HomeMy WebLinkAbout1995-02-06 City Council Summary Minutes
Regular Meeting February 6, 1995 1. Interviews for Historic Resources Board ................ 75-35 1. Presentation of American Public Power Association Honor Roll Certificate to Former Mayor Jack Sutorius ......... 75-36 2. Resolution Expressing Appreciation to Don Mayall for Outstanding Service as a Member of the Mid-Peninsula Access Corporation Board of Directors .................. 75-36 ORAL COMMUNICATIONS ......................................... 75-36 APPROVAL OF MINUTES OF NOVEMBER 28 AND 29, 1994 ............. 75-37 3. Resolution 7483 entitled "Resolution of the Council of the City of Palo Alto Ordering the Summary Vacation of a Public Service Easement for a Gas Pipeline at 854 Marshall Drive, Palo Alto .............................. 75-37 4. Resolution 7484 entitled "Resolution of the Council of the City of Palo Alto Adopting and Authorizing Execution of Program Supplement No. 005 Rev. 1 to the Agreement between the City of Palo Alto and Caltrans for Federal-Aid Projects, Relating to the Proposed Embarcadero Bridge and Bike Path Extension Project ..... 75-37 5. Conference with City Attorney--Potential Initiation of Litigation ............................................. 75-37 6. Conference with City Attorney--Potential/Anticipated Litigation ............................................. 75-38 7. PUBLIC HEARING: Pursuant to Section 14.2 of the Amended and Modified Franchise Agreement By and Between the City of Palo Alto on Behalf of the Joint Powers and Cable Communications Cooperative of Palo Alto, Inc. (Cable Co-op), the City Council will determine whether the City shall grant its consent to Cable Co-op's assignment to TCI Cablevision of California Inc. (TCI) of an irrevocable license to use and a security interest in a portion of the fiber optic ring being constructed by TCI and owned by Cable Co-op ............ 75-38
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8. The Finance Committee recommends to the City Council approval of the exemption to the Real Property Transfer Tax for all transactions involving a release of ownership interests held by co-borrowers without monetary consideration ................................. 75-44 9. Ordinance Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation to Reallocate Human Services Contracts ............................... 75-63 10. Ordinance Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation for Public Communication Services ................................. 75-65 11. Ordinance Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation for the Department of Planning and Community Environment for Hiring of Contract Planners ............................ 75-65 12. Agreement between the City of Palo Alto and the Arastradero Park Apartment Corporation and the Palo Alto Housing Corporation to Provide a Loan of 1994-95 Community Development Block Grant Funds to Arastradero Park Housing Corporation for Acquisition of Arastradero Park Apartments at 574 Arastradero Road, Palo Alto ..... 75-66 13. Report from City Attorney Regarding Potential AB 133 (Designation of Historic Churches) Lawsuit ............. 75-68 14. Waiver of the City Council Appointment Procedure for Advertisement of the Unexpired Term of John Baer and to Allow for the Appointment of Two Applicants to the Historic Resources Board ............................... 75-68 15. Council Comments, Questions, and Announcements ......... 75-68 ADJOURNMENT: The meeting adjourned at 11:10 p.m. to a Closed Session ................................................ 75-68 FINAL ADJOURNMENT: The meeting adjourned at 11:45 p.m. ..... 75-69
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The City Council of the City of Palo Alto met in a Special Meeting on this date in the Council Conference Room at 6:00 p.m. PRESENT: Andersen, Fazzino, Huber, McCown, Rosenbaum, Schneider, Simitian, Wheeler ABSENT: Kniss ORAL COMMUNICATIONS None SPECIAL MEETINGS 1. Interviews for Historic Resources Board ADJOURNMENT: The meeting adjourned at 7:00 p.m.
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The City Council of the City of Palo Alto met on this date in the Council Chambers at 7:10 p.m. PRESENT: Andersen, Fazzino, Huber (arrived at 7:14 p.m.), Kniss, McCown, Rosenbaum, Schneider, Simitian, Wheeler SPECIAL ORDERS OF THE DAY 1. Presentation of American Public Power Association Honor Roll Certificate to Former Mayor Jack Sutorius Mayor Simitian said the American Public Power Association (APPA) Honor Roll was a special recognition awarded only to local officials who made significant contributions to public power, and it was limited to those who had given at least 10 years of service. He asked the record to reflect a letter from the Executive Director of American Public Power Association (APPA) regarding the recognition of Mr. Sutorius' contributions to public power on the local level (on file in the City Clerk's Office). He presented the American Public Power Association Honor Roll Certificate to Former Mayor Jack Sutorius. Former Mayor Jack Sutorius was touched by receiving the Honor Roll Certificate and the letter from APPA. He acknowledged and thanked everyone with whom he had served, e.g., June Fleming, Ed Mrizek, Ariel Calonne, Bill Zaner, and previous and present Council Members. The City of Palo Alto had earned APPA's recognition and appreciation, and he was sure it would continue to do so. Council Member Rosenbaum was the current Northern California Power Agency (NCPA) Commissioner and said there were tremendous regard and admiration for the contributions of Mr. Sutorius to NCPA. The City of Palo Alto owed Mr. Sutorius a great debt of gratitude. 2. Resolution Expressing Appreciation to Don Mayall for Out-standing Service as a Member of the Mid-Peninsula Access Corporation Board of Directors MOTION: Council Member Huber moved, seconded by Wheeler, to adopt the Resolution. Resolution 7482 entitled "Resolution of the Council of the City of Palo Alto Expressing Appreciation to Don Mayall for Outstanding Service as a Member of the Mid-Peninsula Access Corporation Board of Directors" MOTION PASSED 9-0. Mayor Simitian presented the Resolution to Mr. Mayall. Mr. Mayall said there would be no Mid-Peninsula Access Corporation without the City's support, and he urged continued support. ORAL COMMUNICATIONS
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Edmund Power, 2254 Dartmouth Street, spoke regarding government accountability (letter on file in the City Clerk's Office). Herb Borock, 2731 Byron Street, spoke regarding the Comprehensive Plan and Sand Hill Road. Vernon Schabert, 1987 Colony Street, No. 4, Mountain View, intro-duced the new KZSU announcer, Vince Larkin. APPROVAL OF MINUTES OF NOVEMBER 28 AND 29, 1994 MOTION: Vice Mayor Wheeler moved, seconded by Kniss, to approve the Minutes of November 28 and 29, 1994, as submitted. MOTION PASSED 9-0. CONSENT CALENDAR MOTION: Vice Mayor Wheeler moved, seconded by Schneider, to approve Consent Calendar Item Nos. 3 and 4. 3. Resolution 7483 entitled "Resolution of the Council of the City of Palo Alto Ordering the Summary Vacation of a Public Service Easement for a Gas Pipeline at 854 Marshall Drive, Palo Alto" 4. Resolution 7484 entitled "Resolution of the Council of the City of Palo Alto Adopting and Authorizing Execution of Program Supplement No. 005 Rev. 1 to the Agreement between the City of Palo Alto and Caltrans for Federal-Aid Projects, Relating to the Proposed Embarcadero Bridge and Bike Path Extension Project" Program Supplement Agreement between the City of Palo Alto and Caltrans for Federal-Aid Projects, Relating to the Proposed Embarcadero Bridge and Bike Path Extension Project MOTION PASSED 9-0. CLOSED SESSION Mayor Simitian said the intent was to hear Item No. 5 in Closed Session during the break and that Item No. 6 would be heard immediately following the Regular Meeting. 5. Conference with City Attorney--Potential Initiation of Litigation Subject: Potential initiation of litigation on one separate matter
Authority: Government Code ∋54956.9(c) Public Comment
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None. 6. Conference with City Attorney--Potential/Anticipated Litiga-tion Subject: Significant Exposure to Litigation
Authority: Government Code ∋54956(b)(1) arising out of the San Francisco Symphony's demand to cease use of the phrase
"black & white ball." [Gov. Code, ∋54956.9(b)(1) & (b)(3) (C)] Public Comment Harry Merker, 501 Forest Avenue No. 302, spoke regarding the Black and White Ball. He suggested the name be changed to the Palo Alto "Black and White Gala." PUBLIC HEARINGS 7. PUBLIC HEARING: Pursuant to Section 14.2 of the Amended and Modified Franchise Agreement By and Between the City of Palo Alto on Behalf of the Joint Powers and Cable Communications Cooperative of Palo Alto, Inc. (Cable Co-op), the City Council will determine whether the City shall grant its consent to Cable Co-op's assignment to TCI Cablevision of California Inc. (TCI) of an irrevocable license to use and a security interest in a portion of the fiber optic ring being constructed by TCI and owned by Cable Co-op Council Member Kniss queried the future impacts of an approval of the irrevocable license with conditions on the City of Palo Alto and its citizens. Director of Information Resources Dianah Neff said TCI Cablevision of California Inc. (TCI) was constructing a fiber optic cable ring around the Bay, and 9.6 miles of that ring passed through three jurisdictions in the Joint Cable Working Group, e.g., Atherton, Menlo Park, and Palo Alto. Approval of the irrevocable license would allow Cable Co-op access to the fiber ring and to receive future signals from the Sutro Tower, which should result in better service and reception within Palo Alto's service area. TCI would receive an irrevocable license to use, and a security interest in, a portion of the fiber optic ring constructed by TCI and owned by Cable Co-op, which meant that if Cable Co-op no longer existed, the assignee would have to assume that responsibility. Council Member Kniss queried whether the City would have to go through another franchisee process similar to the one which occurred in the early 1980s with the added complication of the assignee if Cable Co-op ceased to exist. Ms. Neff said that was correct. Senior Assistant City Attorney Grant Kolling said if Council approved the security interest with the conditions, staff would
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move forward and propose a formal consent agreement with TCI and Cable Co-op. Council Member Andersen referred to page 6 of the staff report (CMR:133:95) which indicated that TCI would not be in a superior position by virtue of its security interest to successfully negotiate the right to succeed Cable Co-op as the cable service area franchisee. The report also indicated that Cable Co-op had a long working relationship with TCI and that TCI had expressed interest in purchasing Cable Co-op should it become available for sale. He could not understand why TCI's security interest would not give it an advantage. Ms. Neff said with the added conditions, TCI could not block a different cable operator from making a successful bid for the franchise. The agreement would also bind TCI to allow the assignee or new cable operator to use the fiber optic ring. Council Member Andersen understood there was some difficulty with Recommendation No. 4 as reflected on page 2 of the report (CMR:133:95) and queried why the condition was suggested. Ms. Neff said the Joint Powers Working Group believed TCI went through the jurisdictions without notification; and, therefore, the jurisdictions should be entitled to some type of compensation for the use of the right-of-way. The compensation would be a negotiated point in terms of whether it would be at no charge, nominal charge, or a most favored customer charge for being allowed to use the right-of-way. Should any one of the jurisdictions decide to do a communications utility, they could negotiate to use the fiber optic ring for ingress into and egress out of the cities. Council Member Andersen clarified whether the recommendation was primarily a result of other communities wishing to see the condition in order that they might create some type of communica-tions system. Ms. Neff said the recommendation represented a consensus of the group including Palo Alto. Council Member Schneider said voice and data transmission was not specifically addressed, and she queried whether the agreement impacted the City's ability to generate revenues in the future if it decided to have a utility for voice and data transmission. Ms. Neff believed it would be a matter of competition. If TCI offered the service and the City also chose to offer it, the market would determine whether the City generated or lost revenues. Council Member Schneider referred to page 7 of the report (CMR:133:95) and queried whether the statement that the City could be assured of meeting its prospective telecommunications intercon-nection needs currently by obtaining a firm written commitment from TCI and Cable Co-op to make their portion of the fiber optic
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ring available to the City or whether the City's communication licensee or franchisee clarified the response. Ms. Neff said if the City created a communications utility, it would need to tie into a system that went beyond Palo Alto. One of the options would be the TCI/Cable Co-op fiber ring. Other options might be the Southern Pacific right-of-way or MCI or one of the others to have access out of the Palo Alto area. The statement insured the City had the right to negotiate potential options. Council Member Schneider queried whether TCI was looking for a foothold for a local bypass of telephone utilities. Ms. Neff said TCI was not currently a certified telephone utility and did not have the right to provide telephone service. If TCI wanted to provide telephone service in the future, it would have to apply to the California Public Utilities Commission (CPUC) for the appropriate certifications. Council Member Huber queried the benefit to Palo Alto's cable customers to grant the irrevocable license and security interest. Ms. Neff said one of the major benefits would be that the over-the-air channels which were currently received with static because of interference should be eliminated with the use of the fiber. In the future there could be new programming available over the fiber ring that Cable Co-op would be able to negotiate a use for the benefit of the subscribers. Council Member Huber queried whether the City needed to commit immediately in terms of the use of the 48 strands. Ms. Neff said the capacity for 48 strands of fiber was significant, and the City was requesting that TCI be required to negotiate with the City at some future point in time in order to keep the option open. If the fiber should fill up for some reason and the City were not able to get on, it would not be locked out. Council Member Huber believed Cable Co-op received an interduct cable, and he queried its value, cost, or otherwise. Brad Anderson, General Manager, Cable Co-op, 3200 Park Boulevard, clarified TCI needed a route up the peninsula for its fiber optic ring, and the most logical one seemed to be through Palo Alto. While TCI could have taken an alternative route west of Palo Alto, Cable Co-op believed there would be a benefit to its consumers, Palo Alto and its constituents, to negotiate with TCI to be a part of the ring. Ms. Neff was correct that the first reason for wanting to be part of the ring was to receive television signals directly from Sutro Tower rather than through the air waves. Secondarily, all of the cable systems in the Bay Area would be interconnected. The franchise called for such an interconnection, and Cable Co-op believed there was long-term value for the exchange of programming or other information. While trucks currently transported tapes from Palo Alto to San Francisco for
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viewing on San Francisco's system and the tapes were mailed back after they were shown, programming could be exchanged via the fiber optic link which was consistent with the franchise. Thirdly, the fiber optic ring was the first step in allowing Cable Co-op to get into the voice and data business. While he realized there were policy questions for the Council in terms of the voice and data business, it was absolutely necessary in order for Cable Co-op to get into competitive services. While it was unclear where the regulatory front was going, it was clear that competition would be the net result. If Cable Co-op did not get into voice and data service prior to other competitors' getting into the television business, Cable Co-op would be at a competitive disadvantage and eventually would be out of business. In terms of the interduct cable value, he believed it was $75,000 and $100,000. In terms of the 48 strands, if the City wanted to negotiate for use of channel capacity either from Cable Co-op or one of the other carriers on the fiber optic link at a fair price, that offer would be open to the City indefinitely. If the City wanted to convert its long distance or data service over to Cable Co-op, it would be very interested in negotiating. In the interest of good business practices, however, Cable Co-op would not be interested in giving away service that would be purchased elsewhere. Cable Co-op had indicated to City staff that once the connection was made to Cable Co-op's head-end, it would facilitate the City's access to it. The City would then have direct access to the fiber optic cable but not access independently of Cable Co-op. Council Member Huber referred to recommendation No. 4 on page 2 of 8 of the staff report (CMR:133:95) and queried whether Mr. Anderson's statement essentially meant Palo Alto could eliminate any hope of accessing the portion of the fiber optic ring owned by Cable Co-op at no charge or a nominal charge. Mr. Anderson said that was correct. Council Member Kniss referred to letters in the packet (on file in the City Clerk's Office) which indicated alarm over quarterly rate increases particularly with TCI. While those rates could go down, they tended to go up. She also queried the advantage of Palo Alto's having 90 television channels. Mr. Anderson clarified the request that evening had nothing to do with TCI or rates. The agreement was structured to isolate Cable Co-op's rate base from the cost of the project. Further, by offering a variety of services, Cable Co-op's future goal was to hopefully lower the basic rate. The Cable Co-op had frozen its basic rates for 1995 because it sustained a strong customer growth throughout 1994 and was projecting an equally strong customer growth in 1995. While he would not want Cable Co-op's reputation within the industry to be the same as TCI's, TCI was the largest cable company in the world, and Cable Co-op was one of the smallest. TCI did things on a vast regional scale and the Cable Co-op tried to do things locally. He understood Council's trepidation about TCI, but the agreement did not give TCI any additional leverage into Palo Alto. The cable paralleled less
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than two percent of Cable Co-op's total cable system and in one sense was a replacement for satellite dishes. He clarified Cable Co-op currently had a relationship with TCI and purchased much of its programming from them. With over one million customers, TCI purchased programming at much better prices than what Cable Co-op could. Cable Co-op also had a management agreement with TCI which was left over from its Heritage days. The management agreement had been renegotiated twice, and the scope had been significantly reduced. The management agreement was only activated at Cable Co-op's request, and TCI had no day-to-day role. While Cable Co-op had ongoing relationships with TCI, it was important to know that none of the relationships would create a situation in which TCI had an advantage of trying to buy Cable Co-op. He believed the City of Palo Alto had the right of first refusal if any buyer came into the market. Mayor Simitian declared the Public Hearing open. Keith Cooley, 1330 Harker, was co-owner of a local business which provided Internet presence to small businesses. He formerly worked at Bell Laboratories and Bell Communications Research on computer networking. While TCI would greatly benefit from having a connection in Palo Alto, many other companies wanted to have access to Palo Alto as well; and, if TCI desired to get into data communications and wanted to have access to Palo Alto, the City was in a good position to negotiate more competitively with TCI. Many businesses generated data in Palo Alto, and many more would be starting to use data in the next five years. Bob Moss, 4010 Orme Street, said the connection to Cable Co-op's head-end had no impact on TCI's access or lack of access to Palo Alto or to the data highway. The connection would terminate at Cable Co-op's head-end. Cable Co-op would own the fiber and had no intention of allowing TCI to serve the area. The fiber system would help Cable Co-op and its members. Having the programming on the fiber optic cable system would reduce the amount of outages because it was a self-healing system. When the fiber was laid around the entire Bay, it would allow people to continue getting service when an overhead line was cut because of other construction. The trends indicated a likelihood that within two years, the cable systems would be allowed to give telephone service and telephone companies would be allowed to give cable service. Regarding access to the fiber optic cable and the City's ability to lease, Cable Co-op had always said it wanted to work with the City and would like to have the City as a partner in the cable system if it wanted to put up the money. If the City simply wanted access to the capacity, that was acceptable although access would not be given away. Cable Co-op requested that Council agree to the assignment which, while an extremely unlikely event, was a legal and technical requirement and allow Cable Co-op to continue with connecting to the fiber optic cable system and continue to provide high quality service. Mayor Simitian declared the Public Hearing closed. MOTION: Council Member Andersen moved, seconded by Fazzino, to
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grant consent to the irrevocable license to use and a security interest in a portion of the fiber optic ring to TCI subject to the following conditions: 1. The assignment provisions of the TCI/Cable Co-op agreement shall be modified to require TCI to not charge any proposed assignee of Cable Co-op a fee for accepting the assignment of all rights and obligations of Cable Co-op under the TCI/Cable Co-op Agreement. 2. Under the TCI/Cable Co-op agreement, TCI shall expressly agree that it will not, directly or indirectly (except through Cable Co-op), engage in providing CATV services in the franchise service area without first obtaining a CATV franchise from the City acting on behalf of the Joint Powers, unless it is the successor and assign of Cable Co-op under the franchise agreement. 3. Under the TCI/Cable Co-op agreement, TCI and Cable Co-op shall jointly and individually indemnify and hold harmless the City with respect to any liability, loss, or damage arising out of or in connection with the construction, operation, maintenance, repair, and removal of the fiber optic ring. 4. TCI and Cable Co-op shall grant the Joint Powers, including the City, upon their request, access to the portion of the fiber optic ring owned by Cable Co-op and leased to TCI at any time in the future at no charge, a nominal charge or a most favored customer charge as long as Cable Co-op or its successors or assigns owns the fiber optic ring which passes through the franchise service area. Council Member Andersen believed granting of the irrevocable license strengthened Cable Co-op's position by enabling it to stay competitive and deal with a very dynamic market. He encouraged Council support. Council Member Kniss said while she supported the motion, she was concerned about where the City was headed with fiber optic. She hoped Council would hear more from staff soon about where the City was actually going with its fiber optic study. Council Member Fazzino supported the motion. He congratulated Cable Co-op for carefully preparing a limited agreement with TCI to provide better service for the Palo Alto area. He was not concerned about the possibility of TCI's taking over the system unless the City of Palo Alto decided in five or six years that it was the only alternative, and he hoped Council never reached that point. He believed the agreement before the Council would help Cable Co-op continue to thrive and do a better job providing outstanding cable services to Palo Alto's citizens. There had been many complaints over the past few years from Cable Co-op customers regarding static and power outages, and he hoped those would be eliminated. It was important that Palo Alto be a part of the Bay Area fiber optic ring. While Council Member Kniss raised
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legitimate questions about the future of Palo Alto's role in terms of the communications utility, he was convinced Council still had the opportunity to decide what the City's role would be in the fiber optics area. Council Member Schneider supported the motion and associated with the comments of Council Member Kniss. She was concerned that in an industry that was moving so rapidly, the City of Palo Alto was being forced to make decisions which could have future impacts. While she believed Council was impelled to approve the agreement, she had major reservations. Mayor Simitian associated with the comments of Council Members Kniss and Schneider. While Council was aware the cable industry was changing rapidly and radically, it did not know what the City's future role was likely to be in the industry. He was worried when incremental decisions were made which had the potential to tie the City's hands at some point in the future. He encouraged staff to try to bring some long-term focus and clarity to the policy issues. City Attorney Ariel Calonne said the four conditions being proposed were not contract-type language but rather policy directions. He clarified staff would have some room to move consistent with those policy directions. Mayor Simitian clarified Council understood the motion related to policy direction, not contract language. MOTION PASSED 9-0. REPORTS OF COMMITTEES AND COMMISSIONS 8. The Finance Committee recommends to the City Council approval of the exemption to the Real Property Transfer Tax for all transactions involving a release of ownership interests held by co-borrowers without monetary consideration. Council Member Rosenbaum said in December 1994, the Finance Committee considered four possible exemptions to the real property transfer tax. Only the first exemption was recommended. The first exemption related to transactions involving a release of ownership interest held by co-borrowers when no money changed hands, and it was approved unanimously. The second exemption involved first-time home buyers when purchasing a home which cost less than 80 percent of the average priced Palo Alto home, which was currently about $335,000. It failed on a 2:2 vote, with Vice Mayor Simitian Simitian and Council Member Fazzino voting "yes" and Council Members Rosenbaum and Wheeler voting "no." The last two recommendations were not recommended by staff, failed by the same vote, and involved parties who sold within two years of buying and parties who moved within the City. The arguments in favor invoked ideas of equity and fairness and removing an obstacle to home ownership to first-time home buyers. Opposition cited the revenue needs of the City and skepticism that the presence or absence of the tax had any effect on one's ability to
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buy in Palo Alto. MOTION: Council Member Rosenbaum for the Finance Committee moved to grant exemptions to the real property transfer tax for all transactions involving a release of ownership interests held by co-borrowers without monetary consideration. Council Member Huber said in 1992 when the City Council first passed the real property transfer tax, he believed the main reason had to do with the budget situation. When he reviewed the Finance Committee minutes of December 13, 1994, he did not see any comments regarding the current budget situation. Director of Finance Emily Harrison said staff had not finalized the projections for the General Fund for fiscal year 1995-96 because some fairly critical pieces of information were still outstanding, primarily sales and property taxes. Council Member Kniss referred to the nexus between cuts and services and queried whether before or since 1992 when the City Council considered the question of real property transfer tax out of the budget process loop, Council had taken a cut or added a service into the loop in the same way. Ms. Harrison clarified the question related to the criticism the City received for considering the real property transfer tax out of the budget cycle and trying to keep all of the revenue and expenditure changes within the budget cycle, and that was done. Staff also instituted the budget issues sessions with Council so as to begin considering the issues and letting Council know what was happening once the budget cycle commenced. Staff tried to avoid doing what was done with the transfer tax. Council Member Kniss clarified if the exemption before the Council was approved that evening, it would not be a part of the budget process. Ms. Harrison said that was correct. City Manager June Fleming said while action on the real property transfer tax exemption that evening would take it out of the budget process and while staff tried very hard not to bring such items before the Council, Council always had the prerogative to make individual budget decisions. Mayor Simitian said the issue arose out of his liaison relationship and conversations with representatives of the Board of Realtors. In January when the issue was raised again, he went to the City Manager and the Director of Finance and queried how to proceed. The City Manager and the Director of Finance agreed that after a couple of years in process, the staff should review the matter. The timing was specifically designed to parallel the budget process because staff believed even though decisions occurred last spring, ideally the item would go before the Finance Committee in December and before the Council early in 1995. Therefore, staff could fold in whatever policy directions were
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given into the budget process in time for the new fiscal year. He believed it was fair to say that while the real property transfer tax exemption was heard outside the budget process, it paralleled the budget process specifically at the direction of the City Manager and Director of Finance. Council Member Kniss queried whether Mayor Simitian was encouraged to pull the item out of the loop. Mayor Simitian said he was encouraged to put the item on a parallel track with the budget process. Council Member Kniss said if the exemption were rescinded that evening, the rescission would be woven into the process and eliminated without drawing a nexus. Mayor Simitian believed staff was looking for Council's guidance on the policy issues about exemptions so staff knew as it pulled the budget document together for consideration by the Finance Committee and the full Council what the policy direction would be on those points. Ms. Fleming said that was correct. Mayor Simitian said if Council approved the exemptions, staff would cost out the exemptions and keep those in mind as the budget document was prepared. If Council said there were to be no exemptions, staff would anticipate that revenue would be fully available. Ms. Fleming said staff was beginning to put the budget together and look at available revenue for expenditures. Whatever Council approved that evening would be put into the process where Council and staff addressed any shortfalls between revenues and expendi-tures. Given last year's balancing, most of the reductions short of impacting actual services to the public had already occurred. There was a group of miscellaneous reductions that could be pulled out of the budget process and might result in approximately $30,000 to $40,000. Once those types of adjustments were made in the entire budget process, service reductions were next. While she did not want to be held to specific items, some reductions had been somewhat considered during the past year but had not received the lengthy and exhaustive review which would be required after all the revenue projections were received. Those service reductions included some areas of Community Services in terms of library hours, exhibits, and things of that nature. Also considered were the elimination of some reports, such as the annual report, which was about to be produced; cuts in some of the in-house training activities; possibly cuts in the number of productions in the Children's Theatre; and perhaps some reductions in Transportation and Planning. The first $30,000 to $40,000 level would not get into any service reductions. Council Member Kniss said Attachment A of the staff report (CMR:533:94) was a list of the transfer tax payments. Council had received a couple of different comments, and one related to the
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fact that the whole amount supposedly came out-of-pocket. She queried whether transfer tax dollars were included in the total loan amount. Assistant Finance Director Melissa Cavallo said transfer taxes were considered closing costs and would not be included in the loan amount. Council Member McCown queried how many transactions had occurred with the new higher rate since 1992. Ms. Cavallo said the average was about 600 per year for residential property transactions. Council Member McCown clarified the revenue was about 50/50 for residential and commercial. Ms. Cavallo said that was correct. Council Member McCown said prior to Council's action in 1992, the City had the same transfer tax but at a substantially lower rate which had been in effect since the 1950s. She queried whether there were any exemptions under the prior rate. Ms. Cavallo said prior to 1992, the City split its transfer tax with the County, and there were no exemptions. Council Member McCown suggested perhaps there was a focus on the need for exemptions in certain situations because the dollars that a purchaser or seller paid were that much higher than they were prior to the change in 1992. The amount was so small prior to 1992, people did not worry about advocating an exemption for first time home buyers or inter-family transfers. Ms. Harrison agreed. Council Member Andersen referred to Attachment B, Transfer Tax Rate Comparison, in the staff report (CMR:533:94). He believed when Council considered the item in 1991 or 1992, it reviewed a similar chart of cities with transfer taxes. As he recalled, those cities with the $0.55 tax per $500 of valuation in Santa Clara County were not charter cities and could not raise their transfer tax. City Attorney Ariel Calonne said generally speaking since about 1987, general law cities had virtually identical revenue powers as charter cities. Council Member Andersen clarified the rates not being increased had nothing to do with being a charter city. Mr. Calonne said that was correct. Council Member Andersen referred to the Finance Committee minutes dated December 13, 1994, and the statements regarding those cities where the seller paid the transfer taxes. Palo Alto allowed the
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payment of transfer taxes to be negotiated with the buyer and seller. There was a goodwill recommendation that the amount be split between the buyer and seller. He queried whether there were cities which required the seller to pay a portion of the transfer taxes. Ms. Cavallo said not to her knowledge. Council Member Andersen hoped those who spoke in support of the exemption would also provide recommendations regarding some service cuts. Council Member Kniss wanted an easier way to establish who was the low-income buyer. She hypothesized a student who came to the Palo Alto community because he or she was attending Stanford University or Santa Clara University. The student had either no income or very low income and decided to buy a house. She believed the Council supported the recommended exemption in many ways and that Council did not want to penalize someone who was really trying desperately to get into Palo Alto. While there were existing programs for people who qualified, she queried those who could not qualify for that program and who were up at the next level. Ms. Cavallo said there were many ways for the City to determine income levels, and it was an administrative issue staff would have to deal with in determining how to implement the exemptions. One of the recommendations was for the City to align its program with a mortgage credit certificate program that the federal government offered which would be an easy way to determine qualification criteria. Mayor Simitian said the problem with the particular approach as discussed in the Finance Committee was that it brought the cost of the units down to a level which involved few transactions in Palo Alto. The first-time home buyer exemption which drew the most favorable response from staff, industry, and citizens was to simply require the individual to prove his or her status as a first-time home buyer and then use 80 percent of the median sale price of a home in Palo Alto as the standard. Council Member Kniss clarified the exemption had nothing to do with income and everything to do with the price of the house. Mayor Simitian said staff indicated some problems with the administrative difficulties associated with tracking income. If someone of immense wealth wanted to buy a unit that was 80 percent of the median home price in Palo Alto and it was his or her first home, he or she would qualify for the exemption. Council Member Kniss would have no problem with the low-income concept but was puzzled that anyone could come in and buying at the 80 percent range. Ms. Harrison said the administration of verifying income in addition to first-time home buyer status was a concern to staff based upon the number of exemptions that would occur. Staff
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preferred to either tag onto an already existing program with a structure in place or approach it creatively in terms of defining what a low- or moderate-income home buyer would be in a way that would not require staff to get into looking at tax returns. Council Member Kniss clarified that most people who purchased homes in the $300,000 to $325,000 range were struggling first-time buyers with very low incomes. Ms. Harrison deferred response. Council Member Fazzino said while he could not respond definitive-ly, he recalled a discussion at the Finance Committee meeting where the Committee asked what incomes would qualify for a buyer for a $300,000 to $320,000 unit. He recalled they were looking at $75,000 to $80,000 in annual family income. Mayor Simitian clarified they were not talking about simply very low-income people but rather low and moderate income as a target and not using incomes but the sale price. Moderate income constituted 80 percent of the median. Council Member Kniss was not clear on who the buyer was and whether it was a struggling buyer. Everyone favored struggling buyers but she did not see how struggling buyers were defined; therefore, allowing them the exemption of the tax seemed somewhat onerous. Council Member Fazzino was disturbed by the City Manager's focus solely on direct service cuts. Whenever Council Members asked about cuts, they always heard about library hour cuts and Children's Theatre cuts. He assumed staff would present some administrative cut proposals as well. Ms. Fleming said staff did not recommend any service cuts until administrative cuts and other cuts that would not impact the public in terms of service programs had already occurred. That was always the strategy. Mayor Simitian referred to Attachment B, Transfer Tax Rate Comparison, of the staff report (CMR:533:94), and clarified Palo Alto had the second highest transfer tax amount of the 35 cities on the peninsula, including both San Mateo and Santa Clara Counties. Ms. Cavallo said that was correct. Mayor Simitian clarified the recommended exemption was for first-time home buyers. Ms. Cavallo said that was correct. Mayor Simitian queried the extent to which services were at risk if the exemptions were approved. His reading of the costs staff identified was that the first release of ownership interest by a co-borrower, which was unanimously approved, represented a revenue
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loss of around $10,000. On first-time home buyers there was a range because of the uncertainty about how many people might qualify for the program. He understood that only the home buyer in that case received a rebate of the tax not the seller. Ms. Cavallo said that was correct. Mayor Simitian said the midpoint between $33,000 and $86,000 which was the range presented came out at about $60,000. Short-time home buyers involved an estimated annual revenue loss of $19,000. If Council approved all three exemptions using the midpoint figure, the City would be looking at a total revenue loss of approximately $90,000. Ms. Harrison said that was correct. Mayor Simitian said after the Hughes, Heiss & Associates report was submitted, the City Manager went to the Council with her recommendations for the budget on a parallel track with the budget process. He recalled the original proposal from the City Manager involved an increase in budgetary expenditures of about $200,000. Ms. Fleming said that was correct. Mayor Simitian clarified the City Manager believed the City would be able to accommodate that additional $200,000 and still preserve the essential services to the City. Ms. Fleming clarified she had indicated she would not know the answers to how much could be absorbed without more accurate revenue flow information. Mayor Simitian said when those items were considered by the Finance Committee, the $200,000 amount was pared back quite a bit in terms of the policy direction which was given to staff. He queried how much was pared back. He believed the Committee did not end up proposing increased expenditures but rather ended up with a set of recommendations that resulted in net savings. Ms. Fleming said while she did not recall the exact figures, she had eliminated $200,000 worth of changes because she withdrew from her proposal the conversion of temporary to permanent positions. Mayor Simitian recalled at least six positions the Committee indicated could not be new positions. There were $200,000 to $300,000 in expenditures that would not be made based on positions that were eliminated at that time. Ms. Fleming said the reductions made in terms of staffing were phased in and had to do with attrition. Therefore, the dollar value of those versus what would be seen in budget for fiscal year 1995/96 was still being determined. There were other decisions made having to do with overtime and making some positions exempt. Mayor Simitian said the City Manager had proposed positions in the budget, the GIS Coordinator for example at $70,000 plus benefits,
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that were no longer being proposed for the budget based on the directive from Council. Ms. Harrison cautioned that the total dollar savings were not savings that would be in the fiscal year 1995/96 budget because many of the large items, such as contracting for the various parks and recreation and tree maintenance programs, would happen over several years. Therefore, the total amount of those savings would not be realized in fiscal year 1995/96. Mayor Simitian clarified the positions Council specifically identified were savings to be realized as contrasted with what the City Manager presented originally in her proposal. Ms. Harrison said to the extent those positions were vacant or did not exist, that was correct. Mayor Simitian clarified the City Manager on her own initiative eliminated $200,000 worth of expenditures and the Finance Committee and the full Council eliminated $200,000 in positions that had been proposed. He clarified that represented $400,000 and they were talking about less than $100,000 in exemption costs. Ms. Harrison said putting the budget together was a little more difficult than that because salaries went up. There were new service priorities, e.g. a new graffiti program was added to the base level of the budget, and there was a number of offsetting items. It was not as though there were $400,000 less expenditures. Mayor Simitian agreed the budget was more complex than discussing $400,000, but there was a simple and direct relationship put forward by staff between the possibility of exemptions and the possibility of service cuts. Ms. Fleming said when staff dealt with Hughes, Heiss & Associates, staff made some recommendations to the Council which could have resulted in some increased expenditures if they had stayed on the table. Part of the expenditures was removed because it dealt with the conversion of temporary employees to permanent. By taking that out of the mix and only dealing with what Council approved, there were some total package savings to be realized. The difficulty she had in being precise that evening was she did not know what the revenue stream would be and did not know which of those cuts would take place in fiscal year 1995/96. When she went to Council with Hughes, Heiss & Associates in September and up to a few months ago, she did not have the relatively new information about some potential revenue impacts on the budget. She believed there were items combined with Hughes, Heiss & Associates and other adjustments that would be made in the budget which would allow the City to make up to $50,000 or more in adjustments without any visible impacts on the public. She was confident that adjustments within that range could be made. Council was also correct that if staff made a different decision with Hughes, Heiss & Associates, there would have been a different potential savings which still would have had to be phased in.
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Council Member Schneider asked what dollar amounts could be absorbed without impacting Community Services. Ms. Fleming clarified Community Services was not the only area where reductions would be made. When Council made adjustments beyond $100,000, it would impact services to the community because staff ran out of administrative adjustments which could be made. Council Member Schneider clarified the City Manager did not want to commit to an exact figure. Ms. Fleming clarified her numbers represented a general range. Jan Aarts, 561 Jackson Drive, Chaired the Governmental Affairs Committee of the Palo Alto Board of Realtors. He clarified the County charged a reconveyance tax to the seller which was like a sales tax. The City transfer tax was a new tax imposed by the City on the transactions, not an increase of an existing tax as was indicated. In Spring 1992 Council voted to institute the particular transfer tax. While not many people were originally impacted by the proposed tax, every year a few people paid large sums of money so that all of the people could enjoy Palo Alto's services. The position of the Board of Realtors was in 1992 and remained that if such a tax were to be imposed, it should have been voted upon by all the people. Now that the tax was in place, about $1.5 million went into the City's General Fund every year. He urged that Council consider the four exemptions. First-time buyers of low and moderate income deserved a break, and the inequities and unfairness of the transfer tax needed to be corrected. While he agreed it would be hard to prove that any first-time buyer did not purchase a home because of the transfer tax, the City could not prove the opposite. He clarified the exemption was only one-half of the transfer tax. The other half would still be paid by the seller. The second exemption related to residents moving within the City. Currently, if someone sold a $400,000 home and purchased a $600,000 home, the City generated about $3,300 from the two transactions. The resident was charged with taxes when he or she sold and again when he or she purchased. The exemption was for one-half of one of the two transactions. The City would still collect on the other three halves. Council Member Kniss queried whether the person who wanted to buy a home in the $300,000 to $330,000 range was really struggling to get into Palo Alto and whether Palo Alto's tax held those people back from buying in town. Mr. Aarts said the person in the $300,000 to $330,000 range was definitely a first-time buyer, and there were people who were struggling to get into Palo Alto because of the schools, services, etc. He did not believe a wealthy first-time home buyer bought a $300,000 to $330,000 home except possibly a condominium. A $330,000 condominium was a nice condominium whereas a $330,000 house was entry-level in Palo Alto. Council Member Huber referred to closing costs and queried whether
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any of the title or escrow fees changed if someone sold, bought or moved within two years or whether they all remained flat. Mr. Aarts believed they all remained the same. Council Member Huber clarified if someone moved in two months, the next person still had to buy title insurance. Mr. Aarts indicated that title insurance carried a short-term rate of usually five years. He could not think of any of the other fees that would change. Janet Stone, 2225 Ramona Street, said the potential loss of up to $90,000 was significant, and while some of the loss might be made up by cuts in administrative positions, some departments like Community and Human Services could not absorb the loss of adminis-trative staff without impacting the ability to serve some popula-tions within Palo Alto. In some cases there was a nexus between the level of staffing and the level of community services. The proposed transfer tax was fair and a good way of generating needed funds for community services. Low income in Santa Clara County was $20,000 to $30,000 for a family of four, and she did not believe a home could be purchased for $330,000 with that income level. A transfer tax on a home for $250,000 would cost the buyer a little over $400 which was not an unreasonable burden nor a barrier to someone who was able to afford a home of $250,000 to $300,000. She urged support for the Finance Committee recommendation. Carrole Phillips, 1970 Birch Street, urged support for all four of the proposed exemptions for a two-year period in order to give staff time to manage the budget. The rule of thumb for qualifying buyers was the loan amount equaled three times their income. For example, someone with a combined $50,000 income would qualify for around $150,000. First-time home buyers represented Palo Alto's future. Bob Moss, 4010 Orme Street, supported the Finance Committee recommendation. The transfer tax was adopted two years ago because the City faced serious financial problems, and nothing had really changed. In terms of service cuts and possibly cutting library hours, the Terman Advisory Committee was discussing the possibility of recommending that the Terman Library hours be increased. If the City found itself with a slight surplus because the tax was retained, there were many infrastructure needs. It was inappropriate to reduce revenues when the City was more likely to face less revenues from normal sources. If realtors believed real estate transactions cost too much, they should consider reducing the six percent real estate commission. Karen Bageman, 500 Georgia, President, Palo Alto District of the Peninsula West Valley Association of Realtors, urged Council to consider adopting all four exemptions. For first-time home buyers, the amount of cash to be brought to the table, of which the transfer tax was a part, was a burden. Exemptions were also sought for those people who were only in Palo Alto for a short
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period or for those people who were moving within the City. If the citizens of Palo Alto wanted specific services, they would vote for an increased tax and each Palo Altan would pay an equitable share of what they received in services and facilities. Scott Marshall, 1049 Metro Circle, currently rented in Palo Alto, and said for a $200,000 to $300,000 home, the first-time buyer put everything they had into it. While $600 might not sound like much money, it was a lot to have to come up with at the outset. He supported the exemption for the first-time home buyers. Andrea Killam, 761 Sutter Avenue, supported all the property transfer tax exemptions. She rented in Palo Alto and was a potential home buyer. The real property transfer tax impacted a difficult situation because it increased the initial expenses. She worked in a human resources department, and from a business standpoint it was difficult to recruit and relocate potential engineers and their families to Palo Alto because it was such an expensive place to buy. She urged Council consideration of all the exemptions. Amy Fletcher, 670 San Antonio Road #38, was a Palo Alto renter and a potential home buyer. She believed the transfer tax added a burden to the initial costs of buying a home. She supported repealing the entire transfer tax as a totally unfair tax. She was concerned a small number of people paid for services that everyone in the City enjoyed, e.g., students, renters, visitors, businesses, and homeowners. The tax should be spread out over more people, and she would prefer paying an additional $5 per month on her utility bill than $1,000 when buying a home. In terms of making up the lost revenue if all the exemptions were adopted, she suggested increasing the sales tax, utility tax, hotel transient occupancy tax, or user fees for parks; merging fire departments; or improving economic development by allowing more than two-story buildings. At the Finance Committee level, Council Member Fazzino suggested totally repealing the transfer tax, but his motion died for lack of a second. The Finance Committee indicated that repealing the first-time home buyer tax would be a symbolic gesture, and she disagreed because $1,000 was a lot of money to raise as part of the fees for buying a home. She urged Council to consider all of the exemptions and that citizens voice their concerns about the issue. Alisa Fong, Palo Alto Board of Realtors, 610 Cowper Street, said the bottom line was the transfer tax took money out of people's pockets when they were struggling to come up with a down payment and closing costs. She thanked the Palo Alto staff members who had been helpful and responsive. First-time buyers were teachers, firefighters, police officers, and City staff members. The transfer tax was the only factor the City Council could control to help home buyers in Palo Alto, and she urged support for all the exemptions. Eric Trailer, 255 Rengstorff Avenue No. 101, Mountain View, did not believe the transfer tax was equitable and noted renters did benefit from services provided through the transfer tax dollars. While he basically supported the transfer tax, he did not support
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the first-time home buyers and the release of co-signers. While he supported all four of the exemptions, his comments would focus on the first-time home buyer because it represented an insignificant three percent impact on the total revenues generated by the real property transfer tax. He and his wife went to great lengths to earn extra money to get into their first house, and he noted with all the closing costs, the fourth biggest was the transfer tax. While they ended up buying in Mountain View, he wanted to eventually return to Palo Alto. RECESS TO CLOSED SESSION: 9:35 p.m. TO 9:48 p.m. Mayor Simitian announced that the City Council met in Closed Session to discuss matters involving significant exposure to litigation as described in Agenda Item No. 5. Mayor Simitian announced that City Council took no disclosable or reportable action regarding Agenda Item No. 5 during the Closed Session that evening. AGENDA ITEM NO. 8 - Real Property Transfer Tax Review (Continued) Mr. Calonne referred to Council Member Andersen's comment regarding the ability of a general law city to change a tax rate. He noted a December 1991 staff report which indicated general law cities were under the impression they could not change a tax rate. To the extent that was staff's statement in 1991, it was incorrect. Ms. Fleming clarified her comments regarding the City's ability to absorb any revenue reduction. When the recommended exemptions went to the Finance Committee, staff indicated support. Attachment E, Exemption Revenue Impacts, of the staff report (CMR:533:94) listed a number of exemptions, and staff indicated it was possible to absorb the estimated annual revenue reductions associated with Exemptions 1 and 4, which totaled approximately $100,000. Beyond the $100,000 revenue reductions, the City could still accommodate $30,000 to $50,000 in reductions without getting into service reductions. The recommendation staff forwarded to the Finance Committee could be absorbed without getting into service reductions. Reductions beyond the total of $150,000 carried the potential for service reductions. Mayor Simitian clarified if Council desired to rearrange the combination of exemptions, it could still be done within the $100,000 range without impacting services. Ms. Fleming said that was correct. Council Member Huber referred to Attachment E, Exemption Revenue Impacts, of the staff report (CMR:533:94) and clarified the Moderate Income First-time Home Buyer reduction, in effect, included "Low-Income" and "MCC." For example, if Council decided to do something which said "low and moderate," the other categories were picked up, and the whole package would be $33,000 to $86,000.
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Ms. Harrison said that was correct. Council Member Huber was somewhat concerned with property values because while he could support low income, if he knew he were dealing with low income, he was not certain what he was dealing with when a percentage number was placed on a piece of property. If Council chose to serve low income, he queried how it could be tracked so Council would know in a reasonable period of time, e.g., a couple of years, who was really taking advantage of the service. Ms. Harrison said the proposal before the Council defined a moderate income home buyer as one who purchased a house at 80 percent of the median income. Council Member Huber understood that, but it did not tell him that the person was a moderate-income earner. The buyer could earn $500,000 a year. He wanted to know in a year or two downstream who really was buying the particular house and whether it was, in fact, a low-income person. Ms. Harrison said staff would have to return to Council with a proposal to possibly require that people provide income information at the time they requested the reimbursement. Council Member Kniss said in terms of houses versus condominiums, she would be far more willing to bet that someone was struggling to get into the house because $300,000 did not get much of a house in Palo Alto whereas a condominium did. Ms. Cavallo said the 1993/94 data indicated the average price of a condominium was about $275,000 with the average price of a home closer to $450,000. Council Member Kniss clarified with a moderate-income first-time house buyer rather than a condominium buyer Council would be more likely to get into the $300,000 range rather than putting staff through the burden of defining the low-income person. Council indicated its desire to target families, and she guessed that families preferred houses to condominiums. While she did not want to get too definitive, she was trying to find some ground where staff did not have to struggle with guidelines. Ms. Harrison believed staff could administer a program that defined moderate as 80 percent of the median price of the house without a great deal of difficulty. AMENDMENT: Mayor Simitian moved, seconded by Fazzino, as follows: 1. Grant an exemption to home buyers who move in less than a two-year time frame; 2. Grant the exemption to transfers within the City provided the move was completed within a specific time period from the transfer tax; and
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3. Grant the exemption to moderate-income first-time home buyers. Council Member Andersen had helped a low-income person get into a property that would be financially easier, and the person was someone he would consider for a couple of different exemptions. As they reviewed the documents which were similar to the sample requested by Council Member Kniss, clearly the transfer fee was not the major issue. While it was hard to put the deal together, it worked out with the cooperation of a very good realtor who was willing to accept a five percent commission rather than six percent. In the example before the Council, the reduced commission would amount to $4,100, which made closing costs much easier. While he realized a reduced commission would not be possible in every instance, it was more significant than a $300 or $400 transfer tax. The transfer tax was also negotiable, e.g., some part of it was not 50/50 based on the interests of the parties. A major reason for wanting to remain in Palo Alto was its services, and taxes were one way to provide those services. He had never had a problem with the transfer tax, and he expected to live in the area for quite some time. If he ever decided to live in another home, he would pay the transfer tax because he wanted the services to continue. There was no surplus of unsold houses in Palo Alto, and the great demand for those houses was what resulted in the premium prices, not the transfer tax. While he appreciated the interest, he did not see the issue as an equity question because the services in Palo Alto more than compensated for the kinds of costs the transfer tax resulted in at the end of the line or even when the people stayed within the community. He opposed the amendments and supported the Finance Committee recommendation. Vice Mayor Wheeler supported the Finance Committee's recommendation and opposed the amendments, and most of her rationale was contained in the Finance Committee minutes of December 13, 1994. She was concerned by comments that the transfer tax was hastily adopted by the Council in early 1992. For those Council Members who were new to the Council in 1992, the adoption of the transfer tax was done after an extensive and thorough priority study of service levels by the previous Council. The Finance Committee debated and discussed the service levels provided to the citizens of Palo Alto and areas in which service levels might be reduced or savings realized. The Council Chambers was packed with citizens who begged and pleaded not to reduce any of the services that people moved to Palo Alto to enjoy. The Council acted in early 1992 to cover a $1 million budget shortfall which meant that services absolutely had to be reduced. There was a tie between those items. As Council approached the decision that evening, the Palo Alto Weekly contained an ad which urged citizens to call six of the Council Members. While she was named as one of the Council Members to call, she did not receive one call. If some of the items the City Manager listed as potential service cuts were before the Council that night, the Council Chambers would be packed. She found some appeal in the amendment which attempted to address the low- and moderate-income home
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buyer. However, its administration fell short of truly reaching the people the Council wanted to target. For 25 years, the Palo Alto Housing Corporation (PAHC) had been able to target low and moderate renters and buyers in Palo Alto, and Council could not design a program that evening to achieve those goals. She was uncomfortable with the methodologies suggested that evening because there were people in Palo Alto who truly needed financial relief, and there were better ways than through the proposed ordinance to directly target those people. Unless Council could come up with something more narrowly and carefully crafted, she would oppose the low- and moderate-income amendment and each of the other amendments and support the motion put forward by the Finance Committee. Mayor Simitian believed whatever the result, the process, as he stated earlier, was a model of how such things should be presented from staff. Palo Alto had the second highest transfer tax on the Peninsula; therefore, he doubted any exemptions would result in a suggestion that Palo Alto had scaled back its tax to some unreasonable or inappropriate level. He underscored that the City Manager and her staff believed the City could accommodate $100,000 worth of exemptions with no impact on services or programs. The question was whether the exemptions had merit in and of themselves; therefore, it was important to consider each one. His review of the City Council minutes in January 1992 when the transfer tax was approved indicated the rationale regarding fairness and appropriateness of the tax was that "sooner or later everyone paid it." Council indicated at the time that it made sense to take the tax at the time of sale because people who had held their properties for some period of time had the advantage of Proposition 13 and paid less than full tax value as contrasted with new buyers. Secondarily, people who had held their property for a while had the benefit of services in Palo Alto, and the tax was in effect a way to capture a small portion of the cost of those services when the people departed. Thirdly, the point at which someone sold their home was probably a good time to ask for the transfer tax because there had probably been some increase in value, there presumably was some equity, and there was cash on hand to pay the tax. Council needed to keep those points in mind as it looked at the exemptions. The first exemption which came out of the Finance Committee involved a release of ownership interests held by co-borrowers without monetary consideration, and it appeared non-controversial. The second exemption had to do with first-time home buyers. That was a policy question about whether Council wanted to help first-time home buyers--people of modest means--buy a home in Palo Alto. It was one thing to talk about being a family-friendly community, and it was another to reflect those words in the policies Council passed. He was prepared to discuss ways in which Council could make its policies more reflective of its concerns. The last two exemptions were both designed to deal with the issues Council Members raised when the transfer tax was approved. One exemption had to do with someone who had lived within the community for two years or less. That person had only enjoyed Palo Alto's services for a year and one-half and had paid a higher rate of tax as a result of Proposition 13. Finally, that person did not have a lot of cash
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on hand as a result of equity because they had only been in the house for a year and one-half. Essentially, that person had Proposition 13 full assessed valuation when they moved in; Proposition 13 full assessed valuation wherever they went, only a year and one-half worth of services, and transaction costs twice. The rationale offered to support the policy three years ago did not apply to that person. He believed that person was entitled to an exemption. The exemption was also something that could be accomplished without adversely impacting services. The fourth exemption, which he realized was more costly, had to do with people who moved "across the street in Palo Alto" and whether Council could justify a tax policy which charged someone $2,000 for doing so. He did not believe they could. The example was someone who moved within the City, did not have cash in hand because it was used to purchase another house, paid full assessed valuation on property tax already as a result of Proposition 13, and then taxed by Palo Alto twice for the privilege of moving across the street. He did not believe that was sound tax policy. The exemptions were designed to make the existing tax more simpler and fairer and to help middle-class families buy starter housing in Palo Alto. For those reasons, he supported all four of the exemptions. Regarding low- and moderate-income first-time buyers, the recommended approach was at the request of the Finance Department staff who was reluctant to get into the business of determining low- and moderate-income households. Staff believed it would be much easier to keep track of what the property cost than to verify the income levels of a first-time home buyer. If that were the direction Council wanted to go, he had no problem with it. His goal, articulated to him by members of the public and the real estate community, was to help first-time home buyers who were low- and moderate-income earners buy a home in Palo Alto without the added costs. He agreed with the people who said $500 to $700 was a lot of money for many people in the community. The Council should hang on to the fact that Palo Alto was still a middle-class community, and the exemption was one way to do so. Council Member Rosenbaum said he opposed the item when it went before the Council in 1992, and he did not have the same pulls others might have regarding whether the proposed exemptions were consistent with the intent or the rationale offered in 1992. The question was whether the exemptions served the announced purpose. While he did not believe the transfer tax was a great one for many of the reasons articulated by the real estate community, it was a source of revenue, and the City was dependent on it. With respect to the first-time buyer, he did not see that the proposed exemption would make it any easier for the first-time buyer to get into home ownership because the downpayment on a $330,000 home was $33,000 to $66,000. A couple of loan points equated to $6,600; expenses during the first year included the mortgage, which was alone $21,000 to $30,000. Property taxes were $3,300, and the buyer's share of the transfer tax, $553, was the part that went to support City services. It did not add up, and he would oppose the exemption. Council Member McCown associated with Vice Mayor Wheeler's reminders of the context in which the tax arose. In 1991, she
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Chaired the Finance Committee and recalled the Council Chambers packed with people from the broadest possible perspectives within the community who discussed the services they valued. Council regularly and consistently heard from a particular slice of people who wanted Council to try to continue to provide the services, and if that meant looking for other revenue sources that was the direction that part of the community wanted to take. Unfortunate-ly, such issues always resulted in two different groups of people talking to Council at two different times. She could not recall that any of the people who spoke to Council that evening partici-pated in the 1991 discussions regarding levels of service. What came out of those discussions was an examination by the Finance Committee of a variety of possible revenue sources which ultimately led to the recommendation to pursue the real estate transfer tax. Regarding the fairness of the transfer tax and the need for the exemptions because somehow a small group of people were paying for City services, she pointed out that a major contributor to the City's service provision was sales tax. Hundreds of thousands of people who were not Palo Alto residents spent their dollars in Palo Alto from which the City derived sales tax benefits. Those tax dollars were part of what provided the public services. As far as the exemptions were concerned, she agreed with Vice Mayor Wheeler in terms of supporting the Finance Committee recommendations. She would be open to further efforts to defining the low- and moderate-income category. While she believed there were some flaws with the method proposed by staff, she understood staff's reluctance to verify people's incomes to decide whether they should qualify for an exemption. If low- and moderate-income could be defined more precisely as Vice Mayor Wheeler indicated, she would be willing to consider it because she believed it was something that as a matter of policy Council might well want to include as an exemption. She would not support the other two exemptions for the reasons stated previously. Council Member Fazzino referred to the comments he made regarding the issue at the Finance Committee meeting of December 13, 1994. He did make the motion to rescind the tax at that time,and it failed for lack of a second. He consistently opposed the real property transfer tax or at least the unfair way in which it was imposed on the community in 1992, and he respectfully disagreed with some of his colleagues regarding history. While there was a long community discussion regarding the budget, he believed the transfer tax in particular was imposed in haste. The fact of the matter was the Finance Director believed Council could raise taxes quickly and easily by imposing the transfer tax, which was why he and several other Council Members opposed it. In 1992, he indicated he would support the tax if placed on the ballot. In 1987, the Palo Alto community responded positively to a Utility Users Tax benefiting both schools and the City. The Council influenced the community to support an effort to provide badly needed services, and he truly believed if the budget situation were the same in 1995, the community would respond in much the same way. He emphasized his primary concern with the transfer tax had to do with the way in which it was imposed on the community rather than the tax itself. He viewed the sales tax as a broad-based tax whereas the transfer tax raised revenue from a few
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people, but it provided services for the entire community, which he believed was a violation of fundamental tax policy. He believed Mayor Simitian's proposals were solid, and short of rescinding the motion, he believed they were appropriate. He believed the most important exemption of all was the one to eliminate the tax when the co-borrower released ownership interest. He also believed just as important was the issue of the low- or moderate-income first-time home buyers. He realized there were two other proposals before the Council, but they were less important as a matter of policy. The Council made support of families a priority, and the first-time low- and moderate-income home buyer exemption provision provided families with an opportunity to purchase a home in Palo Alto. He could not think of a better way to support families than to help them purchase a home in Palo Alto. He appreciated that some Council Members were wrestling with the issue of threshold, and regardless of whether Council could resolve the matter that evening, he hoped Council would keep at it and find a way to apply the principle in order to help low- and moderate-income families purchase a home. Many Council Members had not purchased a home for many years; he had, and he believed the $500 to $700 cost associated with transfer taxes was significant. While some argued if one could not come up with the money for a transfer tax, they should not try to live in Palo Alto, he believed that ignored the realities of many two-income families in the community today and the fact that the dollars were hard earned and counted for something. If nothing else, Council should find a way of providing an exemption for low- and moderate-income buyers. Council Member Kniss pointed out the Utility Users Tax passed in 1987 by less than 200 votes in a hard fought battle, and it was not something she would be anxious to revisit. She was surprised that she also did not receive any telephone calls on the transfer tax. It was a large ad which appeared in the Palo Alto Weekly, and she expected to be deluged with calls. She was surprised that those who had to pay the transfer tax in the last two and one-half to three years were not in attendance. She was reminded by Vice Mayor Wheeler's cogent comments that she sat in the Council Chambers after she had sat in the Finance Committee meeting with about 300 people in the audience telling Council not to cut services and that they would pay. One of the bigger debates that evening was whether the tax was a capricious one. The Finance Committee in 1991 struggled with the transfer tax for an entire year and debated among four different kinds of taxes, one of which was the business license tax. She was strongly urged by the business community to not support a business license tax. While the transient occupancy tax did generate some revenue, it was not from people from Palo Alto. She also disagreed with the notion that Council imposed the transfer tax on a whim. While she agreed with both Vice Mayor Wheeler and Council Member McCown, she still struggled with the question of how to qualify the first-time homeowner. She supported the Finance Committee recommendation. She did not favor the exemptions for transfers within the City nor did she support the exemption for a buyer who had lived in Palo Alto only a short period of time. In the 1980s there were some homeowners who did extraordinarily well as a result of buying in
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1985 and perhaps selling in 1987. Regarding the amendment targeting first-time home buyers, she suggested Council attempt to find a way to identify the families caught in a segment who did not qualify for the programs discussed by she and Marlene Prendergast and who were not the homeowner who could afford a $300,000 to $350,000 condominium. She suggested Council vote on the issues which had some definition, and leave the others to either struggle with or consider at a later time. Council Member Huber associated with the comments of Vice Mayor Wheeler and Council Member McCown. He supported the Finance Committee's recommendation and was willing to consider first-time home buyer exemption, but he was not willing to consider it as presently structured nor was he willing to create something that evening. He suggested the issue be referred to staff for a means by which Council could actually reach the low- and moderate-income level they were trying to target. If that could be accomplished, he would consider the exemption. He did not want to do things backwards by considering values of houses. In 1992, he voted for the real property transfer tax after having been on the Council for only two weeks. It was not easy to adopt any tax increase, and it was easier to not vote for one. He believed Council made the right decision in 1992 based on the financial situation before the City. Secondarily, the transfer tax always existed. Council never discussed whether there should be such a tax because it was always there. The debate at the time focused on how much the real property transfer tax was going to be raised. The City was still in a budgetary situation where the City could not afford to give away the entire tax or allow very many exemptions. He relied on staff who indicated the two exemptions the City could survive with. He supported the Finance Committee recommendation and a referral of the first-time home buyer exemption. Council Member Schneider had considered each one of the exemptions and discussed them with the Board of Realtors. Regarding the first-time home buyers, Palo Alto had a tradition and a stated commitment via the Comprehensive Plan to encourage low- and moderate-cost housing, and a strong desire to make available housing for moderate-income families and young individuals. The transfer tax on those people was punitive; most had limited cash resources and had worked hard to scrape together the necessary downpayment. The property transfer tax could not be financed and, therefore, could not be rolled into a long-term mortgage and had to be paid up front. While it was not a perfect method of seeing that only moderate-income buyers would benefit, it was a gesture of goodwill to middle-class families, and $600 to $700 to a first-time home buyer was significant. Regarding the short-term residents, frequently those people were forced to move. Houses in the 1990s typically took more than two years to appreciate and frequently were depreciated in value during such a short period. Assuming they were not low- or moderate-income home buyers, the people had already paid the transfer tax upon buying less than two years before. It was grossly unfair to those individuals who had not had much of an opportunity to enjoy City services and yet were forced to pay for them after they left the Palo Alto community. Regarding transfers within the City, she considered the transfer
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tax in that situation an example of blatant double taxation. However, the dollars raised as a result of it were significant, and after reading to the City Manager's report, eliminating it could significantly cut into City services, and she was not prepared to do that. She would be willing to revisit the exemption at a future date. AMENDMENT DIVIDED FOR PURPOSES OF VOTING 1ST PART OF THE AMENDMENT to grant an exemption to home buyers who move in less than a two-year time frame. AMENDMENT FAILED 3-6, Fazzino, Schneider, Simitian "yes." 2ND PART OF THE AMENDMENT to grant the exemption to transfers within the City provided the move was completed within a specific time period from the transfer tax. AMENDMENT FAILED 2-7, Fazzino, Simitian "yes." 3RD PART OF THE AMENDMENT to grant the exemption to moderate-income first-time home buyers. MAKER AND SECONDER AGREED TO INCORPORATE INTO THE 3RD PART OF THE AMENDMENT to refer to the Finance Committee further discussion of a possible exemption for low- to moderate-income first-time home buyers, defining "low to moderate" more in terms of income rather than as a percentage of the purchase price of the house. Council Member Andersen could support the referral of the amendment to the Finance Committee. He would be looking carefully to see the extent to which it might be overly expensive administratively. Council Member Rosenbaum believed there was some merit in sending the item back to staff. He was particularly interested in taking a closer look at the Mortgage Credit Certificate (MCC) because that was one where the ratio of the transfer tax to down payment was much more significant. He supported review by the Finance Committee before it returned to the Council. Council Member Kniss associated with the comments of Council Member Rosenbaum. She was also interested in the same topic. While she realized it was difficult for staff, if there were some way to find the segment between the PAHC and the other group identified as not as needy, she wanted to know what it was. AMENDMENT PASSED 9-0. MOTION AS AMENDED PASSED 9-0. ORDINANCES 9. Ordinance Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation to Reallocate Human Services Contracts
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Vice Mayor Wheeler said because of her former appointment to the City/School Liaison Committee, she was very informed about the counseling needs at the Palo Alto Unified School District (PAUSD) and the threat to those programs. She was less familiar and not enlightened by the report on the subject of why the two programs suggested were the right programs to receive the additional one-time grant out of all of those who applied for Human Services Resource Allocation Process (HSRAP) funds every year. Human Relations Commission Chairperson Janet Stone said the amount recommended for the PAUSD counseling program was a negotiated amount that would allow the program to continue in a way that everyone agreed would make sense. That left the additional amount remaining from the $13,247 to be allocated. The Human Relations Commission (HRC) was unanimous in its feeling that for that amount of money, two priorities could be served effectively by splitting the money basically between Mayfield Community Clinic and Miramonte Mental Health Services because of the City's priorities of serving the homeless population and improving the situation in the Ventura community. Given those priorities and the fact that about $4,000 for each organization could produce significant services and serve many people, the HRC believed the City would get "a lot of bang for the buck." Council Member Schneider queried what happen to the East Palo Alto Youth Development Center. Human Services Administrator David Martin said the Center closed its doors in the fall and did not expend any of the contract dollars. Council Member Schneider asked how the City audited the organiza-tions to know whether they spent money as allocated. Mr. Martin said the City received quarterly reports and performed contract monitoring visits of all 18 agencies. Council Member Schneider queried whether money had been refunded to the City in the past. Mr. Martin said it had occurred before that money was not expended, and some programs were funded on a reimbursement basis. Sometimes an agency did not meet its total goal, and the money reverted to the General Fund. It was the first time in six years that an agency had closed its doors in the middle of the year. City Manager June Fleming said staff was aware a few months ago that the agency might be experiencing some difficulty. Staff had been in contact with the agency but could not get any verification in order to return to Council that indeed the agency would not be able to expend the funds. It was an unusual occurrence. Paul Taylor, Director of Client Services, Miramonte Mental Health Services, 206 California Avenue, thanked the Council for its past support as well as the merchants and shoppers in Palo Alto. He
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concurred with Mr. Martin's statement that the funds could be well used and with Ms. Stone that the City would be getting "a lot of bang for the buck." Maria Solis, Interim Executive Director of Mayfield Community Clinic, 270 Grant Avenue, thanked the Council for its past support and the staff and the HRC for the recommended allocation that would go directly into health care for the very low income and for the homeless in Palo Alto. MOTION: Council Member Huber moved, seconded by Schneider, to approve the Budget Amendment Ordinance reallocating $13,247 from Fiscal Year 1994-95 Human Services Resource Allocation Process (HSRAP) as follows: 1) Reallocate $5,000 to the Palo Alto Unified School District's (PAUSD) Community Counselor Program at Gunn and Palo Alto High Schools to augment services slated to be lost due to the PAUSD budget cuts effective February 1, 1995, through June 30, 1995; 2) Reallocate $4,124 to Miramonte Mental Health Services for additional mental health counseling hours to the homeless population; and 3) Reallocate $4,123 to Mayfield Community Clinic for additional patient visits for basic health care provision to the homeless and low-income population of Palo Alto. Further, amend Contract No. S5055633 Between City of Palo Alto and Palo Alto Unified School District. Ordinance 4258 entitled "Ordinance of the Council of the City of Palo Alto Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation to Reallocate Human Services Contracts" Amendment No. 1 to Contract No. S5055633 Between City of Palo Alto and Palo Alto Unified School District MOTION PASSED 8-0, Fazzino absent. 10. Ordinance Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation for Public Communication Services MOTION: Council Member Huber moved, seconded by McCown, to approve: 1) the consultant agreement with Gagliano & Fisch to provide consultant services for public communications for an amount not to exceed $32,868 for the time period of February 13, 1995, through February 26, 1996; 2) the Budget Amendment Ordinance in the amount of $32,868 from the General Fund Budget Stabilization Reserve; and 3) the waiver of City Policy and Procedure 1-10, which required consultant services in excess of $25,000 to be referred to the Council standing committees prior to consultant selection. Ordinance 4259 entitled "Ordinance of the Council of the City of Palo Alto Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation for Public Communica-tion Services" Agreement between the City of Palo Alto and Gagliano & Fisch
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for Public Communications Services MOTION PASSED 8-0, Fazzino absent. 11. Ordinance Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation for the Department of Planning and Community Environment for Hiring of Contract Planners Director of Planning and Community Environment Ken Schreiber said Council established the contract planner program in 1992, which had been an indispensable factor in staff's ability to process a relatively high development monitoring workload. The workload remained high, and the estimate contained in the Fiscal Year 1994-95 budget proved to be low. The recommendation was that $110,000 for contract planning be authorized and offset by $98,000 in revenue. When contract planners were used, it was only for full cost recovery efforts so whatever staff spent was recovered from applicants. The additional $12,000 was to provide assistance for the transfer of development rights assignment that Council directed staff to undertake on December 12, 1994. At that time staff indicated completing the assignment within the requested time frame would require supplemental assistance. While he did not believe staff would spend the entire $12,000, he did not have a good handle on what lesser amount might be utilized. Whatever was not spent would go to the General Fund at the end of the year. MOTION: Council Member McCown moved, seconded by Andersen, to approve the Budget Amendment Ordinance in the amount of $110,000 to fund the contract planners. Ordinance 4260 entitled "Ordinance of the Council of the City of Palo Alto Amending the Budget for the Fiscal Year 1994-95 to Provide an Additional Appropriation for the Department of Planning and Community Environment for Hiring of Contract Planners" Mayor Simitian hoped the contract planner funds for the transfer of development rights assignment would be well and quickly spent. He was anxious that the issue be satisfactorily and fully resolved before an individual application appeared before the Council. In terms of the use of contract planners, he was concerned that while they had the potential to do a marvelous job lightening the workload and helping to move projects along through the process more quickly, there were so many that the City staff was not able to monitor or supervise as well as they should. The bottom line was while they were contract planners, they were the City's, and the City was responsible for making sure those applicants who appeared before the City received the same good treatment they would if they appeared before City staff. He wanted staff to accept responsibility and move things through the process as quickly as was consistent with good work. MOTION PASSED 8-0, Fazzino absent. REPORTS OF OFFICIALS
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12. Agreement between the City of Palo Alto and the Arastradero Park Apartment Corporation and the Palo Alto Housing Corpora-tion to Provide a Loan of 1994-95 Community Development Block Grant Funds to Arastradero Park Housing Corporation for Acquisition of Arastradero Park Apartments at 574 Arastradero Road, Palo Alto Council Member Rosenbaum was surprised to see that the renovation costs were now listed at possibly $950,000. When the repair costs were $74,000, he remembered some discussion regarding whether the amount was to be subtracted from the sales price. He asked for comment. Marlene Prendergast, Executive Director, Palo Alto Housing Corporation, said the method of calculating the sales price was done with reference to the first-time appraisal. The Palo Alto Housing Corporation (PAHC) was in the midst of arguing about installation or replacement of stairs with the Department of Housing and Urban Development (HUD) about what the rehabilitation costs would be. There was currently no legislative mechanism for factoring those costs into the established sales price. Council Member Rosenbaum clarified there was an appraised value of the amount of money the seller was supposed to get, independent of the condition of the building. Ms. Prendergast said yes. Council Member Rosenbaum clarified if the property were sold, it presumably would not be the case. The buyer would decide what to pay for the property taking into account the condition of the property. Ms. Prendergast said that was correct. As the staff report (CMR:125:95) indicated, the PAHC was in a position due to a couple of issues, that being the major one, and the Section 8 rents subsidies being another of needing to have a fairly sizable grant from HUD to make the process work. If for any reason HUD did not provide the grant, PAHC would have to assess whether the project went forward. PAHC was in rather uncharted waters in addition because of what was happening in Congress. Everything was unknown, and PAHC was taking it one step at a time. The request before the Council was necessary in order to take the next step. Council Member Rosenbaum said he was previously fairly confident the project would happen, but because the grant went from $600,000 to $1.8 million, he queried whether he should be less confident. Ms. Prendergast said while she was less confident, she deferred to Bill Rumpf who advised her on each step and was in touch with people at HUD and in Washington more than she was. Mr. Rumpf believed there was still good reason for optimism. Bill Rump, California Housing Partnership Corporation, 2201 Broadway, Oakland, said the sooner the acquisition was completed,
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the better. In that sense, the Council's support would be helpful because HUD was assessing the rules of the program, and the current rules were likely to be more favorable than in the future. Currently, the project was in the processing stage and moving along fairly well. MOTION: Council Member Rosenbaum moved, seconded by Wheeler, to approve: 1. The funding agreement, with promissory note form, with the Arastradero Park Apartment Corporation (APAC) and the Palo Alto Housing Corporation (PAHC), to provide a loan of up to $325,000 of 1994-95 Community Development Block Grant funds to APAC, for acquisition and financing expenses related to APAC's proposed purchase of Arastradero Park Apartments. 2. Authorize the Mayor to execute the agreement and the promissory note in substantially similar form, and any other documents required to close the transaction for the acquisition of the property. 3. Direct the City Manager, or her designee, to administer the provisions of the agreement and authorize the City Manager to make modifications to the agreement as may be required by HUD. MOTION PASSED 8-0, Fazzino absent. 13. Report from City Attorney Regarding Potential AB 133 (Designation of Historic Churches) Lawsuit City Attorney Ariel Calonne did not recommend that the City participate in the potential litigation as a party. In the alternative, Council could direct staff to prepare a policy resolution indicating support for the litigation, or staff could participate at the trial court level as an interested party. He suggested awaiting the outcome of any trial court litigation and then through the League of California Cities process participating as an amicus party. He emphasized Assembly Bill 133 was bad legislation and could seriously impact local historic preservation efforts and potentially render the City's regulations inconsistent with the State regulations. All of those factors did not alone justify getting into litigation. Mayor Simitian clarified awaiting the outcome of any trial court litigation and then working with the League of California Cities process as an amicus party was the City Attorney's preferred recommendation. Mr. Calonne said that was correct. MOTION: Council Member McCown moved, seconded by Kniss, to participate as amicus curiae in order to express the City's interest in the litigation in the event of an appeal. MOTION PASSED 8-0, Fazzino absent.
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14. Waiver of the City Council Appointment Procedure for Adver-tisement of the Unexpired Term of John Baer and to Allow for the Appointment of Two Applicants to the Historic Resources Board MOTION: Council Member Kniss moved, seconded by Andersen, to waive the City Council Appointment Procedure for advertisement of the unexpired term of John Baer and to allow for the appointment of two applicants to the Historic Resources Board. MOTION PASSED 8-0, Fazzino absent. COUNCIL MATTERS 15. Council Comments, Questions, and Announcements Mayor Simitian congratulated Council Member Schneider on her birthday. Mayor Simitian thanked Vern Schabert for his service. ADJOURNMENT: The meeting adjourned at 11:10 p.m. to a Closed Session. Mayor Simitian announced that the City Council met in Closed Session to discuss matters involving significant exposure to litigation as described in Agenda Item No. 6. Mayor Simitian announced that City Council took no disclosable or reportable action regarding Agenda Item No. 6 during the Closed Session that evening. FINAL ADJOURNMENT: The meeting adjourned at 11:45 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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