HomeMy WebLinkAbout1994-05-23 City Council Summary Minutes
Regular Meeting May 23, 1994 ORAL COMMUNICATIONS ........................................ 73-24 1. Agreement between the City of Palo Alto and Towill, Inc. for Aerial Photogrammetric Mapping of the Palo Alto Landfill .......................................... 73-24 2. Rental Agreement with the Palo Alto City Employees Federal Credit Union ................................... 73-24 5. Contract between the City of Palo Alto and M & G Con-struction for Wastewater Collection Phase III - Sanitary Sewer Rehab Project ........................... 73-24 6. Contract between the City of Palo Alto and West Valley Construction Company, Inc. for Phase III Gas Main Replacement ............................................ 73-24 7. Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Submit an Application for AB 434 Funding for the Alternative Fueled Vehicles Demonstration Project .................................. 73-24 8. Ordinance of the Council of the City of Palo Alto Approving and Adopting the Plans for the Construction of a Concession Stand and Storage Facility for the Baylands Athletic Center Within the City-Owned Baylands 73-24 AGENDA CHANGES, ADDITIONS, AND DELETIONS ................... 73-24 10. Conference with City Attorney--Potential/Anticipated Litigation ............................................. 73-25 11. Conference with City Attorney--Existing Litigation ..... 73-25 12. Conference with City Attorney--Potential/Anticipated Litigation ............................................. 73-25 13. The Historic Resources Board Recommends Endorsement of National Register of Historic Places Application on Southern Pacific Depot at 95 University Avenue ......... 73-25 14. The Policy and Services Committee Recommendation re
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Williams Property, 351 Homer Avenue .................... 73-26 14A. (Old Item No. 9) Resolution Upholding the Zoning Administrator's Decision to Revoke Conditional Use Permit 73-UP-22 Relating to an Eating and Drinking Establishment Located at 3901 El Camino Real ........... 73-36 15. City Auditor's Status Report ........................... 73-37 16. Fiber Optic Communication Utility ...................... 73-39 16A. (Old Item No. 3) Selection of Consultant to Perform Regional Water Quality Control Plant Corrosion Control Investigation Study .................................... 73-54 16B. (Old Item No. 4) Selection of Consultants to Conduct Regional Water Quality Control Plant Pollution Preven-tion Demonstration Project ............................. 73-55 RECESS TO A CLOSED SESSION: 11:12 P.M. - 11:30 P.M. ........ 73-56 ADJOURNMENT: The meeting adjourned at 11:31 p.m. ........... 73-57
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The City Council of the City of Palo Alto met on this date in the Council Chambers at 7:06 p.m. PRESENT: Andersen, Fazzino, Huber, Kniss, McCown, Rosenbaum, Simitian, Wheeler ABSENT: Schneider ORAL COMMUNICATIONS Edmund Power, 2254 Dartmouth Street, spoke regarding the public's interest (letter on file in the City Clerk's Office). CONSENT CALENDAR MOTION: Vice Mayor Simitian moved, seconded by Fazzino, to approve Consent Calendar Item Nos. 1, 2, 5 - 8. 1. Agreement between the City of Palo Alto and Towill, Inc. for Aerial Photogrammetric Mapping of the Palo Alto Landfill; change orders not to exceed $2,000 for 1994 and $2,000 for 1995 2. Rental Agreement with the Palo Alto City Employees Federal Credit Union 5. Contract between the City of Palo Alto and M & G Construction for Wastewater Collection Phase III - Sanitary Sewer Rehab Project; change orders not to exceed $25,000 6. Contract between the City of Palo Alto and West Valley Construction Company, Inc. for Phase III Gas Main Replace-ment; change orders not to exceed $31,316.85 7. Resolution 7307 entitled "Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Submit an Application for AB 434 Funding for the Alternative Fueled Vehicles Demonstration Project" 8. Ordinance 4221 entitled "Ordinance of the Council of the City of Palo Alto Approving and Adopting the Plans for the Construction of a Concession Stand and Storage Facility for the Baylands Athletic Center Within the City-Owned Baylands" (1st Reading, 5/2/94, PASSED 7-0, Fazzino, Huber absent) MOTION PASSED 8-0 for Item Nos. 1, 2, 5 - 8, Schneider absent. AGENDA CHANGES, ADDITIONS, AND DELETIONS City Manager June Fleming announced Item No. 9 would become Item No. 14A, Item No. 3 would become Item No. 16A, and Item No. 4 would become Item No. 16B. Mayor Kniss announced that the Closed Session would take place after Item No. 16B.
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CLOSED SESSION 10. Conference with City Attorney--Potential/Anticipated Litiga-tion Subject: Written liability claim against the City of Palo Alto by William and Elizabeth McCroskey
Authority: Government Code ∋54956.9(b)(1) & (b)(3)(C). 11. Conference with City Attorney--Existing Litigation Subject: Kallstrom v. City of Palo Alto, SCC No. 701606
Authority: Government Code ∋54956.9(a). 12. Conference with City Attorney--Potential/Anticipated Litiga-tion Subject: Significant Exposure to Litigation
Authority: Government Code ∋54956.9(b)(1) & (b)(3)(C)/(D). Public Comments None. REPORTS OF COMMITTEES AND COMMISSIONS 13. The Historic Resources Board recommends Endorsement of National Register of Historic Places Application on Southern Pacific Depot at 95 University Avenue Assistant Planning Official George Zimmerman said the Historic Resources Board (HRB) recommended that the Council endorse the HRB's application to add the University Avenue Southern Pacific Depot to the listing on the National Register of Historic Places. Historic Resources Board Member Jim McFall said the staff report (CMR:287:94) explained the significance of the property. The process was started 15 years before and was never completed at the state level and was returned to the City. The HRB strongly urged the Council's endorsement of the application. Bill Phillips, Stanford Management Company, Menlo Park, said Stanford University would eventually become the owner of the building at the expiration of the present lease term. He said there was no disagreement with the fact that the depot building and the adjacent baggage building were deserving of registration, but he was concerned with the boundary line described which brought in the kiosk, the pedestrian subways to the kiosk, and the subway area which went to University Avenue. It was a wider boundary that could be impacted by the Dream Team process or could be an impact on the Dream Team process. At the Dream Team level, there had been discussion about elimination of the subway, the
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tunnel that went through University Avenue, and replacement of the tracks with a narrower configuration of track. He suggested either the application be held up in terms of its existing broader area until more of the Dream Team concepts had come forward or the application be forwarded but limited to the Southern Pacific Depot building and the baggage area. Council Member Wheeler said a lot of time and thought was given to the application. She asked whether the kiosk area and the other areas could be readily or willingly changed in response to Stanford Management Company's comments. Mr. McFall was not prepared to address the issue since he was unaware of the concerns until Mr. Phillips spoke that evening. He would research the national standard requirements for the bound-aries and determine the implications. Council Member Wheeler asked whether the item should be continued. City Manager June Fleming suggested that since staff and the HRB had just discovered the concern that evening, the item should be removed from the agenda and reagendized for a later date. ITEM REMOVED BY STAFF 14. The Policy and Services Committee Recommendation re Williams Property, 351 Homer Avenue Mayor Kniss summarized the Council's previous action regarding the Williams Property. The proposal before the Council that evening would address the process of designing another Request for Proposal (RFP) or another type of method for choosing whomever would eventually locate in the house. She asked the speakers to speak to the process and not to the merit of his/her organizations. Council would not choose an applicant that evening. Council Member Huber, the Chair of the Policy and Services Committee, passed the item to Council Member McCown and excused himself from the item because he was a member on the advisory board of the Museum of American Heritage. While there was no legal conflict, he believed because the museum was interested in the property, he would not participate. Council Member McCown attended two Policy and Services (P&S) Committee meetings where there was lengthy discussion regarding the item. The P&S Committee explored a variety of possible ways to approach locating a user for the house at its meeting on February 15, 1994, and also discussed the City's leasing policy and how the selection of the user would proceed through an RFP process or a Notice of Intention to Lease. The result of the first meeting was to ask staff to return to the P&S Committee with a suggested process. One possibility was an ad hoc community group to work toward better defining the goals for the use of the house, and another concept was for staff and Council to give a more precise direction of the goals for the use of the house. The
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P&S Committee minutes dated April 5, 1994, were the product of the second meeting. The concept was to look at three prototype RFPs that weighted values for the house differently. One concept might weight the preservation and historical aspects of the house more highly than the purpose of the proposed user. Another concept might weight how well the purpose of the proposed user served the needs of the community higher than the historical preservation values. A third concept would balance the first two evenly, and the RFP would solicit proposals of potential users that would show an equal weight of the historical value of the house with the social benefit to the community of the use. The Council needed to grapple with providing a more precise definition of what it would be looking for in the use of the house and to evaluate the recommendation that the City solicit a RFP once the Council had defined how the property should be used. Later in the discussion, she wanted to explore some ways in which the time frames involved in the RFP could be shortened. A specific recommendation, independent of the process discussion, was a Budget Amendment Ordinance (BAO) which would allocate immediate dollars for the caretaking of the property and some physical work that needed to be done. Although interest was expressed and representatives of some groups were present at the P&S Committee's discussion of the issue, the Committee did not attempt to choose between potential users of the property. She agreed with Mayor Kniss' comments that the Council was one step back from the step that would entertain proposals from particular groups. Mayor Kniss said the Council was involved in a process that evening and not a decision-making mode. Vice Mayor Simitian clarified the Council had been asked to allocate funds and to make a decision about the process for determining the use of the property. Given the fact that there were seven Council Members present that evening, he asked for the City Attorney to indicate whether either or both of the actions required four or five votes. City Attorney Ariel Calonne replied that the BAO would take six votes and the process would need a vote of the majority present. Senior Financial Analyst Janet Freeland said the BAO was for funds that would be used to acquire a residential caretaker for the house to take care of some deferred maintenance and remove the tanks on the property. Staff believed it was necessary in view of the fact that the process to find a user was taking longer than anticipated. Joe Emrlich, 4800 El Camino Real, Los Altos, was delighted that the City was considering maintaining the property. He said the Museum of American Heritage would be ideal since it blended both technology and history. He suggested the process be a blend of both. Ralph Igler, 1873 Bret Harte, asked to present view graphs regarding the Museum of American Heritage.
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Mayor Kniss explained that the view graphs could only be presented if there were reference to the process of choosing between historical preservation, public benefit, or a combination of the two. Vice Mayor Simitian explained the Council was limited to a discussion of the items that were agendized. The Council did not have a desire to limit people from speaking about their program, but the same opportunity needed to be noticed in the agenda and made available to other people who wanted to speak. Mayor Kniss explained that people should speak to the process of whether the house should be historically preserved in its entirety or partially. The Council was looking to the public for guide-lines as to what would be the fairest process for selecting an organization or group that would serve the greatest number in the community. Crystal Gamage, President of the Palo Alto Historical Association (PAHA), 1568 Channing Avenue, said the PAHA had followed with great interest how the Williams Property's use would be determined. The PAHA favored weighing factors. She thought it was admirable that the City would spend money for the deferred maintenance and hoped the matter would be resolved shortly. Regina Thomas, 2016 Middlefield Road, Executive Director of Support Network for Battered Women, urged the Council to adopt the criteria that allowed for a heavier emphasis on the public need and use versus historic preservation. The house could be used by many nonprofit agencies who were struggling financially to continue to provide services that were needed in the community. It would be a good opportunity for the City to address a real public need and at the same time preserve the building. She wanted to see a caretaker on the property so there would be no further deterioration of the property. Beverly Nelson, 3030 County Club Court, asked that the will be followed and urged the Council to speed the action. She hoped a caretaker would be provided for the home. Mayor Kniss clarified the will stipulated a cultural and/or park usage. The will defined an opposition to the property being used as a parking lot for commercial use. Gail Price, 4082 Orme Street, Vice Chairperson of the Palo Alto Child Care Task Force, said the Williams Property was a valuable community resource, and the Council was encouraged to carefully consider how the RFPs could be designed to serve the broadest social and educational needs of the community. The Williams Property should be designated as a site to be used for public benefit. Palo Alto Child Care Task Force (PACCTF) believed that a variety of social service programs was a critical public need of both the residents and the community at large. Many programs were seeking sites and facilities. The Council was urged to maintain the broadest flexibility by strongly emphasizing the public benefit as a condition of all proposed uses of the Williams site.
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Council Member McCown clarified one criteria put more emphasis on the public benefit and less on the historic preservation and another criteria weighted both equally. She asked which criteria the PACCTF advocated. Ms. Price said the PACCTF supported the criteria that weighted the public benefit the highest. Monty Anderson, member of the Historic Resources Board, 423 8th Avenue, Menlo Park, said the last RFP process was difficult and ended with no resolution and further deterioration of the building. The last process also brought forward conflicts that existed between use and preservation. The use was very important if preservation were weighed as a part of the process, and part of the problem was the extensive costs associated with the renovation. The state had indicated the property was eligible for National Register status which could open up funding opportunities that could be used to help stabilize the site and reduce the burdens placed on any applicant who took over the property. He believed the burden of cost created a conflict. There might be uses compatible for the property, but a group might not be able to take on the financial burdens associated with the process. The process could become more inclusive rather than exclusive if the financial burden were reduced by exploring funding or tax credits available through National Register status. He supported formation of a community board that would identify funding sources, establish goals for the property, and effect repairs. The importance of the preservation of the property needed to be identified early. The site also warranted attention to preserva-tion. He encouraged the Council to keep historic preservation as a key piece of the process. Mayor Kniss asked for clarification of the National Register status and whether or not that would allow any changes within the building. Mr. Anderson said any changes would have to conform to the National Standards for Rehabilitation as set forth by the National Park Service. It would require an Environmental Impact Report (EIR), and it would open the door for funding opportunities. Mayor Kniss asked for an explanation of the funding opportunities. Mr. Anderson understood that public buildings that had National Register status were eligible for federal tax credits and/or loans. Claudio Martinez, P.O. Box 273, Palo Alto, said the public use should emphasize the community at large. He did not want a board and wanted people to be able to come before the Council. Margaret Ash, 446 Forest Avenue, hoped the process would not exclude any group in the future from making a proposal. She thought the house should be preserved, and the community's greatest need should be a primary consideration.
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Mary Sylvester, 135 Melville Avenue, member of the working group looking at the development of the Family and Child Resource Center. She emphasized the importance of the public benefit use as the Council proceeded in the determination process. There was a significant need in the community for support services for families and children. She saw no incompatibility between preserving the property's historical integrity and having children and families utilizing the site. She hoped the process could be expedited. She conveyed Lisa Stelck's perspective of heavy consideration of public benefit. Jeannette Cosby, 850 Chimalus Drive, member of the Palo Alto Child Care Task Force, urged the Council to consider the broadest flexibility for social support services for the community. Jean McDonnell, 1509 Portola Avenue, Executive Director, Women's Heritage Museum, said a landscape architect looked at the garden and indicated there were a number of heritage plants on the property, and she urged the Council to have someone take care of the garden so the valuable plants would not be lost. The property was an opportunity for a historic garden. The Williams's house showed the life of people who were responsible in their community and was just as valuable historically as other homes in the community. Ken Kormanak, 450 Ramona Road, Portola Valley, member of the Board of Directors, Museum of American Heritage, said the will specified a specific use for the home. He asked the Council to consider the terms of the will that indicated either a general science library, park, or center for cultural purposes. The resources of the tenant should be considered in the process for the preservation and maintenance of the house. The neighborhood and residences should be considered and the resource that might suit that area. He urged the Council to expedite the process. Roger Broussal, 18 Parrott Court, San Mateo, member of the Board of Directors, Museum of American Heritage, said there were other organizations that could provide funding beyond the preservation agencies. Weight should not be given to anything more than the cultural side in the process because that was what the will recommended. When the City accepted a historical property, it also accepted the responsibility to maintain it until some other means came along. Jeanne Labozitta, 375 Cambridge Avenue, San Jose, President and CEO of Family Service Mid-Peninsula, urged the Council to speak to the recommendation that had more weight on public benefit. The Williams house could be a mixed usage without any conflict. The first place that people learned about culture was in their families. Both arts and culture could be combined. Rebecca Lindenberg, 3748 Redwood Circle, Gunn High School student, said a majority of the students at the meeting that evening believed that the better usage would be for the weight to be equal. Community use was important, and the people in the
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community were the focus of the issue. Robin Parker Meredith, 459 Homer Avenue, member of the Palo Alto Child Care Task Force, supported the heavy emphasis on public benefit. She understood there was mixed usage for the home but history could be created by using the Williams Property in the right way. Mayor Kniss asked for staff comment on the deterioration of the house and the termites. Ms. Freeland said the termite report received shortly after the City took title to the house did not indicate any serious damage. Considering the age of the house, it was in good condition. The primary deterioration that had taken place was intruders trying to get into the house. A security company currently provided security for the property. Staff wanted someone living in the home so the security could be increased and to do some repairs to keep the house from deteriorating any further. Mayor Kniss asked whether the garden had been watered. Ms. Freeland said a landscape contractor took care of the garden. It was watered during the dry months but not during the rainy season. Mr. Calonne emphasized that the City was constrained by the will, and the will specified park and/or cultural purposes. Park use had a well-defined meaning that suggested the general public could not be excluded. Cultural purposes were less defined. The RFP would require some description from the proposers of how their proposal met the terms of the will. If the City felt that the description might not be legally defensible, staff might ask for an opinion from a private attorney on behalf of the proposers to support their position. The consequence of not complying with the will was that the other people mentioned would have an action to challenge the City's use of the property. In terms of public benefit, there was a narrowly defined range of uses that the will would permit. Vice Mayor Simitian said the issues were the criteria that would be used for selection and the process by which the criteria would be considered. He was sympathetic with the requests to expedite the process. The staff report (CMR:286:94) indicated that the abbreviated process would take four to five months. A larger community task force with staff participation would take longer. No matter what process the City went through, the Council would be faced with the same choice as before which was what to do with the property. He preferred an abbreviated, informal process rather than an RFP process that would allow people to suggest what they wanted to do with the property. The Council would then give a preliminary opinion based on its own judgment about what the greatest needs and good were in terms of the policy choice it had to make. The process would be shortened and it would allow a prospective user time to put together a good package without having several groups spend six or seven months working hard to
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pull together a lot of information and then to have the Council indicate that it thought one or two groups really had the greatest merit. There was an artificial construct that had been set up in the materials that suggested that there was of necessity a tension between public benefit and historic preservation. He did not believe that was the case. Historic and architectural preservation meant the Council would respect the historic and architectural integrity of the property, which included the gardens and the grounds, when determining the use of the site. The question was what was the greatest public good that could be derived from the property. He was not prepared to get into the question of whether it should be 25 or 35 percent. The Council needed to indicate a group had to have the organizational ability to perform, financial stability, and had to respect the architectural and historical integrity. The Council should make the selection first based on its own policy values and then ask whomever to put forth the best concept for the use of the house and the grounds to make sure that it could deal with the other things that were given about the property. He did not believe the criteria provided by the staff or what the Committee had produced was inappropriate but the way in which the package and the process was constructed was inappropriate. Council Member McCown said a way should be found to shorten the process. She suggested interested potential users be invited to come forward to the Council in a short time frame to address some fundamental questions about how the group would propose to use the property. The Council would at that point decide from the choices its preference. The Council would ask that proposer to invest the additional time and effort to determine whether a package could be put together. The City was legally required to give a Notice of Intention to Lease and to allow a public hearing for public comment on the proposed use of the property. She believed it would be helpful for the Council to articulate some criteria. When the process was done before, there was clearly a lot of room for argument and important criteria was not indicated. People were interested in the preservation of the structure and were concerned about the Peninsula Conservation Center (PCC) proposal, but the Council did not have a basis to say that it was not interested in a proposal if it changed the structure too much. A similar version of one of the criteria listed on Attachment A of the staff report (CMR:206:94) would be helpful to the people who would respond. She did not believe it was necessary in the first round to ask a group to give a five-year pro forma of its business operation as indicated under the category of financial viability. She agreed with Vice Mayor Simitian that something should be crafted to get a less detailed first set of applicants before the Council, and hopefully the Council could select one from that group. The group could then pursue the proposal in greater detail with staff and bring it back to the Council as a formal Notice of Intent to Lease. The Council should choose that evening one of the packages of criteria or a variation thereof so a clearer direction would be given to the applicants as to what the Council was looking for. Council Member Andersen endorsed the comments by Vice Mayor
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Simitian and Council Member McCown and agreed the process could be made simpler and less expensive. Council Members needed to give some indication of their bias with regard to the direction. He agreed that the percentage issue was a questionable approach. He strongly supported a public benefit direction and was interested in something that would benefit young people and children. He hoped there would be proposals that would come forth that would appeal that area. If the majority of the Council wanted strong historic preservation, it would help people decide whether to pursue the process. The Council owed that to the organizations that had shown interest. He encouraged his colleagues to indicate their interest. Council Member Rosenbaum wanted the process to move even faster. The staff and the P&S Committee came up with an indirect method. The City had one applicant and one concept which were different in emphasis. He wanted staff to schedule a public hearing for the purpose of granting an option to lease. At that point, the applicants would make their presentations, and the Council would make its choice. Council Member Wheeler wanted to expedite the process. She associated with the comments of Vice Mayor Simitian that regardless of the criteria and the weight given to the individual criterion, the potential use must conform to the will. It was a given that the Council accepted the house with a historic designation in Category II, which left the Council under an obligation to protect and preserve the house to a certain extent. She believed that the Council needed to be careful about giving some direction and definition to the concept of public benefit rather than to historic preservation. The Council had heard from two proponents that evening, and each of the potential users would maintain that its use satisfied equally the criteria of public benefit. The Council needed to be clear how it defined public benefit. She would give equal consideration to both historic preservation and the public benefit criteria. Council Member McCown asked whether it was possible to schedule a public hearing that invited potential proposed users to make a presentation and whether the Council could make a decision that evening as to the one that would receive the option to lease. The City had a leasing policy that stated a Notice of Intention had to be given. Mr. Calonne said the Council's policy was its own creation. He suggested that the motion include a direction to staff to take the necessary steps to prepare Council action to waive the applicable portion of the policy. City Manager June Fleming was concerned that even if that process was done, criteria would be needed as a basis for making a judgment. Staff direction would be needed after the proposals were heard as to how to return to the Council with recommendations. Council Member McCown clarified there would be notification that
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proposals would be accepted by a date certain and the items the Council wanted to know about the proposed use. Staff would return to the Council with a report commenting on the proposed uses. Council Member Rosenbaum said that was correct. It was not his intention that staff would be compelled to make a recommendation. Staff wanted the Council to lay out a criteria; and on the basis of the criteria, the staff would make a recommendation to the Council. It was the Council's job to decide, and he wanted to relieve staff of the obligation to make that recommendation. It would be a political decision by the Council. There had to be some criteria, and the Council could not arbitrarily award the lease to someone. He was uncertain how the staff got to the point of preparing a suitable report which would serve as the basis for the Council making a decision. Vice Mayor Simitian said at some point the Council had to say what the best use of the site was. He asked how the Council would quantify or establish criteria and asked whether it would be enough if the Council stated it would evaluate public benefit based on the greatest good for the greatest number meeting the greatest need over the greatest period of time. Council Member McCown said the original RFP had categories of what the Council was looking for. She did not believe it was a lot different, other than the percentages, than the items laid out on Attachment A of the staff report (CMR:206:94). Under public benefit, it met public need, degree of public access, and fees charged. Under historic preservation, it was broken down by different aspects of the building and the garden. Under financial viability, it asked for history of the organization, etc. Under community and environmental impact, it asked how it fit with the Comprehensive Plan and the impact on the neighborhood. If the percentages were set aside, the Council could indicate the points that each proposal needed to address and to address the conformity of the will. People could be invited to present proposals that addressed how their application met those elements and the requirements of the will which could return to the Council on a short time frame. Council Members would debate which criteria was the most important, and the Council would not give advanced concurrence as to how it weighted the criteria but would ask that the proposals address all of the items. Vice Mayor Simitian clarified the four evaluation criteria would be used without any percentages. Council Member McCown said that was correct. The weighting would be dropped. The initial proposals would need to address how the application dealt with each of the items. Vice Mayor Simitian said historic preservation, financial viabili-ty, and reasonable impacts on community and environmental impacts were essentials. If a group's financial viability was zero on the 20 percent scale and it had the highest cumulative score, it would not have produced a successful bidder no matter how wonderful the public benefit was.
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MOTION: Council Member McCown moved, seconded by Andersen, to direct staff to begin an RFP process that would address the criteria identified in the staff report (CMR:206:94), Attachment A; receive proposals within 30 days after publication of the RFP; and set a public hearing with the City Council by August 8, 1994, for Council action. Ms. Fleming said the motion responded to the concerns of staff. Council Member Fazzino supported the terms of the will and preservation of the historic integrity of the home. He supported the balance of public benefit and historic integrity. He wanted assurance that whatever group occupied the site was financially viable. It was also important that the impact on the neighborhood be evaluated. He supported the motion which expedited the process and placed the decision with the Council within a short time frame. Given the tremendous interest from two groups in the community to occupy the site, the Council would be in a position within several months to make a decision regarding the site's future. Council Member Rosenbaum asked whether there was a short RFP form for the process. Director of Finance Emily Harrison said staff's intent would be to abbreviate the process as much as possible. After the Council had made a decision on the direction the staff should take in the negotiations with the tenant, staff would return with an option to lease that was in more detail. Mr. Calonne said at the public hearing the Council could direct staff as to how the option to lease should look. Vice Mayor Simitian said 30 days might not be enough time and asked whether 60 days after publication would be acceptable. Staff could pursue the document during August 1994, and it would return to the Council in September or early October 1994 for a public hearing. Council Member McCown said it was not realistic to hold the public hearing until July 1994, and it made sense to let people have the longest possible period between the announcement that responses were being solicited and the date of the public hearing. She believed it would be better if the Council held a public hearing in late July 1994 before its vacation. Vice Mayor Simitian wanted the staff to review the document in August 1994, and the Council would consider the issue in September 1994. MAKER AND SECONDER AGREED TO INCORPORATE INTO THE MOTION that the Council would receive proposals within 60 days after publication for the RFP and return to the City Council in September or early October 1994 for a public hearing.
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Ms. Fleming was concerned about the September 1994 date and asked for flexibility. Mayor Kniss clarified the decision would be made by the Council and would not take a great deal of time by the staff. Council Member McCown asked how soon an announcement could be published. Ms. Fleming said two weeks. Council Member McCown said if 60 days after the publication were allowed, the applications would be received in August 1994. Vice Mayor Simitian said the Council's vacation would begin at that time and staff could receive the applications during that period. Council Member McCown said the scheduling needed to be flexible. Council Member Andersen asked whether it would be easier if the 30 days remained in place and staff reviewed the applications at the end of July 1994. Mayor Kniss said October 1994 would be better for the staff. Vice Mayor Simitian said a separate meeting could be scheduled in September 1994 to deal with the item. He suggested the materials sent out should indicate that the applicants' proposals should speak to public benefit associated with their proposal and indicate how the proposal would meet the requirements of historic preservation, financial viability, and community environmental impact. MAKER AND SECONDER AGREED TO INCORPORATE INTO THE MOTION that the proposals would speak to how the criteria of the public benefit, historic preservation, financial viability, and community environ-mental impact would be met. MOTION: Vice Mayor Simitian moved, seconded by Fazzino, to adopt the Budget Amendment Ordinance authorizing funds in the amount of $22,950 for a residential caretaker and deferred maintenance for the Williams Property at 351 Homer Avenue; and approve the use of existing funds in Capital Improvement Project (CIP) No. 19101 (Tank Investigation and Removal) for removal of the gas and fuel tanks on the property. Ordinance 4222 entitled "Ordinance of the Council of the City of Palo Alto Amending the Budget for the Fiscal Year 1993-94 to Provide an Additional Appropriation to Fund Deferred Maintenance and Clean-up of the Williams Property at 351 Homer Avenue" MOTION PASSED 7-0, Huber "not participating," Schneider absent. 14A. (Old Item No. 9) Resolution Upholding the Zoning Administrator's Decision to Revoke Conditional Use Permit 73-
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UP-22 Relating to an Eating and Drinking Establishment Located at 3901 El Camino Real Vice Mayor Simitian asked for a brief explanation from the City Attorney regarding the latest developments regarding the issue. City Attorney Ariel Calonne said he asked that the item be removed from the previous Council agenda so that he might respond to a letter from Barton Hectman. The letter asked the Council to reconsider the matter and to reopen the public hearing. The request had been reviewed and he concluded that the Council was not legally compelled to reopen the public hearing but it had the option to do so subject to renoticing. In his memorandum dated May 19, 1994, he drafted for Council's consideration paragraph C, Section 3, "General Considerations," that addressed the request for reconsideration and had the Council concluding that there had not been a sufficient basis shown to warrant reconsideration. Vice Mayor Simitian agreed with the City Attorney's view that there was nothing in the additional material that suggested that there was a need or any real benefit associated with reopening the record. MOTION: Vice Mayor Simitian moved, seconded by McCown, to adopt the Resolution. Resolution 7308 entitled "Resolution of the Council of the City of Palo Alto Upholding the Zoning Administrator's Decision to Revoke Conditional Use Permit 73-UP-22 Relating to an Eating and Drinking Establishment Located at 3901 El Camino Real, and Denying the Appeal Thereof" Council Member McCown said the applicant both at the time of the public hearing as well as by implication in the letter submitted continued to want to focus on how things could change in the future as opposed to the circumstances that brought about the revocation proceeding which were the events of the past. The Council had a sufficient basis, based on the evidence of the conduct in the past, to act on the revocation. She did not see anything in the correspondence that changed that position with respect to the Council's action. Vice Mayor Simitian concurred with the comments of Council Member McCown. MOTION PASSED 8-0, Schneider absent. REPORTS OF OFFICIALS 15. City Auditor's Status Report City Auditor Bill Vinson said the report reflected the activities of his office for the four months ending April 1994. Findings and recommendations for the audits shown as completed have been presented to the City Manager for review and comment. During the reporting period, the audits for Palo Alto Sanitation Company
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(PASCO) and Cable Co-op were completed. Significant progress had been made in the audits of contract administration, cash handling at the Recreation Division, and telephone users tax. Audits were initiated on Palo Alto Community Child Care (PACCC) and timekeeping practices at the Utilities Department. Audits shown on the report could be agendized for further discussion per the Council's request. Vice Mayor Simitian asked when the PASCO audit started. Mr. Vinson said a commencement letter was sent in August 1993 and the audit got underway in November 1993. Vice Mayor Simitian asked when the results would be available. Mr. Vinson said the City Manager had indicated there would be a response by August 1994. Vice Mayor Simitian was troubled that it took a year from the inception of looking at the issue to the time that it arrived in front of the Council for response. He asked whether there was a standard length of time for the preparation of the audit and for response or was the time variable based on the complexity of the issues involved. Mr. Vinson said internal procedures required the City Manager's response within a three-week time period from delivery of the revised draft unless negotiated by the City Manager and the City Auditor. Vice Mayor Simitian said that the City Auditor had indicated during the budget hearings that there would not be anything in the audit that would affect the basic budget process. Presumedly, there would be something in the PASCO contract audit that involved potential for savings, and he was troubled that the City was going through a budget cycle without having the information before the Council. He suggested that audits be done in a tighter, more compact frame of reference. He requested the PASCO and the contract administration audits be discussed at the Council level. Council Member Andersen asked the most appropriate way for items to come before the Council or whether the items should be reviewed in more detail at the committee level. Mr. Vinson said it was important that the reports be presented to the Council as a whole initially. It was appropriate, as with PACCC, that certain audits would warrant significant discussion. As a result, it was appropriate to refer the items back to committee. He did not recommend a standard that stated that a given on a report would be referred to either the Finance or Policy and Services (P&S) Committees directly. City Manager June Fleming said there were a number of ways to deal with the audits prepared by the City Auditor and responded to by the City Manager. One method was to put all of the audits and responses in the packet. If the Council wanted an item agendized,
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Mr. Vinson or she could be notified. She would not recommend that every audit be automatically sent to a committee since not all of the audits involved issues that needed to be reviewed by a committee. Another method was when the City Auditor gave the Council his annual work plan, Council could indicate the audits that it wanted referred to the appropriate committee. She concurred with the City Auditor that not all of the audits needed that level of scrutiny. Council Member McCown recalled that while the audit was pending a response, often through the City Manager's Office or the department involved, responses were implemented before the formal written response had occurred. Ms. Fleming said that was the case with the PASCO audit. The timing was unfortunate. The City Auditor announced the audit as indicated and the audit came to her office in April in the midst of the budget. The people directly involved in crafting the response were involved in other things. She had spoken to the City Auditor about the tight time frame because he had a concern about the work being completed and returned to the Council. The budget could be adjusted if there were issues that needed to be resolved that were not in the budget. The delay would not cause any serious impact on City assets nor place anything at risk. She had discussed the issue at length with the City Auditor who agreed that the issue be delayed because of the complexity of tasks before staff. Council Member McCown clarified some of the corrective actions with respect to the PASCO audit were already being addressed but the City Manager would not be formally responding in writing until August 1994. Ms. Fleming said that was correct. The response had to be for all of the audits. Some changes had been implemented, but there were others that needed to be included in the response that had not been implemented. Mr. Vinson echoed the comments of Ms. Fleming. He noted for the PASCO audit specifically and for all of the work done by his office that if a situation were found where there was a serious internal control violation that put the City's assets at significant risk or if it were concluded that there would be a loss of a potential cost savings, he would be compelled to issue the audit report without the City Manager's response. The PACCC situation required that type of action. It was critical that the information be considered by the P&S Committee and the entire Council. That situation did not apply to the PASCO. The cost savings would be effective for the next budget cycle since the PASCO contract would not enter into negotiations until November 1994. He was confident, given the time frame indicated by the City Manager, that it would not result in any potential loss of cost savings to the City. No action taken.
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RECESS 9:10 P.M. TO 9:27 P.M. 16. Fiber Optic Communication Utility Assistant City Manager Bernard M. Strojny said the request before the Council was for a feasibility study to examine the City's possible role in a fiber optic communication utility. The proposal was brought to the Council at a time when the communication needs of the City's businesses, residences, and schools were rapidly accelerating. The City's role in addressing all or part of those needs had yet to be explored. Because of the City's long standing success in operating municipal utilities, the City was in a unique position to build upon both its experience and existing infrastructure to facilitate the provision of high speed communications to the members of the community who required it. If past history were a valid predictor of the future, it was possible that the City could provide the services in a way that was both cost effective and customer driven and in a manner that only local municipalities and utilities could produce. The staff report (CMR:295:94) specifically identified a range of ultimate City involvement extending from the leasing of existing conduits for fiber optic systems to the installation of a full service communication utility within the City. The City also had an immediate need to use fiber optic technology to strengthen its existing utilities communications backbone, to link various City facilities to one another and possibly to Palo Alto Unified School District (PAUSD) facilities, and to plan for its own future local and long distance telephone and data requirements. The experience gained from the applications of fiber optic technology would assist the City in deciding whether to expand the same services to businesses and residents. Although the City did not have direct experience in providing communication services, it knew the field was evolving rapidly which could present substantial opportunities as indicated in the staff report if the Council decided to actively explore what the options might be. Other municipal governments had already installed fiber optic systems. The municipalities had evolved from providing fiber optic networks for city-owned facilities, schools, and hospitals to full consideration of extending communication services to residences and businesses. A feasibility study that examined the technical, economic, and legal issues surrounding the possible creation of a fiber optic communication utility needed to be undertaken at the present time. The opportunity window for the City to actively pursue its role in the rapidly emerging area of telecommunications was presently open. It would not remain open for very long. The City's role as an active player or a passive customer needed to be answered soon. The feasibility study would provide solid data and a critical analysis of the City's genuine alternatives so that the Council would be in a position to make a decision. He thanked the members of Smart Valley, Inc. who assisted the staff and provided valuable feedback. Council Member Andersen asked for clarification on the window of opportunity and the time line before the Council would be in a position to make a decision.
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Mr. Strojny said the City of Santa Clara had recently undertaken a feasibility study, and it had taken approximately five months to go from Council approval to recommendations to the City Council. Council Member Andersen clarified the Council would not be able to make a decision on the issue until December 1994. Mr. Strojny said that was correct. Council Member Andersen asked whether the window of opportunity would close during that period of time given the responses seen from competing organizations. Mr. Strojny said there were many private firms that wanted to provide that kind of service in the City. The City was not part of Pacific Bell's (PacBell) plans to install fiber optics in the South Bay which would not occur until at least 1996 or 1997. The installation of fiber optic cable would probably come from competitors to PacBell and would occur during the next several years. Council Member Andersen asked whether the cost would be lower and the time it took more rapid if the City were able to eliminate any one of the three options described based on criteria that could be identified without going through a full feasibility study. Manager, Economic Resources Planning Carol Jansen said not necessarily. Staff thought in terms of fiber optics and cable at first, and the possibility of many other areas, including wireless communication, opened up. The City did not have the knowledge yet to preclude options, and it would not be able to do that without some additional study. Council Member Andersen asked whether there was a possibility that if the private sector knew the City was moving in that direction that that would motivate them to move more quickly. Director of Information Resources Dianah Neff said PacBell was aware of the proposal to do a study. There was no indication that that would move PacBell to include Palo Alto or to move ahead with Palo Alto any sooner. Companies continued to come in with specific short-run needs, but no one was looking at a universal service. Council Member Andersen asked how many miles could be done if $150,000 were spent to put fiber optic in the most important significant areas of the City. Director of Utilities Edward Mrizek said the electric distribution system consisted of 200 miles of primary circuits in the City to serve all of the customers. It would not be a lot of mileage due to the undergrounding and putting it in conduit. Council Member Andersen asked whether the Downtown area could be done.
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Mr. Mrizek said it might be possible. Ms. Jansen understood a model in the Digital Equipment Corporation (D.E.C.) conduit leasing program was that the cost of installing the fiber optics for the connection of five buildings was $50,000. Ms. Neff said it was 7,000 linear feet in that area. Council Member Fazzino asked what the City would get for the $150,000 expenditure. The report was excellent, but there was not a lot of information in the report that convinced him that the City needed to spend $100,000 to $150,000 to get the information needed. Ms. Jansen said the City of Santa Clara, which was a less complex example because the city did not have a cable system in place, did a study that was estimated to cost $75,000 to $77,000. Staff did not anticipate that the study would cost $150,000, but it did not want to preclude the possibility that it would be considerably greater than Santa Clara's because Palo Alto would be looking at a more complex system if the existing cable line were added. The cost was uncertain until the City went for the Request for Proposal (RFP) and identified the scope of work. Council Member Fazzino asked how many consultants did that kind of work. Mr. Strojny said there was not a tremendous number of consultants available, and Santa Clara chose a consultant from Canada. The consultant for Santa Clara came up with a four-phase approach that the city could use as options when putting the system together. Santa Clara would initially consider the use of fiber optics with the existing utility operation. A lot could be done with fiber optics and infrastructure in enhancing and strengthening the existing utility system. The second phase was the linkage of city facilities. Palo Alto would have to do that in the near future, and it would involve a considerable expense to use the existing firms available. After the initial phases were implemented, the extension of a fiber optic system to businesses and residences would be considered. After the first two phases were completed, the system could be evaluated to determine whether it worked well and whether it made sense to extend communication services into those areas. A feasibility study would answer those kinds of questions. Council Member Fazzino said the staff report (CMR:296:94) referred to Silicon Valley Joint Venture and the Smart Valley project, and he asked whether the City was being encouraged by Joint Venture to place the City of Palo Alto in a primary provider role as far as the utility was concerned. Mr. Strojny said staff had met with Smart Valley approximately one month before to get a private sector perspective on the report. Their assistance was invaluable regarding how the City could participate in a fiber optics system. Smart Valley saw the uniqueness and experience the City possessed by running its own
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utilities and saw Palo Alto as one of the few cities in the area that could actively engage itself in fiber optics and be success-ful. Ms. Jansen said the City was being encouraged to further pursue the possibility of a communication utility by some of the major tenants at the Stanford Research Park. Staff discussed the issue with the Stanford Research Park on three occasions, and everyone was very encouraging of a potential City role because the City had an existing infrastructure such that another level could be added to it. Council Member Fazzino was unclear to what degree the staff intended to include evaluation of a possible joint effort with Cable Co-op as part of the study. Mr. Strojny said staff had had an opportunity to discuss the idea briefly with Cable Co-op. He believed there could be a role that Cable Co-op could play in the development of any fiber optic system that would be linked to their existing coaxial cable system. A consultant's expertise was needed to determine whether that approach or some other approach made sense. Vice Mayor Simitian said many of the policy issues were laid out very well in the staff report (CMR:295:94) and the factors to be considered in making those policy choices were brief and well described. In some cases the technical information was also well described. There was reference in the staff report to broadbanded communications, coaxial cable, twisted pairs, the effectiveness of photons versus electrons to transmit information, as well as multi-drop, and he asked whether staff believed the nine lay people on the Council would understand what that meant. Ms. Jansen explained a lay person wrote the staff report. Vice Mayor Simitian asked whether the information was relevant to the policy issues that the Council had to make and, if so, whether there was some reason the terms had not been explained to the Council. The Council was discussing moving into a new policy area, and he was not prepared to move into that new policy area unless the technical terms used were readily understandable. Mr. Strojny said staff was trying to provide a report to the Council in a manner that was understandable. Perhaps staff did not spend enough time describing technical areas where more information was needed. The information was available and would be provided to the Council. Vice Mayor Simitian said the Council was a policy body and to the extent that the Council needed the information to make the informed policy choices, his expectation was that the staff would bring the information in a way that the Council could comprehend. If the Council needed to understand the technical information, he was prepared to understand it if staff were prepared to explain it. Staff should not presuppose a level of understanding that was not commonly shared. He recalled that in the late 1970s or early
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1980s he was a member of the Board of Directors, Palo Alto Civic League, and the vice chair for utilities and conservation, and was assigned the study of cable television. Staff indicated a study would be done to explore the possibility of the City being a cable provider and in approximately six months there would be an answer. He recalled that it took longer than six months and involved more than $150,000. He asked staff to compare or contrast the past experience with the path that the Council was about to begin and how it would be a different experience. City Manager June Fleming said the decision-making process took longer, but it did not take staff that much longer to reach the decision that it wanted to bring to the Council. The process did get protracted for a number of reasons, and there were some legal complications. The Council rejected the proposal that the staff run the cable utility. She did not believe it was comparable to the proposal before the Council because providing cable service was not as new a territory as the fiber optics technology. It would be similar to a city being on the cutting edge of running a cable system. Council Member Fazzino was on the Council in 1979 when he and former Council Member Levy jointly placed the issue of cable television before the Council. Former City Manager Bill Zaner indicated he wished to pursue a municipal cable option, and the Council explored the possibility for approximately two years. In 1981, the Council rejected the idea of municipal ownership for a variety of technical, financial, and legislative reasons. The private or co-op option was initiated, and the Council made a decision in 1984 to award the franchise to the Cable Co-op. Council Member Huber said the commercial aspect sounded as if it were in third place in the Santa Clara study. The staff report (CMR:295:94) suggested that one of the more important reasons for doing the study had to do with the Stanford Research Park. Mr. Strojny said Santa Clara went into its study with an open mind regarding what the phasing might be on a fiber optics system. The consultants had indicated that they believed the city should start with their own facilities before it considered commercial activi-ties. In most cases, cities had started with its own utilities/ facilities and were now considering extending the services to residences and businesses. Council Member Huber asked why the cities in Holland, Michigan; Springfield, Missouri; and Manassas, Virginia, had gone into fiber optics. Mr. Strojny said the cities that had run their own power utility operation for a number of years had found that fiber optics was a necessity to strengthen the protective aspects of the utility operations and to connect the utility systems. The cities found other uses outside the utility that could network with fiber optics. The cities were at a point that a good portion of the city had fiber optics and there was an opportunity to extend it into the commercial areas and residences at a lesser cost.
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Council Member Huber asked whether any of the cities had done the commercial expansion. Mr. Strojny said no. Council Member Huber asked the time frame and why. Mr. Strojny said there was a tremendous amount of activity in the industry, and many public and private agencies were moving in that direction rapidly. Businesses were coming into Palo Alto to provide fiber optic services. The City needed to assess in the near future how it would use fiber optics and whether it made sense to do that on its own or to have the service provided by the carriers available. The window depended upon how aggressively the City wanted to move in that area. Council Member Huber asked for an explanation of the statement that "the technical risk was high." Ms. Neff said some networkings had been installed earlier that were not around today, which was the reason for the statement "the technical risk was high." The industry had not developed a standard by which the packets of information were to be transferred between individuals, and the Council might be forced into making a choice before it knew what the industry standard was. Vice Mayor Simitian said the City could end up with an eight-track tape system in terms of a fiber optic system. The City was starting down a path of large consequences and significant expenditures and staff needed to articulate the technical issues. Ms. Fleming said staff felt obligated to answer questions, but it did not have the expertise to do so. Assistance was requested so staff could get the answers and return to the Council with a proposal. Council Member Rosenbaum asked who was responsible for the idea for a communication utility. Mr. Mrizek said staff's interest had come from communication utility information provided through organizations such as the American Public Power Association, the fact that other utilities were installing it in their utility systems, and that the Califor-nia Municipal Utility Association had formed a committee to investigate such systems for municipal utilities. The City started with a coax system and fiber optics would provide more capabilities. Council Member Rosenbaum clarified the City currently had coax cable which had nothing to do with the Cable Co-op system. Mr. Mrizek said that was correct. It was a utility coax system that the City began installing in the early 1980s, but the coax system was limited in locations. Fiber optics would expand the
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City's communication systems to other areas of the utilities to pick up additional functions on the distribution system. Council Member Rosenbaum said coax had quite a broadband capability and asked whether staff was suggesting that the amount of information that the utility must transfer per second exceeds the capability of a coax system. Mr. Mrizek said no. He was not suggesting that the coax system be removed which worked very well, but the coax system could be augmented to other areas with fiber optics. It would not only provide the information to the utility systems, but it would provide additional uses for the City. Council Member Rosenbaum said if the utility system of the City required more communication, it could be done. Mr. Mrizek said that was correct. Council Member Rosenbaum was concerned about the implication that the City should do what private enterprise had done in the communication industry. It started with the idea that the utility system, which did not require fiber optics to enhance its communication ability, should now be extended to a City-owned communication system in a very competitive area and in an area that was in tremendous influx. A consultant might only be able to provide information on what would be the best approach for the current year or one year beyond. He was puzzled as to why the staff had come to the Council with the proposal to go into competition with a very effective private enterprise system in that particular area. Ms. Jansen said part of what precipitated the discussions that lead to the drafting of the staff report came out of the Digital Equipment Corporation's Conduit Leasing Program. It clearly brought into play what role the City would play in the future of communications. Staff approached it as a possibility to have a system, if it were cost effective and technically feasible, that would be able to have potential for commercial applications. Palo Alto had always been able to offer full service to the business community at a lower cost than many other neighboring communities. Fiber optic communication might have the same potential or it might not. The potential for commercial application was there which was why staff solicited the opinions of many people in the private sector, including Stanford Research Park. If the City looked at commercial applications and large users, it could only talk fiber. Council Member Rosenbaum said the City was able to offer its customer a considerable degree of savings in electricity and a lesser degree in gas, and not at all in water. The reason for the proposal was not the distribution system, and the City was fortunate to have access to a supply of electricity and gas which was cheaper than Pacific Gas & Electric (PG&E). None of that would apply to a communication facility. The City could lay the same wire as Metropolitan Fiber Systems could lay. There was no
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possible benefit that could be provided to the customers that a private company could not match. Ms. Jansen said a substantial difference was that the City had existing conduit and access to poles and the infrastructure that would facilitate a communication utility system. In addition, private carriers would generally only provide service to major users. Council Member Rosenbaum said the City would do the same thing if it wanted to start up a system. Ms. Jansen said the needs for small and mid-size businesses might be very great for a communication system, which private carriers would not consider. The City might be able to provide either through coax or a combination of coax and fiber optics. The major corporations had the staffing and the financial wherewithal to provide any system it wanted or needed. Smaller companies would not have that capability which was where the City could play a valuable role. Ms. Fleming said the City had not made a decision that it wanted to get into the fiber communication business. Staff wanted Council's approval to look at the issue and then make a conscious decision. There were competitors for some of the utilities provided by the City and there would be more in the future. The City provided better service more efficiently and the community benefited from the service. The City did not know what all the benefits would be but believed it should be investigated. Council Member Rosenbaum said staff wanted to have a study done to determine the technical, legal, and fiscal feasibility. He asked whether the consultant for the City of Santa Clara could provide the answers for Palo Alto and whether the City could go in with several other cities and share the cost of a study. Ms. Fleming said all cities were different. Palo Alto had cable, but Santa Clara did not. She did not believe any consultant report done for any city could be used for Palo Alto. There might be some pieces of the study that might apply but what Palo Alto wanted and required were different from Santa Clara. Council Member Rosenbaum clarified the City of Santa Clara had cable service, but it was not provided by a cable co-op. Ms. Neff said Santa Clara did not have a dual cable system. Palo Alto had dual cable capability or Cable A and B. Council Member Rosenbaum said the reference was to Cable B which had never been put into operation. Ms. Neff said that was correct. Council Member Rosenbaum said the legal feasibility should be the same for all cities.
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City Attorney Ariel Calonne did not know whether Santa Clara had looked at the system in that context. When the discussion began, it occurred to him that the issues associated with forming the utility and issues associated with the federal involvement were beyond the scope of his office. Council Member Rosenbaum said Santa Clara had hired a consultant to look at the technical, legal, and fiscal feasibility which were the same issues proposed for the City that would cost between $100,000 to $150,000. Mr. Calonne did not know whether the legal issues had been considered in that context. Council Member Rosenbaum asked whether there was a way for the City to proceed but spend less than $100,000 to $150,000. He was not prepared to spend that amount of money even if it came from the Electric Utility. Ms. Fleming clarified that Council Member Rosenbaum wanted to know what could be done for less money. Staff would prefer not to respond quickly to the question that evening but return to the Council with information on what a consultant(s) could provide for a lesser amount and the strategy proposed. Council Member McCown associated with comments of Council Member Rosenbaum and was also extremely skeptical. She had a lot of questions about the concept. She appreciated that there were different elements, and she asked whether a staged approach could be done with less dollars spent initially to take it one step further than the staff had been able to do at that point. She guaranteed that a $150,000 consultant contract would state that the concept could be done but there would be a lot of questions. The City would not get $150,000 worth of advice that it was a stupid idea and should not be done. There might need to be a jumping-off point for less money or a staying-on point that the City could determine. The staff report (CMR:295:94) indicated that there was intense competition among different technologies and that there was enormous flux on the subject. She appreciated the idea of the window but not spending the money on that level of study would give an initial sense on more targeted questions. The first step might be the narrow question whether it would be useful to add fiber optic to City facilities and then let the developments in the private sector continue to proceed. It was a changing landscape, and she did not believe much utility would be gained from a $150,000 study. She wanted the issue returned to staff for additional work that was much narrower and less expensive. Ms. Fleming asked whether the issue should be referred to the Utilities Advisory Commission (UAC) first before returning to the Council. Council Member Wheeler said reference was made to several conversations with major potential users in the Stanford Research
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Park and they had indicated some enthusiasm for the City moving forward. She asked whether the timing of the conversations was prior to or subsequent to knowing about MFS' plans and opportunities that would be presented to the same users. Ms. Jansen said the conversations were both prior to and after. The individual campuses were well connected, e.g., Xerox was a well connected campus and had some connectability to the outside world. The connectability to Hewlett-Packard might not be that great or from Hewlett-Packard to others. Communication with the outside world was possible and ongoing with some of the major companies; however, there were increasing numbers of easement requests so that fiber could be buried in the ground for connection with other companies. The major users saw that as the greatest role for the City to play, which had nothing to do with the MFS proposal. The MFS proposal would be a major trunk line that would come into the City and hit 14 key individual areas, but it would not provide the interconnectability that the Stanford Research Park was looking at for the future. Ms. Neff said another issue that needed to be considered was whether companies similar to MFS would be allowed into the City and what the City would do if 12 companies wanted to lay bits and pieces of fiber. If there were a common carrier that had one cable, it would be capable of allowing 12 or more companies into the City. There was no company presently looking at universal service. Companies were running legs that hit major transportation corridors and businesses. The City needed to consider whether the interconnectability of all the different companies coming in and laying their own small pieces would benefit the City as a whole. Council Member Wheeler said that questions needed to be asked regardless of whether the City proceeded with studying the area. She asked what the legalities were for the City if it wanted to have interconnectability into systems within the City and the world that were not run by the City and whether the companies were obligated to let the City tie into their systems. Ms. Neff said the National Information Infrastructure was looking at that issue at the federal level and the interconnectability of different systems. The technical feasibility study would look at that part as a requirement and what it would take to allow the City to interconnect. Communication systems need to communicate outward. Council Member Wheeler said she lacked vision on the issue and looked forward to the Council fashioning something when the scope narrowed. Council Member Andersen understood fiber optics would not be used throughout an entire community and was only needed where there was a high ban need and interactive capability. The coaxial was sufficient at the residential level. He asked how much coaxial would be necessary to cover the community and whether it would cover businesses, residential, or areas that would not be covered
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by the private sector. Ms. Jansen said service to residential would be provided which would not be covered by the private sector. Council Member Andersen said residential would be taken care of by a coaxial system that was already in place. Ms. Jansen said a coaxial system was in place, but it was not activated and did not have the switching mechanisms. Council Member Andersen said Cable Co-op was already in place and the coaxial would do the same thing. Ms, Neff said two-way upstream/downstream communication could be done with coaxial cable but it took a large amount of ban width. She understood there was not enough ban width for Cable A, the entertainment channel, to do two-way. The Cable B channel would have to be activated for the residential. Council Member Andersen clarified fiber optics would only be needed in an arterial system. Ms. Neff said fiber would need to be brought into neighborhood hubs and there would be a point that fiber would be brought in and coax would go into the homes. Council Member Andersen said one of the main arguments for approving the staff recommendation was that the City would not receive universal service sufficient to cover the entire community unless it proceeded with fiber optics because the private sector would not find it profitable to proceed in that direction. Ms. Neff said that was correct. Mayor Kniss asked the cost of a study that would have some impact. Mr. Strojny said the amount would have to be assessed, and staff would return to the Council with the cost. The study for the City of Santa Clara cost $75,000 and the community believed that it would make an impact. The cost might be less than $100,000. Brad Anderson, General Manager of Cable Co-op, 3200 Park Boule-vard, offered Cable Co-op's support for the staff recommendation to study a fiber optic community utility. It was the first step toward working with the City. Cable Co-op believed that the consultant would conclude that Cable Co-op was the only logical partner for the City in establishing a communication utility. Cable Co-op was the better, cheaper, and faster alternative, and it planned to influence the process in its favor. Cable Co-op believed it had the expertise necessary to assist the City in the process. He noted that Cable Co-op had the ability to go beyond City boundaries since the cable system served adjacent communities. There were current negotiations to create agreements to interconnect with communities throughout the Bay Area and beyond. Cable Co-op would proceed with its plan to offer fiber
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optic technology to the residents of Palo Alto whether the City chose to proceed with the staff recommendations or not. An intensively competitive marketplace was forming and Cable Co-op intended to compete. There was concern that if the City's planning process continued for a protracted period of time, it might place the City at a competitive disadvantage, particularly in light of MFS' recent proposal. If the City wanted to move ahead on an accelerated basis, Cable Co-op would be willing to explore that direction with the City. It was intrigued with the notion of spending $150,000 on capital versus a study and would be happy to discuss the wise use of the funds on capital projects. Council Member Fazzino asked where Cable Co-op would get the financial resources to invest in the system. Mr. Anderson said Cable Co-op had the same concern. It was critically important that the present ratepayers for basic cable service be isolated from the capital construction necessary to offer advanced services. Financing the capital construction out of the existing rate base would cause the same problem that the telephone utilities had when they tried to do something similar. The universal service was a critical part of Cable Co-op's future. The cable system had to be built out in order for Cable Co-op to compete in the area of advanced technology. Other companies would come into the City and skim the cream off of the business and eventually isolate Cable Co-op as only a cable television provider. If that happened, Cable Co-op would lose its market share of that business as Pacific Bell or a direct broadcast satellite system moved into the area. Cable Co-op had to aggressively compete and the financing would have to be found. It would probably mean a partnership with someone because that was the only way it could be done. Tom Passell, Cable Co-op, Board of Directors, 3825 Louis Road, said the study might show the advantage of the City being a partner with Cable Co-op and to add locally generated capital to extend the capability of the cable system and meet the current subscribers' needs. Fiber was 10 times wider as a highway for information as coax. Coax was quite broad and was 100 times wider than the telephone system. The study would show whether the City wanted to be involved. Individual people did not always get everything he/she wanted from the private sector. He encouraged the Council to move forward. R. J. Goldberg, representing the Bay Area Regional Research Network (BARRNET), located at Stanford University, 701 Welch Road, wanted to address the issue of the services that the City anticipated would be provided with a citywide communication service and infrastructure. He described how people were connected to the Internet. Engineering the system ahead of demand had to be accommodated when providing such a service. The users required that the services be sustainable and reliable. He supported the market research effort and whatever funds needed to be allocated toward that activity. Mayor Kniss asked the name of the organization that Mr. Goldberg
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represented. Mr. Goldberg replied BARRNET, a regional component of the National Science Foundation network. Mayor Kniss clarified BARRNET was similar to Internet and not a provider like Netcom. Mr. Goldberg said BARRNET was a wholesale provider of the Internet conductivity. Other service providers often connected to BARRNET and redistributed it to commercial and private concerns. Mayor Kniss clarified that was how BARRNET differentiated itself from Netcom. Mr. Goldberg said that was correct. BARRNET was at a significantly higher level and was direct to the national and global backbone. Vice Mayor Simitian said the policy issues were critical to the study. It was not clear to him that the City knew what it wanted and that even if the entire $150,000 were spent, that the City would get what it wanted. The issues were fascinating, and he did not need to be persuaded about the importance of the issues and the City playing a role. The nature of the local economy had changed and would continue to change, and the economy was moving away from ever having been a manufacturing economy to being an information economy. The movement of information between and among the various players in that economy was critical to the direction the City would go. The value of the study would help the City find the need and the appropriate role for city involvement, if any. There was discussion regarding the City being an enabler as distinguished from being a provider, which were two different roles. The potential for public access was discussed on a universal basis and the needs of small and medium-sized businesses as distinguished from larger businesses. There had not been much discussion about the potential for profit to the City, whether or not profit potential existed, and if there were profit potential, whether it might be used to provide greater accessibility. The study would address legal, technical, and fiscal considerations which might include the kinds of issues he mentioned. He hoped the study would provide an identifiable and projected need and where and how the City might play an appropriate role. The fundamental questions were in those areas; and the legal, technical, and fiscal opportunities were critical to how those questions were answered. There needed to be greater clarity as to what would be derived from the study. MOTION TO REFER: Vice Mayor Simitian moved, seconded by Rosenbaum, to refer the item back to staff, with a referral to the Utilities Advisory Commission (UAC), and return to the Council with a proposal that had more clarity regarding policy issues and a scaled-back plan allowing for incremental additional studies. Mayor Kniss asked whether the issue should return to the Council at a date certain.
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Vice Mayor Simitian said the time line could be open-ended, notwithstanding the concern from staff about taking advantage of the window of opportunity. Ms. Fleming said staff would be able to comply with the request by Council. Council Member Andersen was concerned about the time frame and the referral to the UAC and back to staff. Mr. Strojny said the issue could be referred to the UAC in July 1994, and return to the Council in September or October 1994. There would be an RFP process, the consultant selection, and the work being done so the results would not be available until 1995. Council Member Andersen was concerned about the length of time and asked whether the process could be accelerated. Changes were shifting rapidly, and the City might be making a mistake to take that much time. The referral to the UAC might slow the process down and he wondered whether there would be that much benefit from the referral. Mayor Kniss said she had heard about fiber optics last year and the study would look at a current method of communication within many cities around the country. The issue would probably not return to the Council before January, February, or even March 1995. She asked whether there was a way to speed up the process, have the UAC consider the issue, return to the staff, and reduce the price. SUBSTITUTE MOTION: Council Member Andersen moved, seconded by Kniss, to proceed with the staff recommendation on an incremental basis of $75,000, issue Request for Proposal (RFP), and ask the Utilities Advisory Commission to look at proposals, if needed, before it returned to the Council. Ms. Fleming said the RFP for $75,000 could be done incrementally, and the RFP responses could be taken to the UAC before it returned to the Council. Council Member Andersen supported an opportunity for the UAC to review the responses from the RFP which would provide input on the policy perspective. Vice Mayor Simitian believed the question of what the City would get for the money had not been answered. A half-baked study for a lesser amount of money might ask the wrong questions about the direction the City should go. He preferred a thoughtful, integrated plan for an incremental pursuit of additional knowledge after the City had a well-defined notion of where it wanted to be. He did not support the substitute motion. Council Member Fazzino supported the staff's initiative and commended the staff for bringing the issue before the Council. Council encouraged the staff to take risks and be creative. It
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would be the most exciting technological step the City could take over the next decade. He concurred with Vice Mayor Simitian's comments and believed it was important that the City have a complete study and that any and all issues be evaluated. He believed the City should move forward with the RFP process. The Council would have an opportunity to review the components of the RFP prior to the public notice to determine whether it was comfortable with the components and whether or not the information desired would be received as a result of the study. The Council could decide at that point to decrease the amount of money for the study. He was not convinced at the present time that the City should own or operate its own fiber optic utility, but he was convinced that it was the right time for the City to evaluate what its role should be in the area of the communication utility and at least assure the highest level of service for its citizens, whether it be a city-owned system, operated by Cable Co-op, a joint venture with other public-orientated groups, or run by a private or multiple private organizations. He believed it was extremely important for the UAC to be involved in the evaluation. The UAC had far more expertise than any of the Council Members in that area. He supported the main motion. Council Member McCown agreed with Vice Mayor Simitian and supported the main motion. The City would get a better product for the dollars in the long term. Mayor Kniss was a major supporter of technology, and the technology was very new and was state-of-the-art. She was concerned that if the City did not study the area, the City would not know whether it should be in the area or not. She believed too much time would be spent on processing. She supported substitute motion. SUBSTITUTE MOTION FAILED 2-6, Andersen, Kniss, "yes," Schneider absent. Vice Mayor Simitian clarified the recommendation from staff spoke to looking at the technical issues in connecting with establishing an integrated communication utility. There were many policy issues before the City reached the conclusion it wanted an integrated communication utility. The questions should be asked first before the City reached that point. Council Member Huber supported the main motion. He congratulated the staff for bringing forward the proposal. He did not believe it was the type of utility that the City should be involved in as an owner. It was too risky, and Cable Co-op was far less of a risk years before than the proposal would be; however, the City needed to facilitate those types of systems so the businesses and citizens had it available to them. He wanted to see how the City could facilitate the availability through the private sector at a relatively minimal cost to the City. Mayor Kniss agreed with the comments of Council Member Huber. The industry was split on the issue. Many people stated that there was no reason for the City to be involved and let the private
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industry take over, and other people felt it was an incredible opportunity for cities. The Council would have to eventually consider the issue after a number of companies came into the City, but the opportunity might not be there. MOTION TO REFER PASSED 8-0, Schneider absent. 16A. (Old Item No. 3) Selection of Consultant to Perform Regional Water Quality Control Plant Corrosion Control Investigation Study Vice Mayor Simitian said there were a number of expensive items under the Consent Calendar that went out to bid, but the consultant agreement to perform the Corrosion Control Investigation Study did not. He said the reason the item did not go out to bid was because the City was looking at a consultant arrangement rather than the typical goods and services situation. Director of Public Works Glenn Roberts said that was correct. The item was for expert professional services, and the primary basis for selection was on the skills of the consultants involved, not on price. Vice Mayor Simitian said the agreement involved a $130,000 contract and the staff report (CMR:289:94) indicated the Request for Proposal (RFP) was sent to eight firms, and the City received proposals from three firms. He asked for the cost suggestions from the other two firms. Environmental Compliance Manager Phil Bobel said one bid was for $100,000 and the other was $35,000; however, the one for $35,000 completely missed the mark. MOTION: Vice Mayor Simitian moved, seconded by Fazzino, to approve the selection of consultant to perform Regional Water Quality Control Plant Corrosion Control Investigation Study. MOTION PASSED 8-0, Schneider absent. 16B. (Old Item No. 4) Selection of Consultants to Conduct Re-gional Water Quality Control Plant Pollution Prevention Demonstration Project Vice Mayor Simitian said the Request for Proposal (RFP) was sent to 20 firms, but the City only received proposals from 2 firms. He asked why the City did not hear from the other 18 firms. Environmental Compliance Manager Phil Bobel said the 20 firms that received the RFP were all metal finishing firms in the service areas. The two firms that responded were mid-size companies which had done a lot of work in that area. The companies had been interested in the pollution prevention area and had worked other consultants in the past. City Attorney Ariel Calonne explained the pollution prevention demonstration projects came out of the City's clean agreement, and
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the companies served as guinea pigs for the City to try and market technologies that would be developed. Vice Mayor Simitian said the agreement involved $140,000, and he asked what the other proposal was like in terms of dollars. Mr. Bobel said $140,000 was for two projects. Staff did not negotiate the price. Each contract would be for approximately $70,000. Vice Mayor Simitian clarified those were the two firms that responded. Mr. Bobel said that was correct. Vice Mayor Simitian clarified there were situations where the City had a single respondent for each of the different contracts. Mr. Bobel said there was one RFP, and the City had two responses. Staff recommended that both firms be selected because the firms were not mutually exclusive and several firms could be selected. If three firms had responded, the budget might have permitted all three by scaling back the other two firms. Staff had used the Utilities Department as a model for the demonstration projects. MOTION: Vice Mayor Simitian moved, seconded by Fazzino, to approve the selection of consultants to perform Regional Water Quality Control Plant Pollution Prevention Demonstration Project. Vice Mayor Simitian was troubled that an RFP was sent out to 20 firms and only 2 firms responded. He understood the situation was different in terms of hiring consultants and making a selection based on qualifications rather than on a strict bid situation and a dollar amount. He believed it would be desirable in staff reports for the Council to have some indication of what kind of costs were suggested by other potential bidders. Staff had made a decision to spend $30,000 more than another consultant suggested was necessary. It would have been helpful to have staff explain why it made a judgment to spend $30,000 more. Council had to make a policy decision when the items were on the agenda. He hoped the City Auditor would report on those kinds of issues and that staff would explain the situation in the future. Council Member Andersen appreciated the direction Vice Mayor Simitian had taken on the issue, but he believed the staff efforts regarding the proposals were thorough and complete. He accepted the fact that 18 firms did not wish to respond and were not willing to get into a risky business. He was anxious to review the City Auditor's report on the issue. Vice Mayor Simitian said it was important that the process used routinely by the City should not rely on the integrity of the individuals involved. There was no suggestion that there was any problem with the contractor or the individuals involved. The process allowed, without any explanation, for a staff member(s) to simply select a preferred vendor and spend an additional $30,000
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of City funds with no rationale for that expenditure in the staff report. He did not view that as a good process in terms of protecting City interests on a consistent basis. The issue was not with the particular set of proposals. MOTION PASSED 8-0, Schneider absent. RECESS TO A CLOSED SESSION: 11:12 P.M. - 11:30 P.M. The City Council met in Closed Session to discuss a written liability claim against the City of Palo Alto by William and Elizabeth McCroskey, an existing litigation - Kallstrom v. City of Palo Alto, SCC No. 701606, and a matter involving significant exposure to litigation as described in Agenda Item Nos. 10, 11, and 12. Mayor Kniss announced the City Council's public report of Closed Session action pursuant to Palo Alto Municipal Code ∋2.04.030(b). The Council unanimously by a 8-0 vote, Schneider absent, authorized the City Attorney to conclude a final settlement with William and Betty McCroskey in the amount of an additional $8,000. ADJOURNMENT: The meeting adjourned at 11:31 p.m. ATTEST: APPROVED: City Clerk Mayor NOTE: Sense minutes (synopsis) are prepared in accordance with Palo Alto Municipal Code Sections 2.04.200 (a) and (b). The City Council and Standing Committee meeting tapes are made solely for the purpose of facilitating the preparation of the minutes of the meetings. City Council and Standing Committee meeting tapes are recycled 90 days from the date of the meeting. The tapes are available for members of the public to listen to during regular office hours.
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