions by an additional 14,000 mT of C02 equivalent. A 50% increase
of total foodwaste collections (from the current target of 9,000 mT) would result
in an additional reduction of between 6,300 and 16,200 mT of C02e.
Together, these steps could reduce our city's GHG emissions by 2% to 4% from
the total emissions estimated in the Palo Alto Climate Action Plan. It should be
investigated whether some of this might qualify for carbon credit sales under the
emerging GHG Cap and Trade legislation.
F) Economic Impacts
Due to the complex nature of the technologies, the proprietary nature of vendor
information, and the lack of sufficient time, the Task Force was not able to
complete a quantitative economic analysis of alternatives. The Aerobic
Subcommittee completed initial work on the current Palo Alto compost
operation and the Z-Best (Gilroy) alternative and this work is contained in
Appendix G. A preliminary cost analysis of an aerated static pile operation at
the Embarcadero Road! Airport site for 2012 was begun by Task Force members
but engineering estimates do not yet exist. The next step City staff would have
16
to take for this alternative is to prepare an engineering estimate, should Council
so direct staff.
With respect to the 2015-2021 recommendations, engineering cost estimates of
the alternatives do not exist. Such estimates would have to be made as part of a
facilities planning process, which is one of the recommendations of the Task
Force.
VI. Recommendations and Next Steps
A) Short Term Recommendations
The following recommendations are being made with respect to current
operations at the Palo Alto compost facility. It is recommended that these be
implemented within 45 days of acceptance by Council:
1. Transition from potable to reclaimed water saving approximately 3,700,000
gallons per year of potable water.
2. Suspend sale of blends and only sell pure compost -Blends are mixture of
finished compost with imported materials like sand to create additional
landscaping materials. The blends are not achieving the goal to move
finished compost, especially since commercial disposal has been
discontinued at the disposal site, and those commercial contractors were a
primary customer. The yard has a throughput of about 600 tons per year at
$160 per ton.
3. Instead of utilizing chips for hog fuel with the requisite hauling to the
Central Valley, use the chips as Alternative Daily Cover (ADC) until the
landfill closes. (Estimated at 2,800 tons per year based on 2009 numbers.)
4. Limit Size of Finished Compost Stockpile -While the current excessive size
of the stockpile may be an anomaly based on the economy, a limit will
dictate actions before it becomes a nuisance as was observed by the Task
Group during the site visit. The maximum stockpiled amount should not
exceed 6,500 tons until 6 months prior to cessation of acceptance of yard
trimmings as part of the landfill closure. At that time, the maximum amount
stockpiled can rise to the amount needed for landfill closure.
5. Reduce Dust -The estimated 8,625 to 11,500 tons of compost material
needed for landfill closure should be managed to mitigate particulate loss,
including covering it, ifnecessary.
6. Increase the throughput of Finished Compost to Market:
)0> Enhance convenience and expand availability of free compost for
Palo Alto residents. (For example more convenient pickup
locations in town and more frequent or continuous availability of
finished compost.)
)0> Review the pricing range (current price to free) of Palo Alto
compost to improve the flow of material to the commercial market.
17
7. Improve space utilization toward 7.5 acres or less with a consolidated
footprint, for example:
};> Locate all the materials handling operations (e.g., screening,
finished product storage, blending) closer together in the 7.5 acre
footprint and closer to the windrows to reduce transportation.
};> Investigate combining windrows as volumes decrease.
};> Limit width to lO feet between windrows (width of the loader
bucket) to minimize area used.
};> Maximize the length ofthe windrows for land use efficiency.
8. Enhance the final product by initiating improved protocol for compost
operations. For example:
};> Materials need to move through the process on a clear and regular
cycle. This better serves commercial customers that can more
easily use a predictable and dependable supply.
};> If the regular cycle cannot be maintained due to equipment
breakdown or lack of personnel, then material should be diverted
to SMaRT/Z-Best.
};> Add 100 gpm of reclaimed water at the grinder to enhance quality.
};> Grind directly into a trailer or A-T dump truck to deliver material
to the windrows.
};> Increase water during windrow processing to 60% moisture
content to enhance quality.
};> Tum more frequently 2x/week, minimum 1 x/week
9. Contain composting cost by exammmg outside expenditures.
Recommendations include:
};> Proactively send organic materials overflows to SMaRT station vs.
Half Moon Bay
};> A void contracting out grinding services.
18
B) Recommendations for 2012
I. Install an Aerated Static Pile Compost Facility at the Embarcadero
Road!Airport Site by 2012 or as soon thereafter as possible.
2. Cease composting at the current location when the Aerated Static Pile
facility is ready, or upon cessation of acceptance of yard trimmings due to
landfill closure (2012), whichever is sooner.
3. Take yard trimmings to the Z-Best facility (Gilroy areas) for composting if
the Aerated State Pile facility is not completed by cessation of acceptance of
yard trimmings.
4. Seek ways to increas~. commercial/multifamily food scrap collection and
impl,ement a single family food scrap collection program.
C) Recommendations for 2015-2021
, It is recommended that Palo Alto begin work to establish an Anaerobic
Organics Processing Facility at the Embarcadero Road! Airport Site, with the
expectation of bringing it online between 2015 and 2021. However, it is not
recommended that the other technologies be ruled out now. Rather, it is
recommended that the process described in D(3) (below) be followed which
would ultimately result in final selection of the 2015-2021 technology.
D) Next Steps
The next steps suggested by the Task Force to implement the Task Force
recommendations are:
1. With respect to the Short Term (Operational) Recommendations, Palo Alto .. staff should prepare and execute a brief Implementation Plan, reporting the
outcome to Council as soon as practical.
2. Council should direct Staff to prepare a timeline for execution of the Task
Force's 2012 Recommendation -Aerated Static Piles on the Embarcadero
Road! Airport Site. The key components of that time line are:
a. Resolution of the following issues and tasks associated with the
Embarcadero Road! Airport site:
}o> Roadway relocation
}o> Airport operations
}o> Future airport needs
}o> Existing utilities, easements and access
}o> Visual screening
}o> Baylands habitat protection
b. County, FAA, Corps of Engineers, and State Lands discussions and
issue resolution
c. CEQA documentation
19
d. Obtaining needed pennits
e. Facilities planning
f. Design
g. Construction
h. Operations commencement
3. Council should direct staff to begin work on the Task Force's 2015-2021
recommendations immediately following resolution of issues contained in
2.a above. ~ssuming that the issues associated with the Embarcadero
Road! Airport site are resolved, and Council detennines that the site should
be used for Organics Materials Management, a facilities planning process
for that site for 2015-2021 should be initiated. The first step will be
consultant selection for preparation of a facilities plan and CEQA
documents, and an RFP for design and construction. The RFP process
would result in final selection of a particular technology, insuring that
developments in technology which occur in the next several years are fully
considered at the time Palo Alto makes its final decision.
VII. Alternatives and "Pros and C.ons"
A) Short Term (Operational) Alternatives
The alternative to the Immediate Recommendations is to continue current
practices. City Staff have agreed to the majority of the recommendations and
most result in cost savings or small cost increases. Therefore a detailed
discussion of "Pros and Cons" is not provided here. The City Staff response
(Appendix A) explains the reasons that some of the recommendations are not
being targeted for implementation.
B) 2012 Alternatives
1. Recommended Alternative: Aerated Static Piles at Embarcadero
Road! Airport Site.
Pros:
~ A voids use of parkland
~ Proximity to current site should facilitate pennitting
};> Fewer emissions than current operation (windrows)
};> Continues composting locally avoiding impacts on neighbors
};> A voids CO2 and toxic diesel emissions from trucking to Gilroy
area
};> Can accommodate food scraps
Cons:
};> More costly than Z-Best facility near Gilroy
~ Uses land desired by Airport users
20
~ Issues associated with proximity to Airport and Baylands
~ Unlikely able to be ready when needed (2012)
2. Fall-back Alternative: Z-Best Windrow Composting (Gilroy)
Pros:
~ A voids use of parkland
~ Lower cost than Palo Alto facility
~ Certain to be available and ready on time
~ Produces compost similar to current Palo Alto facility
Cons:
~ CO2 and toxic diesel emissions from trucking to Gilroy area
~ Organics sent to another community, impacting them
~ Windrow composting emissions greater than aerated static piles
3. Continuing Current Operations Alternative (Not Recommended)
(Note: The Task Force specifically recommended against this alternative.)
Pros:
~ Continues composting locally
~ A voids C02 and toxic diesel emissions from trucking to Gilroy
area
~ Likely substantially easier to secure permits than the Embarcadero
Road/Airport site
~ Likely to be ready when needed (2012)
Cons:
~ Uses parkland
~ Windrow composting emissions greater than aerated static piles
C) 2015-2021 Recommendation
1. Anaerobic Organics Composting at the Embarcadero Road/Airport site.
(Recommended Alternative)
Pros:
~ A voids use of parkland
~ Proximity to Water Quality Control Plant should facilitate
permitting and operations
~ Fewer emissions than current operation (windrows)
~ Continue composting locally avoiding impacts on neighbors
~ A voids CO2 and toxic diesel emissions from trucking elsewhere
~ Produces both energy (methane) and compost
~ Less energy required than high-temperature processing
~ Less costly than high-temperature processing
Cons:
~ More costly than aerobic composting
~ Uses land desired by Airport users
21
~ Substantial issues associated with proximity to Airport, Baylands,
and Water Quality Control Plant
~ Process does not control emissions at the same level as other
energy producing technologies
2. Other Energy Producing Technologies
(Note: The Task Force does not recommend ruling these out. Rather, the
Task Force recommends a selection process in which the City makes a final
choice once the location is finalized.)
Pros:
~ Potentially fewer emissions than aerobic or anaerobic compo sting
~ Avoids use of parkland
~ Proximity to Water Quality Control Plant should facilitate
permitting and operations
~ Continue composting locally avoiding impacts on neighbors
~ A voids CO2 and toxic diesel emissions from trucking elsewhere
Cons:
~ Less likely to receive diversion credits than anaerobic compo sting,
but quite possible
~ Consumes more energy than aerobic or anaerobic composting
~ More costly than aerobic or anaerobic composting
~ Uses land desired by Airport users
~ Substantial issues associated with proximity to Airport, Baylands,
and Water Quality Control Plant
3. Other Non-parkland Locations at and/or Adjacent to the Water Quality
Control Plant
(Note: While the Task Force identified the Embarcadero Road/Airport Site
as the top choice, all non-parkland sites at or adjacent to the Water Quality
Control Plant scored almost the same in the ranking exercise. Site geometry
may, however, impact the feasibility of particular options.)
Pros:
~ Synergies with Water Quality Control Plant operations
~ Same type ofland use as Water Quality Control Plant
~ Area already has industrial activities
Cons:
~ Depending on exact configuration, proximity to Airport,
neighboring businesses, Baylands, and Water Quality Control
Plant will all be issues
~ Purchase of land could be an issue
4. Regional Locations (San Jose, Gilroy, and others)
(Note: Currently advanced technologies are not available at Regional sites,
although GreenWaste is considering one in San Jose 12 freeway miles
from Palo Alto. Palo Alto should fully evaluate this option, should it
become available.
22
Pros:
>-Could be less costly than a smaller Palo Alto facility due to
economies of scale
>-Would not take up Palo Alto parkland or other Palo Alto land
Cons:
>-CO2 and toxic diesel emissions from trucking
>-Organics sent to another community, impacting them
23
\
APPENDIX A
Palo Alto Staff Response to Short Term Recommendations
1) Transition from potable to reclaimed water saving approximately 3,700,000 gallons
per year of potable water.
Staff has concerns about fecal colifonn bacteria and higher salt content from the use of
reclaimed water and the resulting quality impact to the finished compost. However, Staff
accepts the recommendation with the condition that reclaimed water be used at the
compo sting facility exclusively until such time (if any) that testing shows that reclaimed
water is contaminating the compost with unacceptable levels· of salts or bacteria or, if
sales of compost are affected by reduced quality of finished material.
2) Suspend sale of blends and only sell pure compost -Blends are mixture of finished
compost with imported materials like sand to create additional landscaping materials.
The blends are not achieving the goal to move finished compost, especially since
commercial disposal has been discontinued at the disposal site, and those commercial
contractors were a primary customer. The yard has a throughput of about 600 tons per
year at $160 per ton.
Staff accepts the recommendation for the following reasons: I) the volume of compost
sold from the material yard has been impacted by the suspension of commercial refuse
disposal at the landfill that has resulted in commercial customers not hauling back
compost from the facility, and 2) it is a costly and labor intensive operation whose profit
is marginal. Furthennore, Staff believes that the materials yard operation can be
discontinued with only minimal interruption in compost sales. The blended material does
account for 17% of the overall sales so projected revenue will be reduced.
3) Instead of utilizing chips for hog fuel with the requisite hauling to the Central
Valley, use the chips as Alternative Daily Cover (ADC) until the landfill closes.
(Estimated at 2,800 tons per year based on 2009 numbers.)
Staff is already using chips as well as other ground green material for ADC. Staff
accepts the recommendation and agrees that ADC is a less expensive final disposition
than transporting the chips to the Central Valley for hog fuel, as long as ADC is counted
as diversion in accordance with AB939.
4) Limit Size of Finished Compost Stockpile -While the current excessive size of the
stockpile may be an anomaly based on the economy, a limit will dictate actions before it
becomes a nuisance as was observed by the Task Group during the site visit. The
maximum stockpiled amount should not exceed 6,500 tons until 6 months prior to
cessation of acceptance of yard trimmings as part of the landfill closure. At that time,
the maximum amount stockpiled can rise to the amount needed for landfill closure.
Staff accepts the recommendation and agrees that 11,500 tons can be a viable finished
compost stockpile limit with the existing operation. The current finished compost
stockpile was recently' measured to be approximately 6,500 cubic yards
Appendix A-I
5) Reduce Dust -The estimated 8,625 to 11,500 tons of compost material needed for
landfill closure should be managed to mitigate particulate loss, including covering it, if
necessary.
It should be noted that the compost that will be used in the closure will not be produced
until late 2010. Staff agrees to continue implementing dust control measures in
accordance with our facility's BAAQMD permit which include such protocols as water
suppression or other· measures as necessary to stay in compliance with Air District
particulate emission standards.
6) Increase the throughput of Finished Compost to Market-
a) Enhance convenience and expand availability of free compost for Palo Alto
residents. (For example more convenient pickup locations in town and more frequent
or continuous availability of finished compost.)
b) Review the pricing range (current price to free) of Palo Alto compost to improve the
flow of material to the commercial market.
Staff acknowledges that throughput has been slow of late due to lack of landscaping
projects from the recession, drought, and the commercial disposal ban (trucks not picking
up compost after they drop off). Staff agrees with the recommendation to add more free
giveaway days for residents (currently there are 5 per year). Staff will also evaluate
whether significant volume discounts should be implemented to promote bulk sales when
finished compost supplies are large.
7) Improve space utilization toward 7.5 acres or less with a consolidated footprint, for
example:
a) Locate all the materials handling operations (e.g., screening, finished product
storage, blending) closer together in the 7.5 acre footprint and closer to the windrows
to reduce transportation.
b) Investigate combining windrows as volumes reduce.
c) Limit width to 10 feet between windrows (width of the loader bucket) to minimize
area used .
. d) Maximize the length of the windrows for land use efficiency.
Staff believes that the current 7.5 acre footprint is optimized for its equipment, traffic
flow and operation. The current windrows lengths, volumes, orientations, and spacing
are designed for the specifications of the Scarab windrow turner. Staff believes that
combining windrows should be accomplished when the scarab is down. Staff will
implement the 10 feet width between windrows. Staff believes that for safety purposes
and operational flexibility the option needs to be kept open for placement of only the
finished compost pile outside of the 7.5 acres.
Appendix A-2
8) Enhance the final product by initiating improved protocol for compost operations.
For example:
a) Materials need to move through the process on a clear and regular cycle. This better
serves commercial customers that can more easily use a predictable and dependable
supply.
Staff believes that the compost produced by Palo Alto is already very high quality and the
materials move through the process on a clear and regular cycle. An exception to this
cycle occurred last year when there were excessive and unexpected equipment
breakdowns during the year.
b) If the regular cycle cannot be maintained due to equipment breakdown or lack of
personnel, then material should be diverted to SmaRTIZBest.
Staff agrees that the curbside collected material should be diverted to SMaRT if
equipment problems warrant it and have already been implementing that system within
the last year. On two intervals in FY 08/09 staff instructed PASCO to take green material
directly to the SMaRT station.
c) Add 100 gpm of reclaimed water at the grinder to enhance quality.
Staff believes that the finished compost produced by the site is already a high quality
product and would not need further enhancement of this type. In addition the site does
not have the equipment to input this large amount of water during processing.
d) Grind directly into a trailer or A-T dump truck to deliver material to the windrows.
Staff believes that moving the portable grinder adjacent to the new windrows and pushing
the material in place is the most efficient way of delivering material from the ground pile
to the windrows. Also, the windrow pad is not comprised of baserock and a truck would
not be able to be used during the wet season.
e) Increase water during windrow processing to 60% moisture content to enhance
quality.
Staff believes that the finished compost produced by the site is already a high-quality
product and would not need further enhancement of this type. Very wet compost (55 to
60%) can become heavy and clumpy. making its application more difficult and delivery
more expensive. A preferred moisture percent for finished compost is 40 -50% (Test
Methods & Parameters from the US Composting Council, 2009).
j) Turn more frequently 2x/week, minimum lx/week
Staff accepts this recommendation and agrees that this could be accomplished with
minimal cost and some benefit.
9) Contain composting cost by examining outside expenditures. Recommendations
include:
Appendix A-3
a) Proactively send organic materials overflows to SMaRT station vs. Half Moon Bay
b) Avoid contracting out grinding services.
Staff accepts this recommendation and agrees that overflows to SMaRT is the most cost
efficient way to manage excess green material. As mentioned earlier, staff is already
doing this. Staff accepts this recommendation and advises that we will only utilize
contractor services when equipment problems occur or if landfill labor is in short supply.
Appendix A-4
PRIORITIZED
Airport/Compost Issues
[August 27, 2009-Subcommittee Meeting Results]
A) Safety Issues
1. Compost would attract birds
2. Compost too close to Heliport
APPENDIXB
3. The proposal forces reduced separation between fixed-wing and helicopters
B) Approval Issues
1. FAA must approve -may take several years, if possible at all
2. County must approve or give up lease -will be difficult
C) Land is Needed for Other Purposes
1. Overflow area for landing helicopters
2. Tie-downs so taxiway can be enlarged
3. Hangers
4. Terminal Building
D) Economic Viability of Airport
1. Should not "jump ahead" of Economic Plan now being prepared
NEXT STEPS
1. Prepare sufficient detail about the proposal to:
a. Demonstrate resolution of safety issues
b. Request approval from F AAICounty
2. Find solution to Airport facility needs
Appendix B-1
Airport/Compost Issues
Identified at 7/29/09 Compost Task Force Meeting
& Modified at 8118/09 Subcommittee Meeting
Federal and County Requirements
);> FAA must approve any non-airport use (per grants received by the Airport)
);> Cannot cease airport use prior to 2026-otherwise FAA Grant repayment required
);> Use of land must be consistent with safety plan (Santa Clara County Airport Land
Use Commission and FAA approvals of safety plan revisions needed)
);> FBOs have leases until 2017
The 4-Acre Site is Need For:
);> Tie-downs so taxiway can be enlarged
);> New heliport site (safety)
);> "Overflow" landing site with respect to current site
);> New hangars
);> New terminal/administration building
);> Allow separation between fixed wing and helicopter operations
);> Changes will be very expensive
Helicopter Pad
);> Compost pile proximity to pad -too close; downwash would create dust and debris
Wildlife and Hazards
);> Compost pile would attract animals and birds (including geese) -hazard to
airplane engines
);> Land is occupied by burrowing owls endangered species
National Defense Issues
);> Civil Air PatrolJunctions are located at the Airport
Visual Impact
);> Compost Facility would detract from appearance of the area.
City of Palo Alto
);> City is working on a business plan
);> Financial issues
);> "No Intensification" Policy and "no expansion into open space" have prevented use of site
);> The County's Lease Expires 2017 Palo Alto may take over operations then
):> Transition of the airport to Palo Alto mayor may not occur even earlier in 2012 -very
uncertain
Degree of Use of Palo Alto Airport
);> Regional and busy airport that is greatly needed
);> Should not drive air-traffic to other airports
);> Airport is a Regional "Reliever" for other airport traffic
);> Council supports airport
);> New buildings and facilities badly needed
Compost Final Report
);> Should identify options and pros/cons
Working Together
);> Compost could produce methane which could ultimately be a source of fuel
Appendix B-2
APPENDIXC
Date: 9/09/2009
To: Palo Alto City Council
From: Craig Barney, Co-chair of Blue Ribbon Compost Task Force
Subject:
Cedric de La Beaujardiere, Co-chair of Blue Ribbon Compost Task Force
Bob Wenzlau, Member Blue Ribbon Compost Task Force
A Suggested Integration of the Proposed Composting and Airport
Facilities That Mitigates Airport Land Loss by Enhancing Facilities
The Blue Ribbon Task Force identified the Embarcadero/Airport site as the
recommended location for continued local management of organics in Palo Alto. The
Council invited the Task Force to further consider this recommendation during the study
session, and subsequently initiated discussions with advocates for the Palo Alto Airport.
The development of the integration approach described herein was motivated by a request
of several council members to seek a compatible land use arrangement between the
airport and compost operations. This memo offers a potential arrangement of an airport
that accommodates compost operations, improves the environmental footprint, and
provides for needed development of airport facilities.
This approach was developed by Bob Wenzlau, Craig Barney and Cedric de La
Beaujardiere who served on the Task Force and also on the airport subcommittee that was
formed to address concerns introduced by airport advocates when the compost site was
announced.
This memo was not adopted by the Task Force or the Task Force's Airport
Subcommittee. However, the concepts within this memo were discussed by the Task
Force, and time constraints to achieve the Council's schedule prevented the Task Force's
full consideration and approval.
The genesis of this approach formed around the concerns introduced and prioritized by
the airport advocates and the Task Force Subcommittee. Those concerns are found in
attachment to this memo. Among the concerns, and top ranked were the following:
• Maintenance of safety of operations.
• Loss of helicopter landing that occurs on the undeveloped land.
• Maintaining tie-down capacity for airplanes
• Provision for a variety of improvements including improved and expanded
heliport, terminal and taxi-way.
The airport advocates held an interest in maintaining and growing the airport including
use of the same four undeveloped acres targeted for composting. During discussions,
there was concern that the inherent loss of airport lands proved irreconcilable within the
short time frame to achieve a mutually agreeable approach. Ultimately the airport
Appendix C-l
advocates felt that there should be better alternatives given the concerns raised. This
memo, never the less, seeks to respond to Council's request to create an integrated
approach.
The proposed plan was informed by several premises:
• The airport should improve safety, including taxiways and heliports.
• The solution should contribute to, and not harm, the financial viability of the
airport.
• The airport should improve its environmental sustainability measurement.
• The terminals should be replaced and better integrated with other airport facilities.
• Any disruption to adjoining land uses should be minimized including disturbing
the parks and the golf course.
There were several observations made by the authors that informed this plan. Current
helicopter landing are not consistent with existing aviation design requirements, and
undeveloped land has been informally used as a second substandard landing site. We
also learned that any terminal must exist between an automobile parking area and the
taxi-way to facilitate safe access to passengers. Additionally, numerous tie-downs on the
County lease portion of the airport (north side) are unoccupied. While this may be a
manifestation of the economy or the County's pricing strategy, the vacancies presented
land that might be applied to a solution.
A proposed solution would have a physical component (the airport/compost layout), and
an organizational component (the financial and organization elements). The physical
component is framed by land use, safety, and the environment, while the organizational
component is framed byeconomic viability of the airport and its organizational
framework.
Physical Layout: A proposed layout,
shown on Figure 1 and 2, achieves an
approach toward the physical layout
accommodating the composting
operations and allowing for
improvements sought by airport
advocates:
• A new expanded terminal
building located just south of the
control tower and east of a road
serving airport and golf facilities
and an existing parking lot.
(Shown as red outlined structure
on Figure 1)
• A new heliport area providing
capacity for two helicopters, and
likely improving safety by
moving the location away from
the proposed compost / existing Figure 1. Detail of New Terminal (T) and Heliports (H) near Existing
duck pond area, and allowing for Tower
a helicopter-safety-compliant
area.
Appendix C-2
Figure 2: Location of Improved Terminal and Proposed Composting Site (with shifted Embarcadero Road)
• Improvements resulting in five increased tie downs: 23 tie-downs are eliminated
near the tower to accommodate the heliport and new terminal, but 28 new tie-
downs are created at the site of the existing terminal (that would be rebuilt in this
proposal.)
• The improvements do not address the taxiways or hangars, but neither do they
impose any restrictions on achieving this. In fact, an airport advocate suggested
hangars could be added north of the control tower, an area near the proposed new
terminal location.
• The improvement uses no golf course or park property.
Furthermore, proposed improvements utilize existing roadways' and parking lots, both of
which appear underutilized. The arrangement achieves integration of terminal and airport
operations by placing them on the common access road to the golf course and airport.
The existing fuel terminal remains and is undisturbed.
Appendix C-3
Organizational Considerations: Integrating compost and airport operations provides
organizational and financial advantages. We anticipated many changes after the city
takes ownership, changes that can trigger accommodation of compost operations. As
suggested by one of the airport advocates, the compost operation by the City could be
designated a new Fixed Base Operator (FBO). When the FBO (in this case the compost
operation) pays land rent to the general fund, the land rent could contribute to airport
overhead, such as long-term funding of new terminals and heliports. These rent
payments, consistent with the four acres utilized, are approximately $400,000 per year.
The City, through its compost operation, and as a potential FBO, could also set as a goal
the use of biologically-generated methane for airport use. With sustainability fuels
integrated into the airport, the FAA might find Palo Alto's airport a model of
sustainability in airport operations. One airport advocate thought that enhancing the
sustainability of the airport would ease expected regulatory bars set by the FAA and the
County.
Potential harmonizing of compost, airport operations within the framework of the
Baylands Master Plan moves Palo Alto toward a vision of a sustainable community that
develops innovative accommodations to land use challenges.
Appendix C-4
Airport/Compost Issues
Identified at 7/29/09 Compost Task Force Meeting & Modified at
8/18/09 Subcommittee Meeting
Federal and County Requirements
~ FAA must approve any non-airport use (per grants received by the Airport)
~ Cannot cease airport use prior to 2026-otherwise FAA Grant repayment required
~ Use of land must be consistent with safety plan (Santa Clara County Airport Land
Use Commission and FAA approvals of safety plan revisions needed)
~ FBOs have leases until 2017
The 4-Acre Site is Need For:
~ Tie-downs so taxiway can be enlarged
~ New heliport site (safety)
~ "Overflow" landing site with respect to current site
~ New hangars
~ New terminal/administration building
~ Allow separation between fixed wing and helicopter operations
~ Changes will be very expensive
Helicopter Pad
~ Compost pile proximity to pad -too close; downwash would create dust and debris
Wildlife and Hazards
~ Compost pile would attract animals and birds (including geese) -hazard to
airplane engines
~ Land is occupied by burrowing owls -endangered species
National Defense Issues
~ Civil Air Patrol functions are located at the Airport
Visual Impact
~ Compost Facility would detract from appearance of the area.
City of Palo Alto
~ City is working on a business plan
~ Financial issues
~ "No Intensification" Policy and "no expansion into open space" have prevented use of site
~ The County's Lease Expires 2017 -Palo Alto may take over operations then
~ Transition of the airport to Palo Alto mayor may not occur even earlier in 2012 -very
uncertain
Degree of Use of Palo Alto Airport
~ Regional and busy airport that is greatly needed
~ Should not drive air-traffic to other airports
~ Airport is a Regional "Reliever" for other airport traffic
~ Council supports airport
~ New buildings and facilities badly needed
Compost Final Report
~ Should identify options and pros/cons
Working Together
~ Compost could produce methane which could ultimately be a source of fuel.
Appendix C-5
**
**
**
**
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
*Note:
** Note:
2021 LOCATION SCREENING
A site solely within the RWQCP
A site (unspecified location) within and immediately adjacent to
the WQCP (This may include Nos. 2, 3,4 and/or 6.)
Palo Alto Airport (assumes Airport closure).
The Embarcadero Road-Airport site (assume Airport continues to
operate)
Z-Best site (near Gilroy)
A site centered in the RWQCP which may include Nos. 2, 3, 4
and/or 6 and may also include a small portion of Byxbee Hills
Park (current landfill), if necessary to provide a minimally suitable
site.
The LA TP site
The North Runway-Airport site (assume Airport continues to
operate)
The P A Landfill site
An unspecified location on Stanford Land
Regional site (other than Z-Best)
An unspecified location to be purchased in the Palo Alto area.
(An example includes Park Avenue land South of Oregon
Expressway.)
APPENDIXD
Uncertain
Uncertain
100
4
Sufficient
Uncertain
6+
22.5
7+
Uncertain
Sufficient
Uncertain
Competing potential uses exist for any and all sites. No sites or portions thereof
have been reserved for organics materials management.
SCREENED OUT ON 6117/09
The WQCP Landfill Interface site
The Embarcadero \llay City Ovmed City site
An Embarcadero 'Vay site to be purchased
The Police Building site
Appendix D-I
Appendix D-2
Appendix D-3
Appendix D-4
Appendix D-5
Appendix D-6
Appendix D-7
Appendix D-8
APPENDIXE
Task Force Activities
Meetings were held weekly in March of 2009 as the Task Force organized itself, selected Co-
Chairs, established procedures, and developed communication methods. As a group covered
by the Brown Act, agendas were published and posted as required. The City's website was
used to share documents among Task Force members, and members of public.
Meetings were changed to every other week in April and continued through September when
the Task Force completed its work. Key accomplishments for each month were as follows:
March
);> Administration/Organization
);> Mission Statement Developed
);> Timeline Developed
);> Technical Subcommittees Fonned
);> Screening/Ranking Criteria Developed
April
);> Screening/Ranking Criteria Developed
);> Three Subcommittees Analyze Alternatives
o Aerobic
o Anaerobic
o High Tech
);> Pennitability of Alternatives Analyzed
May
);> Greenhouse Gas Emissions Analyzed
);> ("What" More Important than "Where")
);> Technologies Seminar Held
);> Technology Timelines Analyzed
);> Baylands History and Land Use Analyzed
);> Task Force Report Outline Developed
);> Input From California Integrated Waste Management Board Obtained
June/July
);> Further Analysis of the following was accomplished:
o Aerated Static Piles (Aerobic)
o Dry Fennentation (Anaerobic)
);> Screening and Ranking Alternatives was completed for the following
timeframes:
o Immediate (Operational) Changes
o 2012 Timeframe
o 2021 Timeframe
);> Council Study Session was held on July 20, 2009
August/September
);> Finalized Recommendations
);> Finalized Brief Report
Appendix E-I
APPENDIXF
Greenhouse Gas Impacts of Palo Alto Organic Wastes
By Bryan Long 8117/09
Summary
Substantial greenhouse gas (GHG) reductions can be achieved first by diverting food and
other wet organic wastes from landfill disposal, and then by moving to advanced
anaerobic digestion technology for our wastewater, food wastes, and yard wastes. Non-
local transport of our organic wastes contributes to GHG emissions, but as can be seen
from the chart below, how we process our organic wastes matters much more than where
that processing occurs.
Food wastes and other moisture-
rich compostable wastes quickly
decompose in landfills, releasing
substantial methane gas long
before methane recovery systems
are in place. Achieving the
contract collection target of our
new commercial, institutional,
and multi-family residence
(CIIIM) food waste program will
reduce methane emissions by at
least 6,000 and as much as
15,000 metric tons (mT) of C02
equivalent, depending on
emissions model assumptions.
Surpassing our collection target
or implementing a single-family
GHG Reduction Opportunity: 3% or more of Palo Alto Emissions
Londlilled
Foodwaste &
Composlobles
Wostewater
Incineralion
Yard wosle
Composling
High estimal.
Mettlc Tons CO,.
100,000
80,000
70,000
.... 60,000
50,000
"0,000
30,000
20,000
10,000
Non-locol
Tronsport -"~~~··~:Wi·~iillhilieo.m.mlllleLrCi·o-'I,.JZ;.Wi~IIhi".;;.....loc~oJ.1 ....
2008 foodwosle & Anaerobic
Baseline yard wosle Digestion
c:omposling
foodwaste collection program would reduce GHG emissions even more.
The use of Advanced Anaerobic Digestion (AAD) facility to process our wastewater
sludge, CIIIM foodwaste, and collected yard wastes would reduce CO2 emissions by an
additional 14,000 mT of CO2 equivalent. A 50% increase of total foodwaste collections
(from the current target of 9,000 mT) would result in an additional reduction of between
6,300 and 16,200 mT of C02e.
Together, these steps could reduce our city's GHG emissions by 2% to 5% from the total
emissions estimated in the Palo Alto Climate Action Plan. It should be investigated
whether some of this might qualify for carbon credit sales under the emerging GH G Cap
and Trade legislation.
Appendix F-l
Palo Alto's organic waste disposal currently contributes between 2.64% and as much as
7.74% of Palo Alto's annual anthropogenic greenhouse gas (GHG) emissions, depending
on assumptions. The large variance in the estimate above is primarily due to differences
in estimates regarding how much methane is released from food scraps and other. wet
compostable matter sent to the landfill (see "A Trip to the Landfill", below). Once the
new GreenWaste program for institutional/multifamily food scraps composting is well
established, our organic wastes will still contribute between 1.76% and 5.64% of our
city's total "footprint".
Fortunately, methods and technologies exist that would allow us to substantially reduce
these GHG emissions,
1. A reduction of approximately 8,650 mT of C02e1 could be realized by diverting
sewage sludge from incineration to energy-generating Advanced Anaerobic
Digestion (AAO) ..
2. A reduction of 5,300 mT C02e, or more, could be realized by shifting organic
materials, food, and other compostables from compo sting to AAD.
3. Increasing commercial/multifamily collection rates or implementing a single-
family residence collection program would achieve reductions of between 1.4 mT
and 3.6 mT of C02e per additional mT of food and organic materials diverted
from the landfill. A 50% increase of total collections from the current target of
9,000 mT would result in a reduction of between 6,300 and 16,200 mT ofC02e.
Together, these steps could reduce our city's GHG emissions by 2% to 45% from the
total emissions estimated in the Palo Alto Climate Action Plan2. It should be investigated
whether some of this might qualify for carbon credit sales under the emerging GHG Cap
and Trade legislation.
Transportation of our organic wastes contributes less than 4000 (est.?) mT of C02,
regardless of regional destination, and much of this is due to local collection. Insofar as
GHG reduction is concerned, how we process our organic waste is far more important
than where we process it. Nevertheless, city ownership of processing operations would
provide greater assurance of optimal GHG reductions, and would likely reduce long-term
costs to the ratepayers, since contract operators require a profit above capital and
operational costs and demand for these services is high.
Palo Alto's Organic Waste GHG Sources
I C02e is C02 equivalent, which translates the GHG impact of methane and other gases,
measured over a 100 year timeframe to the amount of C02 that would have an equivalent
impact. See box section: The Methane Effect
2 The Palo Alto CAP estimates a total of 794,049 mT of C02e from all sources. However
this is probably an underestimate due to overly conservative estimates of methane
emissions from landfilled wastes.
Appendix F-2
Primary organic waste sources of GHG emissions include:
TYPRQp ORGANIC WASTE ESTIMATED GHGEMISSIONS
Food scraps and other compostables sent to 21,000 -61,000 mT C02e (2008)
landfill 14,700 44,800 mT C02e (2010 estl
Sewage sludge incinerated at WQCP 21,200 mT CO2
Yard clippings and other greenwaste 15,000 mT C024
(compost)
Transportation and Processing < 4000 mT CO2 (??)
TOTAL (2008) Approx. 60,000 -100,000 mT C02e
As much as 41,000 mT of the above is considered "biogenic" in origin: C02 that was
originally taken up from the atmosphere by plants through the process of photosynthesis
before being utilized by humans. Biogenic CO2 is not counted when calculating Palo
Alto's "footprint" of anthropogenic (human caused) GHG emissions. For example, C02
from composting operations is biogenic, as is CO2 released from landfills. Methane
released from landfills is counted as human caused, however, since decomposition under
natural conditions would not usually generate methane.
The Palo Alto Climate Action Plan estimates our city's total anthropogenic emissions at
approximately 728794,000 mT of C02e. Landfill-related emissions, however, are
probably underestimated. The CAP provides an estimate of 24,183 mT of annual landfill
waste-related emissions, including the "upstream" emissions associated with
manufactured goods. This was based on generic modeling software, and the assumption
that the landfill would have effective methane capture. Such models and assumptions
have come under criticism, however, because most landfills do not install methane
recovery for several years after disposal of waste into a "working cell", and wet organic
wastes like food and grass will decompose within a few months (see "A Trip to the
Landfill" below). Thus for the higher food scraps estimate in the table above, the total
city emissions should be increased by an equivalent amount.
At the low end, anthropogenic emissions from the above listed organic waste categories,
prior to the new food scraps composting program, total about 19,000 mT, or about 2.6 4
% of a 728794,000 mT total. At the higher end, anthropogenic emissions total about
59,000 mT, or about 7.74% of a 768794,000 mT total. After the new commercial &
multifamily food composting program goes into effect, anthropogenic emissions from
these sources will be between 12,700 mT and 42,800 mT equivalent to between 1.76%
and 5.64% of total city emissions.
3 Estimate for 2010 after new GreenWaste program for collection and composting of
institutional and multifamily residence food wastes.
4 Estimate based on 60% water content, 50% carbon content in dry material, and
complete release of carbon as CO2. A good bit of carbon is retained in the finished
compost, but most of this decomposes over time after application.
Appendix F-3
It is important to note, however, that as Palo Alto works to reduce our footprint, any
biogenic C02 reductions achieved by sequestration or "green energy" production are as
effective as any anthropogenic CO2 reductions. For example, our current composting of
yard waste releases about 15,000 mT of biogenic CO2 per year; The same amount of
yard waste in an advanced anaerobic digestion facility will produce only 12,100 mT of
CO2, along with a substantial amount of methane. When that methane is burned as fuel,
the "missing" 2,900 mT of CO2 will be released. But without AAD, fossil gas would
have been burned instead of that methane, producing about the same 2,900 mT of CO2 in
addition to the 15,000 mT from composting.
Thus, AAD reduces net anthropogenic
emissions.
Food/Compostable Waste: A Trip to
the Landfill
Compostable organics compromised about 29%
of Palo Alto's "black bin" and dumpster waste
sent to the Kirby Canyon landfill in 2008 (the
Palo Alto landfill is open only to "self-haul"
from Palo Alto residents). These landfilled
organic compostables add up to over 22,000
metric tons per year - a greater tonnage than our
yard waste composting operation handles.
More than half of the organic compostable
waste is food scraps.
Food scraps, and moisture rich compostab1e
waste like grass clippings, creates substantial
methane gas emissions when landfilled. These
wet organic wastes are dumped onto the open,
working face of the landfill, and quickly buried
under new incoming loads of waste. This
creates a moist, warm, low oxygen environment
in which anaerobic. (low oxygen) decomposition
rapidly sets in.
Within 120 days, food scraps and grass
clippings may be nearly fully decomposed, with
substantial methane generation (Brown, et aI, 1.
Environ. Qual. 37:1396-1410 (2008)i. This
occurs long before any methane recovery
The Methane Effect
Methane (CH4) is a molecule
consisting of one carbonalom
surrounded by four hydrogen atoms.
It arises in many natural processes,
but is of particula.r concemto us as a
product of municipal waste disposal.
. The specific molecular structure of
CH4 makes it much more like1ythan
a C02 to absorb a heat photon.
Fortul1ately, methane is also not very
.... stable. In any severt· yearpefi6d,a
methane molecule has about a 50%
chance of breaking down . into· C02
and H20 (water). In calcula.tions
about climate change, therefore, the
effects of methane. emissions are
calculated over a specified time
period, usually 100 years. . Over a
period of 100 years, methane is 25
times more potent than an equal
amount (by weight) of CO2. Over a
period of 20 years, however, methane
is 72 times mote potent than C02!
This makes metha.nea prime target
for l1ear-termOHG reductions while
we work on . more difficult longer
tenrtC02 reductions. ReduCing
metha lie /emissionstodaY . provides
72 times the impact over the next20
years than does reducing an
equivalent amount of CO2_ (source:
IPCC)
5 Landfill operations, design, climate, and waste composition will affect the timing and
degree of wet organics decomposition, but specific data for the Kirby Canyon landfill
was not available for this analysis. Our dry summer climate may reduce decomposition
during those months, but our relatively warm wet winters may have the opposite effect.
Appendix F-4
systems are put in place (usually 2 years or more after disposal). Although some of this
methane will be oxidized to CO2 as it reaches the surface of the landfill, most will escape.
Use of simple GHG estimation models such as the EPA's WARM calculator or ICCLI's
CACP are inaccurate for food and grass waste if landfill recovery of GHG is assumed in
the model. The EPA W ARM model can be run on food scraps and grass clippings under
the assumption of no methane recovery to get a better, but still conservative estimate of
GHG emissions. The EPA WARM model gives a conservative result of 21,940 mT of
C02 equivalent emissions6 that would be avoided if our landfilled food, grass, and leaves
waste were composted instead of landfilled. Other research suggests that our annual
landfilled food, grass, and leaves may generate as much as 68,000 mT of C02 e from
methane (Brown, et aI, 1. Environ. Qual. 37:1396-1410 (2008), compared with a
theoretical maximum of about 10,000 tons of CO2 if diverted to composting. The truth
probably lies somewhere in-between: Palo Alto could achieve GHG reductions of 1.4
mT to 3.6 mT ofC02e per mT of food and organic materials diverted from the landfill.
It must also be noted that the estimates above refer to 100 year CO2 equivalents.
However, methane reduction benefits are "front-loaded", whereas most governmental
plans for C02 reductions are "back-loaded", putting off most of the necessary reductions
to future decades (see box "The Methane Effect). Keeping in mind that our City goals
for GHG reductions are based in our desire to keep the planet livable, we should welcome
measures that have their most significant impact in the near term. Using a 20-year C02e
calculation, Palo Alto could achieve GHG reductions of an outstanding 4 mT to 12.3 mT
ofC02e per mT of food and organic materials diverted from the landfill!
A Good First Step: 2009 Compostables Collection
In 2009, Palo Alto begins a new program with our new waste hauler, GreenWaste, to
divert segregated compostable organics from the general waste stream, for compo sting at
ZBest in Gilroy. This program will serve only commercial and multifamily residential
buildings, not single-family residences.
Commercial and multifamily buildings generate around 16,900 mT of compostable
wastes annually, which includes compostable paper as well as food and yard waste.
The City'S contract with GreenWaste establishes a target of 9000 tons of segregated
compostables to be collected annually, with an incentive of $70 per ton for exceeding the
target and a penalty 'of $70 per ton for shortfalls. Experience from other cities (e.g., San
Francisco) suggests that this will be about 50% food and organic materials, and 50%
compostable paper and other compostables. Thus we can estimate that if the target of
6 C02 Equivalent (C02e) emissions converts the warming impact of methane (or other
GHGs) over 100 years into the amount of CO2 that would produce the same amount of
warming over the same amount of time. Metric tons of methane emissions can be
multiplied by 25 to get the 100-year CO2 equivalent (some models use 21 or 23 as the
factor, based on older estimates). Over a 20-year evaluation period, the CO2 equivalent
of methane would be much higher - a factor of72.
Appendix F-5
9000 mT is reached, this will mean 4500 mT of food and organic materials diverted to
composting. This will result in GHG emissions reduction of between 6,300 and 16,200
mT ofC02e, which would be around a 1-2% reduction in our City's total GHG footprint.
Next Steps: Improving and Expanding the Program
In auditing GreenWaste collections, the City should measure not just the total tonnage of
compostables, but the composition of what is collected. Increasing the percentage of
food scraps collected, compared especially with waste paper products, will have the most
significant benefit in terms of GHG reductions. If institutional/multifamily collection
efficiency could be increased to 75%, that would result in an additional 3,150 to 8,100
mT C02e reduction. Expanding the program to serve single-family residences should
also be attempted, if costs are not prohibitive. A 50% efficient collection of single family
residence food scraps compostables would provide a 3500-9000 mT reduction in C02e.
Sewage Sludge: Anaerobic digestion vs. Incineration.
Palo Alto incinerates approximately 24,000 mT of sewage sludge annually7. The
incineration of the sludge itself releases approximately 16,000 mT of C028, while the
natural gas used to incinerate the sludge releases another 5200 mT of C029• The end-
product of incineration is an ash that is landfilled as low-grade hazardous waste.
Many communities around the world are migrating to Advanced Anaerobic Digestion
(AAD) for processing of sewage sludge, sometimes on its Qwn and sometimes along with
, other municipal wastes. AAD would reduce 24,000 mT of sludge to between 3000 mT -
12,000 mTI of digested sludge cake -a safe and low odor product containing no
detectable levels of pathogens that may be used as a valuable agricultural fertilizerll .
More importantIy,from 24,000 mT of sludge AAD could generate approximately 66,300
MMBTU of methane natural gasl2, while saving an additional 100,000 MMBTU of
natural gas that would have been used for incineration. At current spot market prices for
natural gas 13 , the combined generated and saved natural gas is worth approximately
$548,790, and much more at retail prices.
7 Only about 35% of this is from Palo Alto, the rest is from neighboring communities.
8 2008 Palo Alto Emissions Report
9 Approximately half of this is methane gas captured from the landfill, but it is gas that
could be used for other purposes.
10 Different digestion technologies result in differences in end-product volume
11 Renewable Energy World April 27, 2009 Advanced Anaerobic Digestion: More Gas
from Sewage Sludge
12 24,000 mT wet, 25% solids, = 6000 mT dry 13,260,000Ibs
66,300,000 cf CH4 66,300 MMBTU based on: EBMUD study, "Anaerobic Digestion
of Food Waste" March 2008; "Stable anaerobic digestion of food waste at both mesophilic and
thennophilic temperatures provides more gas production (6 to 8.5 ft3 CH4/1b TS applied) than digestion of
municipal wastewater solids (5 ft3 CH4/1b TS applied.)" Different anaerobic digestion
technologies may produce more or less CH4 gas.
13 Approximately $3.30 per MMBTU (NYMEX)
Appendix F-6
Even more importantly from a GHG perspective, total GHG reductions would equal
about 8650 mT of CO2. This is composed of 5200 mT of CO2 would be avoided by not
burning ~as to fire the incinerator, and a 3450 mT C02e "credit" from the methane
produced 4. Thus the use of AAD could reduce CO2 emissions by between 8650, for
sewage sludge alone. The use of AAD for other municipal waste is considered below.
Advanced Anaerobic Digestion vs. Composting
Anaerobic digestion can also be utilized instead of composting for yard waste, food
scraps, and other compostable organics. As with compostin~, anaerobic digestion results
in an end-product suitable for agricultural soil conditioning 5. AAD, however, captures
methane as "green energy" which provides a net CO2 reduction credit.
Based on 21,000 mT organic materials, AAD could generate approximately 55,700
MMBTU of CH4 natural gas16, with a resulting emissions reduction credit of
approximately 2900 mT CO2. If Palo Alto increased its collection of organic materials
from landscaping contractors, it would realize additional green energy.
For commercial and multifamily food and compostable waste, based on the current
GreenWaste collection target of 9000 mT, AAD could generate approximately 46,500
MMBTU of CH4 natural gas, with a resulting emissions credit of approximately 2400 mT
C0217• If we could realize 12,000 mT of commercia II multifamily collections (a 75% vs.
50% collection rate), these figures would increase to 69,700 MMBTU and 3,600 mT of
CO2. Any collection of single family residence food scraps and compostables would
provide a further increase.n
The AAD process generates a biogas which is a mixture of methane and C02 (usually
about 60% methane). The biogas is then either burned to generate electricity or "cleaned
14 Methane produced from AAD is "green" because it displaces an equal amount of fossil
natural gas that would otherwise be consumed. 1 fe CH4 combusted will result in 1 fe of
C02 (Gas turbine handbook); CO2 at .00184212 g/cm3 * 28317.016 cm31 ft3 52.16 g/ft3.
66,300,000 ft3 CH4 3458 mT CO2. This is the amount considered avoided from fossil
natural gas.
15 Quantity and market value may differ, however. In general, compost from 100%
organic materials will have higher market value than either food waste compost or
digested end-product.
16 21 ,000 mT @ 40% solids 8,400 mT dry = 18,564,000 Ibs
= 55,692,000 fe CH4 (conservative estimate, yield 50% less than food waste, below)
55,692 MMBTU (1 ft3 CH4 contains approximately 1000 BTU of energy)
17 assuming 9000 mT collected, 50% food, 50% paper:
4500 mT * 28% solids = 1260 dry mT
4500 mT * 50% solids = 2250 dry mT
7,735,000Ibs 46,410,000 ft3 natural gas (6 ft3llb, EBMUD 2008)
46,410 MMBTU C~ = 2420 mT CO2 when comb us ted
Appendix F -7
and scrubbed" to produce a commercial quality CH4 natural gas. It is possible to capture
the CO2 as well, and sequester it, for much larger CO2 reduction credits. This will
involve significant additional capital and operational costs, however, and is not calculated
in this assessment.
Summary of GHG Reductions and Green Energy Production
Diverting 9000 mT Food/Compost from Landfill
Utilizing AAD for Food/Compost above
Diverting wastewater sludge from incineration19
Utilizing AAD for sewage sludge
Utilizing AAD for yard/organic materials
Total
C02e Reduction
11,250 mT18
2,400 mT
5,200 mT
3,450 mT
2,900 mT
25,200 mT
MMBTUs
o
46,500
100,000
66,000
55,700
268,200
The total reduction of 25,200 mT C02e is almost 3.52% of Palo Alto's total GHG
emissions as estimated in the Climate Action Plan. The total of 268,200 MMBTUs of
natural gas is worth about $885,000 at the current spot market wholesale price for natural
gas.
Further potential for reductions are:
Diverting additional 4,500 mT Food scraps
AAD for additional 4,500 mT Food scraps
Increasing yard/green collections 20%
Total
Implementation
C02e Reduction
5625
1,200
580
7405
MMBTUs
o
23,250
11,140
34,390
Achieving the GHG reductions and green energy productions listed above may be
accomplished in at least three ways:
1. by establishing contracts with waste management companies which specify
landfill diversion and C02e reduction requirements (via AAD or other advanced
conversion technologies)
2. by design and implementation of an AAD facility owned by the City of Palo Alto
3. by partnership with other regional cities for the ownership and/or operation of a
regional AAD facility
18 Based on the average of the high and low estimates.
19 Natural gas not used for incineration that can be used for other purposes.
Appendix F-8
Waste management companies operating organics conversion facilities can achieve
economies of scale by serving numerous regional municipalities. However, regional
municipal demand for organic conversion services is likely to outstrip commercial
facility capacity for some time to come. Service providers will certainly capitalize on
high demand by charging a premium for GHG reducing services, and retaining all profits
from green energy production. On the other hand, for those municipalities willing to pay
the premium, contract services will avoid the capital investment and expertise
development required for city-owned facilities.
If Palo Alto is willing to invest capital and land in a city owned facility, or to partner with
other municipalities in building an AAD facility, utilities rate-payers would likely realize
the lowest long-term cost as revenues from green energy production will help offset
operational costs.
Background Information on Greenhouse Gases
Getting to Know the Greenhouse Gases
Greenhouse gases in the Earth's atmosphere allow visible light photons from the sun to
pass freely to the earth, but tend to absorb passing infrared (heat) photons from the earth
and then re-emit those photons in any direction, including back where they came from.
Just as a blanket over your body retains your body heat, the blanket of greenhouse gases
retains the heat of the planet. Human-caused increases in the concentration of
greenhouse gases is like adding another blanket -on a hot summer night.
u
-~A(:th(J~lr;! (CH.)
_ ,o,.Ji1",J, '~hi~ { ..... :))
Carbon Dioxide (C02}
~ 2(0)0
114GO"'[
"! .~ i 121::0 is ,
• -i 1(.10
i
source: IPCC
Of the primary greenhouse gases, CO2 is by far the most prevalent. Increasing levels of
C02 in the atmosphere due to the human burning of coal, oil, and natural gas is the
primary culprit in climate change. C02 is a very stable molecule: once in the atmosphere
it stays there, unless taken out by processes at the surface of the Earth, such as
Appendix F-9
photosynthesis by plants. The flow of CO2 into plants as they grow, and out of plants as
they die and rot, is a fairly balanced process20, and so changes in atmospheric C02 levels
have been gradual, until the past couple of hundred years. The human extraction and
burning of fossil fuels (coal, oil, and natural gas) has created a dramatic, rapid rise in CO2
levels that is already creating climate change, ocean level rise and severe weather events.
Our best science suggests we must change our ways, and start reducing CO2 emissions by
at least 2% per year to prevent disastrous climate change.
Methane (CH41
Methane is a molecule consisting of one carbon atom surrounded by four hydrogen
atoms. It arises in many natural processes, but is of particular concern to us as a product
of municipal waste disposal. The specific molecular structure of CH4 makes it much
more likely than a C02 to absorb a heat photon. Fortunately, methane is also not very
stable. In any seven year period, a methane molecule has about a 50% chance of
breaking down into CO2 and H20 (water). In calculations about climate change,
therefore, the effects of methane emissions are calculated over a specified time period,
usually 100 years. Over a period of 100 years, methane is 25 times more potent than an
equal amount (by weight) of C02. Over a period of 20 years, however, methane is 72
times more potent than CO2! This makes methane a prime target for near-term GHG
reductions while we work on more difficult longer term C02 reductions. Reducing
methane emissions today provides 72 times the impact over the next 20 years than
does reducing an equivalent amount of CO2_ (source: IPCC)
Nitrous Oxide (N2ill
Nitrous Oxide is released into the atmosphere from many natural processes, as well as
from the use of nitrate fertilizers in agriculture, decomposition of food and animal wastes
in landfills, the processing of sewage, and the burning of fossil fuels, (as well as trace
amounts from compost piles, dentist offices, whipped cream cans, and open pints of
Guinness!) N20 is a stable molecule, and is about 300 times more potent than CO2 over
100 years (289 times more potent over 20 years). Although composting generates some
N20, the application of compost to agricultural fields can significantly reduce the need
for nitrate fertilizers and the consequent release of much larger amounts of N20.
Advanced technologies like anaerobic digestion with cogeneration release even less N20
than aerobic composting (Willis et.al., 2008).
Technologies
Aerobic Decomposition, Anaerobic Decomposition, Incineration and Pyrolysis
Aerobic (oxygen rich) decomposition occurs when organic materials decay in the
presence of air, as in a compost pile. In these conditions, micro-organisms break down
the complex, carbon and hydrogen rich molecules of organic matter primarily into water
20 Except when humans clear-cut forests, or when climate change causes major
vegetation pattern changes.
Appendix F -10
and C02. Some trace amounts of methane and nitrous oxide may also be released, but in
a well-managed composting operation these emissions are negligible. A significant
amount of organic material remains in the finished compost, which will decay over a
period of years into C02 and water.
Anaerobic (oxygen deprived) decomposition occurs when organic materials are buried, or
otherwise contained without exposure to air. In this case, micro-organisms and chemistry
cause the carbon and hydrogen molecules from the organics to form methane (CH4), in
addition to C02 (where the oxygen atoms come from water molecules). The relative
production of CH4 and C02 will vary according to conditions, but typically CH4 will be
50% or more of emissions by weight. Material remaining from anaerobic decomposition
is essentially the same as finished compost.
Incineration involves heating organic materials to a combustion temperature in the
presence of oxygen, and results in a complete release of all carbon, hydrogen, and
nitrogen into gas form. Properly managed, Nitrous Oxide emissions are minimal, and no
methane is released, so C02 is the predominate GHG.
Pyrolysis involves heating organic materials to combustion temperature in the absence of
oxygen. This results in the production of "syngas" consisting primarily of methane and
C02, and the production of liquid hydrocarbons "bio-diesel" and/or charcoal. Pyrolysis
differs from anaerobic digestion in that conversion depends solely on heat, not on
microbes
Appendix F-ll
APPENDIXG
What it would cost to run the Compost Operation as a stand-alone operation in Byxbee Park by Emily Renzel 3/10/09
Item 4/08 Feuibillty U/lS/08Q&A 1/r1J09 Renzel Renzel 3/t/09 Renze13/l/f'JIJ
Study om 116:09 1/29/09 (38% benefits) (52% benefits)
LEA Annual Permit Fee 0 0 0 0 5 13,'122 S 13,122
Salaries &t Benefits 250,000 $328,644 $328.644 (CMR 116:09) 5555,443 5611,793
(personnel Hsted in RCSO
(Daily Post 2/3/09 + 38%)
1 supervisor 5139,015
1 refuse disposal attendant (avg 512.301) 512.307
2 heavy equipment operators (avg 592.909.75) $185,819
1 Landfill TeChnidan 5111,966
4% of PW DIrector, Deputy Director, Sr. Engineer
SoDd Waste Mgr, Mgr Env.ControL
Environmental Specialist -$1,15&342 x .04 .. $ 46,333
Contract Services $178,000 $178,000 $178,000 (CMR 116:09) $178,000 5178,000
Equipment (detail below)
$107,763 $ 29,119 $171,898 (detail below) $220,605 (8.5 year amortization) $220,605
and indirect Allocated Charges 0 0 578,644 ($107,000..$29,119) $ 78,644 $ 78,644
Budget increase $150,000 $lso,OOO (grinding) $185,000 (CMR 387:08) $185,000 $185,000
Fuel Costs 0 0 0 5116,064 (ZWOP B-13) $116,064 $116,064
Maintenance Costs Q Q Q S3Y1S. {ZWQf D:l.D 1...3IL6II8 1...3IL6II8
Total OperadD8 Costs $550,000 $128/111 5'128/111 51,1.,152 5t.386,166 5l,442,51.6
Rent
7.5 acres drop off &t windrow $750,000 $750.000 $750,000 $751,410 (5100,188/ aae) 5751,410 $751,410
1 aae gate, organics yard, staff office $100,188 5100,188 $100,188
Subtotals 51,300,000 51,478,977 $1,478,977 51,991,750 $2,.23',764 ~2,294,114
Revenue Offset (5175,000) (5175,000) (5175,000) (5175,000) ($175,000) (5175,000)
Total Costa $1.125.000 51.303.977 51.303,927 Sl.816.750 51.062.7"-S2.119.114
Cost/ton (5 day week, 21,000 tons/year) S53.57/ton S62.f'JIJ/ton S62.f'JIJlton SlUt/ton S91.23/ton $100.9l!ton
Mimimum Staffing .% more days S U1/ton 5 3.8'1/ton
Cost/ton (1 day week)
S101.14/ton 10US/ton
Per ton costs if average of 44 torttIday
in RCS! is used (16,060 tons/year) S1O.05/t0n S8U9/ton S8U9/ton $113.12/ton $128.44/ton mUS/ton
APPENDIXG
April 6. 2009
Mayor Drekmeier and Members of the City Council:
I received a free copy card so I used it to copy for you my latest version of the Composting
Costs at Byxbee Park. [have submitted this infonnation to our Composting Task Force a..'i
well.
CMR 178:09 in your packet this week includes infonnation on contracts awarded by the Gty
Manager from July 2008 to December 2008 .. Included in those are the following items which
probably also pertain to the composting costs: .
Ahem Rentals
Skylonda Equipment
Peterson Tractor
Peterson Tractor
Power Screen of No CA
Morbark Inc.
ExtecWest
Skylonda Equipment
Tractor Equipment Sales
TMT Enterprises Inc.
8/7/08
8/25/08
9/09/08
9/11/08
9/11/08
9/15/08
7/10/08
8/14/08
8/27/08
9/26/08
27,149.14*
45,000.00*
249,4%.68
85,000.00*
27,000.00*
45,000.00*
40,000.00*
85,000.00
65,000.00*
98,000.00*
Water truck rental
Trucking Services
Purchase of Wheel Loader 950H
Caterpillar equipment, parts & service
Power screen parts and service
Wood grinder, parts& service
Compost screener rental (2nd year)
Trommel screen rental w. operator
PM & repairs for Landfill Equipment
Purchase of Composting Material
The items from the above list that are nQt included* in my summary total $432,149.14 or
$20,58/ton, bringing the total per ton to $125.36/ton at 8yxbee Park.
The Composting Task Force will be developing its own numbers, but this is where my numbers
are at the present time.
Sincerely,
Emily M. Renzel
1056 Forest Avenue
Palo Aito, CA 94301
Appendix G-2
APPENDIXG
What it would Cott to ran tile Compost OperatioJa U I stua.aloae operation in Byxbee Put by Emily R.eaze1 311_
Ilmrl .PeuibUlty .U/l!IGI ow. 1/'UIOJ ..... 1 Resu:el 3/!JfJJ RenHlatJ/OJ Sta4y CMIl116:Ot !/I!IIf» (J8~ bae8ta) (5~ haeftIs)
LEA Annual Permit Pee 0 0 0 0 • ts,m S U.722
Sallries 6: BeIw8tI , ~
(1'etIcmrlet listed in RCSI)
~ ~ (CMR 116:(9) .. .-S6t1,793
(DeJl1 Poet 2/3/09 +.)
~=-~atteltdant( .. ~ .139,015
$12NI
2 ~ ~pDent operaklft (a. $92,90,.,5) $1815,819
1 iIiiimldlft $111,. 4~ofFW~DlNctDr, Sr. JinsIneer Solkl WMIe , Mar Bnv..<:'o.nlnil,
SpedaIJJt -'J,.1!58,3I'Z".DC-$ 46.333
Contract~ $178,000 5118,000 $178,000 (CMR 116:(9) '178,000 $178,000
l!qutpment (detail below)
$W.763 • 29,119 $tn.898 (debd1 below) (8.5 yaarllDOl'lfzatlcla $22D..fiQ5 $22OJi(15
aNllNIIrai ADocated Charaes 0 0 $78M4 (S101,000.G9,119) S~ .". JJudaet i.D.aeue $150,000 $150,(0) (grtndIna) $185.000 (OCR 38'1:08) $185,(0) 5188,(0)
PuelCOIII 0 0 0 $116,06& (ZWOP 8-13) 51l6,OM $116,06f Mlinhlrumm C'o!mI .II .II .II l'"*l aQ! I:l3l ,.a SM-
Total Operadas CCIItI .... $TlJ/I'/'I mun fJ,t40,U2 11 __ S1,4CI.816
Rent
:1.5 ... drcp off. windrow S7!0.000 $75O.ODO $7!IO,ooo $15IA1O ($100,188/ acre) $751,4.10 $751,4.10
1 aae .... orpnla ,.-d.ltlffofBce '100.188 '100,188 $100.188
SubtuIaIt $1,300,000 '1,1178,91'1 ,1.t78,91'1 SJ,.99l.750 ~,166 $U9t..Ui Rnenue 0fJ8et ($175,000) ($115,000) ($1",000) ($175,000) ($175..0:10) '($175,(QJ) r .... c:. 111", ,...", 11 am IUtUM .M,. 'U"U4
CoIt/IDa • .., ... Zl,GDDtDDf/yeut -.s7/taD tw19/Iea ...... SIU1IIan ...,.. IlOUJ/Iaa
.............. 2 .... • U1/Ioft , U'I/toa
Cost/tDa rt..,...w ,101.7..,.. 101."'_
,. .. __ If aftI'III of .. flt:ll.W/IIrt
ill RCSlII Uled (t6,.M ~ S7V.tIiI/Iml StLU/IDn IIt.l9/IoD 1111.17/ton S12IMIIaft sm.9IItaa
APPENDIXH
Further Analysis
A) Short Term (Operational) Recommendations
The Task Force visited the current Palo Alto windrow composting operation,
received a briefing on the operation and received follow-up data from Public
Works Operation Staff. The Aerobic Subcommittee (joined by Hilary Gans)
reviewed the information provided with the following objectives in mind:
,.. Minimize expenditures and use of resources.
,.. Minimize the need for stockpiling finished compost.
,.. Maximize the conversion of yard trimmings to compost.
,.. Minimize dust.
,.. Maximize compost quality.
Based on these objectives, the Aerobic Subcommittee developed the specific
recommendations contained in Section VII. Of the Task Force Report.
B) 112012" and 112015 -2021" Recommendations
The year 2012 is anticipated to be the year in which the current Palo Alto
Compost Facility will cease accepting of yard trimmings, as a result of the landfill
reaching full capacity. Therefore it was essential for the Task Force to develop
recommendations for that timeframe.
Initially two longer term recommendations were considered -one for 2015 and
one for 2021. These were ultimately merged into one set of recommendations as
it appeared that it may be possible to implement any of the alternatives studied by
2015. Experts advised the Task Force that approximately 4 years would be
needed for permitting, CEQA, design and construction of an advanced technology
facility. An additional 2 years may be needed for full consideration by all Palo
Alto Commissions, Committees and the Council itself and for consultant
selection, preliminary analysis and land acquisition. A total of 6 years may
therefore be needed, and 2015 became the soonest achievable timeframe.
In its final deliberations, the Task Force linked its 2012 and 2015-2021
recommendations by recommending a phased approach at a single site. For that
reason, the time frames will described together below.
C) Perspective Locations ("Where'?
Initially, all sites were screened out for 2012 except Z-Best and the current Palo
Alto (Landfill) site because the Task Force concluded that no other sites could be
developed in time. However, the desire to avoid dedicated Parkland (the current
site) and the desire to keep composting local, were both so strong, that the
Embarcadero Road! Airport site was added back to the options, and ultimately
selected. The recommendations (Section VII) recognize that the 2012 time frame
may not be met, and it may be necessary to take yard trimmings to Z-Best in the
interim. The Task Force recommendations make it clear that composting at the
current Palo Alto site should not continue beyond the currently planned cessation
Appendix H-l
of yard trimming acceptance. This recommendation follows Council guidance
that parklands only be considered "after all other non-parkland options have been
pursued." Thus the recommended site is the vacant rectangle in the Southeastern
corner of the Palo Alto Airport, augmented by adjacent Water Quality Control
Plant land and the current roadway, totaling approximately 5.5 acres (see Figure 5
and 6). The key features of the proposed site are:
~ The site does not use parkland.
~ The site is local thereby minimizing transportation-derived greenhouse
gas generation and toxic diesel fuel emissions.
~ The site is adequately sized, and could further draw upon about one-
half acre of space within the water pollution control plant to arrive at a
6-acre facility for accomplishing most organic waste management.
~ As a plan that derives from the Council's immediate attention and City
staffs action, there is greater assurance that the program of the Task
Force will be pursued rather than forgotten if its direction were merely
strategic toward 2020.
There are no existing locations for local municipal-scale composting in Palo Alto
unless a new site is developed. Any existing vacant land has multiple competing
interests for its use, and is not a short-term practical choice. The Task Force also
found that any facility in Palo Alto would optimally be located near the existing
Water Pollution Control Plant given the benefit of proximity to its staff and
physical infrastructure, generation of wastewater-derived organics (biosolids)
which can be processed by the new facility, and production of treated water that
can be used by composting and other organics management options with a
minimum generation of GHa's to fulfill any water needs that may be required by
present and future technologies.
The City's potential take-over of the Palo Alto Airport by 2012 creates a
possibility in which a new site can be developed concurrent with the time when a
new site is needed. This would allow the City to control the use and development
of the land as long as it does not interfere with airport operations. The Task Force
realizes that safety considerations, potential conflicts with federal grants that may
require the land to remain vacant past 2012, and other airport considerations may
Appendix H-2
potentially require fine tuning of the proposed site boundaries. Vacant land
between Embarcadero and the Water Pollution Control Plant is used for landscape
screening, which the proposal addresses by providing an adequate and substantial
landscape buffer to the new Embarcadero road site and all the way around the
proposed site for greenery, and an existing bio-filter for odor control. There is an
East Palo Alto sewer line and a 56-inch outfall line that may need to be re-routed
if significant construction takes place.
While the site is City-owned, it is not dedicated as parkland. There are
expectations for screening that would need to be maintained or developed as part
of this plan. There are also transportation impacts which are similar to existing
transportation, but which are none-the-Iess impacts, which would interfere with
access to the parkland. However, given the subtle change in Embarcadero's
routing, little change might be noticed by Palo Altans.
As background, another site option considered by the Task Force is located
immediately Southeast of the Water Pollution Control Plant. This site is not
recommended for several reasons. The site would be on parkland; The site's
southern extent would have been constrained by the edge of the landfill's lift.
The site would have interfered with anticipated screening between the Byxbee
Hills Park and the water pollution control plant, and also have been too narrow
and small to accommodate a practical operation. Its access would have also
conflicted with the park.
The option of leaving Embarcadero Road as-is could also be explored. In this
case, composting would occur in the same approximated location, but without
moving the road. This has inherent disadvantages caused by the need to
landscape screen two facilities, and of limiting the storage at pre and post-
processed organics. Also, it forces a need to transport biosolids across
Embarcadero Road.
D) "What?" (Type of Organics Processing)
For the 2012 timeframe, an aerated static pile approach has been selected by the
Task Force. A static pile approach uses blowers instead of a scarab windrow
turner to provide air for the process, and uses fabric covers to control aeration.
This approach is offered by several vendors and offers significant advantages
including compactness, and dust and odor control. Figure 7 shows an aerated
static pile compost by Gore that is representative of the technology. The existing
windrow approach now applied appears to require more space, and entails greater
heavy equipment usage during the compost process. The static pile could permit
the beginning of food scraps composting from Palo Alto residences -a collection
not offered by the City now. Given that the recommended site is near the airport,
measures will taken to avoid attracting birds.
Appendix H-3
Figure 7
taw material /
Porous
base Condensate trap
Odor filter pile of
screened corrIJ)OSt
Because aerated static pile technology offers improvements over windrow
composting, and yet is not a fundamentally different technology, it is believed to
be the one more advance technology which· could be permitted in time. Staff
discussions with the Air District find that permitting new urban sites for windrow
composting will be very problematic due to dust and emissions issues. Air
emissions from aerated static piles are controlled, and therefore it is believed that
the Air District permit can be readily obtained. Task Force discussions with the
Integrated Waste Management Board find them quite amenable to assisting with
the appropriate permitting actions for the upgrade of operations at a contiguous,
City owned location. The Embarcadero Road! Airport site is a contiguous, City
owned site.
Technologies which convert orgamc materials to energy ("conversion
technologies") cannot be permitted, designed, and constructed in the 2012
time frame. The Task Force studied all of the types of conversion technologies
and conducted a ranking exercise for them for the 2015-2021 timeframe. A
ranking exercise was also conducted for sites for those technologies for the 2015-
2021 timeframe. The ranking criteria are shown in Figures 3 and 4. Task Force
members individmilly assigned weightings to the criteria, and then numerically
ranked the criteria. Criterion Decision Plus software was then used to compute
overall scores for both the "Where?" (location) and the "What?" (type of process)
questions. Figures 8 and 9 show the results of the overall Task Force ranking.
Anaerobic Processing ranked highest and was selected by the Task Force as the
recommended technology for the 2015-2021 timeframe. The key attributes of
anaerobic processing are:
~ Low energy 'requirements
~ Production and capture of methane for energy production
~ Lower costs than high-temperature processes
~ Contained in a building with emissions controlled
~ Produces compost
~ Amenable to yard trimmings, food scraps, and sewage biosolids
Appendix H-4
Aerated Static Pile (ECS)
Anaerobic Dry Fermentation (Bekon/Havest)
(BEKON Dry Fermentation Plant, Munich-Germany)
Appendix H-5
The Embarcadero Road! Airport site was ranked in the top tier of sites for the
2015-2021 timeframe (Figure 10). The scores among the top tier sites were
almost identical. The key attributes of the Embarcadero Road! Airport site are:
};;-Can be augmented from 4 acres to 5.5 acres by combining with Water
Quality Control Plant land and relocating Embarcadero Road.
};;-Adjacent to Water Quality Control Plant with synergies for organics
management
};;-Not on parkland
};;-Fills in land use between two industrial type facilities the Airport and
the Water Quality Control Plant
};;-Appears large enough for aerated static piles initially, with a transition
to anaerobic processing in the 2015-2021 timeframe.
Schedule and Task Elements for 2012 Compost Site
at Embarcadero Road I WPCP
Figure 10
City of Palo Alto
Permitting
Agencies
Site Preparation
For Aerated
Static Pile
Compost Center
on Embarcadero
Rd. Site
Events
2009 2010 2011 2012 b ~c Di~ct N!r. ~ I tr.--bV...J.~-e-:-'---'''-;:--CJC.L.--CI-l·I
CIWMB D~ ··I!w .... _ ........ 1-...................... , --, ~ :
I PermIt f •
BIAAQMD Re¥1IilDII". I i
I Valli/I I ~Biil == A D~ 8III1d I fL-r'
I
I
E) "When?" (Timeframes)
2013
New Compost
Operation
starts
Accomplishing this project requires approvals by Palo Alto commissions, state
regulatory agencies, an environmental impact report, and the design and
construction of the project -all this within 26 months. Fortunately, the proposal
may benefit from alignment of constituencies previous at conflict over the fate of
Appendix H-6
local composting and parkland. The proposal maintains local compo sting without
the use of parkland, and not interfering with other anticipated public projects.
The schedule anticipates three broad scheduling elements: Palo Alto City
governance, agency approvals, and project design and construction, all schedule
elements constrained by key events. The key events that bracket the schedule
include the end of composting at the current Byxbee Park (Landfill site) and the
availability of the airport property through its transfer back to the City of Palo
Alto.
As a practical approach, the schedule anticipates the use of the Z-Best regional
compost facility if the local compost operation cannot be readied by the time
current compost operations must cease. City staff should maintain the ability to
utilize the regional facility, but understand the goal to keep composting local, if
possible and practical. Therefore a Z-Best regional option might be necessary for
as much as 12 months.
The following are additional schedule considerations:
» City of Palo Alto Approvals. Staff has indicated an Environmental
Impact Report (EIR) will likely be necessary for this project, a process
that could take 18 months. While not a prerequisite for all
development activities, it is on the critical path for the project. The
EIR will be considered by the Planning and Transportation
Commission as well as the City Council. Preceding the EIR, the City
would need to procure planning and design contractors to develop the
basis of a project and EIR. » State Permits. The Task Force visited with representatives of the
California Integrated Waste Management Board (CIWMB). We found
that the state seemed very accommodating to develop permitting
approaches to facilitate a composting operation. This is evidence that
composting is an alternative supported by the state instead of
landfilling. The accommodation could include the ability to extend the
boundaries of the disposal site to include new facilities. » Project Construction. The duration of the design and construction of
the aerated static pile system has been derived from two representative
vendors. The design and construction for shifting Embarcadero, and
any necessary rerouting of the sanitary sewer from East Palo Alto
would need to be developed, but within the broad constraints of the
schedule do not seem critical.
The schedule for this project will need to be vetted further. The ability to access
airport land is critical to the success of the project, and the interest and approach
to win use of this land should be pursued by staff. However the availability and
general timing of this land is anticipated by this alternative. The Task Force
should consider developing more details prior to completion of their study.
Appendix H-7
F) Greenhouse Gasses
Substantial greenhouse gas
(GHG) reductions can be
achieved first by diverting food
and other wet organic wastes
from landfill disposal, and then
by moving to advanced
anaerobic digestion technology
for our wastewater, food
scraps, and yard wastes. Non-
local transport of our organic
wastes contributes to GHG
emissions, but as can be seen
from the chart below, how we
process our organic wastes
matters much more than where
that processing occurs.
GHG Reduction Opportunity: 3% or more of Palo Alto Emissions
landfilled
FoodwoSI. &
Compostabl.s
Waslewaler
Incineration
Yard waste
Composting ').
estimate
M&trIe Tons COre
100,000
90,000
80,000
70,000
60,000
50,000
~o,ooo
30,000
20,000
10,000
Non-lOCQI_L.ii.i~ii.L. __ '-___ "'~_j1i2;..:.s:!.$J.;.iJ
Transport .
2008
8aseline
Wrth commercial
Ioodwosle &
yard waste
composling
With local
Anaerobic;
'Digestion
Food scraps and other moisture-rich compostable wastes quickly decompose in
landfills, releasing substantial methane gas long before methane recovery systems
are in place. Achieving the contract collection target of our new commercial,
institutional, and multi-family residence (CIIIM) food scraps program will reduce
methane emissions by at least 6,000 and as much as 15,000 metric tons (mT) of
CO2 equivalent, depending on emissions model assumptions. Surpassing our
collection target or implementing a single-family foodwaste collection program
would reduce GHG emissions even more,
The use of Advanced Anaerobic Digestion (AAD) facility to process our
wastewater sludge, C/I/M foodwaste, and collected yard wastes would reduce
C02 emissions by an additional 14,000 mT of C02 equivalent. A 50% increase
G) Economic Impacts
Due to the complex nature of the technologies, the proprietary nature of vendor
information: and the lack of sufficient time, the Task Force was not able to
complete a quantitative economic analysis of alternatives. The Aerobic
Subcommittee completed initial work on the current Palo Alto compost operation
and the Z-Best (Gilroy) alternative and this work is contained in Appendix G. A
preliminary cost analysis of an aerated static pile operation at the Embarcadero
Road/Airport site for 2012 was begun by Task Force members but engineering
estimates do not yet exist. The next step City staff would have to take for this
alternative is to prepare an engineering estimate, should Council so direct staff ..
With respect to the 2015-2021 recommendations, engineering cost estimates of
the alternatives do not exist. Such estimates would have to be made as part of a
facilities planning process, which is one of the recommendations of the Task
Force.
Appendix H-8
ATTACHMENT B
CITY COUNCIL
MINUTES
CITY COUNCIL MEETINGS ARE CABLECAST LIVE ON GOVERNMENT ACCESS CHANNEL 26 ==========AND BROADCAST ON KZSU. 90.1 FM==========
Special Meeting
October 19, 2009
STU DY SESSION I •••••• I ••••••••••••••••••••••• 11 ••• 1 ••••••••••••• 11 ••••••••••••••• ., ••••••••••••••• 216
1. Meeting with Senator Simitian Regarding State and Local Issues ......... 216
ORAL COMMUNICATIONS ....................................................................... 216
ACTION ITEMS ..................................... I •••••••••••••••••••••••••••••••••••••••••••••••• 217
2. Approval of Final Recommendations of the Compost Blue Ribbon Task
Force ..... I •••••••••••••••••••••••••••••• I •• I ••• I •••••••••••••••••••••••••••••••••••••••••••••• 217
STUDY SESSION ....................................................•............. 11 ••••••••••••••• 229
3. Discussion of Federal Legislative Process and Preliminary Development
of 2010 Federal Priorities ............................................................... 229
CITY MANAGER COMMENTS .................................................................... 230
APPROVAL OF MINU-rES .......................................................... III ••••••••••••••••• 230
ACTION I ... rEMS ..................................................... 111 •••••••••••••••••••••••••••••••• 231
4:-Colleagues ~4emo from Council ~4embers Espinosa, Kishimoto, and
Schmid Directing Staff to Take Actions to Permit Early Opening of
Portion of S"(xbee Parl< ......................................................................... 231
-5. Re'lie'..., of Community Supported Agriculture (GSA) Pilot Program at
Palo Alto City Hall King Plaza and ~4alEe Recommendations for
Continuation of the Program ........................................................... 231
6. Resolution 8992 entitled "Resolution of the Council of the City of Palo
Alto Revising Green Building Standards for Compliance for Private,
l\Jonresidential and Residential Construction and Renovation, and
Review of Report on Implementation of the City's Green Building
Ordinance. I' ••••••••••• III ....... : ........................................................................... 231
10/19/09 105-214
7. PUBLIC HEARING: Adoption of Two Ordinances: (1) Repealing Chapter
16.17 of the Palo Alto Municipal Code and Amending Title 16 to Adopt
a New Chapter 16.17, California Energy Code, 2008 Edition; and (2)
Repealing Chapter 16.18 of the Palo Alto Municipal Code and
Amending Title 16 to Adopt a New Chapter 16.18, Establishing Local
Energy Efficiency Standards for Certain Buildings and Improvements
Covered by the 2008 California Energy Code .................................... 234
COUNCIL MEMBER QUESTIONS, COMMENTS, AND ANNOUNCEMENTS .......... 235
CLOSED SESSION ................................................................................. 235
&-CONFERENCE ¥JITH LABOR NEGOTIATORS ....................................... 235
ADJOURNMENT: The meeting adjourned at 12: 16 a.m ............................... 235
10/19/09 105-215
The City Council of the City of Palo Alto met on this date in the Council
Conference Room at 6:05 p.m.
Present: Barton, Burt, Drekmeier, Espinosa, Kishimoto, Klein, Morton,
Schmid, Yeh arrived at 7:20 p.m.
Absent:
STUDY SESSION
1. Meeting with Senator Simitian Regarding State and Local Issues.
The City Council met with State Senator Joe Simitian to discuss Statewide
issues of concern to Palo Alto. Senator Simitian began the session by
providing an overview of the State budget challenges. Next, Deputy
Administrative Services Director, Joe Saccio described the issues related to
Comcast charges for access to the I-Net system under the City/s cable TV
franchise. The Council and Senator Simitian then discussed current issues
related to the High Speed Rail project. Director of Planning and Community
Environment, Curtis Williams then expressed the City/s concerns with
implementation of SB375 related to regional planning. Lastly,
Environmental Compliance Manager, Phil Bobel thanked Senator Simitian for
his leadership on various environmental issues related to water, in particular
the return of unused pharmaceuticals.
Mayor Drekmeier announced that there will not be a Closed Session at the
end of the Council meeting.
ORAL COMMUNICATIONS
Christopher Earl, Akeena Solar Marketing Manager, Los Gatos, said Akeena
Solar would be sponsoring the 2nd Annual Mayor1s Cup Challenge which was
part of the 5th Annual Applied Materialsl Silicon Valley Turkey Trot. The City
of Palo Alto would compete with the Cities of Cupertino, Milpitas, and
Mountain View and a Mayor1s Cup presented to the winning city and
displayed locally.
Sherri Sager, Lucille Packard Children/s Hospital, said the Children/s Hospital
would be sponsoring the 5th Annual Kid/s Fun Run. The event raises money
for the Santa Clara County Housing Trust, Second Harvest Food Bank, and
Childrenlsl Health Initiative.
10/19/09 105-216
Timothy Gray, 4173 Park Boulevard, spoke regarding the importance of local
elections to be free from undue influence by outside special interest groups
and should be open and fair. He expressed the importance in following the
lead of the Fair Political Practices Commission.
ACTION ITEMS
2. Approval of Final Recommendations of the Compost Blue Ribbon Task
Force.
Public Works Department Environmental Compliance Manager, Phil Bobel,
said the following presentation would include hearing from the. Compost Blue
Ribbon Task Force (BRTF), statements from the City Attorney's Office, and
comments from the Airport community. He said the BRTF held 20 meetings
in 6 months.
Blue Ribbon Task Force Co-chairperson, Craig Barney gave a presentation as
outlined in Staff Report CMR:402:09 and an overview of the Compost Task
Force Final Report. The Council had directed the BRTF to determine a way
to handle the City's organic materials management problems in terms of: 1)
Short-term Improvements to current operations, 2) Environmental impacts
of alternatives, 3) Economic impacts of alternatives, 4) Permitting of
alternatives, 5) Prospective locations of alternatives, and 6) Energy
generation of alternatives. Recommendations fell into three timelines. The
immediate timeline was the possibility of modifying the existing compost
operation currently located at the landfill. The mid-term recommendations
focused on closing the landfill, when it no longer could accept Palo Alto's
composting materials with a projected date of 2012 or 2013. The longer-
term recommendation was 2021 requiring a more involved technology. The
key recommendation was for the City to establish an Aerated Static Pile, at
the Embarcadero Road Airport site by 2012. Composting material would be
transferred to Z-Best through the Smart Station in Sunnyvale until the
Aerated Static Pile operation was completed in 2012. A dry Advance
Anaerobic Digestion (AAD) facility would be established at the same location.
It was technology that could take on larger inputs, process wastewater
sludge, and food and yard wastes. The goal was to treat all organics the
City generated. The recommended technologies had been used and proven
and the process would be done locally. Reducing greenhouse gases was a
primary consideration and local sites were being considered.
10/19/09 105-217
Blue Ribbon Task Force Co-chairperson Cedric de La Beaujardiere
presentation included the technical portion of the process as outlined in the
BRTF Final Report.
Senior City Attorney, Cara Silver said Staff did not have the opportunity to
review the mid-and long-term recommendations. There were legal hurdles
that had to be addressed regarding the Airport site that include: 1) The
Federal Aviation Administration's (FAA) objecting to the proposal because
the Embarcadero Road site violated certain FAA grant conditions that were in
effect through 2026. A compositing facility at that site was too close to the
airport and would create hazardous situations of wildlife interfering with
airplane flight patterns. Further discussions needed to take place to
determine whether issues were non-starters or to try to reach a resolution
through negotiations; 2) The Baylands Master Plan could require amending
the permitting of compositing sites; 3) Currently, the Airport was governed
bya lease with the County of Santa Clara through 2017. Use of the airport
site prior to that date would require the County's consent; and 4) Other
agencies could exercise jurisdiction over the airport site, including the Army
Corp of Engineers and the State Lands Commission. The City Attorney's
Office was willing to analyze these issues in more detail but wanted to raise
them during the preliminary stages of the process.
Ralph Britton said the airport community was not in favor of placing the
composting facility at the airport site. The Baylands Master Plan had
restrictive guidelines against buildings on the site. A City Auditor's Report
was completed that assu red the operation was profitable and the airport had
the capability of standing on its own. Currently, the open land was used for
helicopters serving medical needs, training, and personal transportation.
Composting piles were subject to rodents and birds. One of the key features
of the airport was to operate independently of any public funding other than
Federal funding.
Council Member Burt asked how the airport community felt about the
possibility of dedicating 8-10 acres of the northern portion of the site as
parkland. The concept was if the BRTF's recommended alternative could not
be reconciled with airport use, the upper strip of the 22 acres and a strip of
land parallel to the levy, adjacent to natural habitat, would be taken as
potential future parkland in exchange for the land desired by the BRTF. The
area ~was adjacent to the Wastewater Treatment Plant along with the current
recycling center and the undedicated five acres of the former landfill. This
plan would require an election.
10/19/09 105-218
Mr. Britton said he was unsure of the FAA's concerns and that the FAA might
want to weigh in on the suggestion.
Council Member Espinosa needed clarification as to why Staff was in
disagreement with the BRTF recommendations.
Mr. Bobel said Staff had concerns with both dealing with the day-to-day
operations and the BRTF recommendations to condense the current working
area. Staff was able to go forward with 75 percent of the recommendations.
Bob Wenzlau, BRTF member said the Task Force felt Staff understood their
intent and honored their disagreement. The BRTF did not find any reason to
revisit the issues and try to persuade Staff. The Windrow Composting was
ending and wanted to have a smooth closure and solution was necessary.
Council Member Espinosa asked what the qirport business plan was and the
timeline for coming back to the Council.
Deputy City Manager, Steve Emslie said a draft of the plan was being
prepared and scheduled to return to the Finance Committee in December.
Council Member Espinosa raised concerns as to why the City Attorney's
Office had not had the opportunity to review the proposal and requested a
timeline for review.
Ms. Silver said the City Attorney's Office had not had the time to analyze the
actual legal obstacles of the airport site which required more analysis in
giving a definitive opinion. There also needed to be consultation with the
FAA.
Council Member Espinosa asked whether the process had begun.
Ms. Silver said a meeting was held with the FAA at a lower staff level and
was too premature to begin full discussions until the Council gave direction
to pursue the airport site.
Mr. Bobel said legal and technical issues had to be discussed with the FAA
and the County. FAA wanted a proposal that would meet their concerns in
controlling the bird problem issue. A plan had not been started and Staff
needed the time to develop the plan. Staff felt it was prudent to get
direction from the Council.
10/19/09 105-219
Vice Mayor Morton said there seemed to be a general agreement that the
six acres needed to be somewhere close to the Water Treatment Plant. He
asked if the land being looked at was in Bixby Park, but noted all of the land
was within the Baylands; and whether the land being referred to was
dedicated parkland beyond Bixby Park or was the word dedicated parkland
and Bixby equivalent.
Mr. Bobel said they were not equivalent. The 22.5 acres was part of the
airport and not in dedicated parkland. The landfill area was dedicated
parkland and the 2.3 acres above the landfill was also dedicated parkland.
Emily Renzel said the Palo Alto Municipal Code, stated the Baylands Park
along with the Bixby Recreational area and everything within the Baylands
was publicly owned in 1965. It was dedicated parkland except for five sites;
the airport, the sewage plant, the Municipal Services Center (MSC), a small
PASCO site of one acre, and a small gas-up station at Geng Road. The
Baylands Master Plan covered both park dedicated and non-dedicated sites.
Council Member Yeh asked whether the anaerobic process was the only
process being studied and why both the aerobic and anaerobic process
required six acres of space.
Mr. Bobel said more than half of the area would be for the actual digester or
piles. The remaining portion would be for truck turn-around, storage, and
ancillary areas. Entrances, exits, and the shape of the facility also had to be
considered.
Mr. de La Beaujardiere said the initial processing of materials or anaerobic
digestion occurred within a building. The post processing would be placed in
piles for distribution.
Council Member Klein spoke of the landfill as not being an appropriate site
for the facility. He asked if the land being referred to was the same area
Council Member Burt spoke of as the trade off for the six acres. Additionally,
he asked if the areas labeled 9, 1, 2, and 6 in the Report were disqualified
for use of the facility.
Mr. de La Beaujardiere said Area 9 was slated to be filled with the landfill
and would need to be excavated in order to use the land. Areas 1, 2, and 6
were the Water Treatment Plant.
10/19/09 105-220
Council Member Klein asked whether Areas 1, 2, and 6 with some acquisition
of existing commercial land would be a viable alternative.
Mr. de La Beaujardiere said it would be.
Council Member Klein referred to the Report, page 12, and asked for
clarification on the statement recommending the City consider amending the
Green Waste Agreement and to add the pick up service in residential green
bins as soon as possible.
Mr. de La Beaujardiere said he did not know what the estimated cost would
be but the City had created a new contract for picking up organics to include
food scraps from all businesses and multi-family residences having 5-units
or more. There was a plan to expand to cover all residences within the City
and believed it should be implemented sooner rather than later in order to
get food scraps out of the landfill.
Council Member Klein asked what the cost would be and how long it would
take to develop a plan for FAA discussion.
Mr. Bobel said it would take a few months to gather the information. The
only thing that would satisfy the agency was a plan to address and prevent
the bird problem. The cost to design the Aerated Static Pile was $3 Million
and an estimated cost would be approximately $100,000 for a meaningful
plan. The funds would come from the Refuse Fund.
Council Member Schmid raised concerns regarding the health issues that
surround the composting process.
Mr. Bobel said compost piles contained coliform but Staff recognized it was
not a likely source of the problem. Reclaimed water would be used at the
composting facility exclusively until testing confirmed that reclaimed water
was contaminating the compost. Compost plies would be tested for coliform.
Council Member Schmid asked whether the Council was being asked to
extend the life of the' landfill by voting to accept recommendations that
contained the date "2012"; and would the City be liable for the $7 million
annual payment.
Mr. Bobel said he would try and answer for the BRTF since it was technical.
Recognizing that concern, Staff tried to be careful in all the
recommendations to say 2012 or when the landfill closed. The reason for
10/19/09 105-221
the language was because it was not really when the landfill closed. It
would be when acceptance of garbage ceased, but still accepted the yard
trimmings for six months in order to get enough compost for the final cover.
It was accurate to say that it would be in the beginning of 2012 when yard
waste no longer would be accepted at the compost facility and required an
alternative home.
Mayor Drekmeier asked if the anaerobic process entailed getting a new
permit.
Mr. Bobel said it would.
Mayor Drekmeier asked whether the Calaveras Fund could be. used for the
anaerobic digestion facility.
Mr. Bobel said he could not provide the answer since it was not within the
expertise of the BRTF members.
Mayor Drekmeier asked whether an economic evaluation was completed.
Mr. Bobel said he felt an economic evaluation would require the expertise of
a consultant.
Mayor Drekmeier asked what the feasibility was in reshaping the landfill to
create six acres of flat space.
Hilary Gans, BRTF member said it would require an engineering study, but
could be done with the existing eqUipment currently on the site.
Mayor Drekmeier asked Staff for feedback regarding the middle and final
step of aerated static piles and the anaerobic process.
Mr. Bobel said the BRTF had analyzed the technology and concluded the next
step would be the aerated static pile. The current and most favorable in the
market was the dry Advance Anaerobic Digestion (AAD).· The safest route to
take would be to move forward with one step but not both at the same time.
Mayor Drekmeier asked if it was a timing or financial issue.
Mr. Bobel said it was both. The aerated static pile could be used as an
integrated part of the AAD.
10/19/09 105-222
Vice Mayor Morton said with respect to recommendations (B) through (I) in
the Executive Summary Report, the Council could request Staff to provide
the costs and challenges that involved the northern versus the southern
location.
Council Member Kishimoto asked for the size of the land south of the landfill
and what would it take to smooth out the landscaping.
Mr. Bobel said a review of the existing plan would need to take place to stay
within the engineering guidelines.
Ms. Renzel said everything including the sewage tr,eatment plant was landfill.
The Water Quality Control rules required certain slopes to eliminate standing
water in the landfill. The steep slopes made the land difficult for park use.
Council Member Burt asked what the cost would be in the trade off between
using an aerated static pile for a few years before moving into a . long-term
anaerobic digestion system.
Mr. Bobel said he did not have an answer.
Mr. Wenzlau said the BRTF felt there were more reasons for the interim
solution rather than introduce a new technology. It accomplished getting
the permit and having the City maintain the expertise in composting.
Council Member Yeh asked who owned the 3.6 acres as indicated in Staff
Report CMR:402:09, 2021 Location Screening, Appendix 0-4.
Mr. Bobel said it was privately owned.
Council Member Yeh asked if the sale price was known.
Mr. Bobel said he did not have the total dollar amount for the three
buildings. The middle building sold for half-a-million dollars, but did not
know the sale, price on the other two buildings. He estimated $10,000,000.
Stanley Peters, Menlo Park, spoke regarding the safety issues of moving a
landfill closer to an airport runway and how it would increase the risk and
frequency of damaging events. He said safety as well as cost should be
taken into consideration in making a decision.
10/19/09 105-223
Harry Hirschman, Palo Alto, BRTF member said the Task Force did not have
the opportunity to complete the economic evaluations which included the
cost of operating the Windrow System, compared to shipping materials to
the Smart Station, and the cost of the Smart Station to take green waste
and not food waste. The Smart Station cost would increase significantly if
food waste was included.
Mark Deem, 685 Sierra Avenue, Mountain View, encouraged completing a
trade-off analysis and the cost and challenges in dealing with the FAA, the
County, and other stakeholders of the Embarcadero/Airport site versus City-
controlled areas.
Chuck Byer, 1170 Hamilton, said he viewed the airport as being a precious
resource. It provided emergency, life-giving, business, and recreation
services. He urged the Council to table the report until economics were
clarified.
Susan Stansbury, 741 Josina Avenue, spoke regarding reducing greenhouse
gas emissions. She suggested looking at innovative technology in ways to
address a global issue.
Debbie Mytels, 2824 Louis Road, said in an effort to find a solution to yard
waste composting, the BRTF found methane from food waste was another
significant problem. By utilizing all of the City's biosolid waste, the proposal
also tackled a problem of handling solid waste from the Water Treatment
Plant. It had the capability of burning the waste stream to produce a new
source of energy which could be used for electric generation.
Enid Pearson said she supported the short-term recommendation to 2012
and urged the Council to begin the process of diverting food and organic
waste from landfill disposal. She was in support of ending the current
compost operation on Bixby Park, taking yard trimmings to Z-Best facility,
opening the landfill and to not prolong the closure. She urged the Council to
begin the study on an aerated static pile compost facility.
David Creemer, Joint Committee Relations Committee for the Palo. Alto
Airport (JCRC) Chair, said his group wanted to be involved and should have
been invited to partiCipate in the BRTF process.
Herb Borock, P.O. Box 632, said he supported the short-term
recommendations and asked how the commercial customers would be
notified in using the landfill again. The BRTF's long-term recommendations
10/19/09 105-224
focused more on the process of what to do rather than the importance of the
location. He asked whether the interim solution was necessary.
Larry Shapiro said he supported the airport as well as composting. The
issue was location. The airport community suggested placing the new
composting operations south of Palo Alto Airport, across the street from the
airport, behind the trees, eliminating the cost of moving Embarcadero Road
and the underground pipes and disrupting the view. All could be done in the
City's desired timeframe.
MOTION: Vice Mayor Morton moved, seconded by Council Member XXXX
to: 1) Accept the September 9, 2009 Palo Alto Compost Task Force Final
Report (Report) submitted by the Compost Blue Ribbon Task Force (BRTF),
2) Direct Staff to implement the short term recommendations for current
compost operations contained in the BRTF Report as modified by the Staff
response, 3) Request Staff provide economic impacts of relocating
composting to the north site Number 4 and expanding the south site of 2.3
acres to the required 6 acres, and 4) Confirm direction to Staff that
commercial garbage disposal at the Palo Alto Landfill is to resume following
Council action on the BRTF recommendations.
MOTION FAILED FOR LACK OF SECOND
MOTION: Council Member Barton moved, seconded by Council Member
XXXX to: 1) Direct Staff to evaluate the FAA issues from a cost and schedule
point of view, 2) Look at the transition between the two composting
systems, and 3) Work closely with airport community for potential options
on the airport site.
Council Member Espinosa, for clarification asked Council Member Barton if he
was suggesting adopting any of the recommendations listed in the Report.
Council Member Barton said he was more focused on the bigger picture but
was open to discussion.
MO:rION FAILED FOR LACK OF SECOND
MOTION: Council Member Burt moved, seconded by Council Member Klein
to: 1) Accept the September 9, 2009 Palo Alto Compost Task Force Final
Report (Report) submitted by the Compost Blue Ribbon Task Force (BRTF),
2) Direct Staff to implement the short term recommendations for current
compost operations contained in the BRTF Report as modified by the Staff
10/19/09 105-225
response, 3) Request Staff return with analysis and recommendation of
whether to incorporate an interim solution of aerobic static pile composting
or consider offsite composting on an interim basis, and 4) Staff to evaluate
the two options (Embarcadero Road/Airport site and 5-6 acres in the
northwest corner of the current landfill site) on the locations.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE
MAKER AND SECONDER: 1) Staff to consider an option of partnering with
other city(ies), 2) Staff to consider whether other locations on Embarcadero
Road could work, taking no more than 90 days, and 3) Consideration of the
airport would not have any negative impact on its operatiol)s, finances, or
relationship with either the FAA or Santa Clara County.
Council Member Yeh asked whether Staff had considered the 3.6 acres and
the adjoining one acre of land by the facility.
IVlr. Bobel said the area contained an air-pollution control device and
underground sewer lines which made it not 100 percent available.
Council Member Yeh said he wanted to know what the different options were
for the north and south end of the area and the economic analysis to see
what the cost benefit was between the different sites. He was in favor of
having local generation through an anaerobic facility. Additionally, if the
facility could be constructed on the 4.6 acres it would not require an FAA
process or having to utilize parkland.
Mr. de La Beaujardiere said he tried configuring the dry anaerobic
composting on the 3.6 acres and it would not fit.
Mr. Bobel said the BRTF recommendation was to find six acres. There were
consultants that felt the facility could fit but Staff found it to' be extremely
tight.
SUBSTITUTE MOTION: Council Member Schmid moved, seconded by
Council Member Yeh to: 1) Accept the September 9, 2009 Palo Alto Compost
Task Force Final Report (Report) submitted by the Compost Blue Ribbon
Task Force (BRTF), 2) Direct Staff to implement the short term
recommendations for current compost operations contained in the BRTF
Report as modified by the Staff response, 3) To explore the longer term
possibility for an anaerobic digestion site, and 4) To direct Staff to continue
accepting commercial garbage disposal at the Palo Alto Landfill.
10/19/09 105-226
Council Member Schmid said his intent was to open a range of possibilities of
looking into different sites, locations, and economics. It would put a longer
term focus of getting into the anaerobic process, allow dropping the interim
step, and keep the BRTF's momentum generated.
Council Member Yeh felt it was a short diversion from the ultimate goal by
moving forward with the anaerobic process.
Council Member Espinosa said he supported the original Motion.
Council Member Kishimoto needed clarification on the Substitute Motion.
She wanted to know whether the long-term was being focused on and if the
maker of the Motion was saying not to pursue the intermediate step of the
aerated static pile.
Council Member Schmid clarified his suggestion was to focus on the long-
term goal and to look back after a decision was made on the best location,
place, and timing. A determination could then be made if an interim step is
feasible. It would open up discussion but would be a secondary long-term
goal.
Council Member Kishimoto asked whether the City would be shifting away
from the Windrows System.
Council Member Schmid said yes but not until the decision was made on
location a nd site.
Council Member Kishimoto asked for clarification regarding the Main Motion
and what was being viewed as interim and long-term.
Council Member Burt said it was to evaluate the two different locations and
to request Staff to return to the Council with additional information on cost
impacts and feasibility and whether to move forward with the interim
approach. The Amendment was in support of a long-term anaerobic
approach and to evaluate potential partnership with other cities.
Council Member Kishimoto asked if an evaluation was going to be done on
the Wastewater Treatment Plant.
Mr. Bobel said it would be done in 2010.
10/19/09 105-227
Council Member Kishimoto asked Staff whether north or south was
preferable in having the long-term solution.
Mr. Bobel said he was referring to the biosolid portion and not the yard
waste portion. He raised concerns as where to place biosolids in the facility
if the process changed. The odds of fully incorporating the yard waste and
food waste was not probable. It would mean having to look at areas outside
the fence.
Council Member Kishimoto said the Report did not address green waste
reduction and incentives to reduce the need of having a massive composting
facility.
Mayor Drekmeier was in favor of the anaerobic process and urged the
Council to move forward toward an anaerobic composting system. He said
the BRTF did a good job in treating' parkland as a second priority but felt the
need to take a more serious look at that option. The landfill was a more
favorable site than the airport since the City had full control over it, less
visible from the Embarcadero, and was already heavily impacted. He was in
favor of doing the 2 for 1 trade of the parkland, including the triangle of the
2.6 acre of the Bayland and a portion of the runway. He supported the
original Motion.
Council Member Klein supported the original Motion and would vote against
the Substitute Motion.
AMENDMENT: Council Member Kishimoto moved, seconded by Vice Mayor
Morton to add the condition that any undedicated parkland would be offset
by twice the dedicated parkland elsewhere.
AMENDMENT FAILED: 3-6 Drekmeier, Kishimoto, Morton yes
INCORPORATED INTO THE SUBSTITUTE MOTION WITH THE
CONSENT OF THE MAKER AND SECONDER to Change Number 4 above to
\\Evaluate deferring accepting commercial garbage until the south option can
be evaluated with any impacts on the need to reduce the grades, and this
action would not extend the life of the landfill."
SUBSTITUTE MOTION FAILED: 4-5 Kishimoto, Morton, Schmid, Yeh yes
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE
MAKER AND SECONDER: 1) Staff to work closely with the airport
10/19/09 105-228
community in the development of any proposals, and 2) Staff to take into
consideration the Airport Business Plan being developed.
AMENDMENT: Council Member Kishimoto moved, seconded by Council
Member Schmid to ask Staff to preliminarily evaluate the proposal to move
the airport helipad to another location.
AMENDMENT FAILED: 2-7 Kishimoto, Schmid yes
MOTION: Council Member Klein moved, seconded by Council Member
Espinosa to Call the Question.
MOTION TO CALL THE QUESTION PASSED: 6-3 Drekmeier, Schmid, Yeh
no
MOTION AS AMENDED PASSED: 6-3 Kishimoto, Schmid, Yeh no
MOTION: Mayor Drekmeier moved, seconded by Council l"1ember Yeh that
it is the intention of the City Council to move toward on an anaerobic
composting system.
MOTION PASSED: 9-0
STUDY SESSION
.3. Discussion of Federal Legislative Process and Preliminary Development
of 2010 Federal Priorities
Assistant to the City Manager, Kelly Morariu introduced the City's new
Federal legislative advocacy firm, Van Scoyoc Associates, and the firm's
representatives, Steve Palmer and Thane Young. Mr. Palmer and Mr. Young
introduced themselves, provided an overview of their professional
backgrounds, and described the experience and qualifications of their firm.
Mr. Palmer and Mr. Young then reviewed the current legislative climate in
Washington, DC and the rationale for maintaining a federal legislative
advocacy program. Ms. Morariu then reviewed the existing Federal
legislative priorities and provided suggested priorities for the upcoming year.
The Council provided feedback and input on these suggested priorities. The
study session ended with a review of the Federal legislative calendar.
10/19/09 105-229
March 8, 2010 REVISED HONORABLE CITY COUNCIL City of Palo Alto SUBJECT: Appointment to the Planning and Transportation Commission for one unexpired term ending on July 31, 2012. Dear Council Members: On Monday, March 8, 2010 the City Council should vote to appoint one commissioner to an unexpired term ending July 31, 2012. The Candidates are as follows:
Brent Butler
Nakul Correa
Leon Leong
Corey Levens
Gordana Pavlovic
Greg Tanaka Voting will be by paper ballot. Five votes are required to be appointed. The first candidate to receive at least five votes will be appointed. Respectfully submitted, Ronna Jojola Gonsalves Deputy City Clerk cc: Donna Grider, City Clerk Curtis Williams, Staff Liaison
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: PUBLIC WORKS
DATE: MARCH 8, 2010 CMR:146:10
REPORT TYPE: CONSENT
SUBJECT: Approval of a Three-Year Extension to the Agreement with the United
States Geological Survey in the Amount of $186,000 for San Francisco
Bay Monitoring
RECOMMENDATION
Staff recommends that Council approve and authorize the City Manager or his designee to execute
the attached extension to Contract No. C05109138 with the United States Geologic Survey
(U.S.G.S.) in the amount of $62,000 per year for a total of $186,000 to monitor pollutants in clam
tissue and sediments and to monitor ecosystem diversity in the Palo Alto Baylands area of San
Francisco Bay during calendar years 2010-2012.
DISCUSSION
Project Description
The work to be done by the U.S.G.S. consists of two parts. Part I provides for sampling and analysis
of tissue from clams and sediment found in the mud flats near the discharge point of the Regional
Water Quality Control Plant (R WQCP). Part IT provides for monitoring of the number and diversity
of the benthic organisms and the reproductivity of the clams. The monitoring is required by the San
Francisco Bay Regional Water Quality Control Board (Regional Board), whiCh regulates the
discharge of treated wastewater to the Bay by Palo Alto. The sampling will cover a three-year period
(calendar years 2010 -2012), and continue the work approved by Council and completed during the
past three years (CMR:197:07).
.... ~
The results to date show dramatic decreases in pollutant levels in the clams compared to the early
1980s when pollutant discharges from the RWQCP were much greater. Part IT of the program has
shown that the clams are better able to reproduce and that certain other benthic organisms are on the
increase, consistent with a less contaminated environment.
Selection Process
The U.S.G.S. has collected clam and sediment data adjacent to the Palo Alto discharge point since
1974. Much data on diversity and clam reproductivity has also been collected at that location. No
other consultants or institutions have the unique capability to analyze pollutant and ecosystem trends
in the vicinity. The work done by the U.S.G.S. for Palo Alto to date has been exemplary and
received nationwide recognition. The U.S.G.S. does not charge Palo Alto for the full cost of the
sampling program, but only for incremental costs associated with Palo Alto's required monitoring.
CMR:146:10 Page 1 of2
The Regional Board and the City wish to take advantage of the knowledge, experience, and
efficiency in analyzing and interpreting data.that the U.S.G.S. is able to bring to this project. For
these reasons, the U.S.G.S. has been declared a sole source provider of the required services.
RESOURCE IMPACT
The total cost of the three-year agreement is $186,000. First year costs in the amount of $62,000 will
be funded from fiscal year 2009-10 operating budget of the RW QCP. It is anticipated that funds for
the second year ($62,000) and the third year ($62,000) will be included for in subsequent base
budgets. The agreement acknowledges that it is "subject to the availability of appropriations". As
with almost all RWQCP expenditures, approximately 113 of expenditure comes from Palo Alto funds
and approximately 2/3 comes from the other partners of the Plant.
POLICY IMPLICATIONS
Approving this continuing monitoring program does not have any new policy implications.
ENVIRONMENTAL REVIEW
The monitoring program does not constitute a project under the California Environmental Quality
Act and, therefore, an environmental assessment is not required.
ATTACHMENT
Attachment A: Agreement with U.S.G.S.
PREPARED BY:
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
-----~-------------------------PHIL BOBEL
Manager, Environmental Compliance Division
Ii 1, f:kr:
GLENN S. ROBERTS
Director of Public Works
J KEENE . .
Ci anager
Page 2
ATTACHMENT A
Customer #: CA228
Agreement#: 04H4CAWROOOOIO
TIN#: 94-6000389
Fixed Cost Agreement: Yes
UNITED STATES DEPARTMENT OF THE INTERIOR
U.S. GEOLOGICAL SURVEY
AMENDMENT OF JOINT FUNDING AGREEMENT
FOR
WATER RESOURCES INVESTIGATIONS
This is Amendment 2 for USGS Joint Funding Agreement 04H4CA WROOOOI 0 (Reference Palo Alto
City Contract #C05109138 dated January 1,2004.
1. The parties hereto agree that subject to the availability of appropriations and in accordance with their
respective authorities there shall be maintained in cooperation Near Field Receiving Water Monitoring of
(1) Tissues and Sediments and (2) Benthic Community herein called the program.
2. Paragraph 2a of the agreement's period ofperfonnance is hereby extended by 3 years to now read as
follows.
(a) $0 by the party of the first part (USGS) during the period January 1,2004 to April 30, 2013
3. Paragraph 2b ofthe agreement's funding amount is increased by $186,000 and the agreement's period
ofperfonnance is hereby extended to now read as follows:
(b) $558,000 by the party of the second part (City of Palo Alto) during the period January 1,2004
to April 30, 2013
4. The Billing Tenns and Conditions listed in Paragraph 2b of the agreement are now changed to read as
follows:
The city of Palo Alto will allocate funds for this project annually to the USGS in
increments of the following for Part (1), $41,000 in 2004, $41,000 in 2005, $41,000 in
2006, $41,000 in 2007, $41,000 in 2008, $41,000 in 2009, $41,000 in 2010, $41,000 in
2011, $41,000 in 2012; and the following for Part (2), $21,000 in 2004, $21,000 in
2005, $21,000 in 2006, $21,000 in 2007, $21,000 in 2008, $21,000 in 2009, $21,000 in
2010, $21,000 in 2011, and $21,000 in 2012. Upon completion of work, the City of
Palo Alto will pay USGS $62,000 in April 2005, $62,000 in April 2006, $62,000 in
April 2007, $62,000 in April 2008, $62,000 in April 2009, $62,000 in April 2010,
2011, $62,000 in April 2012, and $62,000 in April 2013.
5. Additions made to the existing Statement of Work are attached as pages numbered 1 to 35.
6. All other tenns and conditions of the original agreement remain unchanged.
UNITED STATES
DEPARTMENT OF THE INTERIOR
U.S. GEOLOGICAL SURVEY
,/ -/)) BY:~/J~ (Signature) ,
Keith R. Prince
(Name)
Branch Chief
(Title) /
Date: { ~; 12 u /0 I I
CITY OF PALO ALTO
Sr. Asst. City Attorney
By::::::---:----:-_______ --
(Signature)
(Name)
(Title)
Date: ___________ _
COMBINED PROPOSAL TO THE CITY OF PALO ALTO:
NEAR FIELD RECEIVING WATER MONITORING
January 1, 2010 through December 31, 2012
U. S. GEOLOGICAL SURVEY
. Janet Thompson, Dan Cain, and Samuel Luoma
345 MIDDLEFIELD ROAD
MENLO PARK, CA 94025
1
Table of Contents
Executive Summary 3
Tissue and Sediment Proposal 5
Introduction 6
Objectives 9
Monitoring Program Approach 10
Budget 19
Bent,hic Community Proposal 20
Introduction 21
Objectives 23
Approach 25
Budget 33
Executive Summary of Past Findings
Since 1976, USGS personnel have assessed trace metal concentrations in sediments and
sediment-dwelling species and have profiled benthic community structure in the vicinity of the
discharge of the Palo Alto Regional Water Quality Control Plant (PAR WQCP). Ancillary factors
that could affect metal concentrations (body weight in animals, characteristics of sediment,
salinity) and benthic community structure (exotic species invasions, pelagic food availability,
and weather anomalies) have also been measured during this time. These studies initially found
exceptionally high concentrations of copper and silver in mud-dwelling animals from this area
and strong seasonal variability in concentrations that confounded some interpretations.
Additional studies documented that these contaminants were present in enriched concentrations
throughout the food web, including birds from the area. The two metals that were enriched at this
site reached levels unprecedented in the literature for such species and the levels were much
greater than seen elsewhere in the Bay: annual mean concentrations for copper and silver in
Macoma petalum, the clam used to monitor metals at the site, were 287 flg/g and 105 flg/g
respectively, in 1980. During this period of enriched metal concentrations, reproductive activity
in M petalum was very low. This is believed to be due to silver inhibition of reproductive tissue
development. The benthic community also showed signs of environmental stress during this
time. The community was dominated by opportunistic animals (organisms capable of fast
invasion and spread in disturbed environments) that lived on the surface of the mud in tubes or as
shelled animals, brooded their young, and fed on waterborne particles.
Concentrations of copper and silver declined in both sediments and M petalum after
1981 as the P ARWQCP improved its waste treatment facilities .. The downward trends in copper
in sediments and in the clam corresponded with reduced Cu discharges from the P ARWQCP.
The mudflat environment where this animal lives is quite complex and variable from year-to-
year. Sediment composition (for example mean particle size and organic content), salinity, and
other factors varied seasonally and from one year to another. However, over a long period of
study (32 years) none of these factors displayed sustained directional trends that corresponded to
the changes in metal concentrations, metal effects, or benthic community changes. The only
unidirectional change in an environmental factor during this period was the decline in metal
inputs from the waste treatment plant during the 1980s. Coincident with the decline in copper
and silver in the sediment and clams, the reproductive activity of the clam greatly increased such
that the periods of reproductive activity now exceed the periods with no activity. The benthic
community also responded to this changed environment. Opportunistic species became less
dominant and now there are more equally dominant, equally persistent, non-opportunistic
species. The community, which was previously dominated by surface dwelling, brooding
species, is now composed of species with varying life history characteristics. In particular,
species that lay their eggs in the mud and feed by burrowing through and consuming the mud,
which were previously rare in the community, have increased in abundance. The changes to the
benthic community are "young" by the standards used to measure stability in estuarine benthic
communities and patterns that are barely visible now may become more apparent in the future.
Since the significant reductions in the 1980's, concentrations of Cu and Ag in sediments
and clams have remained relatively low, fluctuating modestly but without a sustained temporal
trend. For example, since 1991 copper and silver concentrations in clams averaged 40 and 3.9
3
Jlg/g, respectively. Positive excursions occurred in 1992-1996 when concentrations averaged 59
Jlg/g Cu and 6.2 Jlg/g Ag, but concentrations after this period typically ranged between 30-40
Jlg/g and 2-3 Jlg/g Ag. The lower range ofCu concentrations are comparable to the lower range
of values from other sites within the Bay (20 -30 Jlglg), and therefore could mark the approach
of a regionally-defined baseline concentration. Although Ag remains elevated it was only 3
percent of the maximum value observed in 1980. Importantly, since 1991 annual variations in
metal concentrations in M petalum do not correlate with discharge of Cu and Ag from
P ARWQCP, suggesting that variations in tissue metal concentrations due to metals discharged
from the plant can not longer be distinguished against the background of other variables .. A
concurrent study was conducted at San Jose for a few years and those results suggested that
trends in the 1990's were driven by regional factors, not by changes at individual waste treatment
facilities. The legacy of contamination held in regional sediments appeared to be more important
than local factors. Other metal contaminants have also been monitored since the early 1990's
(including selenium and mercury). For all metals studied, regional influences and year-to-year
differences appear to be much more important in determining exposures of bioavailable metals
to clams than does the local influence of the PARWQCP (again, when compared to studies at
San Jose).
These studies demonstrated the effectiveness of changes in waste discharges that
followed passage of the Clean Water Act in 1972. Metals were important pollutants in South
Bay in the late 1970's through 1980's, and local discharges were an important source of those
metals. Although metal contamination of the Bay has receded as the local facilities implemented
different and better treatment technologies, human impacts on the Bay ecosystem will continue.
Events that have the potential of altering the observed contamination in the system include: (1)
the ongoing salt pond restoration which could mobilize old and new sediments and change the
hydrodynamics of South Bay, (2) the recent changes in the copper standard for South Bay by
USEPA, and (3) new technologies, such as the rapidly expanding commercialization of
consumer products utilizing metallo-nanoparticles. An important implication of our recent
findings is that effects on metal contamination from these changes have not proven to be
sufficient to be detectable in the present South Bay environment
Recent changes in the seasonal pattern of phytoplankton growth and accumulation
(blooms) in south bay are also likely to affect and be affected by the benthic community. We
have seen a significant increase in the background levels of phytoplankton biomass in the south
bay since 1999. We have also observed a fall phytoplankton bloom in addition to the spring
bloom during many years since 1999. There are a number of possible factors contributing to
these changes in phytoplankton dynamics. Two strong possibilities include: (1) a change in
light availability due to lower suspended sediment concentrations; or (2) smaller populations of
filter feeding bivalves that normally heavily graze the phytoplankton during all periods except
early spring. But it is also likely that these changes would not be occurring if metal
contamination had not been reduced to a level that is no longer inhibiting phytoplankton growth.
The decline in metals in the south bay has created an environment that is more conducive to
healthy phytoplankton growth.
PROPOSAL TO THE CITY OF PALO ALTO:
NEAR FIELD RECEIVING WATER MONITORING
OF TISSUES AND SEDIMENTS:
January 1,2010 through December 31, 2012
U. S. GEOLOGICAL SURVEY
Daniel Cain ,Samuel Luoma, Michelle Hornberger,
MAIL STOP 465
345 MIDDLEFIELD ROAD
MENLO PARK, CA 94025
5
1.0 INTRODUCTION
In the 1990's the Regional Water Quality Control Board described a Self Monitoring
Program with its NPDES pennits for South Bay dischargers that included specific receiving
water monitoring requirements. One of the requirements was for inshore monitoring of metals
and other specified parameters, to be conducted using the clam Macoma petalum, fonnerly
reported as Macoma balthica (Cohen and Carlton, 1995), and sediments, following protocols
compatible with the Regional Monitoring Program. Monitoring efforts were to be coordinated
with the U. S. Geological Survey (USGS). The latter requirement stemmed from the 18 years of
previous data that USGS collected from a station south of the Palo Alto discharge site in the
extreme South Bay. Over the last decade such a program has-continued with the partial support
of the City of Palo Alto. The goal of the Board was to take advantage of that data in interpreting
monitoring data in the future. The program has had demonstrated successes in this regard,
documenting a progressive reduction of contamination at a mudflat near the discharge of the Palo
Alto RWQCP and identifYing regional and local factors contributing to more complicated
temporal patterns.
Looking forward, our understanding of water quality and the ecosystem needs to consider
on-going and planned activities during the next three years. The South Bay Salt Pond
Restoration Project is about to enter an intensive period of construction and opening of ponds to
the bay. Present plans (July 2009) show one pond at Ravenswood will be breached in Aug 2010,
and two more in Alviso will be breached in September and November 2010. Remobilized
sediment and water from these ponds are likely to be transported throughout South Bay, and
specifically to our field site. In addition, recent increases in phytoplankton biomass in South Bay
since 1999 (Cloern et al. 2007) and the apparent causes of the increase (influx of predators on the
benthos and decreased turbidity) are likely to be reflected in the benthic community structure if
the higher phytoplankton biomass persists. Monitoring of metals will contribute to a strength-of-
evidence approach to assess potential causes for observed shifts in community composition.
The present proposal describes a continued program of metal exposure monitoring at the
near field (inshore) site in Palo Alto, taking advantage ofthe more than 32 years of existing data.
We also propose, in a separate document, to accompany evaluations of trends in metal exposure
with determinations of effects on reproduction in the indicator clam, and an evaluation of benthic
community structure. The reproductive index and the biointegrity index are proven indicators of
biological responses to metals (Hornberger et aI, 2000). Monitoring these indices will allow a
strong near field evaluation of environmental change in the years ahead that is compatible with
the Regional Monitoring Program's broader approach.
1.1 PREVIOUS MONITORING STUDIES IN NEAR FIELD RECEIVING WATERS
Since 1976, USGS personnel have monitored and studied trace metal concentrations in
sediments and sediment-dwelling species in the vicinity of the discharge of the Palo Alto
Regional Water Quality Control Plant (PARWQCP), along with ancillary factors that could
affect metal concentrations (body weight in animals; characteristics of sediment, salinity). These
studies initially found exceptionally high concentrations of copper and silver in mud-dwelling
animals from this area and strong seasonal variability in concentrations that confounded some
interpretations. Additional studies documented that contaminants were present in enriched
concentrations throughout the food web, including birds from the area. Two metals were
7
enriched at this site to levels much greater than seen elsewhere in the Bay: copper and silver
(mean concentrations in M. petalum were 287 Ilg/g and 105 Ilg/g, respectively, in 1980).
Concentrations of copper and silver declined in both sediments and M. petalum after
1981 as the P ARWQCP improved its waste treatment facilities. The downward trends in copper
in sediments and in the clam correlated with reduced Cu discharges from the PARWQCP. The
mudflat environment where this animal lives is quite complex and variable from year-to-year.
Sediment composition (for example mean particle size and organic content), salinity, and other
factors varied seasonally and from one year to another. However, over a sustained period of
study (32 years) none of these factors displayed temporal trends that corresponded to the changes
in metal concentrations, metal effects, or benthic community changes. The only unidirectional
change in an environmental factor during this period was the decline in metal inputs from the
waste treatment plant during the 1980s. Since 1991, metal concentrations in M petalum more or
less stabilized around 40 Ilg/g Cu and 4 Ilg/g Ag. Annual variations in tissue metal
concentrations of relatively small magnitude occur, but there have been no sustained trends and
the temporal patterns do not correlate with Cu and Ag discharged from the plant. A concurrent
study was conducted at another site in South Bay for several years, and it suggested that
temporal variation at least during the 1990s was driven by regional factors rather than discharges
at individual treatment facilities.
These studies demonstrated effective approaches to long term monitoring. The results
suggested that sediments and local populations of clams are sensitive indicators of the response
of receiving waters to changes in metal output from a discharger. They illustrated that reducing
metal discharge in South Bay can be reflected within a year by reduced near field contamination
in the environment and biota of San Francisco Bay. Both sediments and clams responded
sensitively to the changes. Also, both incorporated important environmental factors in their
responses. When sediments and clams were monitored together, they provided corroborating
lines of evidence, minimizing mis-interpretations. The most effective interpretation of trends
occurred when samples were collected at several times during the year, because of seasonality in
concentrations. The data from a receiving water monitoring program of this type is not only
useful for the Regional Board but can provide valuable feedback to local industries and small
businesses. Palo Alto has used the data to provide feedback to participants in their silver source
control program, for example. Periodically summarizing the long term data set may offer
opportunities to evaluate influences of the P A WRQCP on contamination in South Bay compared
to influences of other inputs.
By analyzing archived animals we also have recently shown that clams with high metal
exposures in the 1980's were unable to produce mature gametes (i.e. it is highly likely individual
animals at Palo Alto could not reproduce). In the attached proposal we are suggesting to extend
the reproductive study into the future and to continue to analyze the community data for effects
on other species, thereby providing a program of exposure and effect monitoring, consistent with
risk assessment paradigms.
2.0 Objectives
The purpose of the monitoring program is to characterize trends in trace element
concentrations inshore near the discharge of the P ARWQCP. Trace elements and associated
parameters will be determined in fine-grained sediments and in the clam M petalum. The
monitoring will be conducted in a manner that will provide high-quality data that are compatible
with existing data, and with data provided by programs such as the Regional Monitoring
9
Program.
Specific objectives include:
• Provide data to assess seasonal patterns and annual trends in trace element concentrations
in sediments and clams near the discharge; specifically at the site designated in the
RWQCB's Self-Monitoring Program for PARWQCP.
• Present the data within the context of historical changes inshore in South Bay and within
the context of on-going monitoring of effluents.
• Coordinate sampling efforts with similar inshore receiving water monitoring programs
associated with the Regional Monitoring Program.
• Provide data which could support other South Bay issues or programs such as
development of sediment quality standards.
The monitoring approach described below has been effective in the past in relating
changes in near field contamination in San Francisco Bay to changes in metal discharges from
RWQCPs, despite the complexities of monitoring natural systems. Existing historical data will
provide a context within which cause and effect can be assessed for change in the future. If
continued, this study will build on a unique record of understanding how investments in sewage
treatment actually affect a receiving water environment. The monitoring effort also will act as a
local extension of the Regional Monitoring Program.
3.0 Monitoring Program Approach
The proposed approach will be to monitor trace element concentrations in fine-grained
sediments and resident populations of the deposit feeding clam M petalum. Sediment particles
bind most trace element pollutants strongly, efficiently removing them from the water column.
Numerous prior studies have shown that analysis of concentrations of these pollutants in
sediments provide a time-integrated indicator of trace element input to the water column.
Animals such as M. petalum live in contact with sediments and feed upon organic material
associated with sediment particles. Thus they are exposed to this concentrated pool of trace
elements and sequester them in their tissues. These animals are important prey for larger species
that live in the Bay, including migrating water fowl. Analysis of the tissues of the clams
provides a measure of their exposure to bioavailable pollutants and an estimate of food chain
exposures. Study of such exposure is the first step in understanding whether pollutants are
adversely affecting an environment (although elevated tissue concentrations alone do not prove
an effect is occurring). Understanding exposure in one species can be useful in indicating a
larger exposure of the local food web, as shown in earlier studies at Palo Alto. Past USGS
monitoring efforts have demonstrated the value of the dual sediment/tissue approach, when data
are collected following the rigorous protocols described below.
3.1 Sampling Design
3.1.1 Sampling location
Samples will be collected from one station located north of Sand Point (Figure 1). This is
a mudflat on the shore of the bay (not a slough) approximately 1 kilometer southeast of the Palo
Alto discharge. It was chosen because it is influenced by the discharge ofPARWQCP, but it is
not immediately adjacent to that discharge. Thus it reflects a response of receiving waters to the
effluent, beyond just a measure of the effluent itself. Earlier studies have shown that dyes,
natural organic materials in San Francisquito Creek and effluent from the PA WQCP all move
11
predominantly south toward Sand Point and thereby influence the mudflats in the vicinity.
Earlier work showed that San Francisquito Creek and the Yacht Harbor were minor sources of
most trace elements compared to the PARWQCP. Earlier studies also showed that intensive
monitoring at one site was more effective in determining trends in trace element contamination
than was less frequent sampling at a larger number of sites in the vicinity of the discharge.
3.1.2 Sampling frequency
The basic monitoring program supported by Palo Alto will have a sampling frequency of
three times per year as stipulated by the RWQCB. Sampling will correspond as closely with
Regional Monitoring Program sampling as tides permit. The RMP samples once during the wet
season, once during the dry season and then again at the end of the dry season. The basic
program will follow this schedule also. Statistical techniques such as power analyses indicate
that three samples per year will provide a 20 percent sensitivity in detecting trends. The USGS
monitoring experience through the last 32 years indicates that three samples per year will be
insufficient to sensitively track seasonality in metal contamination; and that understanding the
seasonal cycles in metals and sediments is critical to understanding and interpreting metal
concentrations and their effects. The City of San Jose also now has an extensive data set on
metals in solution that further verifies that a complex seasonal cycle exists in metal
concentrations in the Bay. Thus, frequent sampling is essential to provide accurate interpretation
of cause and effect in a temporally variable environment (accuracy is not considered in power
analysis). USGS activities will include collecting samples an additional 3 - 5 times per year at
their own expense.
3.2 Constituents to be Determined
The constituents to be analyzed in sediments, and associated variables, are listed in Table
1. The constituents and variables to be detennined in clam tissues are listed in Table 2. The
constituent list is consistent with the constituents analyzed by the Regional Monitoring Program.
The methods employed will be adjusted so as to minimize below detection limit detenninations.
The variables chosen for detennination are those required by the Regional Board.
3.3 Methods
3.3.1 Sampling
M. petalum and sediments will be collected at low tide from the exposed mudflat.
Sediment samples will be scraped from the surface oxidized layer «2cm depth) with a metal-
free tool in a manner similar to previous sediment sampling in the area. Sediment will be
collected from the same area as the clams. Enough sediment will be obtained to conduct all
proposed analyses (Table 1) and to archive approximately 10 grams for any unforeseen future
needs. Approximately 60 individual clams will be collected for metals analysis at each sampling
time. In addition, approximately 40 individual clams will be collected for total analysis of
mercury and selenium three times during the year.
3.3.2 Sample preparation
Sediments will be sieved through 100 Jlm mesh in ultra-clean (-18 Mohm) deionized
water immediately upon return to the laboratory. Both the fraction of sediment passing through
the sieve and the fraction retained on the sieve will be dried and weighed. Particle size
distribution will be defined as the proportion of the total sediment mass divided between these
13
two fractions. This also provides an estimate of the particle size characteristics of the bulk
sediment for those who might want to make comparisons with bulk analyses.
Replicate aliquots of the fraction of sediment that passes through the 100 llm sieve will
be digested by reflux with concentrated nitric acid to determine near total concentrations (the
same approach employed by the RMP). Replicate aliquots of each sediment will also be
extracted in O.SN hydrochloric acid to determine the leachable, anthropogenic contribution to the
sediment concentration. Standard reference materials will be digested with each sediment
digestion run.
Clams will be returned to the laboratory live, washed free oflocal sediment and placed in
clean ocean water diluted with distilled water to the salinity on the mudflat at the time of
collection (determined from the water in the mantle cavity of representative individual clams).
The animals will be held for two days to depurate undigested sediment, then prepared for
analysis. The length of each clam will be determined then the shell and soft tissue will be
separated. Soft tissues will be composited into 4 -8 composite samples, each containing animals
of similar shell length, and digested by nitric acid reflux. Samples for mercury and selenium
analysis will be composited as above, and freeze dried before digestion in concentrated
nitric/perchloric acid. The above procedure will result in 4 -8 replicate samples from each
collection for ICPOES analysis and 4 samples for mercury/selenium analysis. The data from
these animals are not normally distributed and may be affected by animal size. Correlations will
be calculated between animal size and metal concentration; and established procedures will be
employed to calculate metal content of a standard sized clam for each collection. Previous
studies show that such data reduction procedures are necessary to account for biological factors
(size and growth) that affect metal concentrations, thus allowing a clearer linkage between
RWQCP discharges and responses of the clams.
3.3.3 Analytical methods
Digested tissue and sediment samples will be evaporated to dryness and reconstituted in
O.6N hydrochloric acid. Most elements will be analyzed by Inductively Coupled Plasma Optical
Emission Spectrophotometry (ICPOES) (Table I and 2).
All glassware and field collection apparatus will be acid washed, thoroughly rinsed in
ultra-clean deionized water, dried in a dust-free positive pressure environment, sealed and stored
in a dust free cabinet. Quality control will be maintained by frequent analysis of blanks, analysis
of National Institute of Standards and Technology standard reference materials (tissues and
sediments) with each analytical run, and internal comparisons with prepared quality control
standards. Detection limits for each ICPOES analytical method (tissue and sediment) are
determined. Typical detection limits for each element, in the appropriate sample matrix, are
shown in Table 3 and compared to "background" (the lowest) concentrations found in San
Francisco Bay. A full QAlQC plan is available upon request.
3.4 Data Analysis
Data will be summarized and reported to Palo Alto annually. Annual reporting will be
consistent with Regional Monitoring Program reporting format and will be coordinated with the
receiving water monitoring programs of San Jose/Sunnyvale. Data appendices that show basic
analytical and computational data will be included. The data report will include interpretive
figures and tables that express each year's monitoring data within the context of historical change
and concentrations observed elsewhere.
15
4.0 Budget
The budget for the proposed project is outlined in detail in Table 4. This budget includes
charges only for the basic monitoring program of 3 collections per year~ USGS will complement
the study with the additional collections in each year. This proposal describes work that will
begin January 2010 and continue for three years, through December 2012. Renewal each
January will be at the discretion ofPa10 Alto.
Table 1. Activities, constituents and variables in near field monitoring of fine grained
sediments near Palo Alto RWQCP discharges.
Activity Method Additional Frequency
activities
Field Collections Intertidal Logistics 6-8/y
Sediment -Particle size >100 f.Ull & sieve from field 6-8/y
<100 11m
Sample prep for metals HCI & Total 6-8/y extractions
Sample prep for Hg & Se Hydride Freeze dry, 3/y
(total) sample shipping
Quantitative analysis ICPOES 6-8/y
(metals listed below)
Ag
Al
Fe
Mn
Cd
Cr
Cu
Pb
Ni
Zn
Hg & Se (total) Hydride 3/y
TOC Total C dry aliquot 6-8/y
Archive sediment Scint vial Dry 6-8/y
Assemble data Common 6-8/y
spreadsheet
Annual Report Common fonnat lIy
17
Table 2. Activities, constituents and variables in near field monitoring of metals in the
bivalve, Macoma petalum near the discharge of the Palo Alto RWQCPs.
Activity Method Additional Frequency
Field Collect Intertidal Logistics 6-8/y
Sample preparation metals 60-80 individuals 6-8/y
Sample preparation Hg&Se 40 individuals 13/y
Quantitative analysis ICPOES 6-8/y
(metals listed below)
Ag
Fe
Mn
Cd
Cr
Cu
Pb
Ni
Zn
Se & Hg (total) Hydride Sample packaging 3/y
and shipping
Condition Calculate
index/content
Assemble data Common spreadsheet 6-8/y
Annual Report Common Fonnat 1/y
Table 3. Typical detection limits for constituents to be determined in monitoring study
(units are micrograms per gram dry sediment).
Element Detection Background in SF Bay*
Cd 0.05 0.2
Cr 1.0 >50
Cu 1.0 10-20
Pb 1.0 5-20
Hg 0.1 0.1
Ni 1.0 >40
Se 0.1 0.1
Ag 0.05 0.1
Zn 1.0 >40
TOC 0.1% 0.3%lowest
*Determined from pre-1850 sediments from cores.
19
Table 4. 2007-2009 Budget* for Palo Alto Metals Studies, in dollars.
ACTMTY
Field Work
Sample Preparation
ICP Analyses
Mercury/Selenium
Total Organic Carbon
Reduce & Assemble Data
Instrument Repair &
Maintenance
Final Report
SUBTOTALS
TOTAL DIRECT COST
INDIRECT COST
TOTAL COSTS 2010
TOTAL COSTS 2011
TOTAL COSTS 2012
SALARY
3,850
4,950
2,200
3,465
4,200
18,665
TOTAL COSTS 2010 through 2012
SUPPLIES ANALYSES
500
1,100
1,100
2,600
805
2,700 3,405
MISCELLANEOUS
1,650
1,650
26,420
14,580
41,000
41,000
41,000
123,000
PROPOSAL TO THE CITY OF PALO ALTO:
NEAR FIELD RECEIVING WATER MONITORING
OF BENTHIC COMMUNITY:
January 1,2010 through December 31,2012
U. S. GEOLOGICAL SURVEY
Janet K. Thompson and Francis Parchaso
MAIL STOP 496
345 MIDDLEFIELD ROAD
MENLO PARK, CA 94025
21
INTRODUCTION
Concurrent, and prior to the initiation of the Luoma study, the USGS has been collecting
benthic (sediment dwelling animals) community data at three, nearby intertidal sites (south of
Sand Point). This data provides us with the opportunity to examine if the changes seen in the
tissue concentrations of metals in Macoma petalum are reflected in physiological changes to the
clams (i.e. reproduction) and are reflected in changes to the benthic community structure. In
addition, this data can serve as background information should changes to the system occur with
salt pond restoration in South San Francisco Bay. This proposal describes a continuation of the
near-field (inshore) monitoring program at Palo Alto to continue an analysis of the benthic
community between January 1, 2010 and December 31, 2012, and for analysis of reproductive
activity from January 1, 2010 through December 31, 2012.
PREVIOUS MONITORING OF THE BENTHIC COMMUNITY IN NEAR FIELD
RECEIVING WATERS
Since 1974, USGS personnel have monitored and studied the benthic community and
reproductive activity of Macoma petalum in the vicinity of the discharge of the Palo Alto
Regional Water Quality Control Plant (PARWQCP). Our findings during the first 10 years of
this study were published in Nichols and Thompson (1985a and 1985b). We found that this
community was composed of non-indigenous, opportunistic species that dominated the
community due to their ability to survive the many physical disturbances on the mudflat. The
disturbances discussed included sediment erosion and deposition, and exposure at extreme low
22
tides. The possible effects of metal exposure as a disturbance factor were not considered in these
analyses as the decline in metal concentrations in Macoma petalum and sediment had just begun.
Luoma's results (see Hornberger et al. 1999,2000) have suggested that sediments and
local populations of clams at this location are sensitive indicators of the response of receiving
waters to changes in metal output from a discharger. These studies have illustrated that reducing
metal discharge in South Bay can be seen, within a year, as reduced near-field contamination in
the environment and biota of San Francisco Bay. Recent analysis (Thompson et al. 2002, Shouse
2002,2003, Moon et a12005, Cain et a12006) has shown that the benthic community response to
reduced metal output takes longer. A response at the organism level (Le. reproductive activity) is
seen within a year or two, but a consistent response at the community level, a change in the
number or type of species that colonized the area change when the pollutant concentration, took
several years to develop. Due to the natural intra-annual variability of benthic community
dynamics it is likely to take 5-10 years for a change in the benthic community to be stable.
trends:
Analyses ofthe benthic community data from 1974 through 2009 revealed the following
1. The community has shifted from being dominated by a few opportunistic species
to a community where there are more equally dominant, equally persistent
species.
2. The community, which was previously dominated by surface dwelling, brooding
species in now composed of species with varying life history characteristics.
3. Species that lay their eggs in the mud, previously rarely present in the community,
have increased in abundance.
23
4. Macoma petalum reproductive activity has increased concurrent with the decline
in tissue metal concentrations, resulting in a population with predictable semi-
annual reproductive periods.
Continued sampling and analysis will allow us to monitor if the benthic community structure
continues to reflect changes in pollutant concentration.
We propose here that samples will be analyzed at a frequency of no more than one per
month. We learned in our analyses of the early (1974 through 1983) sampling (Nichols and
Thompson 1985a, 1985b) that benthic samples need to be collected at a maximum time step of
every other month in order to distinguish seasonal differences from inter-annual differences if
the differences are small. In dynamic systems such as San Francisco Bay, distinguishing
between the effects of natural seasonal changes and anthropogenic environmental stressors is
more reliable with more frequent samples.
Objectives
The purpose of this program is to characterize long term trends in benthic community
structure and reproductive activity of Macoma petalum near the discharge of the PARWQCP. It
is our goal to describe these characterizations with simple measures. For example, changes in
community structure will be described as number of species, number of individuals of dominant
species and rank analysis curves (i.e. benthic communities in more polluted environments are
expected to have fewer species, and higher numbers of individuals for the dominant species than
benthic communities in non-polluted environments). Reproductive activity will be reported as
(1) total percentage of animals reproductively active for each year (we know from previous work
that this percentage is lowest during periods with the highest pollutant concentrations
24
(Hornberger et a1. 1999,2000)) and (2)a reproductive index. Coincident near field monitoring of
trace element concentrations in sediment and clams (Luoma study) will allow us to compare
changes in the reproductive activity and benthic community structure with changes in metal
accumulation in animals. The analyses will be conducted in a manner that will provide high-
quality data that are compatible with data collected historically, and with data provided by
programs such as the Regional Monitoring Program.
Specific objectives are separated into two priorities and include the following:
Priority 1: On-going Benthic Community Analyses (2010-2012)
• Continue monitoring to assess seasonal and annual trends in benthic community
structure at one location near the discharge (specifically at the site designated in the
RWQCB's Self-Monitoring Program for PARWQCP)
• Coordinate sampling efforts with inshore receiving water monitoring programs by
Luoma
Priority 2: Reproductive Activity of Macomapeta/um (2010-2012)
• Provide data to assess seasonal and annual trends in reproductive activity of clams near
the discharge; specifically at the site designated in the RWQCB's Self-Monitoring
Program for P ARWQCP
• Coordinate sampling efforts with inshore receiving water monitoring programs by
Luoma
The approach described below has been shown to be effective in relating changes in near
field contamination to changes in benthic community structure (Kennish, 1998) and in
reproductive activity of a clam (Hornberger et a1. 2000), despite the complexities inherent in.
25
monitoring natural systems. Historical data (Shouse et al. 2003), provides a context for any
observed changes. Continuation of this study will build on a unique data set where ecological
data and contaminant data are concurrently collected and analyzed within the context of
changing sewage treatment practices. This monitoring effort would act as a local extension of the
Regional Monitoring Program. The coordination with Luoma's study will provide an
environmental context for interpreting results.
Approach
The benthic community data will be analyzed in a manner similar to that used in
published benthic studies near sewage treatment outfaIls (see Kennish 1998). The proposed
approach will examine species dominance patterns and community composition changes in
combination with environmental variables. Other studies have shown that more opportunistic
species are likely to persist in highly disturbed environments (as was shown by Nichols and
Thompson (1985a) at this location in 1974 through 1983), and that the abundance and types of
dominant species can change with changes in metal concentrations (Shouse et al. 2003). We will
also examine changes in the benthic community concurrent with changes in the concentrations of
specific metals. For example it has been shown that some crustacean and polychaete species are
particularly sensitive to elevated copper (Morrisey et aI. 1996, Rygg 1985) and that most
taxonomic groups have species that are sensitive to elevated silver (Luoma et al. 1995).
Analysis of the trace element concentration in the tissues of Macoma petalum, as done by
Luoma, provides a measure of their exposure to bioavailab1e pollutants and an estimate of food
chain exposures. This does not however, examine the physiological effect of the metal exposure
on the animal. One of the more common animal responses to an environmental stressor is a
26
change in reproductive activity. Earlier studies (Hornberger et al 2000) have shown that
reproductive activity of Macoma petalum has increased with declining heavy metal
concentration in animals from this location. Therefore, reproductive activity of Macoma petalum
appears to be a good indicator of physiological stress by pollutants at this location.
Sample Locations/Frequency
Samples will be collected at a station located south of Sand Point (Figure 1): station
FN45 is 12 m from the edge of the marsh and 110 em above MLL W. The location of the benthic
station, on a mudflat on the shore of the bay (not a slough) 1 kilometer south of the Palo Alto
discharge, is influenced by the discharge of PAR WQCP, but is not immediately adjacent to that
discharge. Thus this location reflects a response of receiving waters to the effluent, beyond just a
measure of the effluent itself. Earlier studies have shown that dyes, natural organic materials in
San Francisquito Creek and wasters in the P A WQCP discharge all move predominantly south
toward Sand Point and thereby influence the mudflats in the vicinity of Sand Point (Thomson
1984). Earlier work by Luoma showed that San Francisquito Creek and the Yacht Harbor were
minor sources of most trace elements compared to the PARWQCP.
Sampling Methods
Samples for benthic community analysis will be collected quarterly from station FN45 as
part of the continuous monitoring study (Priority 1). Three replicate samples will be collected
using 8.5 cm diameter x 20 cm deep cores for the monitoring study. Our prior analysis of benthic
community data in San Francisco Bay has shown us that quarterly samples are not sufficient to
show important community patterns so the USGS will sample the benthic community an
additional two to six times per year.
27
Samples for analysis of reproductive activity will be collected on a near monthly basis
coincident with the sampling for trace elements in Macoma petalum. A minimum of 10
individual Macoma petalum of varying sizes (minimum of Smm) will be collected for analysis.
Laboratory Analysis
Benthic community samples will be analyzed as in the past (1974-2003). Samples will
be washed on a O.Smm screen, preserved, and sorted to species level where possible (some
groups are still not well defined in the bay, such as the oligochaetes), and individuals for each
species will be enumerated. Samples will be currated by the USGS until it can be arranged for
the California Academy of Sciences (CAS) to take this collection.
A minimum of 10 clams will be processed for reproductive activity each month. Clams
will be immediately preserved in 10% formalin at the time of collection. In the laboratory, the
visceral mass of each clam will be removed, stored in 70% ethyl alcohol, and then prepared
using standard histological techniques: tissues will be dehydrated in a graded series of alcohol,
cleared in toluene (twice for one hour each), and infiltrated in a saturated solution of toluene and
Paraplast for one hour and two changes of melted Tissuemat for one hour each. Samples will
then be embedded in Paraplast in a vacuum chamber and then thin sectioned (10 micrometer)
using a microtome. Sections will be stained with Harris' hematoxylin and eosin. The stained
thin sections will be examined with a light microscope. Each individual will be characterized by
size Oength in mm), sex, developmental stage, and condition of gonads, thus allowing each
specimen to be placed in one of five qualitative classes of gonadal development (previously
described by Parchaso 1993).
28
Data Analysis: Methods
Benthic community data analyses will be done at a frequency of quarterly at a minimum.
Annual patterns during prior years will be compared with the patterns seen in 2004-2009.
The seasonal benthic community data will be examined using multivariate techniques (Shouse
2002). Multivariate classification and ordination analyses will be used to identify connections
between the environmental variables (including body burdens of trace elements in bivalves and
copper and silver sediment concentrations) and benthic community structure. Data for individual
species will also be examined to determine if there are any population changes as a result of
metal concentration change&. The time series for individual species will be examined using
annual and seasonal trends, and will be examined in conjunction with time series of trace metal
concentration. The reproductive stage data will be similarly analyzed as a time series in
conjunction with trace metal concentrations and benthic community data.
Data Analysis: Products
Data will be appended to the existing data record maintained by the USGS, summarized,
reviewed and reported with the metals data as annual USGS Open-File Reports that will be made
available to the City of Palo Alto at the completion of each year. Each annual report will be
consistent with the Regional Monitoring Program reporting format. Appendices will include
species lists, species counts, species analysis by functional group, and basic analytical and
computational data for the benthic community and reproductive data. The report will include
interpretive figures and tables that show the data as a part of the of the long-term time series.
Summary, mUlti-year reports will include analysis of the data within the context of the historical
29
change of trace element concentration as reported by Hornberger et al. (1999) and that being
concurrently studied by Luoma.
Budget
The budget for the proposed project is outlined in Table 1. This proposal describes work
that will begin January 2010 and continue for three years, through December 2012. Renewal
each January will be at the discretion of Palo Alto.
30
Bibliography
Cain, DJ., F. Parchaso, J.K. Thompson, S.N. Luoma, A. H. Lorenzi, E. Moon, M.K.
Shouse, M.I. Hornberger, J.L. Dyke, and R. Cervantes. 2005. Near field receiving water
monitoring oftrace metals and a benthic community near the Palo Alto Water Quality Control
Plant in South San Francisco Bay, California: 2005. U.S. Geological Survey Open File Report
2006-1152, 120 pp.
Cloern, J.E., Jassby, A.D., Thompson, J.K, Hieb, K. 2007. A cold phase of the east
Pacific triggers new phytoplankton blooms in San Francisco Bay. Proceedings National
Academy of Science v. 104, no. 47, p. 18561-18565
Cohen, A.N., and Carlton. J.T., 1995, Biological study, nonindigenous aquatic species in a
United States estuary; a case study of the biological invasions of the San Francisco Bay and
Delta: Washington D. C., U.s. Fish and Wildlife Service.
Hornberger, M., S. Luoma, D. Cain, F. Parchaso, C. Brown, R. Bouse, C. Wellise, and J.
Thompson. 1999. Bioaccumulation of metals by the bivalve Macoma balthica at a site in South
San Francisco Bay between 1977 and 1997: Long-term trends and associated biological effects
with changing pollutant loadings. U.S. Geological Survey Open File Report 99-55, 42p.
Hornberger, M., S. Luoma, D. Cain, F. Parchaso, C. Brown, R. Bouse, C. Wellise, and J.
Thompson. 2000. Linkage ofbioaccumulation and biological effects to changes in pollutant
loads in South San Francisco Bay. Environmental Science and Technology, 34:2401-2409.
Kennish, J.K. 1998. Pollution impacts on marine biotic communities. CRC Press, New
York. 310 pp.
Lorenzi, A., Cain, D. J., Parchaso, F., Thompson, J.K., Luoma, S.N., Hornberger, M.I.,
Dyke, J.L., Cervantes, R., and Shouse, M.K. 2007, Near-field receiving water monitoring of
trace metals and a benthic community near the Palo Alto Regional Water Quality Control Plant
in South San Francisco Bay: 2006: u.s. Geological Survey Open File Report 2007-1199, 121p.
Luoma, S.N., Y.B. Ho, and G. W. Bryan. 1995. Fate, bioavailability and toxicity of
silver in estuarine environments. Marine Pollution Bulletin, 31 :44-54
Moon, E., M.K. Shouse, F. Parchaso, J.K. Thompson, S.N. Luoma, D. J. Cain, and M. I.
Hornberger. 2004. Near field receiving water monitoring of trace metals and a benthic
community near the Palo Alto Water Quality Control Plant in South San Francisco Bay,
California: 2004. U.S. Geological Survey Open File Report 2005-1279, 115 pp.
Morrisey, DJ., AJ. Underwood, and L. Howitt. 1996. Effects of copper on the faunas of
marine soft-sediments: an experimental field study. Marine Biology 125:199-213
31
Nichols, F.N, and J.K. Thompson. 1985a. Persistence ofan introduced mudflat
community in South San Francisco Bay, California. Mar. Ecol. Prog. Ser. 24:83-97.
Nichols, F.N, and J.K. Thompson. 1985b. Time scales of change in the San Francisco
Bay benthos. Hydrobiologia.129:121-138
Rygg, B. 1985. Effect of sediment copper on benthic fauna. Mar. Ecol. Prog. Ser. 25:83-
89.
Shouse, Michelle K. 2002. The effects of decreasing trace metal concentrations on
benthic community structure. Master's Thesis, San Francisco State University. 177pp.
Shouse M.K., Parchaso, F., and J .K. Thompson. 2003. Near field receiving water
monitoring of benthic community near the Palo Alto Water Quality Control Plant in South San
Francisco Bay: February 1974 through December 2002. U.S. Geological Survey Open File
Report 03-224, 52pp.
Thomson, E.A., S.N. Luoma, C.B. Johansson, and DJ. Cain. 1984. Comparison of
sediments and organisms in identifying sources of biologically available trace metal
contamination. Water Resources. 18(6):755-765.
Thompson, J.K and F. N. Nichols. 1988. Food availability controls seasonal cycle of
growth in Macoma balthica (L.) in San Francisco Bay, California. J. Exp. Mar. BioI. Ecol.
116:43-61.
Thompson, J .K., F. Parchaso, and M.K. Shouse. 2002. Near field receiving water
monitoring of benthic community near the Palo Alto Water Quality Control Plant in South San
Francisco Bay: February 1974 through December 2000. U.S. Geological Survey Open File
Report 02-394, 117pp.
32
Figure 1
Palo Alto
sa mpli ng site
33
$3,950
34
Total
$500
$1,000
$1,500 $13,550
$7.450
$21,000
$21,000
$21,000
$63,000
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER
DATE: MARCH 8, 2010
REPORT TYPE: CONSENT ITEM
DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
CMR: 155:10
SUBJECT: Adoption of a Resolution Committing $2.5 Million In-Lieu Fees from
SummerHill Homes to Tree House Apartments, L.P. for the
Development of the 35-Unit Affordable Housing Tree House Apartments
Project at 488 W. Charleston Road
EXECUTIVE SUMMARY
The recommended action will enable Tree House Apartments, L.P. to fill an existing funding gap
for the development of a 35-unit 100% affordable housing project for extremely-low and very-
low income households at 488 West Charleston Road, proposed by the Palo Alto Housing
Corporation. In addition, approval of the recommended action will allow Tree House
Apartments, L.P. to submit a more competitive application for the Low Income Housing Tax
Credit Allocation. A City commitment of this additional funding is a critical component of Tree
House Apartments, L.P.' s March 2010 application for tax credit allocation. The additional funds
will make the City's total contribution to the project in the amount of $5,338,577. No monies
from the General Fund will be committed, only funds that are restricted to housing will be used.
The federal low-income housing tax credit program is a principal source of federal funding for
the construction and rehabilitation of affordable rental homes created as part of the Tax Reform
Act of 1986 to encourage the development of rental housing for low income households. States
allocate the tax credits to developers according to the criteria specified in the states' qualified
allocation plans. Developers, either for-profit or nonprofit, then work with syndicators to sell the
credits to investors generating the equity necessary to complete their projects. Some states, like
California, also have similar tax credit programs.
CMR: 155:10 Page 1 of5
RECOMMENDATION
Staff recommends that the City Council:
1. Adopt a resolution committing $2.5 million of in-lieu fees from SummerHill Homes to Tree
House Apartments, L.P. for the development of a 35.:.unit 100% affordable housing project;
2. Direct staff to include an appropriation of $2.5 million in Residential Housing In-Lieu Funds
for the Tree House Project, to be provided in the form of a loan for housing construction
expenses;
3. Authorize the City Manager or designee to prepare and execute documents approved by the
City Attorney that are required to demonstrate the City's commitment of funding for the Tree
House project in support of the developer's application for tax credit allocation.
BACKGROUND
On October 14,2008, the City and Summerhill Redwood Gate LLC entered into an agreement
for the provision of seven (7) Below Market Rate (BMR) units for their housing project at 4249
El Camino Real. The project involved the demolition of the Elks Lodge facility and the
construction of forty-five (45) new homes, including ten (10) attached duet units and thirty-five
(35) single-family homes to be built behind a new Elks Lodge facility. The project was subject
to a fifteen percent (15%) BMR requirement. The owner agreed to sell seven (7) of the forty-five
(45) units under the rules and procedures of the BMR program.
On December 9, 2009, Council approved an amendment to the Agreement between SummerHill
Redwood Gate LLC and the City of Palo Alto allowing the payment of fees in-lieu of providing
seven (7) Below-Market Rate (BMR) dwelling units. The amendment allows SummerHill to
satisfy the project's BMR requirements by making cash payment to the City's Housing
Development Fund in an amount equal to seven and one-half percent (7.5%) of the greater of the
actual sales price or fair market value for each unit sold. City staff estimates $4,387,500 in total
revenues will be generated from in-lieu fees based on an estimated average per unit sales price of
$1.3 million for the Redwood Gate market rate homes and an in-lieu fee rate of7.5% applicable
to all 45 units.
One of the primary reasons for amending the existing BMR Agreement is to generate revenues to
provide additional funding to two recently approved affordable housing rental projects, Eden
Housing's 50-unit family housing project at 801 Alma and Palo Alto Housing Corporation's
(PAHC) 35-unit Single Room Occupancy (SRO) project at 488 Charleston Road. Both projects
target very-low and extremely-low income households and each needs at least $2.5 million in
additional funding to be more competitive in obtaining tax credit allocations.
In June 2009, Tree House Apartments, L.P. submitted an application to the California Tax Credit
Allocation Committee for low income housing tax credits. The application received a perfect
score, but lost to another project by a narrow margin in the tiebreaker category, which measured
the percentage of public funding and overall leveraging. Included in the application was the
City's commitment to provide an acquisition loan in the amount of$2,838,577 from the
CMR: 155:10 Page 2 of5
Residential Housing Fund and Community Development Block Grant (CDBG) funds for the
development of the project.
This month, P AHC will submit a new application for the Low Income Housing Tax Credit
Allocation reflecting the City's committed additional funding from the in-lieu fee payments.
DISCUSSION
Tree House Project Description
On April 3, 2009, Council approved a Planned Community (PC) zone application for the
development of the 35-unit affordable housing project. The project site, located between Alma
Street and El Camino Real on West Charleston Road, is approximately 0.7 acres and contains a
single-family home that was previously occupied by Recording for the Blind and Dyslexic. PAHC
proposes to construct 35 new affordable housing units consisting of33 studios and two one-bedroom
units, which will be affordable to extremely-low and very-low income households earning between
20% and 50% of the area median income.
PAHC estimates the overall development cost for the 35-unit Tree House project to be
approximately $12.9 million, and plans to assemble a financing package to fund the project as
shown below.
Permanent Sources of Funds for Development
• Low Income Housing Tax Credits $ 5,582,432
• City of Palo Alto (Acquisition) $ 2,838,577
• City of Palo Alto In-Lieu Fees (Construction) $ 2,500,000
• County of Santa Clara -Stanford Affordable Housing Fund $ 960,000
• County CDBG $ 400,000
• County of Santa Clara -Housing Trust Fund $ 350,000
• Fee Waivers $ 308,403
• General Partner Equity $ 100
TOTAL PROJECT FUNDING $ 12,939,512
Total Funding per Unit (35 units) 369,700
Funding Commitment
Upon adoption of the resolution, the requested $2.5 million would be earmarked to the Tree
House project; the funds will not actually be loaned to Tree House Apartments, L.P. until other
development funding has been obtained and construction is scheduled to commence. The total
$5,338,577 funding for the project ($2,500,000 in new housing funds plus the previously
approved $2,838,557 in CDBG and housing funds) will then be combined into one permanent,
long-term City loan, secured by appropriate legal documents against the entire property.
The permanent loan will have similar terms as the existing City loan, which is evidenced by a
Note and Deed of Trust secured by the property. The Note will bear simple interest at 3% per
annum, and payments will be made from residual receipts over and above the project's operating
CMR: 155:10 Page 3 of5
expenses and will be divided among other funding agencies based on the City's proportionate
share of its funding to total development costs. No interest will accrue and no payments will be
required until after the project is constructed and occupied. Due to the deep affordability of the
rents, it is not expected that residual receipts will pay the annual interest in full. In return for less
annual interest payments, the proposed project will be affordable to extremely low and very low
income households, and the affordability restrictions will be in place for a minimum of 55 years
after the issuance of a certificate of occupancy. The loan terms are typical to this type of
development and similar to other affordable housing properties and developments funded with
City funds. Some of the City's standard loan terms described here may need to be modified to
meet the requirements of other lenders or funding programs for construction or permanent
sources of funds.
Rents and Occupancy of the Apartments
In order to succeed in the competition for the State's Multifamily Housing Program (MHP)
funding and tax credit allocation, P AHC needs to emphasize housing for extremely low-income
and very-low income households. The project's proposed rent categories and income limits are
shown below; actual rents may change somewhat by the time the project is constructed and ready
for occupancy due to changes in the County median income.
T H ree ouse H pOt D OUSln~ rO.1ec-Of eSCrIp' Ion 0 fP ropose dU °t nl san d R t 1St t en a ruc ure
Rent As A Percent of Median Studios I-Bedroom Total Units Income
Extremely Low Income (20% of AMI) 5 units at $371 ° 5 14%
Extremely Low Income (30% of AMI) 7 units at $557 1 unit at $597 8 23%
Very Low Income (40% of AMI) 5 units at $743 ° 5 14%
Very Low Income (50% of AMI) 16 units at $928 ° 16 46%
Manager's Unit ° 1 unit (rent free) 1 3%
Total Units 33 2 35 100%
Notes: AMI means the Area Median Income for Santa Clara County, which equals $105,500 for a
household of four persons as published on April 3, 2009.
RESOURCE IMPACT
The Residential Fund has a current available balance of approximately $2.1 million, of which
$982,014 came from SummerHill's payment of in-lieu fees on ten (10) Redwood Gate homes
sold. As mentioned earlier, City staff estimates $4,387,500 in total revenues will be generated
from SummerHill in-lieu fees based on an estimated average per unit sales price of $1.3 million
for the market rate homes and an in-lieu fee rate of7.5% applicable to all 45 units. Thus, after
funding the Tree House Project, about $3 million will still be available from the Residential Fund
for future housing development activities.
POLICY IMPLICATIONS
The actions recommended in this report implement the City's adopted Housing Element policies
and programs supporting the development of very low and extremely low income housing.
CMR: 155:10 Page 4 of5
These 35 units will be counted towards the City's housing production goals for the 2007 to 2014
Housing Element period. This project will also provide 12 of the 35 units to households below
35% of the Area Median Income (AMI), considered Extremely Low Income, which will help the
City address State requirements for meeting housing needs of this population.
ENVIRONMENTAL REVIEW
On April 3, 2009, Council approved the Mitigated Negative Declaration and Environmental
Assessment for the development of the 35-unit Tree House project in accordance with the
California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA).
PREPARED BY:
DEPARTMENT HEAD REVIEW: ~W~"".J~'M-t\
CURTIS WILLIAMS, Director
Planning and Community Environment
CITY MANAGER APPROVAL:
ATTACHMENT
A: Resolution of the Council of the City of Palo Alto Committing $2.5 Million In-Lieu Fees
from SummerHill Homes to Tree House Apartments, L.P., for the Development of the 35-Unit
Affordable Housing Tree House Apartments Project at 488 W. Charleston Road
COURTESY COPIES
Palo Alto Housing Corporation
CMR: 155:10 Page 5 of5
ATTACHMENT A
i
Not Yet Approved
Resolution No. ---Resolution of the Council of the City of Palo Alto Committing $2.5
Million In-Lieu Fees from SummerHill Homes to Tree House
Apartments, L.P., for the Development of the 35-Unit Affordable
Housing Tree House Apartments Project at 488 W. Charleston Road
WHEREAS, On March 16,2009, the City Council approved a loan agreement with Tree
House Apartments, L.P. to provide an acquisition loan in the amount of $2,838,577 from the
Residential Housing Fund and Community Development Block Grant (CDBG) funds for the
development of the proj ect; and
WHEREAS, On April 3, 2009, Council approved a Planned Community (PC) zone
application for the development of the 35-unit affordable housing project at 488 West Charleston
Road; and
WHEREAS, On December 9,2009, Council approved an amendment to the Agreement
between SummerHill Redwood Gate LLC and the City of Palo Alto allowing the payment of
approximately $4.3 million fees in-lieu of providing seven (7) Below-Market Rate (BMR)
dwelling units; and
WHEREAS, Tree House Apartments, L.P.'s project will provide affordable rental units
to be made available to extremely low income households at or below 35% Area Medina Income
("AMI") and very low income households at or below 50% AMI, with one unrestricted
manager's units; and
WHEREAS, Tree House Apartments, L.P. must have commitments of all local
government funding, including funding from the City of Palo Alto, to have a competitive tax
credit allocation application and such funding commitment can be documented by an approved
resolution; and
WHEREAS, the City has determined that an additional loan amount of $2.5 million for
housing unit construction costs is needed to make the project feasible and that the City funds
shall be provided in the form of a loan with a promissory note at 3 % interest deferred for 55
years and secured by a Deed of Trust, and payments will be made from residual receipts over and
above the project's operating expenses and will be divided among other funding agencies based
on the City'S proportionate share of its funding to total development costs.; and
WHEREAS, $2.5 million will be available in the Residential Housing In-Lieu Fund from
the payment of in-lieu fees from SummerHill Redwood Gate Project; and
1
100302 syn 0120428
Not Yet Approved
WHEREAS, the appropriation of funds committed from the Residential Housing In-Lieu
Fund is for one-time cost and no future funding costs are anticipated; and
WHEREAS, the City Council authorization is needed to amend the 2010-11 budget as
hereinafter set forth.
NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows:
SECTION 1. The sum of $2.5 million is hereby appropriated to non-salary expense in
the Residential Housing In-Lieu Fund to be committed to the Tree House project as a loan for the
affordable housing project. No transfer shall occur except per execution of loan agreements
prepared in a form approved by the City Attorney.
SECTION 2. A note receivable of $2.5 million will be established on behalf of the Tree
House project, upon execution of the aforesaid loan agreements.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Assistant City Attorney
100216 syn 0120428
Mayor
APPROVED:
City Manager
Director of Planning and
Community Services
Director of Administrative
Services
REPORT
FROM
THE
CITY
CLERK
Honorable City Council
FROM: Donna J. Grider, City Clerk
DATE: March 8, 2010 , ),
SUBJECT: ADOPTION OF BUDGET AMENDMENT ORDINANCE FOR
FISCAL YEAR 2010 TO PROVIDE ADDITIONAL
APPROPRIATIONS of $89,196 WITHIN THE GENERAL FUND
FOR THE COUNTY OF SANTA CLARA REGISTRAR OF
VOTERS NOVEMBER 2009 ELECTION COSTS.
RECOMMENDATION
Staff recommends that Council adopt the Budget Amendment
Ordinance (BAO) in the amount of $89,176 to make an additional
appropriation within the General Fund to cover the County of Santa
Clara Registrar of Voters November 2009 election costs.
DISCUSSION
On November 3, 2009 the City of Palo Alto participated in the Uniform
District Election Law election to elect five City Council members and
the Business License Tax Initiative. The City Clerks Office estimated
the costs for the Registrar of Voters to be $258,000. The total cost
was $352,796. The City Clerk's office needs an additional $89,196 to
make final payment to the Registrar of Voters for the November 3,
2009 election.
RESOURCE IMPACT
A Budget Amendment Ordinance in the amount of $89,176 is required
to make this final payment. Funds will come from the Budget
Stabilization Reserve.
POLICY IMPLICATIONS
This recommendation does not represent any change to existing City
Policies.
ENVIRONMENTAL REVIEW
This is not a project for purposes of the California Environmental
Quality Act.
endment Ordinance
Donna J. Grider
City Clerk
ATTACHMENT A
ORDINANCE NO. ______ _
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING THE BUDGET FOR FISCAL YEAR 2010 TO PROVIDE
ADDITIONAL APPROPRIATIONS OF $89,196 WITHIN THE GENERAL
FUND FOR THE COUNTY OF SANTA CLARA REGISTRAR OF VOTERS
NOVEMBER 2009 ELECTION COSTS
The Council of the City of Palo Alto does ORDAIN as follows:
SECTION 1. The Council of the City of Palo Alto finds and
determines as follows:
A. Pursuant to the provisions of Section 12 of Article III
of the Charter of the City of Palo Alto, the Council on June 15,
2009 did adopt a budget for Fiscal Year 2010; and
B. The City Clerk's Office estimated a budget of $258,000
for the costs associated with the Uniform District Election Law
(UDEL) Election; and
C. The City of Palo Alto participated in the UDEL Election
held on November 3, 2009; and
D. City Council authorization is needed to amend the
Fiscal Year 2010 budget to make an additional appropriation of
$89,196 (Eighty Nine Thousand One Hundred Ninety Six Dollars) for
the cost associated with increased election costs.
SECTION 2. The sum of $89,196 (Eighty Nine Thousand One
Hundred Ninety Six Dollars) is hereby appropriated to Inter-
Agency non-salary expenses in the City Clerk's department, and
the Budget Stabilization Reserve is correspondingly reduced.
SECTION 3. The Budget Stabilization Reserve is hereby decreased
by the sum of $89,196 (Eighty Nine Thousand One Hundred Ninety Six
Dollars) . As a result of this change the Budget Stabilization
Reserve will be reduced from $24,747,000 to $24,657,804.
SECTION 4. As specified in Section 2.28.080(a) of the Palo Alto
Municipal Code, a two-thirds vote of the City Council is required to
adopt this ordinance
SECTION 5. The Council of the City of Palo Alto hereby finds
that this is not a project under the California Environmental
Quality Act and, therefore, no environmental impact assessment is
necessary.
ATTACHMENT A
SECTION 6. As provided in Section 2.04.350 of the Palo Alto
Municipal Code, this Ordinance shall become effective upon adoption.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
APPROVED:
Mayor
City Manager
Director
Services
of Administrative
TO: HOr~ORABLE CITY COUr~CIL
FROM: CITY MANAGER DEPARTMENT: CITY MANAGER'S OFFICE
DATE: March 8, 2010 CMR:167:10
REPORT TYPE: CONSENT
SUBJECT: Confirmation of Appointment of Pamela Anti! as Assistant City Manager
and Approval of At-Will Enlploynlent Contract
RECOMMENDATION
The City Manager recolnmends that the City Council confinn the appointInent of Palnela
Antil as Assistant City Manager and approve the attached at-will elnploytllent agreelnent.
BACKGROUND
The Municipal Code designates the Assistant City Manager as an "officer of the city" (Sec.
2.08.010) and requires that the City Council approve the City Manager's appointInent of the
Assistant City Manager and all City departlnent heads (Sec.2.08.020). The position has
relnained vacant since May, 2008 due to the transition of City Managers in 2008 and a
subsequent operational asseSSlnent by the new City Manager. The Assistant City Manager
serves as the operations officer for the City and Inay act on behalf of the City Manager when
necessary at City Councillneetings and in other high-level capacities. Filling the position at
this tilne is critical to the effective operations of the City and our ability to help transition our
organization through challenging times while fulfilling Council priorities.
DISCUSSION
The City Manager requests approval of the appointment of PaInela Antil to the position of
Assistant City Manager. Ms. Antil was selected as result of an extensive national search by
the executive recruitnlent finll of PeckhaIn & McKenney. An in-depth assessnlent process
was conducted, a process which resulted in the selection of Ms. Antil whose cOlnbination of
energy, experience, and cOlnmitInent to professional city Inanagelnent make her an ideal fit
for Palo Alto.
Ms. Antil has been the Assistant City Manager for the City of No vi, MI (pop.53,000) since
2006, and she was the Assistant City Manager for the City of Rancho Palos Verdes, CA
CIVIR: 167: 10 Page lof 2
(pop.45,000) where she served froln 1989-1995. She worked for the City of Ann Arbor, MI
(pop.l14,000) fron12004-2006 in a variety of positions including a brief appointnlent as
Assistant City Manager before Inoving to Novi. Ms. Antil holds the title of International
City/County Managelnent Association (lCMA) Credentialed Manager and has a Master of
Public AdIninistration Degree froln California State University, Long Beach. She has also
served onnUlnerous policy and planning conmnttees with ICMA and is a highly respected
IneInber of the city Inanagelnent cOlrununity.
RESOURCE IMPACT
The annual control point for the Assistant City Manager position is $199,431. The attached
at-will eInploYlnent agreelnent for Ms. Antil reflects an annual salary level of $195,000,
which is approxilnately 2.2% below control point.
The agreelnent includes reiInburseInent for basic relocation costs for travel and Inoving
expenses for Ms. Antil and her falnily in accordance with the basic relocation provision in
the Managelnent Professional COInpensation Plan and the City's existing policies.
All other terms are consistent with the at-will agreelnent teInplate that the Council approved
in 2004 when it transitioned to an at-will systeln for new department heads. Ms. Antil is to
begin her duties as Assistant City Manager on April 12,2010.
POLICY IMPLICATIONS
This recommendation is consistent with existing City policies.
ATTACHMENT
EInployment Agreelnent Between Pamela Antil and the City of Palo Alto
FOR DEPARTMENT HEAD: W G~ ------~----~---------------------------
CITY MANAGER APPROVAL:
CMR:167:10
Russell Carlsen
Director of HUInan Resources
----~~~~~~~~---¥~---------
Jalne
City -
Page 20f2
THIS AGREEMENT is between the City of Palo Alto, a 1111111icipal corporation
and chartered city ("City") and Pan1elaWeaver Antil ("AntH") its Assistant City Manager. It is
effective on the latest date. next to the signatures on the last page.
This Agreelnent is entered into on the basis of the following facts, aluong others:
A. City, acting by and tln'ough its duly appointed City Manager and with the
approval of its duly elected City Council, desires to enlploy Antil as its Assistant City Manager
subject to the terms and conditions set forth in this Agreement, the Palo Alto Municipal Code
and in the Charter oftlle City of Palo Alto (the "Charter").
B. Antil desires to be enlployed by the City as its Assistant City Manager,
subject to the terms and conditions set forth in this Agreelnent, the Palo Alto Municipal Code,
and in the Charter.
C. City and Antil desire to establish specific ternlS and conditions relating to
cOlnpensation and benefits, perfonnance evaluations, and related lnatters.
D. Notwithstanding any provision of the City of Palo Alto Merit Systen1
Rules and Regulations, the City desires Anti} to serve on an at-will basis, with no expectation of
continued enlploytl1ent, and with no right to pre-or post-separation due process or appeal.
E. Antil desires a predictable runount of severance notice and severance pay
should her enlployment be ternlinated with or without cause or notice.
BASED UPON THE FOREGOING, CITY AND ANTIL AGREE AS
FOLLOWS:
1. Erl1ployment. City will appoint and enlploy Antil as Assistant City
Manager with the City of Palo Alto ruld Antil will accept the appointInent and elllployment with
the City for an indefinite te1ID to begin on April 12, 2010 (the "Start Date"). In the event Antil
does 110t actually report for or C0111n1011ce work on Aplil 12, 2010, the emploYlnent Start Date
will be the date, if any, as otherwise Dlutually agreed by the parties.
2. Duties of Antil. Antil shall perfonn the duties established for the
Assistant City Manager by the Charter, Palo Alto Municipal Code, direction of the City
Manager, or as otherwise provided by law, ordinance, or regulation.
2.1. Full Energy and Skill. Antil shall devote her full energy, skill,
ability, and pl:oductive thlle to the perfomlance ofhis/her duties.
2.2. No Conflict. Antil shall not engage in any enlploYIl1ent, activity,
consulting service, or other enterprise, for compensation or otherwise, which is actually or
potentially in conflict with, iniIllical to, or which interferes with the perfornlance of her duties.
1-
100225 sh 8261264
Antil ac1010wledges that she is subject to the various conflict of interest requirements found in
the California Goverlllllent Code and state and local policies and regulations.
2.3 Permission Required For Outside Activities. Antil shall 110t
engage in any elnployment, activity, consulting service, or other enterprise, for compensation or
otherwise, wHhout the express, written permission of the City Manager.
3. Compensation. While perfonning the duties of Assistant City Manager,
Antil shall be cOll1pensated as provided in this Section 3.
3.1. COll1pensation. Antil shall receive an initial base alUmaI salary of
One Hundred Ninety Five Thousand Dollars ($195,000) cOlmnencing on the effective date of the
contract.
3.2. Salary Adjusttnents. Not less than once each year, the City
Manager shall nleet with Antil for the express purpose of evaluating the perfOlll1anCe of Anti!.
The City Manager will act in good faith in detennining whether to increase the salary of Antil,
but the ultimate decision in this regard is within the sole discretion of the City Manager.
3.3. Variable Managenlent COlnpensation. If a Variable Management
COlnpensation (HVMC") progranl is provided in any given year, Antil shall be entitled to receive
VMC pursuant to the terms of a City Council approved ll1anagelnent compensation plan.
4. Regular Benefits and Allowances. Antil will be eligible for, and shall
receive, all regular benefits (i.e., health insurance, PERS contribution paid by City, etc.) and
vacation, sick leave, and Inanagement leave as are generally provided to Inanagelnent employees
pursuant to the City Council-appl'oved Management C0111pensation Plan.
5. Additional Benefits and Allowances. In addition to the benefits specified
in section 4, Antil sha11 receive the following additional benefits and allowances:
5.1 Reinlbursement for Relocation Expense:
5.1.1 Basic Relocation Benefits. Antil shall receive the Basic
Package for relocation benefits as provided in section B of Policy and Procedure 2-08.
5.2 Transportation Allowance. Anti! shall receive a transportation
allowance as provided in the City Council-approved Manageluent Compensation Plan.
6. Additional Expenses of ElnploYlnent. City shall pay the following usual
and custOlnary enlploymellt expenses:
6.1. The cost of any fidelity or other bonds required by law for the
Assistant City Manager.
7. Dlu'ation of EluploYlnent. Antil understands and agrees that she has no
constitutionally protected property or other interest in her employnlent as Assistant City
2-
100225 sh 8261264
Manager. She understands that notwithstanding any provision in the Merit System Rules and
Regulations, she has no right to pre-or post-disciplinary due process. She understands and agrees
that she works at the will and pleasure of the City Manager and that she lnay be tenninated, or
asked to resign, at any time1 with or without cause, upon thirty (30) days written notice to Anti!.
Anti11nay telminate this agreement upon thirty (30) days written notice to the City Manager.
7.1. Severance Pay. If Antil is asked to resign or is terminated as
Assistant City Manager helshe shall receive a cash severance pa)'lnent, or pa)'lnents (without
interest) at intervals specified by Anti!, equaling 6 months salary and benefits.
7.2. Non-Pa)l1nent of Severance Under Celtain Conditions. If the
termination of Anti! is the result of conviction of a felony, helshe shall not be paid any severance
pay.
8. IvIiscellaneous.
8.1. Notices. Notices given under this Agreenlent shall be in writing
and shall be either: a) served personally; or b) sent by facsiInile (provided a hard copy is mailed
within one (1) business day); or c) delivered by first-class United States lnai!, certified, with
postage prepaid and a retunl receipt requested; or d) sent by Federal Express, or some equivalent
private nlail delivery service. Notices shall be deemed received at the earlier of actual receipt or
tlu-ee (3) days following deposit in the United States In ail , postage prepaid. Notices shall be
directed to the addresses shown below, provided that a party Inay change such party's address for
notice by giving written notice to the other party in accordance with this subsection.
CITY:
Attn: City Manager
City of Palo Alto
250 Hanlilton Avellue
Palo Alto, CA 95901
Phone: (650) 329-2226
FAX: (650) 328-3631
PA.MELA WEAVER ANTIL:
Pmnela Weaver Antil
250 Hamilton Avenue
Palo Alto, CA 94301
Phone: (650) 329-2226
FAX: (650) 328-3631
8.2. Entire Agree111entiAmendlnent. This Agreenlent constitutes the
entire understanding and agremnent between the parties as to those matters contained in it, and
supersedes any and all prior or contelnporaneolls agreenlents, representations and understandings
of the parties. This Agreement may be amended at any time by mutual agreelnent of the parties,
but any such alnendnlent Inust be in writing, dated, and signed by the parties and attached hereto.
-3-
100225 sh 8261264
8.3. Applicable Law all(i Venue. This Agreelnent shall be interpreted
according to the laws of the State of California. Venue of any action regarding this Agreement
shall be in the proper court in Santa Clara County.
8.4. Severability. In the event any portion of this Agreelnent is
declared void, such portion shall be severed from this Agreement and the relnaining provisions
shall relnain in effect, unless the result of snch severance would be to substantially alter this
Agreelnent or the obligations of the parties, in which case this Agree111ent shall be imlnediately
ten11inated.
8.5. Waiver. Any failure of a party to insist upon strict compliance
with any term, undertaldng, or condition of this Agreement shall not be deelnecl to be a waiver of
such term, undertaking, or condition. To be effective, a waiver nlust be in writing, signed and
dated by the parties.
8.6. Representation by Counsel. Antil and City acknowledge that they
each did, or had the opportunity to, consult with legal counsel of their respective choices with
respect to the Inatters that are the subject of tIns Agreement prior to executing it.
8.7 Section Headings. The headings on each of the sections and
subsections of this Agreenlent are for the convenience of the parties only and do' not lhnit or
expand the contents of any such section or subsection.
Dated: CITY OF PALO ALTO
By ________________________________ __
Ci ty Manager
Dated: _____ _ Assistant City lVIanager ~{;J ,~7=Up
Pamela Weaver Antil
Attest:
City Clerk
Approved as to Fonn:
By:
-4-
100225 sh 8261264
TO: HONORABLE COUr~CIL
FROM: CITY MANAGER DEPARTMENT: CITY MANAGER'S OFFICE
DATE: March 8, 2010 CMR:168:10
TYPE:
SUBJECT: Confirmation of Appointment of Gregory as Director of
Community Services and Approval of At-Will Employment Contract
RECOMMENDATION
The City Manager recolmnends that the City Council confinn the appointinent of
Gregory Betts as Director of COlnmunity Services and approve the attached at-will
employtnent agreeinent.
BACKGROUND
Municipal Code Section 2.08.020 requires that the City Council confinn the City
Manager's appointinent of City departInent heads.
DISCUSSION
The City Manager is reconunending appointnlent of Gregory Betts to replace Richard
Jmnes as Director of COlllinunity Services who retired in June, 2008. Mr. Betts has acted
as the Interiin Director of the Conmlunity Services Department since June, 2008.
Mr. Betts was selected as a result of a national search conducted by the executive
recruitInent finn of Peckhain & McKenney as well as a subsequent in-depth assessment
process. This process also included an outreach by the City Manager to various
stakeholder groups in the course of developing a candidate profile. Once finalists were
selected, interviews were conducted by two panels whose Ineinbers included SOlne
executive personnel as well as cOlnmunity representatives froin various cOlllinissions and
friends groups.
Mr. Betts has worked for the City of Palo Alto as a Inanager for the past twenty-six years
and has Inanaged a variety of responsibilities including the operation of the Aniinal
Services Division, Special Events, Open Space & Interpretation, Mitchell Park
COlnmunity Center, the Parks Division and special interest classes and caInps. was
liaison to the Parks and Recreation COlnmission and was responsible for a number of
CMR:168:10 10f2
public/private projects such as the playground at Heritage Park, the renovation of Lytton
Plaza, and the stewardship agreement for the Pearson Arastradero Preserve. Mr. Betts
holds degrees froln the University of Califonlia, Davis, in Aninlal Science and Wildlife
Biology, and received his Master of Public Adlninistration degree fronl the University of
San Francisco. He is also an active Inember of the California Parks and Recreation
Society, National Parks and Recreation Association, and National Association of
Interpretation.
RESOURCE IMPACT
The annual control point for the Director of COlrununity Services position is $174,221.
The attached at-will emploYlnent for Mr. Betts reflects that salary level, and all other
tenllS are consistent with the at-will agreelnent teInplate that the Council approved in
2004 when it transitioned to an at-will systenl for new departlnent heads.
POLICY IMPLICATIONS
This reco1TIlnendation is consistent with existing City policies.
ATTACHMENT
EInploYlnent Agreelnent Between Gregory Betts and the City of Palo Alto
F~D~AITMlliTHMD:_~~='_~~~~_~ __ ~~~ ____ _
Russell Carlsen
Director of Human Resources
CITY MANAGER APPROVAL: ------~~~~--~~~~~---------
CMR:168:10 Page 20f2
EMPLOYMENT AGREEMENT
THIS ... t\GREE::VIENT is between the of Palo Alto, a Inunicipal corporation
and chartered city ("City") and Betts, Conununity Services Director ("Betts"). It is
effective on the latest date next to signatures on last
This Agreenlent is entered into on the basis of the following facts, alnong others:
A. City, acting by and through its duly appointed City Manager and with the
approval its duly elected City Council, desires to elnploy Betts as Community Services
Director, subj ect to the temlS and conditions set fOlih in this Agreement, the Palo Alto Municipal
Code in the Charter of the City of Palo Alto (the "Charter").
Betts desires to be elnployed by the City as its Community Services
Director subj ect to telIDS and conditions set forth this Agreement, Palo Alto Municipal
Code, and the Charter.
City and Betts desire to establish specific terms and conditions relating to
compensation and benefits, performance evaluations, and related matters.
D. Notwithstanding any provision of the City of Palo Alto Merit System
Rules and Regulations, the City desires Betts to serve on an at-"will basis, with no expectation
continued employment, and with no light to pre-or post-separation process or appeal.
E. Betts desires a predictable anlount of severance notice and severance pay
should his enlployment be terminated with or without cause or notice.
BASED UPON THE FOREGOING, CITY Al'ID BETTS AGREE
FOLLOWS:
1. City will appoint and elnploy Betts as Community Services
Director with the City of Palo Alto and Betts will accept the appointment and employment for
City for an indefinite ternl to begin on March 8, 2010. In the event Betts does not actually
report for or commence work on March 8, 2010, Employment Stmi Date will be date,
any, as otherwise mutually agreed by the parties.
2. Betts shall perform the duties established for the
C01111nunity Services Director by the Charter, Palo Alto NIunicipal Code, direction of City
Manager, or as otherwise provided by law, ordinance, or regulation.
2.1. Betts shall devote his full energy, skill,
ability, and productive time to the performance of his duties.
2.2. No Conflict. Betts shall not in any employment, activity,
consulting service, or other enterprise, compensation or otherwise, which is actually or
potentially in conflict with, inilnical to, or which interferes with performance his duties.
100225 sh 8261266
Betts acknowledges that he is subject to the various conl1ict of interest requirenlents found in the
California Government Code and state and local policies and regulations.
2.3. Permission Required For Outside Activities. Betts shall not
engage in any employment, activity, consulting service, or other enterprise, for compensation or
otherwise, without the express, written pennission of the City Manager ..
3. COlnpensation. While performing the duties of Conlll1unity Services
Director, Betts shall be compensated as provided in this Section 3.
3.1. Compensation. Betts shall receive an initial base annual salary of
One Hundred Seventy Four Thousand Two Hundred Twenty One Dollars ($174,221.00)
commencing on the effective date of the contract.
3.2. Salary AdjustInents. Not less than once each year, the City
Manager shall Ineet with Betts for the express purpose of evaluating the perfoilllance of Betts.
The City Manager will act in good faith in determining whether to increase the salary of Betts,
but the ultimate decision in this regard is within the sole discretion of the City Manager.
3.3. Variable Management Compensation. If a Variable Management
Compensation ("VMC") program is provided in any given year, Betts shall be entitled to receive
VMC pursuant to the terms of a City Council approved management compensation plan.
4. Regular Benefits and Allowances. Betts will be eligible for, and shall
receive, all regular benefits (i.e., health insurance, PERS contribution paid by City, etc.) and
vacation, sick leave, and management leave as are generally provided to management employees
pursuant to the City Council-approved Management Compensation Plan.
5. Additional Benefits and Allowances. In addition to the benefits specified
in section 4, Betts shall receive the following additional benefits and allowances:
5.1. Transportation Allowance. Betts shall receive a LTansportation
allowance as provided in the City Council-approved Management Compensation Plan.
6. Additional Expenses of Employment. City shall pay the following usual
and custOlnary elnployment expenses:
6.1. The cost of any fidelity or other bonds required by law for the
Comn1unity Services Director.
7. Duration of Employment. Betts understands and agrees that he has no
constitutionally protected property or other interest in his employment as Conununity Services
Director. I-Ie understands that notwithstanding any provision in the Merit System Rules and
Regulations, he has no right to pre-or post-disciplinary due process. I-Ie understands and agrees
that he works at the will and pleasure of the City Manager and that he may be terminated, or
asked to resign, at any ti1ne, with or without cause, upon 30 days written notice to Betts. Betts
may tenninate this agreement upon 30 days written notice to the City Manager.
-2-
100225 sh 8261266
8.
7.1. If Betts is asked to resign or is tenninated as
Conununity Services Director he shall receive a cash severance payment,
or payments (without interest) at intervals specified by Betts, equaling 6
lTIonths salary and benefits.
7.2. If the
termination of Betts is the result of conviction of a felony, he shall not be
paid any severance pay.
8.1. Notices given under this Agreelnent shall be in writing
and shall be either: a) served personally; or b) sent by facsimile (provided a hard copy is mailed
within one (1) business day); or c) delivered by first-class United States mail, certified, with
postage prepaid and a return receipt requested; or d) sent by Federal Express, or some equivalent
private mail delivery service. Notices shall be deemed received at the earlier of actual receipt or
tbree (3) days following deposit in the United States mail, postage prepaid. Notices shall be
directed to the addresses shown below, provided that a party may change such party's address for
notice by giving written notice to the other party in accordance with this subsection.
CITY:
BETTS:
Attn: City Manager
City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 95901
Phone: (650) 329-2226
FAX: (650) 328-3631
Greg Betts
250 Hamilton Avenue
Palo Alto, CA 94301
Phone: 650-463-4951
FAX: 650-321-5612
8.2. Entire Agreement/An1endment. This Agreement constitutes the
entire understanding and agreement between the parties as to those matters contained in it, and
supersedes any arid all prior or contelnporaneous agreements, representations and understandings
of the parties. This Agreement may be arnended at any tin1e by mutual agreement of the parties,
but any such amendment must be in writing, dated, and signed by the parties and attached hereto.
8.3. This Agreement shall be interpreted
according to the laws of the State of California. Venue of any action regarding this Agreement
shall be in the proper court in Santa Clara County.
8.4. Severability. In the event any portion this Agreement is
declared void, such portion shall be severed from this Agreelnent and the remaining provisions
shall remain in effect, unless the result of such severance would be to substantially alter this
-3
100225 5h 8261266
Agreement or the obligations of the parties, which case this Agreement shall be immediately
terminated.
8.5. Any failure of a party to insist upon stdct compliance
vvith any term, undertaking, or condition of this Agreement shall not be deemed to be a waiver of
such term, undertaking, or condition. be effective, a waiver must be in wliting, signed and
dated by the parties.
8.6. Betts and City acknowledge that they
each did, or had the opportunity to, consult with legal counsel of their respective choices with
respect to the matters that are subj ect this Agreement pdor to executing
8.7. The headings on each of the sections and
subsections of this Agreement are for the convenience or the parties only and do not linlit or
expand the contents of any such section or subsection.
Dated: _____ _ CITY OF P ALO ALTO
City Manager
Dated: -----~ C01v1MUN1':VISERVICES DIRECTOR (~#~ ~es
Attest:
City Clerk
Approved as to Form:
By:
-4-
100225 sh 8261266
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER
DATE: MARCH 8, 2010
REPORT TYPE: CONSENT
DEP ARTMENT:PLANNING AND
COMMUNITY ENVIRONMENT
CMR: 154:10
SUBJECT: Adoption of a Resolution to Consent to the City of Palo Alto Being Included
Within the Boundaries of the San Mateo County Tourism Business
Improvement District and Direction to Terminate Destination Palo Alto
Contract
RECOMMENDATION
Staff recommends that the City Council:
1) Approve the attached Resolution to Consent to the City of Palo Alto being included
within the boundaries of the San Mateo County Tourism Business Improvement District;
and
2) Direct City Manager to formally provide written notice to the Convention Visitors
Bureau that the contract between the City of Palo Alto and the San Mateo County/Silicon
Valley Convention Visitors Bureau be terminated effective June 6, 2010, providing the
required 60 day notice for this action.
EXECUTIVE SUMMARY
The purpose of this report is to provide City Council with the Resolution of Consent which will
initiate the process to include Palo Alto hotels as participants in the San Mateo County Tourism
Business Improvement (TBID). Following adoption of the Resolution of Consent, the City of
Burlingame, as lead agency for the San Mateo County TBID will propose the addition of Palo
Alto Hotels into the TBID. The participation of Palo Alto hotels in the TBID would result in the
hotel guest paying a small increment of approximately ($.15 to $1.00) per room, per night rather
than the City providing funds in the Destination Palo Alto contract. (The exact amount of
assessments would depend on a property's projected occupancy.) Essentially, the same service
level would be provided to hotels through this approach, as was provided under Destination Palo
Alto. The SMC/SVCVB has also indicated continuation of the Palo Alto Visitors' Center at the
Palo Alto Chamber of Commerce. The potential cost savings to the City would be $80,000 in
FY 2010.
CMR: 154:10 lof5
BACKGROUND
In October 2005, the City Council directed staff to agendize a Council discussion that would
explore enhancing Palo Alto's economy by improving visitor outreach. In February 2006, staff
convened a committee of stakeholders for a Palo Alto visitorship effort. The Destination Palo
Alto committee was chaired by the City Manager and held its first meeting on March 15,2006.
Stakeholders included: the Palo Alto Chamber of Commerce, Stanford Athletics, Palo Alto
Business Improvement District, Palo Alto Weekly, Stanford Visitor's Center, Palo Alto Online,
California Avenue Area Development Association (CAADA), Stanford Shopping Center,
Stanford University, Town and Country Shopping Center, Palo Alto Arts Center and business
representatives from the hotel, retail and hospitality industries.
On October 6, 2008, City Council authorized the City Manager or his designee to execute the
agreement with the San Mateo County/Silicon Valley Convention and Visitors Bureau
(SMC/SVCVB) in an amount not to exceed $455,000 for visitorship services for the fiscal year
2009 and fiscal year 2010.
The first year of the contract included $215,000 to the SMC/SVCVB, and $25,000 to the Palo
Alto weekly for an update of the Destination Palo Alto website and additional marketing
materials. In the second year of the contract, the full amount of $240,000 was allocated for the
provision of visitors hip services by the SMC/SVCVB. On November 2,2009, City Council
confirmed the extension of the contract but requested that staff return with a description of the
methodology and specific metrics to be used to quantify the City's return on its investment. The
Council also directed that the contract be amended to provide for a 60-day termination clause by
either party (which has been completed). In December, the Council received a request from the
SMC/SVCVB that the City vote to approve inclusion in the Bureau's TBID, switching from a
contractual arrangement with the City.
In February 2010, staff presented baseline information and metrics quantifying the City's return
on investment for Destination Palo Alto to assess the effectiveness of the program thus far, and
considered a letter from the CVB to move to include the Palo Alto hotels in its TBID and
terminate the Destination Palo Alto contract. Following this review, City Council unanimously
approved the staff recommendation to consider adoption of a Resolution of Consent to
participate in the San Mateo County TBID.
DISCUSSION
Attached to this staff report is a letter dated December 18, 2009 which staff received from the
SMC/SVCVB. In the letter, the CVB indicates that inclusion of Palo Alto hotels into the
Tourism Business Improvement District which encompasses most of San Mateo County (with
whom Palo Alto would otherwise compete for hotel room bookings without inclusion into the
CVB) would be a more effective way to deliver tourism services in the Palo Alto marketplace.
Eventual transition of the Destination Palo Alto to a TBID was the longer term outcome when it
was initiated.
Should Palo Alto opt into the TBID, the CVB will retain its visitor center presence in the Palo
Alto Chamber office, at no additional cost to the City, so service would be uninterrupted. In
addition, a Palo Alto hotel owner will be included on the TBID's advisory board.
CMR: 154:10 20f5
The CVB proposed that the contract between the CVB and the City of Palo Alto end in April or
May of2010 (to allow for public notifications regarding transition, etc.) and that the City
Council pursue participation in the existing TBID. Inclusion into the TBID would result in a
nominal additional cost to travelers. The range of cost is approximately 15 cents to $1 per room
night based on the projected occupancy of each hotel. Smaller hotels with limited services and
meeting space with lower occupancy pay less than larger, full-service hotels.
The CVB's TBID has been in place successfully since April of2001. The City of Burlingame is
the lead city for the TBID and conducts the notifications and public hearings for the TBID.
Other areas competing for meetings with TBIDs of their own include San Jose, San Francisco,
Santa Clara, Sacramento County, San Diego and Santa Cruz County. The CVB has already
conducted outreach to the largest hotels in Palo Alto that represent a majority of rooms in the
City. Several Palo Alto hotels, including the Westin, Sheraton, Cabana, Garden Court and
Dinah's Court, have indicated their support for inclusion into the TBID. The CVB is continuing
its outreach and will update the City Council on the outreach to both large and small hotels.
Expanding the TBID to include Palo Alto hotels is a multi step process. To initiate the process,
the Palo Alto Council must adopt a Resolution of Consent to be included within the San Mateo
County TBID (Attachment 3). Once the initiating resolution is adopted, the Burlingame City
Council as lead agency of the TBID conducts two additional public hearings to formalize the
inclusion of the Palo Alto hotels as District C of the TBID. At these hearings, affected hotels
will be given the right to file written protests. If protests are not received from owners of hotels
or other lodging establishments responsible for 50% or more of the total value of the projected
Palo Alto hotel assessment, the district will be amended to include Palo Alto hotels and the
assessments will be levied against the hotels. The entire TBID inclusion process may take up to
90 days due to the, notification and public hearing process. Once the Palo Alto hotels are
included in the TBID, the Burlingame City Council will conduct annual re-authorization
hearings. This process is similar to that used to establish the Palo Alto Downtown Business
Improvement District.
To provide for an effective transition of this program, the contract with the San Mateo
County/Silicon Valley Convention and Visitor's Bureau (SMC/SVCVB) would continue through
May with an effective termination date of June 6, 2010. As discussed at the February 8, 2010
City Council meeting, City Council, staff, and the Convention Visitors Bureau believe that
termination of the Destination Palo Alto contract and participation in the Tourism Business
Improvement District is the best option for the delivery of services to the hotels in Palo Alto.
Since hotels would not begin paying TBID assessments until the beginning of the first full
quarter of inclusion, anticipated to be July 2010, there would be ample time to transition from the
Destination Palo Alto contract to the Tourism BID.
The SMC/SVCVB has met with the City's largest hotels and thus far the Sheraton/Westin,
Cabana, Dinah's, Garden Court hotels and Creekside have indicated support for the transition to
a TBID. Immediately following the City Council meeting on February 8, 2010, all Palo Alto
hotels received a letter explaining the plan to make a transition TBID (Attachment 4). The letter
provided contacts for questions and comments. To date, only one clarification request was
CMR: 154:10 30f5
received from the Stanford Terrace hotel. No other comments, questions or concerns have been
communicated to the CVB or the City.
RESOURCE IMPACT
The first year of Destination Palo Alto Visitor Program was funded through an allocation of the
City's General Fund for FY 2009. The Destination Palo Alto program is a two-year pilot with
$240,000 for the second year allocated as a part of the 2009-10 budgets. If the contract is ended
on June 6, 2010, $80,000 of the original contract amount will not be expended. City Council will
consider how to redirect the remaining Destination Palo Alto funds as a part of the FYI0 mid-
year or FY 2011 budget process.
Should the City collect the TBID remittances directly, there will be additional administrative
workload for the Administrative Services Department. In light of past and future budget
reductions and general policy to become more effective and efficient, staff recommends that
remittances be sent directly from hotels to the City of Burlingame. There appear to be no
benefits to the City from it acting as an intermediary or second step in the remittance process. It
is important to note that most cities in the TBID collect TBID assessments while collecting the
transient occupancy tax. By remitting fees directly to Burlingame, hotels will experience a
modest increase in work and mailing expenses.
ENVIRONMENTAL REVIEW
This action by the City Council is not considered a project pursuant to Section 21065 of the
California Environmental Quality Act.
PREPARED BY:
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
CMR: 154:10
~cb.~~
$USAN BARNES{ Manager
Economic Development/Redevelopment
CURTIS WILLIAMS, Director
Planning and Community Environment
40f5
ATTACHMENTS
Attachment 1:
Attachment 2:
Attachment 3:
Attachment 4:
CMR: 154:10
. Letter from SMC/SVCVB of December 21,2009
CMR 138:10 (February 8, 2010)
Resolution of Consent for inclusion of Palo Alto hotels into the San Mateo
County Tourism Business Improvement District
Letter from SMC/SVCVB re: Joining San Mateo County TBID
50f5
December 21, 2009
Palo Alto City Council
250 Hamilton St.
Palo Alto, CA 9430 I
ATTACHMENT 1
111 Anza Boulevard, Suite 410, Burlingame, CA 94010
650-348-7600 • 1-800-288-4748
Fax 650-348-7687
info@sanmateocountycvb.com • www.visitsanmateocounty.com
Dear Mayor Drekmeier and Members of the Council:
As you know, we began representing Palo Alto hotels and motels in October, 2008, promoting your
properties in the same manner as the properties in the cities we represent as part of ollr TOllrism Business
Improvement District (TBID). We have appreciated your Council's support and we believe that the
relationship has resulted, and will continue to result, in a positive economic benefit for your city. When
we entered into a contract with your city, our hope was that after two years under contract, Palo Alto
properties would become patt of Ollr tourism business improvement district, with no Palo Alto City
money involved.
In these challenging times, ollr desire as a board is to maximize the time our staff spends on selling and
promoting the area as a whole. It is the regional efforts that maximize the return on investment and bring
people i11to ollr properties. What we are tinding lately. however, is that a disprop01tionate amollnt of staff
time is being spent on local Palo Alto meetings, questions, etc.
In an eff0l1 to allow our team to foclls on regional promotion, we voted at Ollr December Board meeting
to spend the next fe\v weeks talking to Palo Alto properties about becoming part of our existing TBID
midway through the second year of our contract with the City of Palo Alto, rather than operating under a
system under which the City of Palo Alto pays for the equivalent of their assessments. Should such a
change occur, it would save your city approximately $120,000.
We will repOIt back to your city staff well in advance of your February 8 council meeting. If the hotels
have an interest and your council wishes to be part of the TBlD (with hotel guests paying for the
assessments, rather than using any city money), it would mean the City of Palo could simply pass a
resolution requesting that Palo Alto be included in the existing TBID. The request would then go to the
City of Burlingame as lead agency for our TBID, to handle all noticing requirements.
We look forward to a continued positive relationship with the City of Palo Alto, We want to commend
Susan Barnes in particular for doing everything possible to promote your businesses and city. It is a
pleasure working with her.
Sincerely,
Ken Landis E~~O~ (tid»
Chairman of the Board (2009) Chairman of the Board (2010)
ATTACHMENT 2
City of Palo Alto
City Manager's Report
TO: HONORABLE CITY COUNCIL 14'
FROM: CITY MANAGER
DATE: FEBRUARY 8, 2010
REPORT TYPE: ACTION
DEPARTMENT:PLANNING AND
COMMUNITY ENVIRONMENT
CMR: 138:10
SUBJECT: Review of Destination Palo Alto Metrics and Direction to Staff to Pursue
Transition to Participation in the San Mateo County Tourism Business
Improvement District
RECOMMENDATION
Staff recommends that the City Council:
1) Review the baseline data, methodology and Destination Palo Alto return on investment
information; and ,
2) Direct staff to explore participation in the San Mateo County Tourism Business
Improvement District operated by the San Mateo County/Silicon Valley Convention
Visitors Bureau.
EXECUTIVE SUMMARY
The purpose of this report is to respond to City Council questions and concerns regarding the
City's return on investment for the City's visitorship effort, Destination Palo Alto. At the
November 2,2009 City Council Meeting, staff was directed to return to City Council within
three months with details of metrics t6 be used to measure performance of the program. This
staff report contains detailed baseline data on transient occupancy tax revenue, occupancy rates,
and total number of hotel rooms for Palo Alto and 7 other area cities. In addition, a specific
estimate is provided for transient occupancy tax revenue generated as a-result of the San
Mateo/Silicon Valley Convention and Visitors Bureau (SM/SVCVB) through Destination Palo
Alto. The period covered in this review is November 2008 through December 2009. The data
indicates the City received $187,061 in revenues, as compared to the $249,000 cost of the
program which includes the $25,000 paid directly to the Palo Alto Weekly (for local
marketing-website, visitors' guides, rack brochure) and operation of the Visitors' Center at the
Chamber of Commerce.
CMR: 138:10 10f6
Since the City Council meeting in November, staff has received communication from the
SM/SVCVB regarding its desire to transition from the existing contract to the inclusion of Palo
Alto hotels into the existing Tourism Business Improvement District operated by the CVB. This
change would result in the hotel guest paying a small increment ($.15 to $1.00) per room, per
night rather than the City providing funds in the Destination Palo Alto contract. Essentially, the
same service level would be provided to hotels through this approach, following up on the
success of Destination Palo Alto. The SMlSVCVB has also indicated continuation of the Palo
Alto Visitors' Center at the Palo Alto Chamber of Commerce. The potential cost savings to the
City would be approximately $60,000 -$120,000 in FY 2010.
BACKGROUND
In October 2005, the City Council directed staff to agendize a Council discussion that would
explore enhancing Palo Alto's economy by improving visitor outreach. In February 2006, staff
convened a committee of stakeholders for a Palo Alto visitorship effort. The committee,
Destination Palo Alto, was chaired by the City Manager and held its first meeting on March 15,
2006. Stakeholders included: the Palo Alto Chamber of Commerce, Stanford Athletics, Palo
Alto Business Improvement District, Palo Alto Weekly, Stanford Visitor's Center, Palo Alto
Online, California Avenue Area Development Association (CAADA), Stanford Shopping
Center, Stanford University, Town and Country Shopping Center, Palo Alto Arts Center and
business representatives from the hotel, retail and hospitality industries.
The goals of Destination Palo Alto included the development of a specific, actionable and
achievable plan that would strengthen visitorship in Palo Alto. Three key objectives included:
1. Attracting more visitors to Palo Alto
2. Promoting return visitorship to Palo Alto
3. EntiCing visitors to stay longer, use additional amenities and spend more money
locally
Staff issued an RFP for visitorship services on April 14, 2008. Staff was directed to include
$240,000 for the Destination Palo Alto program in the FY 2009 proposed budget and $240,000
in the FY 2010 proposed budget.
Based on input from the Administrative Services Department, a formula was identified for
estimating the City's return on its investment for Destination Palo Alto. Based on a 5% increase
in the occupied room days for the five largest hotels in Palo Alto, the growth in revenue was
estimated to be approximately $240,000 yearly. This amount was proposed for two years as a
part of the FY 2009 and FY 2010 budgets.
On October 6, 2008, City Council authorized the City Manager or his designee to execute the
agreement with the San Mateo County/Silicon Valley Convention and Visitors Bureau
(SMC/SVCVB) in an amount not to exceed $455,000 for visitorship services for the fiscal year
2009 and fiscal year 2010.
$25,000 of the total $240,000 contract amount was awarded to the Palo Alto Weekly for an
upgrade of the Destination Palo Alto website ($15,000) and for the provision of two visitor
CMR: 138:10 20f6
· guides ($10,000). The cost of the visitor guides and website upgrade are one time costs. No rate
of return was calculated for this portion of the contract. Thus, in the first year of the contract, the
SMC/SVCVB portion of the contract was only $215,000.
In the second year of the contract, the full amount of $240,000 was allocated for the provision of
visitorship services by the SMC/SVCVB. On November 2,2009, City Council confirmed the
extension of the contract but requested that staff return with a description of the methodology
and specific metrics to be used to quantify the City's return on its investment. The Council also
directed that the contract be amended to provide for a 60-day termination clause by either party
(which has been completed).
DISCUSSION
Staff has collected baseline data from a number of other cities in an effort to address the
questions from City Council. Attached is a spreadsheet that identifies the transient occupancy
tax (TOT) revenue, occupancy rates (when available) and the tot~:tl number of hotel rooms in Palo
Alto, Berkeley, Redwood City, Cupertino, Campbell, Mountain View, Menlo Park and
Sunnyvale (Attachment 2).
Baseline Metrics
Staff analyzed FY2007, 2008, and 2009 data related to TOT revenue, percentage occupancy rates
and number of hotel beds from 8 cities: Palo Alto, Menlo Park, Cupertino, Berkeley, Redwood
City, Campbell and Sunnyvale. The statistical analysis did not identify any significant
differences accounted for by either the presence or absence of a convention bureau, or the rate of
TOT. Overall, the statistical results of the TOT analysis indicated that macroeconomic factors,
especially the downturn in the economy in the Bay Area Region, swamped any other effects.
While no specific inferences can be made from this data, the collection of baseline figures will
allow staff to determine the impact of Destination Palo Alto as the program continues to develop.
Rate of Return
The Destination Palo Alto contract was initiated in October of 2008. Events and hotel room
bookings are planned months and even years in advance. For this reason, the CVB cannot
attribute any hotel bookings to the program for that 2008, therefore the table below begins with
calendar year 2009.
The following table illustrates rooms booked in Palo Alto for 2009, and 2010 (based on bookings
through 12/15/2009). In addition, revenues generated through transient occupancy tax,
secondary impacts (such as sales tax) and costs to operate Destination Palo Alto are detailed.
CMR: 138:10 30f6
Table I
Destination Palo Alto 2009 2010
(Full year estimate) 10
.. Rooms bookedl , 9,900 12,000
Palo Alto hotel room revenue generated by $1,439,559 $1,744, 920
DPA2
... Secondary Revenue· Impact 3 $1,439,059 $1,735,080 .
A. TOT Revenue to Palo Alto from DP A $172,747 $209,390
bookings 4
B. Sales tax revenue 5 $14,314 $17,351
Total TOT and Sales Tax Revenue 6 $187,061 $226,741
Annual Cost ofDPA 7 $240,000 $240,000
C. Return on investment 8 78% 94.4%
D. Rate of Return (without Visitor Center) 117% 142%
The following summarizes some of the key assumptions used to prepare the table (corresponding
to the footnotes):
1. Rooms booked by SMC/SVCVB
2. Average room rate (9,900 x $ 145.41/night = hotel room revenues)
3. Secondary Revenue Impact (retail sales, restaurant sales, services purchased by travelers)
-144.59 per room per day per Smith Travel Research
4. TOTrateofl2%
5. Sales tax at 1 % of retail impacts
6. A+B
7. Amount includes $25,000 to PA Weekly (2009) and $80,000 for Visitor Center at
Chamber of Commerce
8. Ratio of total City revenue to cost ofDPA ($240,000)
9. Data through 12115/2009
10. Contract period is 10 months in 2010
Staff notes that there is an anticipated 21 % increase in total transient occupancy tax, and sales
tax revenue comparing 2009 figures to 2010. This trend is expected to continue as the program
matures and as additional room nights are booked.
The ROR is estimated at 78% for 2009, including the dollars allocated to the Palo Alto Weekly
($25,000) and for the Visitor Center ($80,000). For 2010, the return on investment is projected
at 94% (again including the Visitor Center costs). The figures above assume all room nights
booked become actual room stays, which may tend to overstate bookings. However, this
overstatement is somewhat offset by other revenues not captured in this metric, such as room
night revenue, sales tax and total economic impact generated from leisure travelers generated by
numerous articles and advertisements featuring Palo Alto, and rooms generated by features or
ads in publications aimed at meeting planners.
CMR: 138:10 40f6
Tourism Business Improvement District
Attached to this staff report is a letter dated December 18, .2009 which staff received from the
SM/SVCVB. In the letter, the CVB indicates that inclusion of Palo Alto hotels into the Tourism
Business Improvement District (TBID) which encompasses most of San Mateo County (with
whom Palo Alto would otherwise compete for hotel room bookings without inclusion into the
CVB) would be a more effective way to deliver tourism services in the Palo Alto marketplace.
This was the longer term outlook for Destination Palo Alto when it was initiated.
Should Palo Alto opt into the TBID, the CVB will retain its visitor center presence in the Palo
Alto Chamber office at no additional cost to the City, so service would be uninterrupted.
The CVB proposes that the contract between the CVB and the City of Palo Alto end in April or
May of 2010 (depending on the timeframe for public notifications, etc.) and that the City Council
direct staff to pursue participation in the existing TBID. Inclusion into the TBID would result in
a nominal additional cost to travelers. The range of cost is approximately 15 cents to $1 per
room night based on the projected occupancy of each hotel. Smaller hotels with limited services
and meeting space with lower occupancy pay less than larger, full-service hotels.
The CVB' s TBID has been in place successfully since April of 200 1. Other areas competing for
meetings with TBIDs of their own include San Jose, San Francisco, Santa Clara, Sacramento
County, San Diego and Santa Cruz County. The CVB has already conducted outreach to the
largest four hotels and others in Palo Alto that represent a majority of rooms in the City.
Currently· a number of Palo Alto hotels including the Westin, Sheraton and Dinah's Court have
indicated their support for inclusion into the TBID. The CVB is continuing its outreach arid will
report these outcomes at City Council.
Should City Council determine that participation in the TBID be explored, staff will return to
City Council tentatively on March 8, 2010, with a resolution of intention for inclusion into the
TBID by Palo Alto hotels. The entire TSID inclusion process may take up to 90 days with
notifications. This process is similar to that used to establish the Palo Alto Downtown Business
Improvement District.
RESOURCE IMPACT
The first year of Destination Palo Alto Visitor Program was funded through an allocation of the
City's General Fund for FY 2009. The amount of the funding allocated for the program was
based on the expected growth in hotel occupancy that results from implementation of the
program. The expected growth in occupancy was estimated to be 5 percent, which translates into
$240,000. It is estimated that approximately $187,061 was generated in revenue to the City in
transient occupancy tax and sales tax alone for 2009. The Destination Palo Alto program is a
two-year pilot with $240,000 for the second year allocated as a part of the 2009-11 budgets. If
the contract is ended in April-June, 2010, approximately $60,000-$120,000 of the original
contract amount will not be expended. Staff has recommended the flexibility to terminate the
contract in April or May, depending on the time required for TBID inclusion to ensure
uninterrupted services to the hotels and visitor's center at the Chamber of Commerce.
CMR: 138:10 50f6
ENVIRONMENTAL REVIEW
This action by the City Council is not considered a project pursuant to Section 21065 of the
California Environmental Quality Act.
PREPARED BY:
S SAN BARNES, anager
Economic Development/Redevelopment
DEPARTMENT HEAD: .
CURTIS WILLIAMS, Director
Planning and Community Environment
CITY MANAGER APPROVAL:
ATTACHMENTS
Attachment 1:
Attachment 2:
Attachment 3:
CMR: 138:10
Letter from SMC/SVCVB of December 21, 2009
Baseline data on transient occupancy tax revenue, number of hotel rooms
and occupancy for selected cities
CMR: 386:09 dated November 2,2009: Approval of the Extension of the
Agreement between San Mateo County Convention and Visitors Bureau
and the City of Palo Alto for the Provision of Destination Palo Alto
Visitorship Services in the amount of $240,000 for Fiscal Year 200911 0
60f6
Not Yet Approved ATTACHMENT 3
Resolution No. ---
Resolution of the Council of the City of Palo Alto to Consent
to the City of Palo Alto Being Included Within the Boundaries
of the San Mateo County Tourism Business Improvement
District
WHEREAS, Section 36521.5 of the California Streets and Highways Code
authorizes this City to consent to its inclusion within the boundaries of a Business Improvement
District; and
WHEREAS, it is proposed that the City of Palo Alto be included in the boundaries
of the San Mateo County Tourism Business Improvement District for the purpose of collecting
assessments from commercial lodging facilities (hotels, motels, etc); and
WHEREAS, pursuant to the Streets and Highways Code sections 36500 and
following, the City of Burlingame will hold necessary hearings, provide required notices, and
receive testimony and protests; and
WHEREAS, this City has reviewed the ordinances establishing the San Mateo
County Tourism Business Improvement District, including but not limited to the proposed
district boundaries, assessments, and purposes for the District.
NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as
follows:
SECTION 1. The City of Palo Alto hereby consents to being included in the
boundaries of the San Mateo County Tourism Business Improvement District for hotels and
authorizes the City of Burlingame to take necessary steps and actions to formalize its inclusion in
the boundaries of the District.
SECTION 2. The City further requests that the Burlingame City Council amend
Section 14 of Ordinance 1648 to require an owner or manager of a hotel or property occupied by
a hotel in the City of Palo Alto be appointed to the advisory board.
II
II
II
II
II
II
100210jb 0130565
Not Yet Approved
SECTION 3. The Council finds that this is not a project under the California
Environmental Quality Act and, therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
, City Clerk
APPROVED AS TO FORM:
City Attorney
100302 jb 0130565
Mayor
APPROVED:
City Manager
Director of
Director of Administrative
Services
February 9, 2010
To: Palo Alto Properties
ATTACHMENT 4
111 Anza Boulevard, Suite 410, Burlingame, CA 94010
650-348-7600 • 1-800-288-4748
Fax 650-348-7687
info@sanmateocountycvb.com • www.visitsanmateocounty.com
From: The San Mateo County/Silicon Valley Convention and Visitors Bureau
Re: Joining Existing San Mateo County (Silicon Valley) Tourism Business Improvement District
Dear Property Owners and Managers:
A few years ago, we approached some of the largest properties in Palo Alto with an offer to have Palo Alto hotels
and motels join our tourism business improvement district (TBID). In our TBID, hotels are assigned an
assessment*, which is passed on to guests on the guest folio as a small "tourism fee". These TBIDs are now in
place all over California, including Sacramento County, San Francisco/San Francisco County, Monterey County,
the City of San Jose, the City of Santa Clara, San Diego and, of course, San Mateo County. They have become
commonplace and visitors have become used to paying a tourism or TBID fee.
At that time, it was proposed that instead of joining the TBID, the hotels get representation and sales outreach from
our Bureau, but funded by the City of Palo Alto in a contract. In October of 2008, a contract was signed with the
City of Palo Alto and all promises in that contract honored. We have found, however, that the "strictly local"
meetings, reports and requests are detracting from our sales outreach for our area. We are all about sales and
marketing, and our Board is convinced your properties would benefit far more from joining the TBID.
At a Council meeting on March 8, the Palo Alto City Council will vote on a resolution requesting Palo Alto's
inclusion in our TBID. If approved, the process would take up to 90 days, with Palo Alto properties officially in the
TBID as of Mayor June, but with no assessments passed on until the quarter beginning July 2010, to allow
collection of the fees prior to any billing, so no money would be out-of-pocket.
We have already met with multiple properties in Palo Alto that would have the highest assessments and all five to
whom we have spoken so far support giving the TBID a try, particularly in today's challenging economic times.
(Hotels are notified annually when the renewal process is pending.) We are now reaching out to notify Palo Alto
properties whose assessments would be at much lower levels to let them know this is under discussion.
Enclosed is a list of services we offer. Worth noting for smaller properties are the opportunities we provide in
terms of generating editorial about the area, leisure room nights, film crew leads and tour and travel. In addition, a
general rule of thumb is that,even when we book a large conference into an area hotel, 20% of the attendees will
book elsewhere in the area, "outside the block", in order to get a lower rate. Large meetings usually also generate
overflow rooms for smaller properties. Please let us know if you have any questions or concerns prior to March 80
Thank you!
Sincerely,
Anne LeClair
President & CEO
* According to our calculations, since your property has over 20 sleeping rooms, if your occupancy is at 60%, your assessment
would be covered with a tourism fee of 15 cents per night. The fee is adjustable. So, if your occupancy were at 30%, you
could pass on a fee of30 cents per night. (All of this is explained in documentation that goes out to participating properties.)
111 Anza Boulevard, Suite 410, Burlingame, CA 94010
650-348-7600 • 1-800-288-4748
Fax 650-348-7687
info@sanmateocountycvb.com • www.visitsanmateocounty.com
Your best contacts for questions about:
Sales efforts in general/how small properties benefit most: Teipo Brown teipo@smccvb.com
Billing/payment process: Gina Allhands gina@smccvb.com
General Questions: Anne LeClair AnneL@smccvb.com
Office Number: 650-348-7600
that could be sent to bidders bidding Palo Alto construction projects to evaluate differences· in
benefits and work conditions present at contracting companies paying or not paying prevailing
wage on their projects. This report presents the details of the recommended prevailing wage
study.
BACKGROUND
As a charter city, Palo Alto is not required to pay prevailing wages on "public works" projects,
so long as the projects are within the realm of "municipal affairs", funded entirely by local funds,
and no other statutory exceptions apply. This "home rule" principle allows decisions on
expenditure of local funds to be made by locally elected officials. In 1981, Palo Alto passed a
resolution to pay prevailing wage, "only when required by federal or state grants and on other
jobs considered to be of statewide concern." (See Attachment B).
Recently, charter cities' power to opt out of state prevailing wage law was upheld by California's
Follf$ District Court of Appeal in State Building and Construction Trades Council of California
v. City of Vista, (2009) D052181. In 2007, the City of Vista (Vista), a charter city like Palo Alto,
adopted an ordinance under which City contracts generally would not require payment of the
prevailing wage. The Court held that state prevailing wage laws were intended ''to keep state
contracting from undermining what local markets have established." However, because an
ordinance like Vista's would not materially interfere with the stability of the area's labor market,
the effect of ordinances like Vista's were not a matter of statewide concern. Therefore, the court
_:held that charteLcities, like Vista and Palo Alto, retain the pow_er to_opt out of the_state's
prevailing wage law. The State Building and Construction Trades Council of California intends
to petition the California Supreme Court to review this case. In the meantime, the Vista decision
is still good law, and it affi~s the City of Palo Alto's right to opt out of paying prevailing wage.
Also relevant is SB 9EX, which the Governor Arnold Schwarzenegger signed on February 20,
2008, noting the (then) ongoing litigation in Vista. SB 9EX narrowed potential prevailin.g wage
obligations for charter cities involving work on water, sewer, or storm drain systems that have
previously been extended to disadvantaged communities.
Amid the recent debate over charter cities' prevailing wage requirements, on December 9,2008,
staff presented to the Council and the P&S Committee a recommendation that Council not
change current prevailing wage policy, allowing City capital construction ("public works")
projects to be bid without prevailing wage requirements unless prevailing wage is required for
the project pursuant to state or federaLlaw, due to potential cost impacts to the City's General
and Enterprise Fund Capital Improvement Program (CIP) Projects (CMR 443:08, Attachment
C). The Committee carefully reviewed this recommendation and decided it was in the best
interest of the City to recommenct to the full Council that a resolution be adopted requiring
prevailing wage on all City capital construction contracts. The P&S Committee also instructed
staff to recommend types of construction contracts that could be considered for exemption from
a prevailing wage requirement. Minutes of the December 9th P&S Committee meeting is
Attachment D.
On March 10, 2009, staff presented to the Council's Ad Hoc Committee on Prevailing Wage
proposed exemptions from the possible prevailing wage policy discussed at the December 9,
2008 P&S Committee meeting. The possible exemptions reviewed with the Ad Hoc Committee
were:
CMR:151:10 Page 2 of6
1. Maintenance projects under $250,000 as defined by Section 22002 of the California
Public Contract Code;
2. Projects using public-private partnership funding;
3. Projects that construct/rehabilitate affordable housing for people with low or moderate
incomes; and
4. Projects where the work is performed either entirely or partially by volunteers.
A detailed discussion of the above staff recommended exemptions can be found in the
CMR:150:09, Attachment E. At the March 10th meeting the Ad Hoc Committee on Prevailing
Wage recommended that Council. approve the staff recommended exemptions for projects where
the work is performed entirely by volunteers and for low and moderate income housing projects.
Minutes of the March 10th meeting are Attachment F.
The Ad Hoc Committee asked staff to come back to the full Council with additional information
on possible exemptions for maintenance projects and projects involving public-private
partnerships, as well as clarification that the proposed exemption for affordable housing would
apply unless otherwise required by law. Speci:&cally, the Ad Hoc Committee asked staff to
present justification for the proposed $250,000 threshold for maintenance projects that is
reflective of the dollar value of most maintenance contracts and not tied solely to the $250,000
threshold cited in Section 2.30.210 of the City's Municipal Code for Public Works projects
requiring City Council approval. The Ad Hoc Committee also asked staff to develop criteria for
exemptmg pubbc-pnvate partnershIp projects that reflects the amount of CIty fUridmg m these
projects and addresses project administrative responsibilities.
At the June 29, 2009, P&S Committee meeting staff recommended that the Committee
recommend that the City Council retain its current prevailing wage policy, allowing City "public
works" construction projects to be bid without prevailing wage requirements unless prevailing
wage is required for the project pursuant to state law, in light of the City'S current economic
difficulties and to avoid additional cost impacts to the City's General and Enterprise Fund CIP
projects. At that time staff also recommended a pilot study of potential prevailing wage impacts
be conducted on selected CIPs where prevailing wage would be required, to determine whether
the prevailing wage requirement impacts the number of bids, project costs, change orders and
other factors. At this meeting staff also presented additional information on a possible
exemption for maintenance projects less than $250,000 and another possible exemption for
Public-Private Partnership projects where the private party is the lead entity funding 50% or
more of the project cost and manages the project design and construction. CMR:236:09
(Attachment G) contains a full discussion of the prevailing wage topics presented at the meeting
on June 29. At this meeting the P&S Committee voted unanimously (with Committee member
Yiaway Yeh absent) to defer the prevailing wage Ordinance for one year and direct staff to study
the issue using pending projects to achieve constructive data.
The P&S Committee Chair also confirmed that staff would come back to the P&S Committee
with the study criteria within a couple months and then within a year with final results. Minutes
of the June 29 meeting are Attachment H.
At the December 17, 2009 P&S Committee meeting, staff presented proposed prevailing wage
study criteria that the P&S Committee could recommend to the City Council. The staff
recommended study criteria would center on the following two areas:
CMR:151:1O Page 3 of6
• Performance of a pilot study of potential prevailing wage impacts on selected CIPs where
prevailing wage would be required to determine whether the prevailing wage requirement
impacts the number of bids, project costs, change orders and other factors; and
• Development of a survey to be submitted to all bidders on Palo Alto construction projects
that would be used to evaluate differences in benefits and work conditions at contracting
companies paying or not paying prevailing wages.
At the December 17 meeting, the P&S Committee moved to recommend that the City Council
accept the above staff recommendations with the following additional requests:
• Staff should reevaluate the proposed survey questions presented at the December 17
meeting to explore the core issues of wages and the nature of worker benefits;
• Staff should conduct a post study evaluation of completed work for quality, cost and
schedule control on projects using and not using prevailing wage;
• Staff should also survey sub-contractors bidding on Palo Alto construction projects;
• The City Manager should convene with the City Attorney to determine how the survey
can be distributed at bid time; and
• A question on construction company training programs should be included in the survey.
The P&S Committee Chair Sid Espinosa also requested that the prevailing wage staff report to
Council remove any discussion of a potential 5% to 10% cost impact to CIP projects as the
purpose of the study will be to verify if there are any cost impacts on projects the City bids.
CMR:472:09 (Attachment I) contains a full discussion of the prevailing wage topics presented at
the December 17 meeting.
DISCUSSION
Since the December 17 P&S Committee meeting, the City Attorney has opined that a contractor
survey may be sent to all contractors and sub-contractors bidding on Palo Alto construction
projects. The surveys should be sent after bids are opened, in order to preserve the integrity of
the bid process. A survey cannot be required as part of the invitation for bid (IFB) contracting
process on CIP projects.
Study of Selected CIP Projects
Next fiscal year's CIP will include some projects that could be separated into two contracts, one
with prevailing wage and one without. These projects will need to be of similar size and scope
to ensure comparable bid price data. The projects would be bid in late spring in anticipation of
funding with the adoption of the 2011 Capital budget. Some of the projects staff will consider
using this approach includes:
• Annual street maintenance projects;
CMR:151:1O Page 4 of6
City Auditor Lynda Brouchoud agreed that the City Clerks office could
serve the function. The most recent amendment to the contract did
address the issue. This contract serves as another Council Appointed
Officer (CAO).
Mr. Keene said the existence of one CAO did not eliminate the
responsibilities of other CAO's and did not create immunity. He quoted
Article 3, Section 6 of the Charter to explain the duties of the City
Manager in relation to contracts.
Council Member Kishimoto was happy there was consensus. She
suggested a change to Staff's recommendation to reflect that Council
should approve contract management and that receipt and distribution
of the Police Auditor Report will be done through the City Clerks Office.
Mr. Keene said that the Independent Police Auditor will supply the City
Clerk with their report and the City Clerk will immediately distribute it
to the Council.
MOTION: Council Membel Kishimoto moved, seconded by Council
Member Barton that the Police Auditor will provide their reports to the
City Clerk to immediately distribute to the City Council.
Chair Espinosa said that the Committee requested that Staff debate
the pros and cons of this process. He said Staff provided a very
strongly worded report on the one side of the argument. He didn't feel
they had received information on both sides of the issue.
MOTION PASSED: 3-0, Yeh absent
Council Member Kishimoto asked for clarification regarding the Police
Auditor's role in the racial profiling issue.
Assistant to the City Manager, Kelly Morariu said the contract
amendment stated that the Police Auditor would audit policy, training
and practices, and some demographic data collection. They would not
perform additional demographic data analysis.
Council Member Kishimoto said the Council should consider requesting
the Police Auditor add that to the contract.
Chair Espinosa said that could be discussed in 2010.
Policy & Services: 091217Working 2
'questionnaire out at that time would jeopardize the process. Staff
would take the list of bidding contractors and send the questions out
to contractors following the contractor selection.
Council Member Barton said that needs to be reviewed again by the
Attorney.
Mr. Sartor said they suggested a sealed package to be opened by
contractors after the bid was awarded, but the City Attorney did not
approve the process.
Council Member Kishimoto said this was cost versus benefits. She
asked how the packets would be evaluated in terms of the numbers of
bidders. She said they should measure quality.
Mr. Sartor said that was more, of a qualitative question. The questions
being proposed would shed light on the quality of construction.
Council Member Kishimoto questioned the accuracy of determining the
quality of the construction work by the questions.
Mr. Sartor said if they have worked Palo Alto before, they would be
aware of Palo Alto's standards.
Council Member Barton added that Staff would want to know if they've
worked in Palo Alto before to gauge an increase in the size of the
bidding pool.
Council Member Kishimoto asked if there was a way to look at total
compensation to the workers.
Mr. Sartor said with the prevailing wage requirement they would be
bidding on the worker pay scale. The question about which benefits
are provided will allow Staff to evaluate additional compensation.
Council Member Kishimoto said the level of expertise should be
defined.
Mr. Sartor said contractors who are familiar with Palo Alto standards
for construction will have that quality already.
Council Member Kishimoto said the contractor can bid whether or not
they've had experience in Palo Alto.
Policy & Services: 091217Working 4
Mr. Sartor agreed and said Staff had to ensure contractors followed
standards.
Council Member Kishimoto asked if Palo Alto standards were different
from other municipalities.
Mr. Sartor said they were typical for the Bay Area, though higher than
municipalities outside the Bay Area.
Chair Espinosa asked what buckets Council Member Kishimoto wanted
to organize the questions in.
Council Member Kishimoto defined them as benefits to workers, cost to
the City, and quality of work.
Chair Espinosa said Council will be concerned about the cost to do the
study.
Council Member Barton said it was similar to Council's vote to study
the externality costs of environmental issues.
Chair Espinosa said the wording was that it could be 5%-100j~-higher;
implying that there were resource costs not yet understood.
Council Member Kishimoto said Council will request that Staff leave out
that 50/0.
Chair Espinosa the goal of the study was to solve these logistical
issues and that there were arguments on both sides. He said the
survey needs to be looked at in terms of process and what needs to be
learned. .
Council Member Kishimoto asked if wording should be added requiring
sub-contractors complete the surveys.
Mr. Sartor said the prime contractor was required to list their subs, so
the survey would go out to both.
Council Member Kishimoto asked if prevailing wage applies to the sub-
contractors.
Mr. Keene asked about the total change orders and additional costs at
close out. He asked if they could be added.
Policy & Services: 091217Working 5
Council Member Yeh arrived at 6:48.
Mr. Sartor indicated that Mr. Struthers made that suggestion as a
mechanism for evaluating quality.
Mr. Keene asked if they could be added.
Mr. Sartor said they wouldn't be part of the questionnaire but they
could be included at some pOint.
Mr. Keene asked if patterns regarding pay scale and other social
concerns such as minority representation should be addressed in the
survey.
Chair Espinosa clarified that these measurement suggestions should be
included in a follow-up Staff Report.
MOTION: Council Member Barton moved, seconded by Council
Member Yeh that the Policy and Services Committee recommend that
Council direct Staff to perform a pilot study of potential prevailing
wage impacts on selected Capital Improvement Projects to determine
. whether the prevailing wage requirement impacts the number of bids,
project costs, change orders and other factors.
Council Member Barton moved, seconded by Council Member
Kishimoto that the Policy and Services Committee recommend the
Council accept the staff recommendations with the following additional
requests: 1) Staff should revaluate the survey questions to explore the
core issues of wages and the nature of benefits; 2) a post study
evaluation of completed work for quality cost and schedule control
should be included; 3) sub-contractors should be included in the
survey; 4) the City Manager should reconvene with the City Attorney
to determine how the survey can be distributed at bid time; and 5)
training should also be included.
Chair Espinosa requested that the measures discussed here should be
incorporated into the next Staff Report, the impact should be studied
and the 5% should be removed.
MOTION PASSED: 3-0, Yeh Abstained
4. Recommendation for Council Approval of the City's 2010 Federal
and State Legislative Priorities and Overall Legislative Action Program
Structure
Policy & Services: 091217Working 6
Assistant to the City Manager Kelly Morariu said the overall Legislative
Program structure had been refined. Staff requested the Committee's
comments on the legislative process. A few minor changes had been
outlined in Attachment D. Staff had taken input from the City's
Federal legislative advocacy firm, the Executive Team and other Staff
Members who have been involved in the process, and put together
some Federal legislative priorities which were included in the Staff
Report. With the Committee's approval, Staff was planning to bring
the program before Council in January in conjunction with the Utilities
Department legislative program.
Council Member Barton commented on the different relationships
between the federal program and state program. He commented on
broadband-cable-telephone-wireless issues as they related to the tax
base. He questioned how competition should be addressed at the
federal level. He also stated that the San Francisquito Creek issue
should be addressed more specifically as part of the appropriations
request.
City Manager James Keene said they 'Nere guiding principles.
Council Member Kishimoto said that Staff should look at liberal
communities and climate change. Smart Grid straddles broadband,
and should be considered. Positioning Palo Alto as a model city should
be mentioned.
Council Member Barton suggested finding a way to build innovation in,
and to leverage the brand.
Mr. Keene agreed with the suggestions. He added that the Federal
lobbyists made the same point in relation to competing for Federal
funds.
Council Member Barton suggested working with private industries to
accomplish the goal.
Ms. Morariu said that was something the Council would like as an
overall principal.
Council Member Kishimoto agreed they should add the public-private
partnerships to the procedure.
Chair Espinosa commented that progress was being made in this
Policy & Services: 091217Working 7
program. He said it's important to clarify the role the Council will play,
and it's being mentioned more, but it should be thought through more
than it has.
Council Member Kishimoto said that guidelines for High Speed Rail
have been developed and the role of the legislature is to respond
quickly.
Chair Espinosa said creating a flow chart would be a good idea.
Community engagement should also be added. There should be
triggers that instigate community involvement. He asked about the
next steps for understanding what the lobbyist's work plans were.
Ms. Morariu asked for suggestions on what that would look like.
Mr. Keene asked for timing suggestions. He said that every year there
should be a work plan with priorities defined.
Chair Espinosa said the most important priority should be identified.
Ms. Morariu said Council will help define that in January.
Chair Espinosa said that community partners could help reach
legislators with certain appropriations requests.
Ms. Morariu said the Federal lobbyist had recommended a trip to
Washington in early February.
Chair Espinosa said it should be up to the new Council, but they will
have to have the conversation quickly. It's incumbent on the lobbyists
to inform Staff soon about issues that are important to give them time
to prepare a response for when Palo Alto visits them.
Council Member Kishimoto asked if Palo Alto had a State Lobbyist.
Mr. Keene said the City does not.
Council Member Kishimoto suggested the City prioritize their goals
with the Cities Association. High Speed Rail could be prioritized to
have more of an impact.
Council Member Barton suggested creating an organization of Cities
that shared Palo Alto's view, such as a coalition of green California
Cities. A small group of Cities with a relatively small amount of money
Policy & Services: 091217Working 8
can accomplish much with the nimble nature of such a group.
Chair Espinosa agreed with Council Member Barton's suggestion, with
the exception that they were competing with some of those cities for
much of the project funds. He also discussed the process for
determining when Palo Alto will connect with other organizations to
join forces to leverage lobbying resources.
Council Member Kishimoto said that under Guiding Principles they
should add "proactive advocating on behalf of the City, taking a
proactive role in working with Federal and State legislatures, League of
Cities,and CPA or other partners."
Council Member Yeh said another area with dollars available was the
Low Carbon Cities Initiative between China and the U.S. The other
Bay Area Cities participating in the program were Oakland and
Berkeley. He talked about the importance of familiarizing Staff with
that process, without taking too much of their time.
MOTION: Council Member Kishimoto moved, seconded by Council
__ MembeLBartQn that the Policy and Services Committee recommend
approval of the 2010 State and Federal legislative Priorities with
changes recommended by Staff, and the additional bullet under
Overall Guiding Principles, and promoting Palo Alto's role as a leader.
Chair Espinosa said the three bullets were; 1) positioning and branding
ourselves as an innovation leader to lead on certain policies, 2) taking
a proactive step to building a coalition of cities to leverage resources,
and 3) thinking about broader community engagement. He said that,
if Staff understood the three bullets, the motion was fine.
Council Member Kishimoto added that Smart Grid needed to be added
under Federal, and asked about High Speed Rail.
Mr. Keene said he wanted to define how proactive the City should be.
Chair Espinosa said it would be good to call that out in a Staff Report.
There will be an evaluation of the committee assignments in the
following year. The State approach needs to be driven through the
League; we would like to see them be decisive.
Ms. Morariu suggested that should be called out under the role of
Council in the program manual.
Policy & Services: 091217Working 9
Chair Espinosa agreed but added the principals will already have been
assigned at that time. The Mayor will need to recognize the impact
this will have in the overall strategy.
Mr. Keene added that the overall guiding principles don't have this
detail. It may be beneficial to recognize the state was broken and
determine the importance of advocacy for State reform.
MOTION PASSED: 4-0
5. Discussion and Recommendation to Council of a Structure for
Policy and Services Committee to Provide Feedback on Prioritizing
Major Issues
City Manager James Keene said the role the Committee should play
can help structure the Council Agenda. The smaller forum of the Policy
& Services Committee would be ideal to have discussions about
priorities.
Assistant to the City Manager Kelly Morariu said that ultimately the
. .::City'sjob.uwas to CI eate public value. Tllecolltext of that was the Staff
and Council's capacity, another component was the authorizing
environment, and how does the organization and Council find that spot
where all the pieces come together. The authorizing environment
creates added processes and a greater need for additional capacity.
The City needs to find a balance and understand how that environment
impacts Staff's time.
Mr. Keene said the Council Agenda process was the collection of things
Staff and Council were trying to do to create or protect public value.
There is no systematic vehicle for matching the capacity to deliver
those items.
Ms. Morariu used the California Avenue Tree Incident as an example to
show the number of Staff that were needed to work on a situation.
She noted how all of the Staff that had to work on this still had their
original workload to accomplish in addition to this new project. She
said that the impacts can be seen around the organization. She said it
has been difficult for Staff to communicate these impacts to Council
and the community, and Staff would like some suggestions. Staff
would also like to discuss how projects are prioritized as they come up,
and how to evaluate the accomplishments from the previous year.
Mr. Keene. added that it's not very effective to have this conversation
Policy & Services: 091217Working 10
at the Council Meetings. The smaller scale of this committee created a
different type of conversation.
Chair Espinosa said the Policy & Services Retreat will help move this
forward. This conversation was about how to help Staff in their work
and how to help the City operate better. He said the Committee can't
dictate action to Staff without the approval of full Council. He said the
broader objective was to have a sounding board for priorities and how
they compete. He wasn't sure how that could happen with Policy &
Services. He said that was something they needed to figure out, if it
was the goal.
Mr. Keene said there was a process to create new projects or direct
new work. But there was no process to take anything away.
Chair Espinosa said he understood that was what Staff was asking for,
but he voiced concern about whether or not Policy & Services would be
able to help. He felt that the full Council should be the mechanism for
taking priorities away.
_ Mr. Keene !;~id that perhaps the role of Policy & Services needed to be
redefined. Perhaps Policy & Services should deal with delivering the
services that are being financed by the Finance Committee. He said
that often new tasks didn't get prioritized at all or they move up to a
high priority and other items fall to the bottom of the list. The Policy &
Services Committee could be in a position to communicate to Staff
what the priorities are.
Council Member Barton said that Policy & Services was underutilized.
He said Council had learned to trust the Finance Committee to digest
the budget. They could learn to trust Policy & Services with this type
of work as well. It would be helpful for Staff if Policy & Services looked
at overarching work plans each month. They would not change
Council priorities, but they could discuss goals and capacity. The
policy on colleague's memos had not been followed. There was no
analysis behind them for Council to discuss around. He suggested that
Policy & Services could be more involved with that. The Policy &
Services Committee can· also serve in a "policy scheduling executive
committee" role. He encouraged Staff to be more forward with their
vision of what Policy & Services could be and how they could help
Staff.
Council Member Yeh suggested that crisis response pulls immediate
resources which are different than procedures for normal priorities. To
Policy & Services: 091217Working 11
have clarity as it relates to resource impact was very important. The
See It site had many projects in it, and could be utilized more.
Ms. Morariu said there was an internal See It site available that was
more of a work load management tool but Staff hasn't taken
advantage of that feature yet.
Council Member Yeh said it should be used more. The Policy and
Services Committee should deal with some high-stakes issues much
like the Finance Committee does. Delegated authority, such as annual
prioritizing in January, could be beneficial for Staff.
Council Member Kishimoto said the Finance Committee was the holder
of the budget. We. are the holder of public value. Regular
presentations can help highlight the See It site. The SEA report could
be used more. Using these tools that we already have in place would
help prioritize. The climate plan was already on See It. See It could
be used like a dashboard for the Policy and Services Committee.
Mr. Keene said that it's an interesting idea. There weren't policy
--discussions on the olganization. Selvices that Council would want to
be protected should be discussed. The whole communications plan
and capacity for connecting with the community regarding our goals, is
an area that needs work. If the City doesn't have effective
communications vehicles, we won't have the support and trust.
Council Member Kishimoto said the City Clerk maintains a ten-week
agenda that could be used as a tool. Council had been frustrated
because some of the topics aren't seen by the Council. She suggested
a mechanism for the entire Council to vote on priorities, perhaps by
using that ten-week agenda.
Council Member Barton spoke regarding the work plan document
saying it had value to the public. When a new idea comes from Staff
or Council, where it fits in is critical to know.
Mr. Keene said the building of departmental work plans was critical. It
was appropriate to have a vehicle to discuss that with the Council. He
said that transparency wasn't just openness; it was meaningful
openness. They need to explore the City's proposal for High Speed
Rail as well as how Staff can deliver without harming other projects.
Chair Espinosa said it will take a shift in the way Council thinks of this
Committee's role. He suggested that Staff continue to develop their
Policy & Services: 091217Working 12
idea of the role Policy & Services should have.
Council Member Kishimoto reminded everyone that they should refer
to the Charter.
Espinosa said a clear plan should be put together for Council.
Council Member Barton said a retreat would be a great place to start
the process.
6. Review of 2009 Policy & Services Items
Assistant to the City Manager Kelly Morariu discussed the agenda
items that came before the Policy and Services Committee in 2009.
She said the Committee reviewed the Council Procedure Changes. The
work plan had one item that did not get back to Committee, the Social
Networking policy, which was drafted. However, there were some
legal issues which needed to be resolved first before it came back to
the Committee.
7. Discussion of Upcoming Meetings and Topics.
Council Member Barton said that Google Wave should be looked at
during the social networking conversation.
Council Member Kishimoto said Open City Hall should be continued and
used for the social networking.
Mr. Keene suggested it might be a good survey tool for advanced input
on budget issues.
Ms. Morariu said Open City Hall was linked on the City website now.
Council Member Kishimoto asked if there was a process for distribution
of emails on this topic.
Mr. Keene said there was no constituent relationship management
system.
Council Member Yeh said that the list of neighborhood associations
should be plugged into this somehow to help issues from specific
neighborhoods come up in a constructive manner.
Ms. Morariu said that having a more formal process to bring
Policy & Services: 091217Working 13
neighborhoods into the City process was on the work plan.
Chair Espinosa said that issues. like packet distribution, and liaison
relationships with the community will need to be looked at.
Council Member Kishimoto asked for packets one or two days earlier.
She also suggested a formal council liaison for PAN.
Adjourned at 8:29.
Policy & Services: 091217Working 14
wage discussion to the Council Policy. and Services Committee (see Attachment B, minutes of
September 17, 2007 Council meeting). '
What are Prevailing Wage Rates?
The intended purpose of prevailing wage law is to ensure that public construction projects do not
lower local wages by allowing contractors to pay' wages below the local standard. In 1931,
Congress passed the Davis-Bacon Act, which mandated the payment of prevailing wages on all
construction projects that receive more than $2,000 of Federal funds -an amount that has
remained unchanged today. In subsequent years, especially during the Great Depression, many
states and localities passed similar prevailing wage laws. Most states, including California, now
have such laws.,
Prevailing wages are determined in many different ways across the' country. The Federal and
California Prevailing Wage calculations are similar because if more than 50% of the workers
make the same wage this becomes the prevailing wage for the trade. They differ in the
calculation when less than 50% of the workers have the same wage. The Federal Law
determines the prevailing wage by averaging all the wages, whereas in California the most
common wage occurring becomes the prevailing wage. California's calculation method usually
results in a slightly higher wage than the Federal calculation method.
California passed its prevailing wage law in 1931, the same ear the federal Davis-Bacon Act._
was passe . 1 orma Labor Code § 1771 requires that any "public works" project that receives
more than $1,000 in state funding pay prevailing wages. The Labor Code dermes "public
works;' to include construction, alteration, most demolition, installation or repair work done
under contract and paid for in whole or part out of public funds. All capital improvement
projects done by the City, including those managed by the Community Services, Utilities or the
Public Works Departments are considered "public works" under this law. Although California's
prevailing wage law applies to all of California's "general law" cities, charter cities are permitted
to elect whether to pay prevailing wage on locally funded public works projects that qualify as
municipal affairs.
DISCUSSION
. Prevailing Wages in Charter Cities ,
The California Labor Code require$ that public agencies pay prevailing wages, as determined by
the California Department of Industrial Relations, on most public works projects. As a charter
city, Palo Alto is not required to pay prevailing wage rates on "public works" projects, so long as
the projects are within the realm of "municipal affairs'" are funded entirely by local funds, and
no other statutory exceptions apply. This "home rule" principle, grounded in the California'
Constitution, allows decisions on expenditure of local funds' to be made by locally elected
officials. Utilities Enterprise Fund projects are often deemed to be "public works" projects in
this context.
Since no precise definition of what constitutes a "municipal affair" has been judicially settled,
courts consider the issue on a case by case basis. The expenditure of city funds on local projects
and th~ rates of pay of the workers the City hires to carry out such projects has been held to be a
municipal affair. In 1981, Palo Also passed a resolution to pay prevailing wage "only when
required by federal or states grants and on other jobs considered to be of statewide concern."
(See Attachment A: Resolution 5981).
CMR:443:08 Page 2 of8
· '
Recently, courts have blurred the issue of whether a charter city may elect not to pay prevailing
wage. For example; in 2004; the California Supreme Court in City of Long Beach v.DIR,
declined to decide whether p~vailing wage law is such a matter of statewide concern that it
should override the ability of charter cities to conduct their municipal affairs. Since then, labor
unions have mounted a statewide campaign to overturn existing law and declare prevailing wage
a matter of state, concern. The charter city of Vista is <:urrently defending its choice not to pay
prevailing wages in a lawsuit brought by the State Building and Construction Trades Council.
Although the trial court reluctantly ruled in favor of Vista in December 2007, the case is pending
on 'appeal. A detailed summary of the case is included in this report's discussion below.
These recent judicial developments led the City Attorney to recommend that Palo Alto pay
prevailing wages on regional projects that transcend the city's geographic boundaries, even if
these projects could be considered municipal affairs. Capital improvement projects related to the
City's Water Quality Control Plant (WQCP) fall into this category. Some Charter Cities have
created special categories where they do not pay prevailing wages on low-income housing and
maintenance type projects, but do pay prevailing wage on construction projects. To date, Palo
Alto has not made this distinction.
Summary of Staff Research
Staff found that there is considerable disagreement on the impacts of prevailing wage· rates on
project quality found in studies cited by the union groups and builder trade groups. Studies by
"government agencies, however, concluded that paying prevailing' wage rates do not significantly
change the quality of construction on most projects.
In a survey of contractors, it was reported that requiring the payment of prevailing wage rates
could reduce the quantity of bidders on projects by about 20% percent. Most contractors that are
not paying prevailing wages, which make up about 50% of the' contractors responding to the
survey, will bid prevailing .wage contracts. In the majority of cases, the makeup of their
workforce does not change to accommodate prevailing wage requirements.
In its ,surveys of both contractors and other cities, staff found that implementing prevailing wage
rates in construction contracts may increase construction costs' on City capital iniprovem~nt
contracts by up to 10%. This increase would also affect projects involving private/public
partnerships.
The following sections present a summary of the studies related to prevailing wage reviewed by
staff and the results of surveys of other cities and contractors. The pending City of Vista case
related to the charter city exemption from prevailing wage is also discussed below.
Studies on the Effects of Prevailing Wage
A number of academic and government studies have examined the costs and benefits of
prevailing wage. Generally, these studies fall into three different camps:
Pro-prevailing wages studies, issued by University-level academics, and conStruction
trade organizations.
Anti-prevailing wage studies, issued by University-level academics, and various policy
institutes. '
Government studies, issued by the States of Ohio and Kentucky legislative commissions.
CMR:443:08 Page 3 of 8
Staff reviewed seventeen such studies, both pro-prevailing wage and anti-prevailing wage, and
studies prepared by government organizations. Summaries of these studies are included in the
attached memorandum dated ~ebruary 15,2008 (Attachment C).
Studies by government organizations provide some of the most interesting insight into the issue
of prevailing wage. These studies should, in theory, have no ag~nda beyond uncovering what is
in the best interest of taxpayers. All of the studies examined indicated that prevailing wage laws
do not save money .. Some studies did, however, equivocate about whether the benefits of
prevailing wage -once other unquantifiable factors were taken into account -. may be higher
than the costs.
The two most-referenced government studies are both studies conducted by state legislative
research offices, in Kentucky and Ohio. In Ohio, its Legislative Service Cortunission issued a
study analyzing the effect of a 1997 bill that exempted school districts from being forced to
require prevailing wage. The study, which asked contractors for bids under and not under
prevailing wage conditions, found that repeal did save money -especially on smaller projects.
It asserts that the exemption yielded 1.2 percent in total cost savings in new construction, 10.7
percent savings on building alteration projects and 19.9 percent savings on building additions.
This conclusion seems to strongly support the notion that the smaller projects have greafer
savings when prevailing wages are not required.
---------=-~----~~~----~~~~~~~--~~~~~~--~--Furtheimore~ the study surveyed school districts to discover if they had noticed any decrease in
the quality of construction. Six percent of respondents said that they had noticed higher quality
construction since the exemption, 91 percent noted no change and 3 percent said quality had
decreased.
In one very unique case, the survey discovered that one school district had put a project out to
bid under prevailing wage conditions and then rebid the project without such requirements. The
winning bidder in the second case, without prevailing wage, was 5.8 percent lower; yielding a
cost savings of more than $500,000 .
. In Kentucky, the legislature also ordered its research arm to· study the issue of prevailing wage.
The study made a notable number of findings, including learning that 60 percent of workers
surveyed were paid more on prevailing wage jobs than on market-rate jobs; the average increase
for prevailing wages was 24 percent over the workers' market rates. Among the 141-page
report's other findings were:
• 90.7 percent of non-union and 24.4 of union contractors said prevailing wage laws raise
construction costs.
• 55.4 percent of small firms (10 or fewer employees) said prevailing wage laws have a
negative effect on their business, compared to 73 percent of large firms.
• 95.7 percent of cities and 83.3 percent of municipal utilities that responded believe
prevailhig wage laws increase construction costs, while, respectively, 7 and zero percent
believe laws increase quality.
• More cities believed prevailing wage legislation decreases -not increases -quality of
construction.
It is worth noting that the report did not call for the abolishment of prevailing wages in
Kentucky. The report did not take an opinion on the issue. Its main overall conclusion on the
effectiveness of the legislation, however, is as follows:
CMR:443:08 Page 4 of8
To the extent that quality is increased, prevailing wages are an inefficient method
to increase qUality. The wage requirement results in contractors paying higher
wages with no guar8:Iltee that these additional wages will result in· quality
improvements.
Aside from the Kentucky .and Ohio reports, there are a number of smaller government reports on
the topic. The Federal Congressional Budget Office (CBO) and General. Accounting Office
(GAO) have both issued reports on prevailing wage, with the GAO 'asserting that repealing the
Davis-Bacon Act would save $1.2 billion annually. The CBO study, written during the early
1980's, was likely the impetus that caused.the Reagan Administration to change the definition of
prev8iJ.ing wage to the wage earned by 50 -as opposed to 30 -percent of local wageeamers .. It
found that repeal of.Davis-Bacon would save $13 billion (2007 dollars) over five years and that
some 20 percent of opt!n shop. contractors have no interest in bidding on prevailing wage
contracts. It also recommended raising the threshold at which the prevailing law is triggered, as
the $2,000 trigger"was set in 1931 and has never beeri increased.
The final government study of note is another state legislative study -Maiyfand "in this case -
conducted in 1997. Maryland's Department of Fiscal Services, which issued the study, asserted
that repeal of the prevailing wage 'aw then. on Maryland's books would save the state· between 5
and is percent on public works construction ..
surVey· ofCaliforilia Cities
To further exa:mine the policies of other California municipalities regarding prevailing wage law,
staff surveyed dozens of other cities on the topic. The survey was sent out to all members of the
Association of Bay Area Governments, as well as to all Charter Cities that had email addresses.
available. Forty-eight municipalities responded to the survey. Usually, the respondents were
public works offiCials, though afew citY managers replied as well. A short summary of the
findings follows and ~e more detailed results are included in' Attachment C.
• 42 of 48 .cities surveyed pay prevailing wage rates.
• 26 out of 32 Charter Cities pay prevailing wage rates.
• Based on the survey. results, staff estimates that paying prevailing wages may increase
construction costs in the range of 5% to 10%.
• A large majority' of the respondents believe that paying prevailing wages does not
increase quality of the work.
• Most believed that requiring prevailing wages decreases the number of bidders on
projects. .
• Some cities have exceptions to paying prevailing wages for certain· types of contracts.
The responding cities were also asked to provide comments on the positive and negative effects
of paying prevailing wages. These are summarized below:
Positive Effects
• Supportive of labor
.• Evens the playing field
• . Assures that workers are being treated and paid fairly
• . Higher wages allow people to live closer to work
• More professional bidding pool
CMR:443:08 Page 5 of8
• Higher-quality work
Negative Effects
• Higher costs
• Fewer projects can be built .
• Need for extra staffmg and paperwork for compliance monitoring
.• Smaller pool of bidders
Survey of Contractors
The staff's. research on prevailing wage did provide a number of insights into the views of
construction contractors on the topic of prevailing wage legislation. In addition, staff conducted
a. survey of contractors bidding work in Palo Alto to best judge .the impaCt a change in Palo
Alto's prevailing wage policy would have on construction projects in Palo Alto.
A'summary of the survey results follows:
• Approximately 50 % of the contractors responding pay prevailing wages on all contracts.
• Most contractors that do not typically pay prevailing wage rates will bid prevailing wage
. contracts. . '
• 70% of the contractors not paying prevailing wage mtes use the same labor force when
bidding prevailing wage contracts.
• The a".,rerage of. the estimated increase to consttUctioIl costs associat~ with,· paying
prevailing wage rates was approximately 8% according to the contractors responding to
the survey. .
City of Vista Court Case
As discussed previously, the Charter City of Vista is currently defending its decision not
to pay prevailing wages in a lawsuit brought by the State. Building and Construction Tmdes
Council. The outcome of this case'will be very important, as it could determine whether charter
cities can continue to exercise their ability to locally determine whether to pay prevailing wages
on local projects. Some background on the case is illustrative. .
In Jl,Ule 2007, Vista became a Charter City. Before the election,·the City prepared a fact
sheet discussing common questions regarding the Charter City proposition, including questions
and answers regarding the. potential tax savings on local public works projects should the. City
chose to forego prevailing wages on municipal projects. 67% of Vista voters approved the
decision to become a Charter City. Vista plans on completing about $100 million in public
improvements in the near future; projects which would traditionally be considered within the·
realm of''municipal affairs" and paid from local·revenues.
The State Building and. Construction Trades Council of California, a labor union,
challenged Vista's assertion that it was exempt from prevailing wage law, arguing that the
prevailing wage statute is of statewide concern. Although the trial court reluctantly found in
favor of Vista, in issuing his ruling, the Superior Court judge stated that were he not bound by a
preceding case, Vial v. City of San Diego, he would have been inclitied to grant the union's
petition. The Vial decision stated that prevailing wage law does not apply to public works
projects of a chartered city, "as long as the projects in question are within the realm of
'municipal affairs.'"
CMR:443:08 Page 6 ofS
The judge in Vista, however, contended that instead of focusing on the project, a more
appropriate analysis would involve whether the prevailing wage statute is a matter of statewide
concern. Had the court not b~en obligated·to foliow Vial, the court acknowledged that it would
have found that the prevailing wage law is a matter of statewide concern and that Vista was
therefore bound to follow the law in relation to its pending public works projects.
The petitioner's appeal. is currently pending before the California Court of Appeal and
oral argument was heard on Friday, November 14, 2008. A decision is expected in the next two
months. Should the court frame the question as suggested by the superior court, and ask whether
the prevailing wage statute is a "statewide concern," it is possible that the Court will answer that
question affirmatively, thereby overruling or limiting the Vial decision. The California
Legislature has previously declared that the prevailing wage statute addresses two important
statewide concerns: (1) it prevents public projects from driving down. area labor standards and
(2) it ensures training opportunities for apprentice construction workers. Even if Vista wins on
appeal, observers expect this case will eventually be appealed to the California·Supreme Court.
A California Supr~me Court decision would not be expected on this case for at least another
year. The City Attorney's Office will keep Council informed on the· statUs of this case.
RESOURCE IMPACT
The Adopted 2009 Capital Budget includes about $11.5 million in General Fund projects and
about $28 million in Enterprise Fund projects that are not now or will not require prevailiIlg-------~--
wage in their. consttUction contracts. The Enterprise Fund projects include those under the
. electric, water, gas, wastewater collection, storm drainage and refuse fund programs. Projects
constructed by the Wastewater Treatment Fund already require prevailing wage as discussed
. above and would not be impacted by a change in Council policy. If staff research proves correct,
the costs of the 2009 General Fund projects could increase by as much as $1 million and the
·2009 Enterprise Fund projects could increase by as much as $2.8 million if Council were to
adopt a policy requiring prevailing wage rates be paid on all capital construction projects
contracted by the City. It also should be noted that any private/public partnership agreements
entered into by the City for capital construction would also require payment of prevailing wage
rates on these construction projects (e.g. Art Center, Lytton Plaza, Junior Museum and Zoo).
POLICY IMPLICATIONS
The recommendation does not change existing policy. If Council were to change policy and
require prevailing wage be paid on all City capital construction projects, Council would need to
adopt an ordinance codifying such a requirement.
ENVIRONMENTAL REVIEW
Policy and Services Committee review of the prevailing wage policy issues presented in this
report does not represent a project under the California Environmental Quality Act (CEQA),
pursuant to Section 21065 of the Public Resources Code.
CMR:443:08 Page 7 of8
ATTACHMENT D
POLICY AND SERVICES COMMITTEE
Regular Meeting
December 9, 2008
Chairperson Kishimoto called the meeting to order at 7:01 p.m. in the Council
Conference Room, 250 Hamilton Avenue, Palo Alto, California.
Present: Barton, Drekmeier, Kishimoto (chair), Espinosa
Absent: None
1. Oral Comml mlcations
None.
2. Review and Request for Recommendation on Prevailing Wage Issues
Related to City Capital Construction Projects
Assistant Public Works Director, Mike Sartor presented a staff research report
related to the prevailing wage issue and City Capital projects. He stated
prevailing wages pertain to Public Works contracts which include Utilities,
Capital Improvement Projects and Public Works General Fund and Enterprise
Fund Projects. He explained that as Palo Alto was a Charter City, it was not
required to pay prevailing wage unless the project involved Federal or State
Grant funding, Gas Tax Funds or other non-local funding sources.
Council Member Barton asked whether the potential for cost increase was at the
bid process or the total at the end of a project. He stated there were bid
numbers and the true cost of a project. He stated he would not be supporting
the recommendation.
Mr. Sartor stated the study was based on the review of completed projects.
12/09/2008 P&Sl
Vice Mayor Drekmeier asked whether the income levels of prevailing wage were
that of a medium income versus average income.
Mr. Sartor stated the State determined the prevailing wage based on individual
labor categories. For example carpenters in Santa Clara County, the State takes
a look at wages for carpenters throughout the entire County then take fifty
percent of the highest wages being paid and establish that as the prevailing
wage.
Vice Mayor Drekmeier clarified the breakdown of wages was by county.
Mr. Sartor stated yes, by the Department of Industrial Relations.
Vice Mayor Drekmeier asked whether Palo Alto currently had policy on union
wages.
Mr. Sartor stated no.
Vice Mayor Drekmeier asked whether there was a forum to view municipality
rating systems for contractors.
Mr. Sartor stated the purpose of the survey was to verify any quality impact.
Vice Mayor Drekmeier asked how to determine whether a contractor had poor
quality of work.
Mr. Sartor stated reference checks and checking with other municipalities. The
bid process require statements of qualifications and experience of similar types
of projects.
Vice Mayor Drekmeier asked the impact. of the economy on the timeline for
moving forward with the prevailing wage.
Mr. Sartor stated direct impact of quality in work were protected by
performance specifications and plans prepared. He stated when a contractors'
performance was not adequate the contract could be terminated or the
contractor could be given the opportunity to correct any performance issues.
Vice Mayor Drekmeier asked how frequently the prevailing wage was
recalculated .
. Mr. Sartor stated he had no actual data however, he antiCipated an annual
review would be probable.
12/09/2008 P&S2
Vice Mayor Drekmeier asked whether there was data on prevailing wage
contractor's not bidding in Palo Alto because of the possibility of low-balling by
non-prevailing wage entities.
Mr. Sartor stated in his research the non-prevailing wage contracts attracted
more bidders than prevailing wage contracts.
Council Member Espinosa asked how employees being treated or paid fairly was
factored in to the calculations of whether to recommend prevailing wage or not
to.
Mr. Sartor stated staff's primary consideration was fiscal. He stated an expected
increase in cost of up to ten percent would occur during smaller and or
maintenance type projects. Research revealed on major projectsthe contractor
usually paid prevailing wage already.
Mr. Keene stated if the adoption of prevailing wages did increase costs the
question to Council would be what the consequence would be in absorbing the
costs.
_I _____________________ _
Council Member Espinosa stated his agreement. The City as a whole needed to
weigh the two challenges between increase in cost to a project versus ensuring
fairness and fair payment for employees working on projects.
Mr. Keene stated the basis of the decision being requested was not quality
against cost but an overall combination of reaching a higher level of them
together.
Council Member Barton asked for a comparison of both prevailing wage and
non-prevailing wage bidders against projects in Palo Alto for 2007 and 2008.
Chair Kishimoto asked whether the increase in cost of going with prevailing
wage was transferred to the worker or administrative fees.
Mr. Sartor stated the study being viewed was a study compiled by the State of
Kentucky of contractors in their region.
Chair Kishimoto stated it appeared the higher cost of the project went to more
administrative fees which was against the object of going forward with
prevailing wage. She stated her process was for the higher cost to translate to
better wages for the worker.
12/0912008 P&S3
Mr. Sartor stated the administrative costs were incurred by the owner.
Chair Kishimoto asked whether the employees' benefits and healthcare were
included in the cost.
Mr. Sartor stated no. He stated the benefits and healthcare costs were included
in the rates. For example a thirty dollar per hour job would cost forty-five
dollars.
Chair Kishimoto asked whether the rates changed by skill level or category.
Mr. Sartor stated the rates tended to be geared towards the level of skill for the
person in a particular category.
Chair Kishimoto asked how flexible the categories were as in filling-in. If person
A from category one was out could person A from category two fill-in or was it
job specific.
Mr. Sartor stated his understanding was there was no cross trading without
experience.
Council Member Espinosa asked how quality and safety played a role together.
Mr. Sartor stated there were standard quality controls and safety measures in
place and monitored by the contractor in charge of the project. The inspector's
checks ensure appropriate operators for the specific duties on each project.
Nicole Goehering, 4577 Las Rositas Rd, Unit C, Livermore, spoke of flexibility
under prevailing wage work. She stated within Palo Alto the flexibility of metal
roofing could be covered by sheet metal workers or roofers and underground
utility work could be covered by utilities or laborers.
Kevin Dayton, 4577 Las Rositas Rd, Unit C, Livermore, spoke of the increase in
cost not necessarily coming from the prevailing wage but the specifics of how
prevailing wage was determined by the state.
Neil Struthers, 2102 Almaden Road, San Jose, spoke of how qualification
implied quality. He stated the more experienced worker would turn out a better
and quicker product than one of less skill. The hourly wage does not determine
the quality. He noted statistical data on percentages of prevailing wage versus
non-prevailing wage bids in Palo Alto.
12/09/2008 P&S4
Peter Philips, Economics Department, University of Utah, Salt Lake City, stated.
the staff report data was built on impressions from first principles rather than
natural experiments or empirical observations. He stated there was no
statistically significant difference in the number of bidders on Palo Alto jobs
compared to the four surrounding cities. In the sample examined, there were
140 projects, 19 of which were in Palo Alto with 450 bidders. He continued to
speak of the study he provided.
Council Member Barton stated one of the supporting factors for the prevailing
wage rule was the majority of the workers had come up though some sort of
union training program. The people would be well trained in their trade, have
quality standards and efficient. He stated Council had an obligation to be
morally efficient in the expenditure of public dollars.
MOTION: Council Member Barton moved, seconded by Council Member
Espinosa, that the Committee make a recommendation to the Council to impose
a prevailing wage requirement for all City Capital Projects.
Mr. Keen asked for clarification as to the relativity to City Capital Construction
Projects.
Council Member Barton stated yes.
Chair Kishimoto asked whether the Motion covered all capital projects.
Council Member Barton stated in the beginning to incorporate them all and at a
later date discussions could be brought forward as to the necessity of each
project.
Council Member Espinosa stated the treatment of workers in any function or
capacity as workers for the City needed to be treated with fairness and
payment equality.
Vice Mayor Drekmeier stated the Water Treatment Plant project brought about
concern whether the City needed to provide prevailing wage or not. The lowest
bidder chosen was paying prevailing wage. He noted the importance of fairness
in treatment of employees' payment and benefits.
AMENDMENT: Chair Kishimoto moved, seconded by Council Member XXX to
incorporate parameters of exclusion for maintenance and smaller projects, and
to add a financial threshold where prevailing wage would not apply to a project
below $XXX.
12/09/2008 P&S5
Amendment failed for lack of second.
Mr. Sartor stated staff was prepared to return with exclusionary criteria for
maintenance projects from the prevailing wage requirements.
Chair Kishimoto asked whether the matter should be moved forward without
adequate information or revisited at a later date.
Mr. Keene stated the language could incorporate the exclusion of routine
maintenance contracts. He noted a more specific concern would be
public/private partnerships.
Chair Kishimoto asked whether the exclusion of public/private partnerships
would cause any legal matters.·
Deputy City Attorney, Amy Bartell stated the current statute reads if a project
was receiving public funds in whole or part it was subject to prevailing wage law
in General Law Cities. She noted currently, Palo Alto remained in the Charter
City category, pending the outcome of the City of Vista's court case.
~hair Kishimoto clarified General Law Cities were required to pay prevailing
wage when entering into a public/private partnership.
Ms. Bartell stated yes. She clarified the requirement for a Charter City to pay
prevailing wage included the receipt of public funds in any amount.
Mr. Keene stated not to overlook the possibility of a group or non-profit
organization offering to accomplish a capital project that the city may nor have
planned to move forward with and they request a contribution or matching
funds. The question would be how prevailing wage would affect that situation.
Vice Mayor Drekmeier asked whether there was a recommendation ready for
Council or if the matter would go before Council with further information from
staff.
Chair Kishimoto stated staff would return to Policy and Services for further
review prior to going to Council.
Council Member Espinosa stated he would prefer staff return to Policy and
Services with information detailed to the concerns coming from this meeting.
He noted a set timeline should be outlined to avoid prolonging unresolved
matters.
12/09/2008 P&S6
Chair Kishimoto suggested requesting the new Mayor extend the current
Committee panel for a one month term therefore allowing staff time to gather
the detailed information needed to complete a recommendation for Council.
Mr. Keene stated he concurred and stated staff would be prepared to return
with adequate information.
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER
AND SECONDER, to request the Mayor allow the current Committee panel to
meet an additional time in January to finalize a recommendation to the City
Council. .
Council Member Barton withdrew the Motion.
The Committee recommended that the Mayor direct staff to return to the
current Committee panel in late January of 2009 with threshold discussions so
the current Committee could return a recommendation to Council on prevailing
wage requirement.
3. Discussion for Future Meeting Schedules and Agendas-Last meeting-
another in January
ADJOURNMENT: Meeting adjourned at 8:38 p.m.
12/09/2008 P&S8
TO:
ATTN:
FROM:
DATE:
ATTACHMENT E
CITY COUNCIL
AD·HOC COMMITTEE ON PREVAILING WAGE
CITY MANAGER
MARCH 10,2009
DEPARTMENTS: PUBLIC WORKS
UTILITIES
CMR:150:09
REPORT TYPE: RECOMMENDATION
SUBJECT: Review and Recommendation on Proposed Prevailing Wage Policy for
City Capital Construction Projects
RECOMMENDATION
Staff recommends that the Council Ad-Hoc Committee on Prevailing Wage recommend that the
GltyCouncil adopt a Resolution Requiring the Payment of Prevailing Wage 011 City Capital
Improvement Project Construction Contracts with exemptions for maintenance projects under
$250,000 as defined under Section 220002 of the California Public Contract Code, projects
involving public-private partnerships, projects where the work is performed either· entirely or
partially by volunteers, and low and moderate income housing projects.
EXECUTIVE SUMMARY
This report responds to the December 9, 2008 discussion by the Council Policy and Services
Committee on prevailing wage issues related to City capital construction contracts. Attachment
B contains minutes of that meeting. At the December 9 meeting, the then Policy and Services
Committee indicated a strong interest in requiring prevailing wage on City capital construction
contracts and directed staff to come back with additional information on possible exemptions to
the proposed Council policy. Discussed in this report are staff recommended exemptions for
mainteruuice, public/private partnership, volunteer and low and moderate income housing
projects.
BACKGROUND
As a charter city, Palo Alto is not required to pay prevailing wages on "public works" projects,
so long as the proje~ts are within the realm of ''municipal affairs", ·~ded entirely by local funds,
and no other statutQry exceptions apply. This "home rule"· principle allows decisions on
expenditure of local funds to be made by locally elected officials. In 1981, Palo Alto passed a
resolution to pay prevailing wage "only when required by federal or state grants and on other
jobs considered to be of statewide concern." (See Attachment A Resolution 5981).
Recently, charter cities' authority to opt out of prevailing wage law has been subject to
challenge. The charter city of Vista, California is .currently defending its decision not to pay
CMR: 150:09 Page 1 of 6
prevailing wages in a lawsuit brought by the State Building and Construction Trades Council.
Further, on February 20, 2008, the Governor signed SB 9EX, noting the ongoing litigation in
Vista and narrowing potential prevailing wage obligations for charter cities involving work on
water,sewer, or storm drain systems that have previously been extended to disadvantaged
communities. .
Amid the recent debate over charter cities' prevailing wage requirements, on December 9, 2008
staff presented to the Council Policy and Services Committee a recommendation that Council not
change current prevailing wage policy, allowing City capital construction ("public works")
projects to be bid without prevailing wage requirements unless prevailing wage is required for
the project pursuant to state or federal law, due to potential cost impacts to the City's General
and.Enterprise Fund Capital Improvement Programs (CIPs) (CMR 443:08, Attachment B). The
Committee carefully reviewed this recommendation and decided it was in the best interest of the
City to recommend to the full Council that a resolution be adopted requiring prevailing wage on
all City capital construction contracts. They also instructed staff to recommend types of
construction contracts that could be considered for exemption from a prevailing wage
requirement.
DISCUSSION
Following the December 9, 2009 meeting, staff reviewed four areas that the Council Ad-Hoc
Committee on Prevailing Wage could consider for exemptions to the prevailing wage
requirement it may recommend to the full Council. The possible exemptions reviewed were:
1. Maintenance projects under $250,000 as defined by Section 22002 of the California
Public Contract Code
2. Projects using public-private partnership funding
3. Projects that construct/rehabilitate affordable housing for people with low or moderate
incomes
4. Projects where the work is performed either entirely or partially by volunteers
In starr s research on the prevailing wage issue, 48 general law and charter cities responded to a
survey examining the policies of other California municipalities regarding prevailing wage.law.
Of the 48 survey respondents, 25 were charter cities that have a prevailing wage policy in place.
As noted, charter cities have a policy choice of paying prevailing wage or not on ''public works"
construction contracts, so long as the projects are municipal affairs and no federal or state funds
are involved. Half of the 25 charter cities responding, that already pay prevailing wage, have
prevailing wage exemptions for maintenance projects. This exemption is applied to smaller
projects. where prevailing wage requirements may discourage many contractors from bidding due
to restrictions on the ability of contractors to move workers from one trade to another or simply
due to the additional administrative costs of producing Certified Payrolls as required by
prevailing wage law.
Exemption for Maintenance Projects
Although as a charter city, Palo Alto is free to craft its own definition of ''maintenance'' in a
proposed prevailing wage exemption policy, referring to a definition already present in
CMR:lSO:09 Page 2 of6
California law is a helpful starting point. Section 22002 of the California Public Contract Code
defines maintenance as shown:
. • Routine, recurring work for the preservation or protection of any publicly owned or
publicly operated facility
• Minor repainting
• Resurfacing of streets at less than 1 inch
• Landscape maintenance including mowing, watering, trimming, pruning, planting,
replacement of plants, and servicing of irrigation and sprinkler systems
• Work performed to keep, operate, and maintain publicly owned water, power, or waste
disposal systems
Since the City's Street Maintenance program receives funding from State Gas Tax and other
State and Federal grant funding, prevailing wage is already required on these projects, and the
proposed maintenance exemption category of resurfacing streets at less than 1 inch would not
apply. For the other maintenance categories defined above, staff recommends that any projects
in these categories that fall under the City's Purchasing Ordinance threshold of $250,000 (the
City Manager has the authority to award "Public Works" construction contracts under $250,000 ------~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~---.--------
without Council approval, pursuant to Section 2.30.21O(a) of the Palo Alto Municipal Code) be
exempt from any Council adopted prevailing wage policy. This will ensure the City of having the
broadest pool of bidders on these routine maintenance projects, keeping bids competitive and
likely reducing costs for these critical building, parks, and utility system maintenance activities.
Staff has received suggestions that a lower threshold should be considered. The Committee may
wish to discuss that.
Exemption for Public-Private Partnerships
Staff also recommends that Council consider an exemption for City projects that are funded
through public-private partnerships. The purpose of offering this exemption is to maximize the
use of private funding in joint projects with the City. Because many public-private partnership
projects are administered by the private entity in the partnership, exempting prevailing wage
requirements from these contracts could make participating in such projects more attractive to
private funders by reducing restrictions on potential contractors and reducing administrative
work for the private entity.
Some background on public-private partnerships is helpful, as there are several types. A public-
private partnership is an agreement between the City and a nonprofit or private organization to
provide services or to assist in funding of public facilities and programs. Public-private
partnerships typically fall into one ofthree categories: co-sponsorship, alliances or joint ventures.
Co-Sponsorships: In this common type of public-private partnership, an organization
furthers the mission of the City by supporting a City activity or program in conjunction
with pursuit of that organization's own mission or program. Some examples include the
CMR:150:09 Page 3 of6
Palo Alto Tennis Club use of City courts to provide a youth tennis program and
American Youth Soccer Organization's use of space in a City facility to train· referees.
Co-sponsorships are entered into by staff and normally have no or minimal financial
impact.
• Alliances: This type of public/private partnership involves organizations that have been
created for the sole purpose of supporting a City program(s). The organization does not
expect to receive any direct financial benefit or to alter City policy and/or operations, but
undertakes to work cooperatively with staff to implement City goals. Alliance
organizations include the Recreation Foundation, the Art Center Foundation (project
Lo~k or Cultural Kaleidoscope), the Library Foundation and the Friends of the Palo Alto
Library (financial assistance with the renovation and expansion of the Children's
Library). Alliances are approved by the Council if there are any staffing or budgetary
implications to the partnership.
• Joint Ventures: This type of public-private partnership involves organizations which have
programs or missions independent of the City and involve the' City entering into a
contractual relationship with the public or nonprofit organization with both parties
contributing to the partnership for their mutual benefit. Each joint venture is uniquely
negotiated by the staff and approved by the City· Council. Examples of Joint Ventures
include TheatreWorks, Palo Alto Players and West Bay Opera's use of the Community
Theatre and use of the former police station broIder adult service provider, Avenidas.
The applicability of an exclusion to the requirement to pay prevailing wages on contracts which
arise out of a public-private partnership will depend on the details and goals each project, the
financial· requirements, assets, and capabilities each the party brings to the partnership and how
each contract is structured.
Because the characteristics of each partnership will be unique, the proposed decision to exempt
public-private partnerships from prevailing wage requirements may not be suitable for every
project. For example, if Palo Alto, as a charter city, is involved in a public works project which
would not normally require the payment of prevailing wages, and the City becomes involved in a
pUblic-private partnership, the partnership could trigger prevailing wage requirements if the
funding sources are unclear or the partnership causes the project to become more regional in
nature.
Without fully ,knowing the details of a future relationship between partners, it will be difficult to
draft exclusionary prevailing wage language broad enough to cover all potential partnership
scenarios, and narrow enough to meet the key statutory elements of whether the contract is "paid
for in whole or in part out of public funds", and whether the project is a "municipal affair." The
application of these legal requirements to the unique facts in each case will be. needed to
determine if the City's Prevailing Wage Policy exclusions will apply.
Thus, it would be wise to avoid trying to establish a single all encompassing exclusion on this
point. Instead, staff recommends that the City's proposed prevailing wage policy simply state
that the City's intention is that prevailing wage law will not apply to pUblic-private partnerships.
However, the applicability of the prevailing wage requirement to any pUblic-private partnership
CMR:150:09 Page 4 of6
ATTACHMENT F
CITY OF PALO ALTO
City Council Ad Hoc Committee on Prevailing Wages
Special Meeting
Tuesday, March 10,2009
The meeting of the City Council Ad Hoc Committee on Prevailing Wages was called to
order at 6:01 p.m.
Present: Barton, Drekmeier, Espinosa
Absent: Kishimoto
1. Oral Communications
None
2. Review and Recommendation on Proposed Prevailing Wage Policy for
City Capital Construction Projects.
City Attorney, Gary Baum reviewed the City's Prevailing Wage policy.
Assistant Public Works Director Mike Sartor reviewed the PowerPoint presentation in
follow-up of the December 9, 2008 meeting. His presentation included a summary of
that meeting, the Prevailing Wage exemptions and Staffs recommendations.
Neil Struthers, 2102' Almaden Road, San Jose, thanked Staff for incorporating
information from meetings held prior. He questioned why $250,000 was listed as a
threshold for the prevailing wage. He stressed more thought should be given to the
public-private partnership aspects of the policy. He spoke regarding affordable housing
and requested further research be completed on Staff's recommendation and how the
policy affected the General Fund.
Lindsay Byers, 4577 Las Positas Blvd., Livermore, Associated Builders and Contractors
Union, in representation of non-union members, stated they would continue to work in
the City of Palo Alto whether or not prevailing wage was opposed. She gave an
overview of prevailing wage calculations and the wide variety of areas that the wages
cover beyond employee compensation. She suggested raising maintenance project wage
thresholds to allow smaller community businesses to remain competitive with regional
and statewide contractors.
Aletha Coleman, 296 Bay Road, Atherton, from the Palo Alto Friends of the Junior
Museum and Zoo spoke in support of Staffs recommendations from a public-private
partnership viewpoint.
Molly McAuliffe, 1554 Cowper Street, from the Palo Alto Friends of the Junior Museum
and Zoo spoke in support of Staff s recommendations.
Council Member Barton stated it was his understanding that the $250,000 threshold was
consistent with what the City Manager brought forth to Council for authorization and
approval.
Mr. Sartor stated that was correct.
Council Member Barton asked how many projects fit within this $250,000 threshold per
year.
Mike Sartor stated the amount pertained to Capital Improvement Projects (CIP) and
maintenance type projects, with several projects projected for the year within that
threshold. He gave the example of parks and maintenance type projects.
Council Member Barton stated maintenance was defined under California Code and State
Law exemptions.
Mr. Sartor stated many maintenance projects exceed the threshold. He gave the example
of the Utility Department's gas main replacement project, which was considered a
maintenance project and routine work and repair of an existing system. He stated Staff is
mindful that larger projects should be included, but they· did not want to restrict the
smaller maintenance-type projects.
Council Member Espinosa stated Staff s current report was concise· and covered all the
options available. He asked for further clarification on the different dollar points
($50,000, $100,000 to $250,000 and above). He asked for further information on the
scale and scope of projects within each threshold.
Mr. Sartor stated there were $10-12 million contracts each year in the CIP. Smaller
projects made up less than one million, or 10 percent, of the total for projects. Most of
the CIPs greater than $250,000 are major projects. The types of small range projects
included annual roofing, interior finishing and landscaping contracts for buildings and
parks. The total value of maintenance-type projects was likely less than one-tenth of the
overall CIP.
Assistant Director of Utilities, Tom Marshall stated there were not a lot of contracts in the
under $250,000 range. Projects that fell into this range included annual Roto-Rooter
service contracts for sewer maintenance, as one example.
City Manager, James Keene reviewed various projects from the 2008-09 Adopted Budget
for CIP. He listed projects that fit underneath the $250,000 threshold which included the
Bayland Athletic Center's fencing, dugout and trailhead park projects as one example.
He listed several other projects of the same caliber.
Council Member Espinosa asked how each specific project was cast as a recipient of
these buligeted amounts within the CIP budgeting. He stressed they were making the
effort to create a policy around what these projects were exactly.
Mr. Sartor gave an overview of what projects are considered as maintenance projects.
Maintenance projects specifically include such items as annual roofing projects or
interior projects such as carpeting and painting. Park trail projects were also included
within this realm. He stated many of these projects were already defined in the Public
Contract Code as Maintenance projects and separate from the Public Work projects. He
stated these types of contracts typically attract the smaller contractors.
Mr. Keene stated one of the goals is to spread the work around, from these smaller
projects, to smaller contractors that might not otherwise be considered. He stated this
brought with it social equity value. He asked what the results were in areas where there
were no prevailing wage policies.
Mr. Sartor stated when-eompared-to what other-Cities are doing, a broader-xwanUJg""eJ--VofL-Ub""id ..... s>---______ _
come through with smaller contractors when prevailing wage policies did not exist.
Council Member Espinosa stated this was an area where he felt he did not have sufficient
data with which to form a decision.
Council Member Barton asked whether Staff might consider modification of the public-
private partnership funding exemptions to the point at which the private-partner became
the managing partner. He understood that there could be bookkeeping issues and
volunteers may not be able to do this. He stated that public funds should be spent in
ways that cover external costs associated with living in this area.
Mr. Keene stated the goal was to move projects forward and keeping costs to a minimum.
In some cases, when volunteers took the lead on a project, they were not considered
under the prevailing wage guidelines.
Council Member Barton stated the assumption was that prevailing wages drove up the
costs for a project. He was not of this mind. When you build in externalities it is better
all around. He doesn't want to go down the road of implied incentives.
Mr. Keene stressed taking a look at future emerging public-private partnerships where
there may be a situation wherein the City may want the lead on the project. He noted
civil liability issues came into play in this case.
Council Member Espinosa hoped for clarity around defining the public-private
partnership aspects of this proposed policy. He agreed with the policy in concept but was
worried about these public-private partnerships working against the policy. He stated he
felt that clarity was needed on this policy as it pertains to public-private partnerships.
Mr. Baum stated there were different standards in the pUblic-private partnership where
the private party is the majority contributor but is not the managing partner.
Council Member Espinosa stressed there were instances where further clarity was
necessary when private parties were donating money for these projects within the
confines of the proposed policy.
Mr. Keene pointed the Committee towards Page 4 of the Staff report on regarding
exemptions and exclusions. He gave examples and applications of what was proposed on
Page 4 of the proposed policy.
Council Member Espinosa stated this was a good start. He hoped for more clarity on the
criteria and an outline of this prior to taking it to Council.
Mr. Baum stated under the Committee's general direction this was adequate for them to
forward on to Council. The presumption of paying prevailing wage in public-private
parmershipsua.n<lifl!Ot then under what circumstances.
Council Member Espinosa stressed the needs for more specifics.
Mr. Baum stated ironing out the specifics may require another meeting.
Council Member Barton suggested deleting the complicated language on Federal Tax
Credits on Page 5 of the proposed policy.
Council Member Espinosa asked for clarification on what he specifically wanted
excluded.
Council Member Barton wished to delete bullet point 3, on Page 2, which refers to
affordable housing projects.
Council Member Espinosa stated it was included at this point more for clarity than policy
based on information Mr. Sartor and Mr. Baum gave in address to this point.
Council Member Barton stated if the inclusion was for clarity's sake, it should be worded
to include affordable housing projects that would otherwise be exempt.
Mr. Sartor stated the extent of the exemption was an attempt to clarify and specifically
note the other two bulleted items.
Council Member Barton stated this did not matter in either direction and was merely
semantics.
Mayor Drekmeier asked for further clarification on the prevailing wage. He asked what
causes fluctuations in the prevailing wage.
Mr. Sartor stated fluctuations were tied to union bargaining agreements and labor rates.
He was not famili~ with any recent bargaining agreements which cut these wages and
rates.
Mayor Drekmeier asked if they went with prevailing wage, would the prevailing wage go
up a notch with the addition of their City coming on board.
Mr. Sartor stated it would not go up. The wages are set by the County and State.
Council Member Espinosa asked if there was a way to move forward but also get clarity
on how decisions were made and what the different dollar amounts meant with regard to
the number of projects.
Mr. Sartor stated in projects less than $250,000, prior Council was comfortable In
providing the City Manager with the authority to award those types of contracts.
Council Member Espinosa stated the issue was not about the dollar amount of the
contracts but the kind of contracts we are setting up in terms of whether we would have
more bids, different kinds of companies, workers doing different levels of work. The
decision making would be based on the types of contracts, companies, skill levels of
employees and that would drive prevailing wage
Mr. Sartor stated the difference remained in what was considered a maintenance versus
construction project in that maintenance projects were of a recurring nature on existing
structures. He stressed these projects were typically, significantly smaller in scope. He
stated they were not suggesting that a new building project under $250,000 would be
exempt. A new building project would still require prevailing wage parameters.
Mr. Keene stated moving forward meant getting something on the Consent Calendar and
then they could return with more definitive data.
Council Member Espinosa stated it was important to understand who these companies
are, and understand why the dollar amount is what it is for these smaller projects.
Mr. Keene stated the dollar amount was not at issue. They were not vetted to any
particular dollar amount at this point.
Council Member Espinosa agreed it was more important how they arrived at their final
conclusions rather than the actual final numbers.
Mayor Drekmeier stated recent Request for Proposals brought in lower bids. He asked if
wages were the same, how or where costs were rising within this bidding process.
Mr. Sartor stated product costs were the primary reason for any extra or higher costs
above and beyond what may have been· seen in the past. Also material costs have· gone
down.
Council Member Barton stated it was not labor rate, per se, of a project, but the number
of people working on that project that also played a role.
MOTION: Council. Member Barton moved, seconded by Mayor Drekmeier to
recommend to the City Council to adopt: 1) Paying Prevailing wage for City Capital
Improvement Projects with exemptions for; a) maintenance projects between $ lOOk-
$250k to be determined by the Council after further investigation by Staff, b) projects
worked entirely by volunteers, c) public-private partnerships unless otherwise exempted
by Council.
Mayor Drekmeier asked how many projects would be heard by Council.
Council Member Barton stated it would not be each and every project. It would be
prevailing wage, unless the private funding is greater than City funding.
Mayor Drekmeier stated it was suggested that the City is in a better position to manage
prevailing wages than a private group. He asked if they were suggesting that the City
would manage all or most of the projects.
Council Member Barton asked how many public-private partnership projects have been
done where the City has not been the hiring agent.
Mr. Sartor stated it was his experience that the private partners have managed more than
the City has managed in the past.
Council Member Barton asked by what percentage has the private partner provided more
than 50 percent of the funds for a project.
Mr. Sartor stated the Heritage Park project received more private partner funds.
Mayor Drekmeier stated he did not want his vote to be a recommendation at this point.
He remained neutral until more information was available. He agreed that if more than
50% of the funds came from private partner that it could fall into one category, but in
fairness it would make it easier to be the same across the board.
Chair Espinosa clarified Staff s return at a later date with delineation of the decision-
making criteria for public-private partnerships.
Council Member Barton was comfortable with Staff making the decision to modify the
Motion.
Chair Espinosa asked for clarification of what exact information they would return with
for further discussion.
Mr. Bawn stated what he heard was they should bring back more information on the
presumption and concerns over paying prevailing wage for public-private· partnerships
. unless specific exemptions are met. '.
INCORPORATED INTO THE MOTION WITH CONSENT OF THE MAKER
AND SECONDER to change the language to read "public-private partnerships needed to
meet specific exemptions in order to receive payment of prevailing wage."
Council Member Barton asked the number of yes votes required to take action.
Mr. Bawn stated the in the absence of a member there would not be a unanimous vote
and the Chair had the discretion to provide their own Motion.
Chair Espinosa asked why there needed to be a specified dollar amount in order to
qualify for prevailing wage.
Council Member Barton stated the dollar amount was not necessary.
Chair Espinosa had a concern about the affordable housing aspect and he did not have a
concern how Staff had written it. He wanted the inclusion of the wording on page 2 and
page 5 of the Staff report.
Mr. Bawn stated the language "unless otherwise required by law" would be added.
INCORPORATED INTO THE MOTION WITH CONSENT OF THE MAKER
AND SECONDER to add "unless otherwise required by law."
Mayor Drekmeier asked how the situation would be handled if both the affordable
housing and public-private partnership entities were vying for the same project.
Mr. Keene stated there would be qualifying factors of exemption and one entity would be
less qualified than the other.
Mr. Bawn stated the public-private partnership was not designed to apply to affordable
housing projects.
MOTION PASSED : 3-0, Kishimoto absent
Meeting Adjourned at 7: 14 p.m.
TO:
FROM:
DATE:
ATTACHMENT G
POLICY AND SERVICES COMMITTEE
CITY MANAGER
JUNE 29, 2009
DEPARTMENTS: PUBLIC WORKS
UTILITIES
CMR:236:09
REPORT TYPE: RECOMMENDATION
SUBJECT: Policy and Services Committee Review and Request for
Recommendation on Prevailing Wage Issues Related to City Capital
Construction Projects
RECOMMENDATION ,
Staff recommends that the Council Policy and Services Committee recommend that City Council
retain its current prevailing wage policy, allowing City "public works" projects to be bid without
prevailing wage requirements unless prevailing wage is required for the project pursuant to state
law,-m hght oflheuGity's economic difficUlties and to aVOid ad<litlonal cost impactS to the City'S
General and Enterprise Fund Capital Improvement Programs (CIPs). Staff also recommends a
pilot study of potential prevailing wage impacts be conducted on selected ClPs where prevailing
wage would . be required, to determine whether the prevailing wage requirement impacts the
number of bids, project costs, change orders and other factors.
EXECUTIVE SUMMARY
This report responds' to the December 9, 2008 and March 10,2009 discussions by the Council
Policy and Services Committee and Ad Hoc Committee on Prevailing Wage regarding prevailing
wage issues related to City capital construction contracts. At the December 9 meeting, the
Policy and Services Committee (comprised at that time of Chairperson Kishimoto and Council
members Barton, Drekmeier and Espinosa) indicated a strong interest in requiring prevailing
wage on City capital construction contracts and directed staff to come back with additional
information on possible exemptions to the proposed Council policy. At the March 10th meeting
the Ad Hoc Policy and Services Committee· (Chairperson Kishimoto and Council members
Barton, Drekmeier and Espinosa) reviewed staff's proposed exemptions to the prevailing wage
policy and recommended Council approve exemptions for projects involving volunteers and low
income housing projects. The Ad Hoc Committee also directed staff to come back to the full
Coun<;il with the proposed prevailing wage policy. and with further infor.mation on possible
exemptions for maintenance projects and projects involving public-private partnerships.
On June 15th, the City Council adopted the 2010 budget which included several dramatic and
unavoidable cuts to the City's operating and capital budgets. The "adopted budget reduced
spending in the Infrastructure Reserve by $2 million. In addition, the 2010 budget assumes
additional reductions in staifmg costs which have not yet been identified. Due to on-going
budget challenges, staff recommends that Council retain the current prevailing wage policy, for
CMR:236:09 Page I of7
now and direct staff to perform a pilot study where prevailing wage would be required on
selected CIPs ,that are not subject to prevailing wage under the current policy. This will allow
staff to collect ''real-time'' data on Palo Alto construction to better assess potential costs and
quality impacts on projects where prevailing wage is a requirement.
Although staff is not recommending a change in the City's prevailing wage policy at this time,
this report' provides additional information as requested by the Ad Hoc Committee on Prevailing
Wage regarding possible exemptions from a possible prevailing wage requirement for
maintenance projects and projects involving public-private partnerships.
BACKGROUND
As a charter city, Palo Alto is not required to pay prevailing wages on "public works" projects,
so long as the projects are within the realm of "municipal affairs", funded entirely by local funds,
and no other statutory exceptions apply. This "home rule" principle allows decisions on
expenditure of local funds to be made by locally elected officials. In 1981, Palo Alto passed a
resolution to pay prevailing wage "only when required by federal or state grants and on other
jobs considered to be of statewide concern." (see Attachment A, Resolution).
Recently, charter cities' power to opt out of state prevailing wage law was upheld by California's
FoUrth District Court of Appeal in State Building and Construction Trades Council of California
v. City of Vista, (2009) 0052181. In 2007, the City of Vista, a charter city like Palo Alto,
adopted an ordinance under which City contracts generally would not require payment of the
prevailing wage; Theeourt held that state prevailing wage laws were intended ''to keep state
contracting from undermining what local markets have established." However, because an
ordinance like Vista's would not materially interfere with the stability of the area's labor market,
the effect of ordinances like Vista's were not a matter of statewide concern. Therefore, the court
held that charter cities, like Vista and Palo Alto, retain the power to opt out of the state's
prevailing wage law.
The State Building and Construction Trades Council of California interids to petition the
California Supreme Court to review this case. In the meantime, the Vista decision is still good
law, and it affirms the City of Palo Alto's right to opt out of paying prevailing wage.
Also relevant is SB 9EX, which the Governor signed on February 20, 2008, noting the (then)
ongoing litigation in Vista. SB 9EX narrowed potential prevailing wage obligations for charter
cities involving work on water, sewer, or storm drain systems that have previously been extended
to disadvantaged communities.
Amid the recent debate over charter cities' prevailing wage requirements, on December 9,2008,
staff presented to the Council and the Policy and Services Committee a recommendation that
Council not change current prevailing wage policy, allowing City capital construction ("public
works'') projects' to be bid without prevailing wage requirements unless ,prevailing Wage is
required for the project pursuant to state or federal law, due to potential cost impacts to the City's
General and Enterprise Fund Capital Improvement Programs (CIPs) (CMR 443:08, Attachment
B). The Committee carefully reviewed this recommendation and decided it was in the best
interest of the City to recommend to the full Council that a resolution be adopted requiring
prevailing wage on all City capital construction contracts. The Committee also instructed staff to
recommend types of construction contracts that could be considered for exemption from a
CMR:236:09 Page 2 of 7
overall budget challenges, and economic challenges in the region as a whole, staffbelieves·that
this is an inopportune time to change the City's current prevailing wage policy.
To better assess the potential impact prevailing wage may have on construction cost and quality
staff proposes to conduct a pilot study. The pilot study will select a few Capital projects where
one of the bid requirements will be the payment of prevailing wage on the project. The bids
received on these projects will be analyzed to determine:
• If the imposition of a prevailing wage requirement had an impact on the number
of bids received
• If the prevailing wage requirement increased the project cost
• If the number of change orders were increased or decreased by the prevailing
wage requirement
• If quality of construction was impacted by the prevailing wage requirement
Staff proposes to return to the Council Policy and Services Committee next year with the results
of the pilot study and further recommendations on the prevailing wage issue.
Discussed below is the additional information on possible prevailing wage exemptions requested
by the Ad Hoc Committee on Prevailing Wage at their March 10th meeting.
Maintenance PrQject Exemption
Attachment F is a table liSting all of the maintenance CIPs· included in the 2009 Adopted five
Year Capital Budget with their associated budgets and project category. The listed projects are
budgeted at a level of $222,000 or less and all meet the definition of a maintenance project under
Section 22002 of the California Public Contract Code (see page 3 of 6, CMR: 150:09, Attachment
D). Many of the maintenance CIPs listed in Attachment F are annual projects where the budget
is often carried from year to year. The construction contracts associated with annual CIPs are
. typically $250,000 or less. Staff recommends that if the Council were to require prevailing wage
on "public works" co~struction contracts they should also approve an exemption for City
maintenance CIP contracts valued at $250,000 or less to ensure the City of having the broadest
pool of bidders· on these routine projects. This would keep bids competitive and will likely
reduce costs for ~ese critical building, parks, and utility system maintenance activities.
Public-Private Partnership Exemption
Staff met with representatives of the Friends of the. Palo Alto Junior Museum and Zoo on
March 30th and with representatives of the Friends of Lytton Plaza and the Palo Alto Art Center
Foundation on April 1,2009. Each of these groups has an ongoing public-private partnership
with the City supporting their projects. At these meetings the proposed prevailing wage policy
was presented and the potential impacts of prevailing wage on their projects was discussed. The
upcoming planned projects at both the Junior Museum and Zoo (proposed 2009-10 CIP AC-
.10000 New Bobcat Habitat) and Lytton Plaza Renovation (CIP PE-08004) will be managed by
the respective private entity while the Art Center Improvement project (CIP PF-07000) will be
managed by the City once design work is completed. The Friends of the Palo Alto Museum and
Zoo are funding all of their project with donations (totaling over $505,000) while the City will be
contributing $70,000 for resurfacing of zoo pathways. The Council approved letter of intent with
the Friends of Lytton Plaza provides for a maximum City contribution of $350,000 for Lytton
CMR:236:09 Page4of7
Plaza improvements wjth the Friends of Lytton Plaza responsible for 50 percent or more of the
additional funding that will· be needed for this project. The City will be funding more than 50
percent of the Art Center project.
The private groups that will be funding the majority of their projects and also managing project
design and construction (Junior Museum and Zoo and Lytton Plaza) are very concerned about
the potential of prevailing wage requirements increasing the cost of their projects. They are also
concerned that the administrative requirements associated with ensuring contractor compliance
with prevailing wage requirements would likely impose a burden on private entity project
managers that they are not prepared to undertake. On the other hand, the Palo Alto Art Center
Foundation indicated that they would be in a better position to comply with the proposed
prevailing wage policy since the City will be contributing over 50 percent of project funding and
managing project construction. Attached is a letter from the Friends of the Palo Alto Junior
Museum and Zoo and two emails from the Friends of Lytton Plaza asking that their projects be
exempt from the proposed prevailing wage policy (Attachments G and H respectively).
Staff recommends that if the Council were to require prevailing wage on "public works"
construction contracts they. should also approve a Public-Private Partnership exemption that
would exempt Public-Private Partnership projects where the private party is the lead entity
managing the project design and construction and the private entity funds at least 50 percent of
the project cost.
RESOURCE IMPAC'I' -------------~----
The Adopted FY 2010 Capital Budget includes an estimated $56.1 million in General Fund
construction and $32.1 million in Enterprise Fund construction that would require prevailing
wage in their construction contracts if Council were to change the City's prevailing wage policy.
These amounts can be seen in Attachments J and K and do not include total project costs such as
design services contracts which would not be subject to prevailing wage in most cases. The
construction costs of maintenance projects under $250,000 and Public-Private partnerships
where the private entity funds at least 50 percent of project cost and manages the project, are not
included in the above totals (see footnotes 1,2,3 and 5 of Attachment J). The FY 2010 General
Fund projects include $50.5 million for Mitchell Park and Downtown Measure N Library bond
projects and the FY 2010 Enterprise Fund projects include $22.5 million for the Utility
Department Emergency water supply project. The remaining four years (FY 2011 through FY
2014) of General and Enterprise Fund projects included in the Adopted Capital Budget are also
included in the attached tables. Both total project and construction costs for these projects are
shown in the attachments.
Attachments J and K also show the potential increased cost impacts on the City's CIP project if
the City's prevailing wage policy is changed. As discussed above, stafrs research indicates that
prevailing wage may incre.ase construction costs by up to 10 percent. While other studies have .
been conducted which indicate no such impact on project costs, based on the study conducted by
staff, one can see that the FY 2010 General Fund construction costs may increase by $2.8 million
if prevailing wage caused a 5 percent increase and by as much as $5.6 million if prevailing wage
caused a 10 percent increase in construction costs. Similarly, the FY 2010 Enterprise Fund
construction costs may increase by $1.6 million at 5 percent and $3.2 million at 10 percent.
Attachments J and K also show the possible construction costs increases in the FY 2011 through
CMR:236:09 Page 50f7
wage discussion to the Council Policy and Services Committee (see Attachment B, minutes of
September ,17, 2007 Council meeting).
What are Prevailing Wage Rates?
The intended purpose of prevailing wage law is to ensure that public construction projects do not .
lower local wages by allowing contractors to pay wages below the local standard. In 1931,
Congress p,assed the Davis-Bacon Act, which mandated the payment of prevailing wages on all
construction projects that receive more than $2,000 of Federal funds -an amount that has
remained unchanged today. In subsequent years, especially during the Great Depression, many
states and localities passed similar prevailing wage laws; Most states, including California, now
have such laws.
Prevailing wages are determined in many different ways across the country. The Federal and
California Prevailing Wage calculations are similar because if more than 50% of the workers
make the same wage this becomes the prevailing wage for the trade. They differ in the
calculation when less than 50% of the workers have the same wage. . The Federal Law
determines the prevailing wage by averaging all the wages, whereas in California the most
common wage occurring becomes the prevailing wage. California's calculation method usually
results in a slightly higher wage than the Federal calculation method. •
California passed its prevailing wage law in 1931, the same year the federal Davis-Bacon Act
. was passed. California Labor Code § 1771 requires that any "public ')Jerks" project that receiv~s
more than $1,000 in state funding pay prevailing wages. The Labor Code defines "public
works" to include construction, alteration, most demolition, installation or repair work done
under contract and paid for in whole or part out of public funds. All capital improvement
projects done by the City, including those managed by the Community Services, Utilities or the
Public Works Departments are considered "public works" under this law. Although California's
prevailing wage l~w applies to all of California's "general law" cities, charter cities are permitted
to elect whether to pay prevailing wage on locally funded public works projects that qualify as
municipal affairs.
DISCUSSION
Prevailing Wages in Charter Cities
The California Labor Code requires that public agencies pay prevailing wages, as determined by
the California Department of Industrial Relations, on most public works projects. As a charter
city, Palo Alto is not required to pay prevailing wage rates on "public works" projects, so long as
the projects are within the realm of "municipal affairs," are funded entirely by local funds, and
no other statutory exceptions apply. This "home rule" principle, grounded in the California·
Constitution, allows decisions on expenditure of local funds to be made by locally elected
officials. Utilities Enterprise Fund projects are often deemed to be "public works" projects in
this context.
Since no precise definition of what constitutes a "municipal affair" has been judicially settled,
courts conSider the issue on a case by case basis. The expenditure of city funds on local projects
and the rates of pay of the workers the City hires to carry. out such projects has been held to be a
municipal affair. In 1981, Palo Also passed a resolution to pay prevailing wage "only when
required by federal or states grants and on other jobs considered to be of statewide concern."
(See Attachment A: Resolution 5981).
CMR:443:08 Page20fS
Recently, courts have blurred the issue of whether a charter city may elect not to pay prevailing
wage. For example, in 2004, the California Supreme Court in City of Long Beach v. DIR,
declined to decide whether prevailing wage law is such a matter of statewide concern that it
should override the ability of charter cities to conduct their municipal affairs. Since then, labor
unions have mounted a statewide' campaign to overturn existing law and declare prevailing wage
a matter of state concern. The charter city. of Vista is currently defending its choice not to pay
prevailing wages in a lawsuit brought by the State Building and Construction Trades Council.
Although the trial court reluctantly ruled in favor of Vista in December 2007, the case is pending
on appeal. A detailed summary of the case is included in this report's discussion below.
These recent judicial developments led the City Attorney to recommend that Palo Alto pay
prevailing wages on regional projects that transcend the city's geographic boundaries, even if
these projects could be considered municipal affairs. Capital improvement projects related to the
Citfs Water Quality Control Plant (WQCP) fall into this category. Some Charter Cities have
created special categories where they do not pay prevailing wages on low-income housing and
maintenance type projects, but do pay prevailing wage on construction projects. To date, Palo
Alto has not made this distinction.
Summary of Staff Research
Staff found that there is considerable disagreement on the impacts of prevailing wage rates on
project quality found in studies cited by the union groups and builder trade groups. Studies by
government agencies, however, concluded that paying prevailing--wage rates do not sigllificIDltly
change the quality of construction on most projects.
In a survey of contractors, it was reported that requiring the payment of prevailing wage rates
could reduce the quantity of bidders on projects by about 20% percent. Most contractors that are
not paying prevailing wages, which make up about 50% of the contractors responding to the
survey, will bid, prevailing wage contracts. In the majority of cases, the makeup of their
workforce does not change to accommodate prevailing wage requirements.
In its surveys of both contractors and other cities, staff found that implementing prevailing wage
rates in construction contracts may increase construction costs on City capital improvement
contracts by up to 10%. This increase would also affect projects involving private/public
partnerships.
The following sections present a summary of the studies related to prevailing wage reviewed by
staff and the results of surveys of other cities and contractors. The pending City of Vista case
related to the charter city exemption from prevailing wage is also discussed below.
Studies on the Effects of Prevailing Wage
A number of academic and government studies have examined the, costs and benefits' of
prevailing wage. Generally, these studies fall into three different camps:
Pro-prevailing wages studies, issued by University-level academics, and construction
trade organizations.
Anti-prevailing wage studies, issued by University-level academics, and various policy
institutes.
Government studies, issued by the States of Ohio and Kentucky legislative commissions.
CMR:443:08 Page 3 of8
Staff reviewed seventeen such studies, both pro-prevailing wage and anti -prevailing wage, and
studies prepared by government organizations. Summaries of these studies are included in the
attached memorandum dated ~ebruary 15,2008 (Attachment C).
Studies by government organizations provide some of the most interesting insight into the issue
of prevailing wage. These studies should, in theory, have no agenda beyond uncovering what is
in the best interest of taxpayers. All of the studies examined indicated that .prevailing wage laws
do not save money. Some studies did, however, equivocate about whether the benefits of
prevailing wage -once other unquantifiable factors were taken into account -may be higher
than the costs. .
The two most-referenced government studies are both studies conducted by state legislative
research offices, in Kentucky and Ohio. In Ohio, its Legislative Service Commission .issued a
study analyzing the effect of a 1997 bill that exempted school districts from being f.orced to
require prevailing wage. The study, which asked contractors for bids under and n.ot under
prevailing wage conditions, found that repeal did save money -especially .on smaller pr.ojects.
It asserts that the exemption yielded 1.2 percent in t.otal cost savings in new constructi.on, 10.7
percent savings on building alteration projects and 19.9 percent savings on building additi.ons.
This conclusion seems to str.ongly supp.ort the noti.on that the smaller projects have greater
savings when prevailing wages are not required.
Furtbennore, the study surveyed school-distriets to diseov'er if-they had net4ced any dee-rease in
the quality of construction. Six percent .of respondents said that they had noticed higher quality
construction since the exempti.on, 91 percent n.oted no change and 3 percent said quality had
decreased.
In one very unique case, the survey disc.overed that .one scho.ol district had put a project out to
bid under prevailing wage conditions and then rebid the projtct without such requirements. The
winning bidder in the second case, without prevailing wage, was 5.8 percent lower, yielding a
cost savings of more than $500,000.
In Kentucky, the legislature .also ordered its research arm t.o study the issue of prevailing wage.
The study made a notable number of findings, including learning that 60 percent of workers
surveyed were paid m.ore on prevailing wage jobs than on market-rate jobs;. the average increase
for prevailing wages was 24 percent over the workers' market rates. Among the 141-page
'report's .other findings were:
• 90.7 percent of non-uni.on and 24.4 .of uni.on contractors said prevailing wage laws raise
constructi.on costs.
• 55.4 percent of small firms (10 .or fewer empl.oyees) said prevailing wage laws have a
negative effect on their business, compared to 73 per~nt of large firms.
• 95.7 percent of citie~ and 83.3 percent .of municipal utilities that responded believe
prevailing wage laws increase construction costs, while, respectively, 7 and zero percent
believe laws increase quality.
• M.ore cities believed prevailing wage legislati.on decreases -not increases -qualitY of
construction.
It is w.orth n.oting that the report did n.ot call f.or the ab.olishment .of prevailing wages in
Kentucky. The report did n.ot take an opinion .on the issue. Its main .overall conclusion.on the
effectiveness of the legislation, h.owever, is as f.oll.ows:
CMR:443:08 Page 4 of8
To the extent that quality is increased, prevailing wages are an inefficient method
to increase quality. The wage requirement results in contractors paying higher
wages with no guar~tee that these additional wages will result in quality
improvements.
Aside from the Kentucky and Ohio reports, there are a number of smaller government reports on
the topic. The Federal Congressional Budget Office (CBO) and General Accounting Office
(GAO) have both issued reports on prevailing wage, with the GAO asserting that repealing the"
Davis-Bacon Act would save $1.2 billion annually. The CBO study, written during the early
1980's, was likely the impetus that caused the Reagan Administration to change the definition of
prevailing wage to the wage earned by 50 -as opposed to 30 -percent of local wage earners. It
found that repeal of Davis-Bacon would save $13 billion (2007 dollars) over five years and that
some 20 percent of open shop contractors have no interest in bidding on prevailing wage
contracts. It also recommended raising the threshold at which the prevailing law is triggered, as
the $2,000 trigger'was set in 1931 and has never been increased.
The final government study of note is another state legislative study -Maryland in this case -
conducted in 1997. Maryland's Department ofFisca1 Services, which issued the study, asserted
that repeal of the prevailing wage law then on Maryland's books would save the state between 5
and 15 percent on public works construction.
Smyyof California Qities
To further examine the policies of other California municipalities regarding prevailing wage law,
staff surveyed dozens of other cities on the topic. The survey was sent out to aU members of the
Association of Bay Area Governments, as well as to all Charter Cities that had email addresses
available. Forty-eight municipalities responded to the survey. Usually, the respondents were
public works officials, though a few city managers replied as well. A short summary of the
findings follows and the more detailed results are included in' Attachment C.
• 42 of 48 cities surveyed pay prevailing wage rates.
• 26 out of 32 Charter Cities pay prevailing wage rates.
• Based on the survey results, staff estimates that paying prevailing wages may increase
construction costs in the range of 5% to 10%.
• A large majority of the respondents believe that paying prevailing wages does not
increase quality of the work.
• Most believed that requiring prevailing wages decreases the number of bidders on
projects.
• Some cities have exceptions to paying prevailing wages for certain types of contracts.
The responding cities were also asked tQ provide comments ()n the positive and negative effects
of paying prevailing ·wages. TheSe are sumriwized below:
Positive Effects
.' Supportive of labor
• Evens the playing field
• Assures that workers are being treated and paid fairly
• Higher wages allow people to live closer to work
• More professional bidding pool
CMR:443:08 Page 5 on
1& Higher-quality work
Negative Effects
• Higher costs
• Fewer projects can be built
• Need for extra statling and paperwork for compliance monitoring
• Smaller pool of bidders .
Survey of Contractors
The Staff's research on prevailing wage did provide a number of insights into the views of
construction contractors on the topic of prevailing wage legislation. In addition, staff conducted
a survey of contractors bidding work in Palo Alto to best judge the impact a change in Palo
Alto's prevailing wage policy would have on construction projects in Palo Alto.
A summary of the survey results follows:
• Approximately 50 % of the ~ntractors responding pay prevailing wages on all contracts.
• Most contractors that do not typically pay prevailing wage rates will ,bid prevailing wage
contracts.
• 70% of the contractors not paying prevailing wage rates use the same labor force when
bidding prevailing wage contracts.
• The average of the estimated increase to construction costs associated with paying
prevailing wage rates was approximately 8% according to the contractors responding to
the survey.
City of Vista Court Case
. . As discussed previously, the Charter City of Vista is currently defending its decision not
to pay prevailing wages in a lawsuit brought by the State. Building and Construction Trades
Council. The outcome of this case will be very important, as it could detennine whether charter
cities can continue to exercise their ability to locally determine whether to pay prevailing wages
on local projects. Some background on the case is illustrative.
In June 2007, Vista became a Charter City. Before the election, the City prepared a fact
sheet discussing common questions regarding the Charter City prop'osition, including questions
and answers regarding the potential tax savings on local public works projects should the. City
chose to forego prevailing wages on municipal projects. 67% of Vista voters approved the
decision to become a Charter City. Vista plans on completing about $100 million in public
improvements in the near future; projects which would traditionally be considered within the.
realm of "municipal affairs" and paid from local revenues.
The State Building and Construction Trades Council of California; a labor union,
challenged Vista's assertion that it was exempt from prevailing wage law, arguing that the
prevailing wage statute is of statewide concern. Although the trial court reluctantly found in
favor of Vista, in issuing his ruling, the Superior Court judge stated that were he not bound by a
preceding case, Vial v. City of San Diego, he would have been inclined to grant the union's
petition. The' Vial decision stated that prevailing wage law does not apply to public works
projects of a chartered city, "as long as the projects in question are within the realm of
'municipal affairs.'"
CMR:443:08 Page60fS
The judge in Vista, however, contended that instead of focusing on the proj ect, a more
appropriate analysis would involve whether the prevailing wag~ statute is a matter of statewide
concern. Had the court not been obligated to follow Vial, the court acknowledged that it would
have found that the prevailing wage law is a matter of statewide concern and that Vista was
therefore bound to follow the law in relation to its pending public works projects.
The petitioner's appeal is currently pending before the California Court of Appeal and
oral argument was heard on Friday, November 14,2.0.08. A decision is expected in the next two
months.. Should the court frame the question as suggested by the superior court, and ask whether
the prevailing wage statute is a "statewide concern," it is possible that the Court will answer that
question affirmatively, thereby overruling or limiting the Vial decision. The California
Legislature has previously declared that the prevailing wage statute addresses two important
statewide concerns: (1) it prevents public projects from driving down area labor standards and
(2) it ensures training opportunities for apprentice construction workers. Even if Vista wins on
appeal, observers expect tbis case will eventually be appealed to the California Supreme Court.
A California Supreme Court decision would not be expected on this case for at least another
year. The City Attorney's Office will keep Council informed on the'status oftbis case.
RESOURCE IMPACT
The Adopted 20.09 Capital Budget includes about $11.5 million in General Fund projects, and
about $28 million in Enterprise Fund projects that are not now or will not require prevailing
wage in their constmction contracts The Enterprise Fund projects include those under the
-electric, water, gas, wastewater collection, . storm drainage and refuse fund programs. Projects
constructed by the Wastewater Treatment Fund already require prevailing wage as discussed
above and would not be impacted by a change in Council policy. If staff research proves correct,
the costs of the 2.0.09 General Fund projects could increase by as much as $1 million and the
2.009 Enterprise Fund projects could increase by as much as $2.8 million if Council were to
adopt a policy requiring prevailing wage rates be paid on all capital construction projects
contracted by the City. It also should be noted that any private/public partnership agreements
entered into by the City for capital construc~ion would also require payment of prevailing wage
rates on these construction projects (e.g. Art Center, Lytton Plaza, Junior Museum and Zoo).
POLICY IMPLICATIONS
The recommendation does not change existing policy. If Council were to change policy and
require prevailing wage be paid on all City capital construction projects, Council would need to
adopt an ordinance codifying such a requirement.
ENVIRONMENTAL REVIEW
Policy and Services Committee review of the prevailing wage policy issues presented in this
report does not represent a project under the California Environmental Quality Act (CEQA),
pursuant to Section 21.065 of the Public Resources Code.
CMR.:443:08 Page 7 of8
recommendations to move to prevailing wage. However, he is now less
confident that there is enough data to assure Council whether prevailing wage
would or would not cost the City money. Staff met with Neil Struthers to
review this issue. After those meetings, and given the current economic
climate, prevailing wage should be put on hold for this year. Staff should
design some test cases that will show comparisons using prospective bidding of
City projects. Staff recommends the Committee put this on hold. Staff will
report back to the Committee on a pilot test design by this winter so that by
next spring Staff can report back with more data.
Assistant Public Works Director, Mike Sartor, stated the Staff report included an
attachment that lists all projects that are considered maintenance, per the
Committee's request, to support a potential exemption for maintenance
projects. Attachments I and J show all General Fund and Enterprise Fund
capital projects. This shows a 5-10 percent potential impact based on the
application of prevailing wage requirements. A pilot study would help
determine if that is a realistic number. Lastly, Staff held meetings with
representatives of the Friends groups that have an interest in this issue. They
presented letters that are included in the packet detailing their concerns. The
resulting recommendation would be to exempt public private partnerships
. where the private partner would do more than 50 percent of the 'Nork and
manage the job.
Mr. Keene added that his goal is to make a clear recommendation for or against
a prevailing wage proposal. Staff has suggested that not having a mandatory
prevailing wage provision incites competition among firms that provide
prevailing wage. On the other side, Mr. Struthers suggested that not paying
prevailing wage may result in drawing from a smaller pool of firms, causing less
competitive prices. Hidden costs in performance could exist. There aren't many
projects in the near future, but there will be some important ones that will
assist in gathering data. He stated that Staff recommendsdeferment of action
on this and for the Policy and Services Committee to direct Staff to undertake
the recommended study.
Nicole Goehring, 4577 Las Positas Road, Livermore, requested that the
Committee go forward with a pilot study and not change the existing policy
regarding prevailing wage.
Council Member Kishimoto asked Ms. Goehring what her experience is
regarding the impact on wages paid and bidding on projects.
Ms. Goehring said that the City is at an advantage as they would have 30 to 40
bidders on a project. It would have a 5-10 percent impact on the bidding.
P&S: 090629 PS FINAL 2
Council Member Kishimoto asked if she had any sense of how many workers are
affected.
Ms. Goehring said it would depend on how the contractor puts the bid together.
Molly McAuliffe, 1554 Cowper Street, thanked Staff and the Committee for
hearing this issue and supported Staff's exemption for public/private entities.
She also announced that the Friends of the Palo Alto Junior Museum and Zoo
have. raised $350,000 to fund the next project.
Ben Lerner, 3482 Janice Way, spoke regarding prevailing wage as a resident
not affiliated with any group. He hopes the Committee votes in favor of
prevailing wage and hopes such an ordinance has no exemptions. It's in the
best interest of all involved parties because it creates an improved quality of
work, defers negative costs to society, and it's a good example for Palo Alto to
set.
Neil Struthers, 2102 Almaden Road, San Jose, Head of the Building and Trades
Council, thanked Staff for meeting with him last week and feels that progress is
being made. The pilot study is a reasonable plan as Staff and Council need to
be comfortable that they are doing the right thing. There are a lot of tangible
-benefits to having this policy in a city like Palo Alto; not having one sends a bad
message. He understands that Staff looks at things conservatively, whereas he
is less conservative, looking at the global impact. He is confident that, given
the right criteria, this issue will be re-visited within a year and Staff will be
confident in their support at that time. Mr. Struthers said he is experiencing
20-30 bidders on public works projects. Contractors must decide to do public
works projects or go out of business as it is the only thing being financed. More
competition is good typically but some contractors are submitting bids way over
their head.
Council Member Kishimoto asked about a gap emerging on large projects,
stating that there isn't usually much of a difference in prevailing wage versus
. non-prevailing wage. She asked if there is a difference in submitted bids, if
they were dropping and if so, how rapidly.
Mr. Struthers wasn't sure if prevailing wage is lowering wages, but the
contractors let go of less skilled workers when times are tough. So now
contractors have more skilled workers and they are being paid prevailing wage
based on their skills. We are seeing their bids come in lower than non union
private and public. This will continue to be measured. Productivity isn't
factored into most studies.
P&S: 090629 PS FINAL 3
Council Member Barton stated that he will reluctantly support Staff's
recommendation. This issue has been an important one that he has worked on
for two years. He also expressed frustration over the concern for costs. The
City should pay more for services just as we are asking our citizens to pay more
for many projects. In addition, if there are so many conflicting studies
regarding the impact of prevailing wage, it's probably a wash. His personal
experience has taught him that preliminary pricing for private projects,
including three bidders where one is union and two are not union, had bids that
were close. He pOinted out that even if there were a five percent surcharge for.
projects, prevailing wage is the right thing to do. The City is going to upgrade
emergency water, and charge more for it, but it's the rightthing to do. The
Business License tax costs businesses more, but it's the right thing to do. The
City can't have it both ways; we'll need to pay more too. He reiterated that he
will reluctantly support Staff's recommendation in recognition of all the work
that has been done and he hopes that, if he isn't on the Council when this issue
is revisited, that someone else will take his stance.
MOTION: Council Member Barton moved, seconded by Council Member
Kishimoto, that the Policy and Services Committee defer the prevailing wage
Ordinance for one year and direct Staff to study the issue using pending
_ .. J2rojects to achieve constructive data.
Council Member Kishimoto asked for an update on the City of Vista Prevailing
Wage Court Case
Senior Deputy City Attorney, Melissa Tronquet, stated that the city is waiting
for resolution. Palo Alto has an Ordinance stating that, as a Charter City it is
not required to pay prevailing wage. A group challenged the Charter City
exemption in the City of Vista, as it should be a matter of state wide concern.
They won at both the trial and appellate levels; both were appealed. Charter
Cities may still opt in or out, and there will likely be another appeal.
Council Member Kishimoto asked for clarification on the type of data Staff will
gather.
Mr. Sartor said Staff has not put together a plan on how to do the study yet.
The thoughts are that Staff would want to evaluate engineer's estimates with
bids that come in and compare to prevailing wage or not prevailing vvage. Staff
also thought of using Add Alternates to look at a way of gauging the cost
difference. Staff will confer with experts such as Mr. Struthers and put together
a plan that makes sense. Staff has gone as far as thinking of some specific
projects to see if they can bid those with prevailing wage requirements to see
how they might look.
P&s: 090629 PS FINAL 4
Mr. Keene added that the City doesn't have an unlimited amount of time or
projects. Anything will not be perfect, but it will be structured enough to give
better results, and provide more confidence in decision making. An Add
Alternate approach mayor may not be the best way. Staff may decide to study
two separate projects that are alike and see how they bid. It may be hard with
out a short term project to do the quality assessment. Staff can look at
prevailing wage union or not union with a prequalification, to control a bit for
the capacity. Staff is not ready at this time to be definitive in the design. The
intent is that this will be a collaborative design approach.
Council Member Kishimoto wanted to look at the impact on the workers on that
project, what wages they are getting paid and what their skill level is. She
referred to an item on Monday's Council Agenda about DBEs, the
Disadvantaged Business Enterprise program for minority and women owned
businesses, which are only 6 percent in Santa Clara Valley. She asked if there
is anything we are doing to encourage more women and minorities to enter
these fields and to own these companies.
Mr. Keene said that Staff would treat that as another issue to focus on. As we
deal with different types of data, we could look at it to see any patterns.
------------------~-~~-----
Chair Espinosa asked about the mention made to the most recent financial
report and requested clarification.
Mr. Keene said that Staff was looking at what the infrastructure reserve would
be at the end of this biannual budget, and it's down to $1.6 million based on
the budget that Council adopted. With reserves, pooled cash and investments,
it may end up being closer to $1 million.
Chair Espinosa asked if Staff has a sense of how many projects in next 12
months would qualify.
Mr. Sartor said the projects he spoke of earlier were General Fund projects that
are coming up such as Greer Park and the Downtown Library, and then later in
the year, Mitchell Park Library. There are a number of projects in the Utility &
Enterprise Fund, such as storm drain rehabilitation.
Assistant Director of Utilities Engineering, Tomm Marshall, confirmed that they
have a number of projects that would fit into the prevailing wage ordinance. He
believes most of their projects already pay prevailing wage. There should be 5
or 6 projects annually that would be appropriate for a study.
Chair Espinosa asked for specifics regarding the timeline and how long it will be
before Staff gets back to the Committee.
P&S: 090629 PS FINAL 5
Mr. Keene said that taking into consideration the concerns expressed by the
Committee, Staff would revisit this sooner rather than later. The goal would be
to get back to the Policy and Services Committee some time in the next couple
of months, and Council by the end of this fiscal year. He also said that to be
fair, it could be a year from now.
Chair Espinosa confirmed that Staff would come back to the Committee with
the study criteria within a couple of months and then within a year with final
results. He hopes that when it does come back it will clearly address the
concerns raised regarding price and quality of service, as well as the pay and
for any sort of package that takes care of workers and how that's weighed.
MOTION PASSED 3-0 Yeh Absent
3. Review of Open City Hall Pilot Program and Recommendation to the City
Council Regarding Continuation of the Program
Assistant to the City Manager, Kelly Morariu, said that Council approved a six
month pilot of Open City Hall in 2008. The City launched the forum in 2009 with
the first topic being composting. One to three topics for each agenda are
posted each week and there have two on-going topics: High Speed Rail and
Long Range Forecast. Each Thursday prior to a Council Meeting, staff posts a
question and people are allowed to post comments until Monday at noon when
the topic is closed. Comments are printed and left at places for Council on
Monday. It's a small window of time for comments, but that is the way the
agenda process is structured. The cost is fairly minimal. The City paid a $5000
set up fee, and pays $200 a month for ongoing maintenance, for unlimited
topics. Th~re is a 24 hour holding period where Peak Democracy staff review
the comments, and no statements have been held so far. Regarding average
usage, the site has had 137 visitors and an average of 24 statements per topic.
If compared to the 3 minutes of public commentary time at Council meetings,
that equates to about 1.2 hours public commentary that has been transferred
to the Open City Hall Program, and is equal to .4 statements per thousand
residents. Each time a new user signed up, they were asked to complete a user
survey. Eighty seven users like the forum and left a number of comments
about why they liked it. A few complaints were about technical issues, most of
which were resolved fairly quickly.
Robert Vogel, Peak Democracy, said that Open City Hall is an online forum that
is both civil and free speech compliant. Palo Alto is getting an average of 24
statements per topic, which is equivalent to 1.2 hours of Public Comment orally
presented but being in writing it's easier to review. He spoke regarding the
usage of Open City Hall in context with the five other Cities that have used it in
P&S: 090629 PS FINAL 6
the last six months. Palo Alto is the only City using it exclusively for Council
Agenda items. Decatur GA, State College PA, and Lake Oswego OR, are using
it for Council agenda items, as well as some more general items. Montgomery
OH is using it exclusively for more general items. He stressed that he wanted
to share these examples to give a sense of what they are doing to bring people
to the forum and to publicize it. If the City wants to increase the number of
users there are opportunities to do so. To identify them, he did a comparison of
the type of usage from all five cities. Palo Alto has .4 statements per topic per
1000 residents; other cities are seeing a broad range of participation from .3 to
2.1. That range of partiCipation rates is easily understood when you look at
how other cities are publicizing their forum. Decatur and Lake Oswego are
announcing each new topic via email using City email lists. Montgomery
announces their topics in a monthly newsletter that goes to every household.
Palo Alto and State College have no similar program and are only seeing a
participation rate about 20 -30 percent of the others. Another opportunity to
increase participation is related to a development recently put into the
software. Open City Hall can now run clones on other websites. The City can
add it to the City of Palo Alto website. Sacramento is using the Open Town Hall
program where the Mayor chooses issues and updates them in a· form that he
controls, and the form is embedded in the Sacramento Bee as well as in Capital
Pllblic Radio Website. Media outlets carry the forum to be consistent to their
mission and to bring readers to their website. The City can invite the local
newspapers to embed a copy of the forum on their websites, as well as embed
it on the City's website, at no extra charge.
Ms. Morariu said that Staff recommends continuing the Open City Hall program
at the same $200 a month service fee. Staff's time to manage the forum is 1-3
hours a week when there are topics. Staff has been exploring ways to increase
participation. The City can work with the local media outlets to get it on their
websites, as well as putting it on the City's website. The pilot was on the Open
City Hall website to insure the public recognizes the program's independence
from the City, but at this point adding it to the City website would give it some
legitimacy. Staff also wants to reach out to the neighborhood associations, in
lieu of a comprehensive email list like Decatur and Lake Oswego has. Staff also
wants to look at how to incorporate the Open City Hall logo on the printed
agendas to identify the topics that are on the forum. Lastly, staff is looking at
increasing the number of issues on the forum, as a response from various
Boards and Commissions as well as other Council Committees.
City Manager James Keene concurred with Ms. Morariu and added that he
doesn't think that the pilot really hit it out of the park, but it did get
participation and civil commentary with a high level of discourse taking place.
P&S: 090629 PS FINAL 7
Staff is working on the area of social networking, such as establishing the City's
own Facebook page and Twitter Account. Tweet notices can be sent in the
absence of email list.
Chair Espinosa shared three pOints that Council Member Yeh shared with him
earlier: 1) Peak Democracy should continue, 2) Distributing it At Places doesn't
work because there isn't enough time to influence decision making, which ties
into the bigger issue of Council not getting the staff reports early enough; and
3) the need for more publicity is paramount to the success of the program.
Council Member Kishimoto recognized that Peak Democracy first contacted her
two years ago, so it is nice to see it going. She agreed with Council Member
Yeh's comment regarding the timeliness of the reports, agreeing that At Places
isn't useful. She asked Staff if the Council can get the comments real time.
Ms. Morariu said that it would be possible for Council Members to view
comments on the forum as often as they would like or Staff could distribute
comments via email on Monday at noon instead of waiting until the end of day.
Council Member Kishimoto said that those options would be better than the
<::ljrrent process of putting the comments At Places. She agreed that the value
of this program is uneven. She was disappointed that there is no longer a one
page view containing one line from all the comments. It is less dynamic now.
She would like the City to take advantage of the knowledge and analysis our
residents have and do, getting them to add their hard earned information to
Peak Democracy is her goal.
.Mr. Vogel explained that the previous look of the website that Council Member
Kishimoto was referring to was a prototype that was much more labor
intensive. The one line comments were hand selected and edited. It would
require work to do it.
Council Member Kishimoto suggested showing just the first one or two lines
from the most recent comments. Only seeing the numbers of yes and no's is
not as compelling for the public to read further and add their own comments.
She asked if there is a way for people to sign up for email notifications.
Mr. Vogel said that the original press release attracted 200 or so people to sign
up and receive additional announcements as topics are added. This is less than
the several thousand subscribers other cities have, but they started with a
mass email distribution, Palo Alto did not.
Ms. Morariu added that if it were embedded in the City website, staff would be
able to use the Gov Delivery service so that people can subscribe through that.
P&S: 090629 PS FINAL 8
Council Member Kishimoto asked if High Speed Rail is a perpetual topic.
Mr. Keene said it might be best to put the comments on the City's website so
we can keep a rolling history of commentary and perhaps even a database.
High Speed Rail has a set of deepening, evolving opinions, data and grass roots
strategies. Then it would start to become part of a body of work and it might
be more compelling to participants.
Mr. Vogel agreed with Mr. Keene about having some editorial process to have
the most relevant topics at the top.
Council Member Barton agreed that the trial wasn't perfect but believes it
should be continued. It's not expensive enough for the financing to be
prohibitive. The timing of when Council gets the comments doesn't work.
What does work is the way Staff sends out the answers to Council Member's
questions that come out around 2:00 -3:00. If Open City Hall came out at that
time he stated that he would have time to read it. He is concerned about the
idea of editing the comments; the City shouldn't be making the decision about
what's best. The point is to have something to engage people. He would like
to see it embedded with randomly selected comments that comaup and change
frequently. The current structure is to put the most recent comments on top,
unedited.
Mr. Vogel said that it is important to make sure the users can't edit their
comments in order to have them move back to the top. Open City Hall is set
up so that it is sorted by creation date, not updated date. It is also critical that
if the City does edit or filter comments, that there is no political agenda behind
it.
Council Member Barton said that because Palo Alto's daytime population is so
much bigger than the night time population, there is value to a passive
communication system. An email communication would miss a lot of the
daytime reSidents, even though they do have a stake in the decisions made by
the Council, such as with business license taxes. He also said that he likes the
agenda pages the way they are currently posted on the website. Users are able
to click on a link that leads them to a PDF of the agenda item. It would be
helpful if we could put an Open City Hall logo next to that link, so that users can
click on it and get to the Open City Hall page. He then asked if there is a way to
find out where the users came from.
Mr. Vogel said that they do know where the users are coming from and they do
have the ability to share that information with the City.
P&S: 090629 PS FINAL 9
Council Member Barton said the Media Center partnering would be interesting
because they could reflect the item back to their video post back to the
discussion and there might be some value. He asked if it can be embedded in
Facebook.
Mr. Vogel said Open City Hall can be embedded in sites like Facebook, and
asked if the City has a presence on Facebook.
Mr. Keene said that the Staff is currently working on it.
Council Member Barton reiterated that Facebook is another opportunity to get
Open City Hall some passive exposure. He also stated that embedding it in the
City website makes sense. Overall, he found the program valuable. He tries to
reflect on the public comments, but it is difficult to do right before the Council
meetings. There has been occasion where he has seen that the tally on Open
City Hall is different than what he hears from other sources. It gives him a
fresh perspective. It is consistently on topic. Palo Alto Online is an intriguing
idea but it is too scattered and unpleasant to be useful to him as a policy
maker.
Mr. Vogel said if we embed it in a local newspaper the format wUI be exactly the
same as it is now on Open City Hall. There should be no change in the quality
of comments, and this was indeed the outcome of the experience in
Sacramento.
Council Member Barton asked how Open City Hall fits in to the FPPC fairness
rules. If a newspaper hosts a Mayor's page during elections, it would be an
endorsement. He then asked if they would be able to host similar pages for
other candidates.
Mr. Vogel said that the forum is open to all elected officials now, and when an
election comes up, it would open to all candidates.
Chair Espinosa asked Staff to speak to the cost impacts of the program and
whether adding additional items from Committee Members or Boards and
Commissions, increasing outreach, email communications or increasing the
number of items discussed increase the cost of the program.
Ms. Morariu said that, originally, there was a per-item cost, but was changed
during the pilot. The City pays a $200 per month flat fee for an unlimited
amount of topics. Having the Boards and Commissions add items would not
increase the cost. She stated that there might be an increased Staff cost, due
to a possible increased need for coordination. Increasing the public's
P&S: 090629 PS FINAL 10
comments about the program. She feels that expanding the outreach will
address a lot of his concerns. She also hopes to attract more in-depth
comments. Palo Alto residents do a lot of research on the topics that affect the
City; it's great to have a forum for them to share all of that. However, three
days isn't enough time for them to do all that work, and then to respond with
in-depth answers, so longer term topics would be useful. It is also valuable to
see real time data.
Council Member Barton agreed in part with Chair Espinosa's comments, but
believes the start up money has been spent and should now be leveraged. He
added that if this conversation is still happening in a year or two, then it might
be time to stop the project.
Chair Espinosa said that if the City must continue to use the program, it should
include other Boards and Commissions as they deal with some hot topics that
should be included.
Council Member Kishimoto agreed to include Planning and Transportation
Commission and other Boards and Commissions as Staff sees fit.
_~_QTION PASSED 2-1 Espinosa no, Yeh absent
3. Discussion for Future Meeting Schedules and Agendas
Assistant to the City Manager Kelly Morariu said that the next regular scheduled
meeting is July 14th. The currently scheduled agenda is the Legislative Program.
The Committee had asked Staff to bring an expert in to discuss this. Dan
Carrigg from the League of CA Cities is willing to come speak, but won't be able
to come until September. While no expert will be there, Staff and the
Committee can still have a more general discussion.
City Manager James Keene added that he wanted to have a general
conversation with the Committee regarding their scope of work, and how Staff
identifies the stream of issues that is coming to the Policy and Services
Committee.
Chair Espinosa said that he had raised that issue as well. He felt this is a good
time to discuss the Committee's role and make sure the agenda is broad and
comprehensive. He then asked what would be involved with a general
conversation regarding the legislative program.
Ms. Morariu said that a general conversation might include the City Manager
speaking about effectiveness of the lobbying efforts and ways to incorporate the
P&S: 090629 PS FINAL 12
Council into the lobbying process as well as discussion about Sacramento
lobbyists and Federal lobbyists.
Chair Espinosa said that he is concerned about the lobby effort and
opportunities that may be missed if we push out the agenda.
Ms. Morariu said that Council has already adopted the legislative program for
this year. This was about more of a general structure for moving forward.
Mr. Keene said that he would like to have a discussion on the routine process
for working with our local officials, and how the process is working for Council.
Chair Espinosa agreed that we must discuss the process. There are also more
specific issues such as High Speed Rail, and figuring out how to track this on a
more useful basis is critical. He again expressed concern that this is being
pushed out to the fall. He stated that High Speed Rail is coming fast and the
Committee needs to get back to Council with specific requests.
Council Member Kishimoto said that most of the bills are turning into two year
bills, so the urgency is not as strong as it was. She also suggested that the
lilly meeting move to July 7th or 21st•
Chair Espinosa reiterated that the Committee and Staff can discuss this without
the lobbyists.
Mr. Keene said it would be a good chance for Staff to gauge what the
Committee wants to see, rather than waiting until the fall.
Chair Espinosa agreed that such a conversation would be helpful. He said he
can not attend a meeting on July 7th•
Ms. Morariu reminded the Committee that the Finance Committee has meetings
on both June 7th and June 21st•
Council Member Kishimoto asked if that would create a conflict with Staff.
Mr. Keene said he may have conflict on June 21 st•
Council Member Kishimoto asked if June 15th might work better for everyone.
Chair Espinosa tentatively agreed to June 15th•
Ms. Morariu said that the Attorney's Office wanted to add the Ad Hoc
Committee Policy as the third item.
P&S: 090629 PS FINAL 13
ADJOURNMENT: Meeting adjourned at 8:52 p.m.
P&s: 090629 PS FINAL 14
TO:
FROM:
DATE:
ATTACHMENT I
POLICY AND SERVICES COMMITTEE
CITY MANAGER
DECEMBER 17, 2009
DEPARTMENTS: PUBLIC WORKS
UTILITIES
CMR:472:09
REPORT TYPE: RECOMMENDATION
SUBJECT: Policy and Services Committee Recommendation That City Council
Direct Staff to Perform a Study Evaluating the Impact of Prevailing
Wage on City Capital Construction Projects
RECOMMENDATION
Staff recommends that the Council Policy and Services Committee recommend that City Council
direct staff:
1. To perform a pilot study of potential prevailing wage impacts on selected Capital
Improvement ProjectS (CIPsrw determine whether the· prevailing wage requirement
impacts the number of bids, project costs, change orders and other factors.
2. To develop a survey to be submitted to all bidders on Palo Alto construction projects that
will be used to evaluate differences in benefits and work conditions between contracting
companies paying or not paying prevailing wages.
EXECUTIVE SUMMARY
This report responds to the June 29, 2009 discussion by the Council Policy and Services
Committee (P&S Committee) regarding prevailing wage requirements for City capital projects.
At the June 29 meeting, the Policy and Services Committee indicated an interest in requiring
prevailing wages on City capital construction contracts and moved that the P&S Committee
defer recommending any prevailing wage Ordinance and direct staff to study the issue using
pending projects to achieve constructive data. This motion passed on a 3-0 vote with Committee
member Yeh absent (see P&S Committee minutes Attachment A).
In October, staffmet with representatives of the Santa Clara & San Benito Counties Building and
Construction Trades Council (Trades Council) and the Associated Builders and Contractors
(ABC) to discuss possible prevailing wage study criteria. At the meeting, the group agreed that
the City should pick a few projects that could be bid with and without prevailing wage to
determine differences in actual bid prices. The group also discussed a possible survey that could
be sent to contractors bidding Palo Alto construction projects to evaluate differences in benefits
. and work conditions present at companies paying or not paying prevailing wage on their
projects. This report presents the details of the recommended prevailing wage study.
CMR:472:09 Page 10f6
2F
BACKGROUND
As a charter city, Palo Alto is not required to pay prevailing wages on ''public works" projects,
so long as the projects are within the realm of "municipal affairs," funded entirely by local funds,
and no other statutory exceptions apply. This "home rule" principle allows decisions on
expenditure of local funds to be made by locally elected officials. In 1981, Palo Alto passed a
resolution to pay prevailing wage "only when required by federal or state grants and on other
jobs considered to be of statewide concern." (see Attachment B, Resolution).
Recently, charter cities' power to opt out of state prevailing wage law was upheld by California's
Fourth District Court of Appeal in State BUilding and Construction Trades Council of
California v. City of Vista, (2009) D052181. In 2007, the City of Vista, a charter city like Palo
Alto, adopted an ordinance under which city contracts generally would not require payment of
the prevailing wage. The Court held that state prevailing wage laws were intended "to keep state
contracting from undermining what local markets have established." However, because an
ordinance like Vista's would not materially interfere with the stability of the area's labor market,
the effect of ordinances like Vista's were not a matter of statewide concern. Therefore, the court
held that charter cities, like Vista and Palo Alto, retain the power to opt out of the state's
prevailing wage law.
The State Building and Construction Trades Council of California intends to petition the
California Supreme Court to review this case. In the meantime, the Vista decision is still good
law , and it affirms the City of Palo Alto's right to opt out of paying prevailing wage.
Also relevant is SB 9EX, which the Governor signed on February 20, 2008, noting the (then)
ongoing litigation in Vista. SB 9EX narrowed potential prevailing wage obligations for charter
cities involving work on water, sewer, or storm drain systems that have previously been extended
to disadvantaged communities.
Amid the recent debate over charter cities' prevailing wage requirements, on December 9,2008,
staft' presented to the Council and the Policy and Services Committee a recommendation that
Council not change current prevailing wage policy, allowing City capital construction (''public
works") projects to be bid without prevailing wage requirements ~ess prevailing wage is
required for the project pursuant to state or federal law, due to potential cost impacts to the City's
General and Enterprise Fund Capital Improvement Programs (CIPs) (CMR 443:08,
Attachment C). The Committee carefully reviewed this recommendation and decided it was in
the best interest of the City to recommend to the full Council that a resolution be adopted
requiring prevailing wage on all City capital construction contracts. The Committee also
instructed staff to recommend types of construction contracts that could be considered for
exemption from a prevailing wage requirement Minutes of the December 9th meeting are
attached (Attachment D).
On March 10, 2009, staff presented to the Council Ad Hoc Committee on Prevailing Wage
proposed exemptions from the possible prevailing wage policy· discussed at the December 9,
2008 Policy and Services Committee meeting. The possible exemptions reviewed with the Ad
Hoc Committee were:
1. Maintenance projects under $250,000 as defined by Section 22002 of the California
Public Contract Code;
CMR:472:09 Page 2of6
/
2. Projects using public-private partnership funding;
3. Projects that construct/rehabilitate affordable housing for people. with .low or. moderate
incomes; and
4. Projects where the work is perfonned either entirely or partially by volunteers.
A detailed discussion of the above staffrecommended exemptions can be found in (CMR:150:09
Attachment E). At the March 10 meeting, the Ad Hoc Committee on Prevailing Wage
recommended that Council approve the staff recommended exemptions for projects where the
w9rk is' perfonned entirely by volunteers, and low and moderate income housing projects.
Minutes of the March 10th meeting (see Attachment F). The Ad Hoc Committee asked staff to
come back to the full Council with additional infonnation on possible exemptions for
maintenance projects ~d projects involving public-private partnerships, as well as clarification
that the proposed exemption for affordable housing would apply unless otherwise required by ,
law. Specifically, the COmmittee asked staff to present justification for the proposed $250,000
threshold for maintenance projects that is reflective of the dollar value of most maintenance
contracts and not tied solely to 'the $250,000 threshold cited in Section 2.30.210 of the City's
Municipal Code for Public Works projects requiring City Council approval. The Committee also
asked staff to develop criteria for exempting public-private partnership projects that reflects the
amount of City funding in these projects and addresses project administrative responsibilities.
This information is discussed below for consideration by the Council Policy and Services
Committee.
At-· the June 29, 2009 P&'.S committee meetmg, staff recommended that the Comrmttee
recommend that the City Council retain its current prevailing wage policy, allowing City "public
works" construction projects to be bid without prevailing wage requirements unless prevailing
wage is required for the project pursuant to state law, in light of the City's current economic
difficulties and to avoid additional cost impacts to the City's General and Enterprise Fund
Capital Improvement Programs (CIPs). At that time, staff also recommended a pilot study of
. potential prevailing wage impacts be conducted on selected CIPs where prevailing wage would
be required, to detennine to the extent feasible, whether the prevailing wage requirement impacts
the number of bids, project costs, change orders and other factors. At this meeting, staff also
presented additional infonnation on a possible exemption for maintenance projects less than
$250,000 and another possible exemption for Public-Private Partnership projects where the
private party is the lead entity funding 50% or more of the project cost and manages the project
design and construction. The attached staff report (CMR:236:09 Attachment G) contains a full
discussion of the prevailing wage topics presented at the June 29 meeting. At this meeting, the
P&S Committee voted unanimously (with Committee member Yeh absent) to defer the
prevailing wage Ordinance for one year and direct staff to study the issue using pending projects
to achieve constructive data. The P&S Committee Chair also confrrmed that staff would come
back to the Committee with the study criteria within a couple months and then within a year with
fmal results.
DISCUSSION
In October 2009, staff met with representatives of the Trades Council and the ABC to discuss
possible prevailing wage study criteria and to seek their input in the process. At the meeting,
two possible methods of comparing prevailing wage impacts were reviewed. One method would
be to select a few upcoming CIPs where the work could be divided into two separate contracts,
one with and the other without prevailing wage requirements. These contracts would all be over
CMR:472:09 Page 3 of6
the Citts Municipal Code bid solicitation threshold ($65k) and would be fonnally bid. The
other method of evaluating potential prevailing wage impacts would be to survey contractors
bidding Palo Alto CIP project~ to measure differences in worker benefits and working conditions
provided by contractors paying or not paying prevailing wage on their projects.
Selected CIP Projects
Next fiscal year's CIP will include some projects that could be separated into two contracts, one
with prevailing wage and one without. These projects will need to be of similar size and scope
to ensure comparable bid price data. The projects would be bid in late spring in anticipation of
funding with the adoption of the 20 II Capital budget. Some of the projects staff will consider
using this approach include:
• Annual street maintenance projects
• Annual sidewalk replacement projects
• Utility main replacement projects (water, gas and wastewater)
Bids received on these projects are typically good for 60 days after bid opening so the contract
awards on these projects could easily occur shortly after budget adoption in late June when both
General and Enterprise funding becomes available. Staff will evaluate which of these projects
would be ready to bid by late spring so that bid results will be available for evaluation and
reporting back to the P&S Committee by summer 2010.
-nSWVey of Contractors
A survey would be conducted of contractors bidding Palo Alto construction contracts. The
survey would be distributed to the bidders' list on all contracts bid over the next several months.
The survey would be used to measure those things that have a real impact on worker benefits and
working conditions to evaluate to the extent possible, the impact prevailing wage has on
construction workers. Survey questions may include:
• Do you have a defined retirement benefit plan and what is the employee contribution to
this plan?
• What is the employee vesting requirement for your retirement plan?
• If your company participates in a multi-employer retirement pension plan, what is the
amount of underfunding in your plan?
• Is your retirement pension plan regarded as "endangered" or "critical" by the u.S.
Department of Labor?
• Do you provide a health care plan and what is the employee contribution to this plan?
• What is the employee contribution to the health care plan and who does it cover?
• What is the average years of experience for your workforce?
• Do you participate in an apprenticeship program and if so which one?
• Have you bid ''public works" projects in Palo Alto before?
• Did your company receive subsidies for your bid, such as "market recovery" or ''job
targeting"funds?
These survey questions were developed in conjunction with representatives of the ABC and the
Trades Council. If the P&S Committee recommends that Council direct staff to proceed with the
staff recommendations included in this report and Council approves the study, staff will meet
CMR:472:09 Page4of6
CITY OF PALO ALTO
MEMORANDUM
DATE: March 8, 2010
TO: City Council Members
FROM: Council Members Yeh, Holman, and Scharff
SUBJECT: Request for the Council to refer to Policy and Services to return
with a recommendation for 1) an amendment to City policy to
require release of CMRs and supporting documents (The Packet)
at an earlier date and 2) amend Council policy regarding late
submissions for Planning projects.
RECOMMENDATION
We ask our Council Colleagues to refer to Policy and Services for a discussion of
(1) City policy regarding the earlier release of the Packet and (2) a review and
recommendation for a Council policy regarding late submissions.
BACKGROUND
Council packets are currently released on Thursday evenings for Monday
Council meetings. Several issues exist related to this policy. Issues have also
been identified related to late submissions.
Issues include:
• inadequate time for Council, public, applicants, media and other
interested parties to review and analyze materials;
• inadequate time to formulate questions and get answers to questions,
given the limited time available to staff to provide
responses with the 9-80 work schedule;
• does not maximize an open and transparent
process for disseminating and reviewing Council agenda materials;
• continues to be a source of ongoing criticism by the public and media;
• fuels the appearance of and concern that applicants use late submissions
to circumvent scrutiny of relevant materials.
PURPOSE
An earlier release of the Packet will resolve or mitigate these issues in positive
and proactive ways. Adequate time for review will also better assure effective
and efficient analysis by various stakeholders and improve the efficiency of
Council meetings. The change is also intended to bring Palo Alto into general
consistency with the practices of other communities which have an earlier
release date and do not have a 9-80 staff work schedule. Establishing a policy
that governs late submissions will eliminate concerns that some "game the
system" and thus avoid appropriate consideration of project review.
PROPOSAL
That Policy and Services is being asked to:
1) • review and recommend a policy change to establish an earlier Packet
release date;
• direct and support staff in determining and establishing deadlines for
material submissions from applicants and others and any other issues that
need to be identified and addressed to effectuate this change in the
Packet release date;
• establish a deadline for implementation and no later than the first Council
meeting following the August Council break;
2) review and recommend a policy precluding last minute proposals and
submission of materials that are integral to decision making on Planning
projects after staff-designated deadlines for packet preparation;
RESOURCE IMPACT
Staff and Policy & Services will review the resource impacts of any proposed
changes after further staff research and analysis.
DATE:
TO:
FROM:
CITY OF PALO ALTO
MEMORANDUM
March 8, 2010
City Council Colleagues
Vice Mayor Espinosa and Council Members Klein, Scharff, and
Schmid
SUBJECT: Request for the City Council to appoint an Infrastructure Blue
Ribbon Commission (IBRC)
PROBLEM
Staff has advised us, based on prior studies, that we have a backlog of
approximately $500 million of infrastructure projects. We presently allocate
about $10 million per year of the General Fund budget to infrastructure. At
that rate, we will never reduce that backlog and in all likelihood will fall
further behind. However, the Council has not explored in depth the need for
particular projects in the $500 million list, whether additional projects should
be added to the list and whether a bond measure or other financing
measure should be attempted to reduce or eliminate this backlog.
RECOMMENDATION
The Council appoint, as soon as feasible, an Infrastructure Blue Ribbon
Commission (IBRC) to advise us on the questions set forth in the Problem
statement. The IBRC would be charged with providing its report to Council
no later than February 28, 2011, so that there would be sufficient time for
the Council to review the report and put an item on the November 2011
ballot if that was deemed desirable (final Council action would have to take
place by late July 2011 for an item to be on the November ballot).
The I BRC would be advised that it could assume that the Council would
continue to fund infrastructure at not less than 5% of General Fund
revenues per year.
We suggest that the IBRC consist of 18 members, each Council Member to
appoint two following such procedures as he or she deems appropriate.
One of the Mayor's appointees would serve as the Convener and the IBRC
would elect a Chair and Vice Chair within its first 30 days. The IRBC would
be subject to the financial disclosure rules and the Brown Act.
We hope that the IBRC would be seated and get to work no later than May
1,2010.
A copy of this Memorandum has been sent to the City Manager who has
expressed general agreement with its contents but has not as yet provided
any specific comments. He supports sending it to Policy and Services
Committee at this time for further discussion.
CONCLUSION
We hope that you will join us in voting to send this proposal to the Policy
and Services Committee for further consideration with direction that the
matter be returned to the full Council in time for action at the Council's
meeting of April 5, 2010.
CITY OF PALO ALTO
Memorandum
March 8, 2010
TO: HONORABLE CITY COUNCIL
FROM:
DATE:
CITY MANAGER
MARCH 8, 2010
DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
SUBJECT: Approval of the Water Supply Assessment for the Proposed Stanford
University Medical Center Facilities Renewal and Replacement
Project.
The applicant requests that this item described above be continued to the City Council hearing of
March 15,2010.
Thank you,
CURTIS WILLIAMS
Director of Planning and
Community Environment