Loading...
HomeMy WebLinkAbout1983-02-28 City Council Summary Minutesr, CITY COUNCIL MINUTES CITY OF MI() ALTO Regular Meeting Monday, February 28, 1983 ITEM_ A G E Ural Communications Consent Calendar Action Item #1, Planning Commission Recommendation re Approval of an Amendment to the Zoning: ordinance Changing Private Colleges and Universities and Hospitals from Permitted to Conditional Uses inrThe Public Facilities (PF) District item #2 Amendments to Municipal Code lterr #3, Agreement Amendment for Baylands bike Path - CIP 79-42 - Request for Extension of Time Item #4, Tennis Court Cleaning Item. #5, Revised 1963-84 Community Development Block Urant Program Agenda Changes, Additions and Deletions Item #13, Loan Request from Friends of Ui Ater Club Item #7, Public Hearing; Planning Commission.. Recommendation re Amendment to the Planned Community (PC) Zone to Provide Greater Design Flexibi l ity for Public ,.Parking Structures 2 9 8 0 2 9 8 0. 2 9 8 0 2 9 8 0 2 9 8 1 2 9 8 1 2 9 8 1 2 9 8 1 2.9 8 1 2 9 8 1 2 9 9 0 Item #8, Public Hearing: Planning Commission and 2 9 9 1 Architectural Review Board Recommendation re Application of Sharon Crawford for Approval of Modification of Planned Community Zone District 2006 for Property Located at 4290 El Camino Real Item #9, Finance and Public Works Committee--Recom- • 2 9 9 3 sr-.endatipn re Consultant Selection for Palo Alto Cable Television- - Request of Mayor Bechtel to Bring Forward Item 10-A (old Item 5) item -#10-A ,(01a' Item 5), Planning- Commission Retom_ mendatiQn ;re Application_ .of Lee & _Fan Architecture and ,,Plann.ing, •.Inc. for Site & U_esi;gn Approval: -of a Si ngl a-Famm ly '_Resi_den e Located at 930 Laurel Alen' ' Drive 2.9 7 8 -2/28/83 ITEM PAGE Item #10, Finance and Public Works Committee Recom- mendation re.r Uti l ity Funds Transfer to the General Fund 3 0 0 1 Item #11, Architectural Review Board Ordinance 3 0 0 A item #12, Ordinance Amending Rental Housing Stabilization Provisions Item #1A,_ Approval of Developer Agreement for Homeownership Mortgage -Revenue Bond Program Item #15., Willow Road Extension: Request of. Stanford University for Inclusion of Willow Road/El Cawing Real Intersections in State Transportation Improvement Plan 3 0 0 5 3 0 0 7 3 0 1 9 Item #16, Jobs Training Partnership Act of 1983 3 0 2 0 Item #17, Request of Councilmember Levy for Response to Richard Rosenbaum's Letter of February 20, 1983 3 0 2 0 Item #18, Cancellation of March 7, 1983, Council 3 0 2 0 Meeting Adjournment 3 0 2 1 2 9 7"9 2/28/83 Regular Meeting Monday, February 28, 1983 The City Council of the City of Palo Alto met on this date in the Council Chambers at City Hall, 250 Hamilton Avenue, at 7:35 p.m. i 1 PRESENT: Bechtel. Cobb, Eyerly, Fazzino, Fletcher, Klein, Levy, Renzel, Witherspoon (arrived at 7:40 p.m.) ORAL COMMUNICATIONS 1. Glenn Affleck, 3930 May Court, said that he and his wife operated the Ballet Art Center, located at 3825 Middlefield Road. His property had a nonconforming use permit which ended on May 1, 1983. His operation was based on a school year, and many of his students attended Palo Alta schools. Classes were taken during the school year, and most students stopped taking classes in the summer. Now was an inappropriate time for he and his wife to decide whether to go out of business or move because it would interrupt the school year. He requested a six week extension until June 11, 1983 beyond the termination date of May 1, 1983 for the nonconforming use permit. He requested that the matter be placed on a City Council agenda by one of the Councilmembers Mayor Bechtel reminded Mr. Affleck that the City Counci 1 was pro- hibited from taking action on items under Oral Communications. 2. Ned Gallagher, represented Downtown Palo Alto, Inc. (DTPA), and reported that today DTPA sent a telegram to Senator Montoya regarding SB 142, which would allow the State to pre- empt local `ordinances concerning signs in the various cities throughout the State. DTPA also enlisted the support of the California Downtown Association, who was in attendance at the Council meeting the night the establishment of the Downtown Business Improvement District was approved. DTPA had 69 city members throughout the State who were also going to respond to Senator Montoya regarding S8 142. A question was raised about whether the telegram would arrive on time because the meeting was this afternoon. He called Senator Montoya's office and requested more advance notice in the. future in order for DTPA to be more effective. CONSENT CALENDAR Mayor Bechtel removed Item #5, Recommendation regarding the appli- cation of Lee & Fan Architecture and Planning, Inc. for Site and Design approval, at the request of a member of the public. MOTION: Vice Mayor Fazzino moved, seconded by Cobb, approval of the Consent Calendar. ACTION • ITEM 01, PLANNING COMMISSION RECOMMENDATION RE APPROVAL OF AN frlu ORDINANCE TRANUINT PRIVATE COLLEGES /nrrr ea ORDINANCE 341.3 entitled 'ORDINANCE OF THE COUNCIL OF r tit I T aF IP DLO ALTO AMENDING CHAPTER 18.32 . (PF ZONE) OF THE ZONING CORE REGARDING PERMITTED AND CONDITIONAL ASE$'' .(1st Roadie, 2/1/83, Passed 7-0.1, Levy "abatain," Reftzel aasent) ITEM #2., AMENDMENTS TO MUNICIPAL CODE 2nd Readin ORDINANCE 3414 entitled "ORDINANCE OF THE COUNCIL OF L0 ALTO AMENDING VARIOUS SECTIONS OF THE PALO ALTO MUNICIPAL CODE REFLECTING ADMINISTRATIVE CHANGES" (1st Reading 2/14/83, Passed .7.0-1, Levy "abstain," Fazzfno absent.) ITEM #3, AGREEMENT AMENDMENT FOR BAYLANDS BIKE PATH CIP 79-42 - i`EQUf••:ST FOR EXTENSION Of TIME (CMR:186:3T Staff recommends that Council adopt the resolution authorizing the Mayor to execute the new agreement amendment with the State Parks and Recreation Department for an extension of time. RESOLUTION 6095 entitled "RESOLUTION OF THE COUNCIL OF TAB CITY. GF PALO ALTO EXTENDING THE TIME . OFPERFORMANCE OF CONTRACT NO. 65-42-003 WITH THE STATE OF CALIFORNIA" AMENDMENT EAST BAY CORRIDOR/ SANTA CLARA COUNTY BAYFRONT BIKEWAY State of California ITEM #4, TENNIS COURT CLEANING (CMR:185:3) Staff recommends that the Mayor be authorized to execute a con- tract with the Court Works Company in the amount of $11,044 to clean tennis courts. AWARD OF CONTRACT Court Works Company ITEM #6, REVISED 1983-84 COMMUNITY DEVELOPMENT BLOCK 1:. GRANT Staff recommends that the City Council authorize staff to submit the modified 1983-84 COBG Program to HUD. MOTION PASSED unanimously. AGENDA CHANGES, ADDITIONS AND DELETIONS Assistant City Manager June Fleming advised that Item #5, re application of Lee & Fan Architecture and Planning, Inc., would become Item 10--A. MOTION: Councl lmember Cobb moved, seconded by Fazzino, to bring forward Item 013, Loan Request from Friends of the Winter Club. MOTION .PASSED unanimously. ITEM #13, LOAN REQUEST FROM FRIENDS O THE WINTER CLUB Councilmember Levy said that the expenses for operating the Winter Club we_r . contained ,on ,page. 3. of CMR:158:3. He asked the following questions: 1. The number: of personnel that would be required to operate the Winter-- Club? 2* Why the substantial drop in utility costs in later years? 3. Whether the rental figure would remain constant for °a number of years to come? Financial Planning Administrator Gordon B. Ford -said that_ the figures shown on, page 3 were basically, those -provided by Marvin Lee '-of . the FriendsTrienrds'i..of the Winter ,Cl-qb , And- it re:1,00-MartTY,r based upon'exist,ing-operating expenses. The figure under t e :Salary and Wages portion was based upon the staff currently- operating, the 2 9 8 1 2/28/83. faci ii ty. The note made in the comments was that if the Friends of the Winter Club intended to operate the facility, it was likely that they'would incur additional expenses for professional assis- tance. However, the figure was not changed. The rent was cur- rently something the Friends of the Winter Club wished t.o negoti- ate. The beat estimate at this time of $12,000 per year needed to be worked out. As noted in the report, there was a possibility that the rent could be lowered dependent upon how the current holder of the land wished to act. He deferred to Marvin Lee to respond to the drop in utility costs. 1 1 Councilmember Levy asked about the term of the lease agreement. Mr. Ford responded that he understood that there was no fixed agreement at this time. The agreement was anticicated and could be a condition of any decision. The length of time of the agree- ment and the exact dollar amounts were unknown at this time, Councilmember Eyerly asked if the Winter Club believed it could write a 20 year (ease. Marvin Lee, 1241 Harker Avenue, said he did not prepare the report and did not see it until it was given to him by a City librarian. He said he prepared a set of numbers, but had not y4t had an opportunity to review the report compared to the numbers provided by the Winter Club. The Friends of the Winter Club attempted to get City staff to meet with them for two weeks in order to review the data, but to no avail. Councilmember Klein asked Mr. Lee if the numbers contained in the staff report represented the figures provided to the City staff by him. Mr. Lee said he did not believe so. Councilmember Klein asked where the numbers were different. Mr. Lee said he did not know where the $2,''00 utility figure came from. Councilmember Klein asked Mr. Lee for his financial statements. Mr. Lee said he believed the utility figure should more accurately read $9,500. When he gave the figures to the City staff, he understood that they would be attached to the report, and he was surprised to see thenrcontained within the body. Further, he had hoped that some of the numbers could be consolidated. For example, regarding employees, the Winter Club anticipated two different types. The present operational Winter Club staff was one basis for employees, but a six-month additional Season was contemplated. The Winter Club had not had an opportunity to work out in detail what those were likely to be or what the staff salaries would likely be under those conditions. The existing estimates as to a reasonable employee benefit program were used as a base. Councilmember Klein asked how many employees the $75,000 year one figure represented. Mr. Lee said it would represent a substantial number of employees because the figure included teaching staff, ' janitorial and part- time people. Most current employees worked pant- time. Councilmember Eyerly asked how Mr. Lee felt about a 20 -year lease. Mr. Lee responded that a reasonable expectation would be somewhere in the 'neighborhood of 20 years. The owner of the property had offered a 10 -.year lease to the Winter ,Club, and,came back with an additional proposition to exchange the entire piece of land 2 9 8 2 2/28/83 with the City for some other one --or anything in between. The owner -said_ he would be perfectly willing to discuss any alterna- tive with the City. He believed the 20 -year- lease was a possibility. Councilmember Eyerly clarified that the Winter Club did not yet have a commitment for a 20 -year lease at the present location. Mr. Lee said that was correct. Councilmember Eyerly clarified that the owner of the property would entertain a trade of property so that the City would own the property. In order for the Winter Club to obtain anysort of sat- isfactory lease, the City would have to become involved in pro- viding the property. Mr. Lee said that would be one alternative. As he understood the matter, the owner was open to any sort of reasonable proposal from the City of Palo Alto to maintain recreational facilities at the Winter Club's present location. Councilmember Eyerly clarified that it would indicate an invest- ment of not just the loan of $200,000, but also the value of the property. Fir, • Lee said he could not respond for the owner of the property. He had hoped to have the assistance of the City staff in exploring the possibilities with the owner of the property, but that was not the case. Councilmember Renee] clarified that the same repairs which neces- sitated the loan would still exist even if an exchange of the property occurred. Mr. Lee said yes, but the fund raising for repair purposes --once the land was secured --was also a possibility. The Winter Club tried to raise $1.5 million funds for the initial facility the City helped to secure, but was unable to do so: Further, it began trying to raise funds for the present location, but the road block was the arrangements with respect to the land. The Winter Club was unable to secure the land without the assistance of the City, and, therefore, people were reluctant to donate funds. There had been some sizable contributions though. The Club was requesting help from the City of Palo Alto, Councilmember Cobb said that Mr. Lee had indicated dissatisfaction with some of the numbers contained in the staff report. He asked what the City might expect if Mr. Lee had more time to work with staff. Mr. Lee said he understood from .the Council resolution -that an effort would be made to work with the Minter Club to find an _ade- quate solution to the _problem. He received good cooperation from the junior members of the -City staff, but had zero cooperation from Mr. Zaner. When he raised questions about what was contained in the report in terms of data, Mr.. Zaner was unwi 1 l i sag to respond. There -were unbelievable discrepancies to data, state- ments..e for- ex,ampl e, one point was a comparison of six month eust of the Winter Cl.ub,and 40,000 attendance versus 60,000 in atten- dance-- at Rinconad.a, -whose . base' was 12_ months. 'He believed the- report was poorly done. Ms. Fleming said she had a copy with her of the estimated: budget which was submitted by the Frl endshl p.__ Pavi l l i on * Staff reviewed that budget again.tonight, and the ffgures contained in the staff report were consistent with those submitted. Further, Mr. Zaner reviewed the report and concurred with its contents. 2 9 8 3. 2/28/83 1 1 1 Shannon Brown, 820 Boyce Avenue, said she supported the retention of the Winter Club. at its present location. The Winter Club was the only local ice skating rink, and was an important recreational activity that -could be done after school. Alison Lee, 1241 Harker, said .that for the last two or three weeks, the children of Palo Alto had been circulating a petition in -support of the Winter Club. She was pleased to report that the children collected over 2,800 signatures. The petitions were signed by all of the PTA -presidents in the City and by a lot of children. It was sad that the staff report implied that because the Winter Club was unable to raise the $1.5 ' million , the com- munity was not behind- them. Early on, many of the community groups were asked to submit a resolution in support of the Winter Club. That was a difficult request to make of a community organi- zation because they were very concerned with their own problems, and _were raising funds for their own interests. She provided a list of. those groups who believed that the Winter Club was very important to the quality in life in Palo Alto. The supporters included the -Palo Alto Girl 's_ Softball League, San efrancisco Curling Club, Stanford Hockey and Skating Club who had fond hopes for the site on Embarcadero Road, New Ways to Work, the. Board of Education of the Palo Alto Unified School District, Brownie Troop 1722, the El Camino Youth Symphony Association, Mt. View City Council, South Peninsula Chapter of Adventure Unlimited, Stanford Students of Webber Hall, The Women's International League for Peace and Freedom Local Chapter, the Consumer's Cooperative Society of Palo Alto, the Palo Alto Lawn Bowl Club, the Stanford Club's Sports Council, Friends of thee. Children's Theatre, Lucy Nixon PTA, et., al. She said the question was one of priorities. The community was very mixed, and followed wholesome, healthy and creative outdoor activities. The Winter Club was very important to the community and she hoped the City would join in trying to keep it alive. Lynn Winkle, 3347 St. Michael Court, said that the City of Palo Alto was undergoing great transitional pains. The City had been noted for many years as a community that provided a very high quality of life --both recreationally and intellectually. She believed the Winter Club issue was indicative of what could happen to the quality of life if the citizens. let their priorities slip. Like the Rinconada Pool •complex, she believed the Winter Club or Friendship Pavillion was an important example of the recreational opportunities available to families in the community. Her entire family had enjoyed the Winter Club for at least six years. As the first speaker indicated, the Winter Club provided an important alternative for teenagers in the community. There were not that many places where large groups of teenagers could gather in an environment that was completely free of many of the aspects which created problems. The teenagers could enjoy themselves and do something healthy. The Winter Club had provided a place to gather for a number of years, and she hoped could continue to do so for much longer. The Winter Club also brought ice skating to a level Of access for everyone in the community. It was not the rich man's sport in the community, and was available to anyone who could come and pay a reasonable price to shu f fel around the ice♦ or learn a few skills. Ice skating was taught in a noncompetitive atmosphere which was important when considering ice skating. Other rinks in the area were much more involved in competitive programs that became elite beyond a certain point. That was not the nature _ of the Winter' Club and an important aspect of it. The City Council had -a history of- supporting the high duality of life in Palo Alto for its;ci t i tens: and families through the choices it made in housing policies, _ City planning, financial support- of worthwhile cultural activities:, and recreational faci1ities opera- ted by the C1ty. She, urged the a 'Council to coati nue keeping its priorities with regard to the Winter Club, and _to "support the„ Friendship Pavi1Iion. Michelle Mlliedge, 1011 Waveriey, said she had skated at the Winter Club for seven years, and did not know what she would do if it closed. Kristina Hellman, 1975 Tasso Street, said she had skated at the Winter Club for seven years. She could not go elsewhere because it was too far away. The Winter Club provided special attention unlike other rinks, Jennifer Kalashian, 3389 St. Michael Drive, said she had skated at the Winter Club for almost six years. She believed the Winter Club should be kept open because it was one of the only places in Palo Alto" where people supported and cared about the skaters. Marilyn Eaton, 690 Hermosa, said she had skated at the Winter Club since she was about eight years old. She was in one of their first shows, and had taught at the Winter Club for the last 13 years, Regarding the staff at the Winter Club, there were approximately 12 teachers and approximately 12 part-time employees. The Winter Club was unique because it was outdoors and recreational. It had served the community for the last 27 years, and was one of the most well -used recreational facilities in the City accepting 35,000 to 40,000 in attendance during its six-month Winter season. Members of 1,200 families were served on a regular basis by morning, afternoon and evening skating, and that did not include parties, Parties were held in between the regular skating sessions, and over 200 were given per year. They were given by churches, Stanford groups, Brownies, Girl Scouts, businesses and industries, birthday parties, and parties from both private and public schools. Many skaters were unable to do other types of recreation. The lesson program served about 500 children or adults per series, and three series were given per year. The Winter Club differed from other rinks because it focused on group 1es ;ons for children and adults. Its free style program took a student to a level of jumping and spilling and performing routines to music. The cost of those lessons was $5,50 per lesson, and included 15 minutes of supervised warm up, 30 minutes of group instruction, and 30 minutes of practice. The price also included the price of admission, which most other rinks did not do. When she began teaching at the Winter Club, ten students were enrolled in the free style program which was initiated the _year bef re. They met for one hour per week, and she was the only instructor. Now, there were six, free style instructors, they met on three different.. occasions per week, and there over 120 children in that lesson program alone. That did not count the beginning program. Many schools had closed over the past few years due to a declining enrollment of children; however, that was not the case at the Winter Club. The City Council was not going to decide the fate of the Winter Club. Mr. Duncan Williams was retiring, and with him would go the name "Winter Club" and the familiar Winter Club Bear. Their departure would be missed by all, °but outdoor ice skating in Palo Alto could continue at the present site under the new name "Friendship Pavi11.ion." She hoped the Council would feel that recreation was served in Palo Alto by the Winter Club over the past 27 years. She believed it had and that it could continue' for a lot longer if the Council was willing to help support it. • Sheryl Keller, 642 Georgia, said that Palo Alto was; a very com- petitive area, and children who might not succeed at some things in school or on the soccer field_, needed to be offered the oppor-e tunity to succeed individually, - She was learning to skate and it was a nice feeling to be able to accomplish Something. > Some children had difficulties with laterality -=that is, not being able to discern left from .right. She had heard from various , teachers: that the problem was helped by learning the stroking methods and having their brain t`aiined to do that. Dyslexic problems, we're also helped in that children were able to, succeed despite 'their dyslexic 'problem. Elizabeth Gioumousis, 992 Loma Verde, had skated and taken lessons at the Winter Club on and off for about 13 years. Considering all of the other activities funded by the. City, an outdoor skating rink was as worthwhile as anything else. She asked the City to look into how it could possibly help. Barbara DeCaro, 164 Heather, said her entire family had skated at the Winter Club for quite a few years. She hated to see Palo Alto lose the Club, and hoped everyone recognized that it was a place where children could go on their bicycles. It was a good place for the children to go after school and in the evenings. Addi- tionally, she believed that the Winter Club's present staff had been extremely faithful and were anxious to continue working in an outdoor ice skating rink. There were also a number of residents who were willing to do more than their share to keep it going. Milton Van Dyke, 506 Campus Drive, said that he and his wife, Sylvia, were best known as the parents of identical male boys. His three !children had grown up, with the Winter Club and cele- brated many birthdays there with hot dogs and skating in between. He expressed his hope that the next generation would have the salve opportunity. Sam Sparck, 4099 Laguna, said he had come to know the Winter Club because his daughters had skated there for a number of years. The Club offered worthwhile and wholesome facilities, and he could not think of a single similar establishment in the City more deserving of civic support. He hoped the City could take some action to keep the ice rink in operation. Any conditions necessary to safe- guard a City investment should be imposed. He was aware of the financial problems of the City, but believed the rink was an asset to the entire City, and that the City should stretch a point to help out if possible. Marvin Lee, 1241 Harker Avenue, thanked the. Council for its patience and for listening attentively to the comments. Every- thing had been said, but he reiterated that the key stumbling block in retaining the Winter Club at its present location was how the City could help to secure an adequate long-term lease. Councilmember Witherspoon clarified that Mr. Lee was counting on receiving about $16,000 from community groups for the summer groups. She asked what types of activities were envisioned. Mr. Lee responded that the facility would be music and general performing arts as well as and theater groups had been approached, and that it would be a marvelous facility. ideal for theater, gymnastics. Music everyone indicated Councilmember Witherspoon asked how it would work. Mr. Lee said the ice was a temporary thing which rested on pipes and gravel. It would only be necessary to ,cover the gravel with plywood. If, the indoor ice skating rink were kept active during the summer, which was anticipated, the Winter Club would probably have the only heated outdoor theater facility in: the Bay Area. One advantage of a nonprofit organization working in conjunction with a city was the access to various government surpluses. Councilmember - Eyerl y believed everyone was aware of how, many people - used the Winter Club, and it was a valuable asset. It was unfortunate that Mr. Williams did not wish to continue : operat i ng , but that was not to say that the City had a lot of _money to make unsecured loams such as the one requested. He found that Mr. Lee _worked very hard _ last year, along with some other members of the proposed -Friendship Pavillion,, 'to procure gifts and donations of money to keep the organization going, and that it was more of ` a last resort to ask the City for funding._ In view:. of the informa- tion presented, he' believed it was inadequate to make a loan`' for the amount requested. He was primarily concerned about writing off the capital improvements, and it looked as if 20 years would be needed, and there was no assurances of a 20 -year lease at that location. It was difficult to do anything but accept the recom- mendations of the staff that the loan not be granted. However, he believed that the approach of the Friendship Paviliion Board of Directors should have been to make their request in connection with the Capital Improvement Program. A report of the type neces- sary was a tall order for this year, and he did not believe staff would have enough time to do that amount of work in time for the 1983-84 Capital Improvement Program Budget. He believed that if the Friends of the Winter Club had enough drive, they should be able to influence Mr, Williams to keep the Winter Club open for another year or to give the City ample opportunity to go through a staff feasibility report and for it to be presented to the Council for decision about whether to include it in the Capital Improve- ment Program at some later date. NOTION: Councilmember Eyerly moved, seconded by Witherspoon, that Council accept the staff report and that the loan not be granted, and that staff be directed to prepare a report for a possible capital improvement to be included in the 1984-85 Capital Improvement Budget. Councilmernber Cobb said he was concerned about the motion in its present form because it left almost a two-year gap with regard to the present facility, and tended to presume that Mr. Williams could be persuaded to come out of retirement for as long as it would take to get the item into the Capital Improvement Program. That appeared to assure that nothing would happen for two years and he did not find that to be a satisfactory solution. He did nt object to exploring the possibility of the City's involvement through either the Capital Improvement Program or some other mechanism, but would like to see it done in a somewhat more timely manner. He commented that the Winter (lub was a unique and impor- tant recreational service for the City of Palo Alto and one which served a -great many people in a positive way. Most of those people were young and he believed the City should snake every con- ceivable effort to make it possible for the activity to con- tinue --both in the short and long term. He noted that the City invested a great deal of its money in a number of different recreational programs which were as worthwhile as the Winter Club. He believed the Winter Club was at least as deserving of some form of City support as were the other activities like tennis, soft- ball, etc. He wanted the City to fled some mechanism for con- tinuing to work with the leadership of the Winter Club to the end of trying to find some more immediate solution. Justification for some continuing interaction with the Winter Club on the part of the City could be based on the concept of matching funds, which was alluded to in the staff report, or the concept of some kind of land exchange or lease to the City with a lease back to the Winter Club, which was suggested as something the land owner would be willing to discuss with the City. Both of those concepts required some kind of City involvement. SUBSTITUTE NOTION: Covehcilaember Cobb moved, seconded by Faasino, that staff be directed to continue working with the Winter Club management/leadership , to see if any avenues existed for the near term continuation of the recreational facility in Palo Altoon a financially spend basis and consistent with estab- lished City : policies with the understanding that the initiative fordeveloping alternative proposals would rest entirely with the Meter Club. Couhcilmember Klein warted- the Winter ,Club to remain _.1n Palo Alto, .. but -did not believe ` the Winter Club was :going about it'J the:right way. The City Counci lmembers were charged by _thei roath of office to be financially responsible for the City, and could not write out blank checks. The -information provided by the WiUter Club was almost a request for a blank check. The fact that the Winter CIO) 1 1 1 had an excellent and desirable program did not mean the City could put all of its money into it. Controls were required on all City programs.. Since Proposition 13, the City had adopted very few new programs, and the comparisons with swimming, softball and tennis programs were not appropriate. Those programs existed before, and the Council could not close down Rinconada Pool. The City's resources were limited, and few, if any, programs could he added. Consideration of the Winter Club would have to be done differ- ently, and the Council would have to determine whether the priority was so great as to justify the expenditure of money. He was extremely disappointed with' the figures submitted by the Friends of the Winter Club, and did not believe they were suffic- ient for the Council to make a decision. A low cost loan or an exchange of property was a City subsidy, and the Council had to know how much it would cost before going forward. Until the City had a much better handle in terms of the amount involved to keep the Winter Club open and where the money would come from, he .could not vote to support any motion. He believed the proponents had a lot more homework to do in terms of providing much tighter financial statements, and it was their job to do so --not so much the City's staff. People who proposed new programs carried the burden of providing the data. The fund raising was a factor, and it was extremely common in all types of activities, for the people who asked for donations and who pushed the program to also come up with money. A matching grant was a common occurrence in fund raising, and it was ,much easier to write letters than to come up with money. If the City was to come up with a program to keep the Winter Club open, it would also involve fund raising efforts. He suggested that Council not accept anything tonight, and that the item be continued for a month or so in order to receive much bet- ter data. SUBSTITUTE MOTION WITHDRAWN `BY MAKER AND SECOND. MOTION TO CONTINUE: Counci1member Klein moved, seconded by Fletcher, to continue the matter to April 18, 1983, Councilmember Witherspoon said she found the Winter Club to be one of the most frustrating issues the Council had dealt with for a long time because her family had used the Winter Club for many years, and she was fond of it. Many people in town had called her and expressed their hope that she would support the request, but when she asked at what level Council support was being sought, they looked blank. Many people had no idea what was involved financially, and the Council had to know -the level of support in the community. Further, she suggested that the :Friends .of the. Winter Club pretend that they were going to the. Bank of America and be prepared for the kinds of questions that would be asked. Those were the kinds of things the City had to know. Her last child skated at the Winter Club about eight years ago, and she remembered the facility to be very cramped for the number of people who used it. If the City was going to spend any money, perhaps it should look at spending a little more and _:getting a decent sized rink. She was not -the least bit interested in swapping land and getting a "third party involved. She suggested that the Club be. located somewhere' else. She would support the substitute motion, but if things did not look like she hoped they would look in April, it was time for the City to look at it from a hard nosed point of view or drop the subject. Councilmember Levy said . his views were stated by ' Counci lmembers Klein and Witherspoon. The activity, at thee Winter Club was highly desirable for the community,- and he also endorsed what many groups throughout town had endorsed : and the petitions received. The con- cept was excellent,; but the implementation also needed to be watched carefully. He believed Councilmember Klein correctly described the request as One - ,for' a blank check. The Colnci l needed financial project1ons that were rational, attainable, and carefully developed. A fire lease was also necessary. The City could not be sole source of - f i"nanci ng--there had to be financing 2 9.8 8 2/28/83 s Corrected 6/06/83 from the community. Verbal statements of support must be backed by financial fund raising so that the City was not the only source of support. In the proposed transition, it was necessary : to have an operating group functioning, with an established and thorough board of- directors, and the management carefully delineated. unfortunately, governments at other levels had gotten themselves into concepts where the implementation was such that the costs substantially escalated out of control. He was concerned about that being -the case here, and could not know without the appropri - ate numbers. The activity was so desirable that he believed the matter should be continued to see if' it was possible to continue ice skating in Palo Alto. Vice Mayor Fazzino said that having skated at the Winter Club in high School, he viewed the facility as being an ,integral part of the City's entire recreational program over the past 25 years. It was important to begin -with that orientation es the Council dis- cussed the issue. He did not support spending the level of money requested, particularly if the facts before the Council were cor- rect. He encouraged the Friendship, Pavillion group to look over the_ report and ascertain whether the facts were correct before the Council math a final decision. He viewed April 18, as being the "fish or cut bait" time with regard to the entire issue. 'He believed that the City could serve as a broker with respect to the issue whether it be through some form of matching funds approach --both private and public --or a land swap as proposed by Councilmernbe,r Cobb, or some form of incorporation of the ice skating activity within the City's recreational program with both public and private support. As indicated by Councilmember Levy, the Friendship Pavillion group needed to organize quickly and come back with some very specific proposals. The Council needed to make a decision fairly quickly and only had so mulch money to offer. There were some ingenious ways in which the City and the Friendship Pavillion could work together to save the program. He strongly encouraged Council support of the motion to continue, and that the Friendship`` Pavillion do its homework over the next six weeks and explore each of the proposals which were raised to determine whether any of them were feasiblef: Councilmember Renzel said she concurred with Councilmember Klein's remarks, She was concerned that the Council had not received very firm financial information from the Friendship Pavillion group, and that the amount of Council support being requested was unclear. When the matter came back, she hoped to see firm infor- mation based on the current operations of the Winter Club and what salaries and benefits were paid, Those figures should be readily available and would be germane to the Council's being able to understand the accuracy of the figures presented. She believed it would be important to have a clear management group identified to take the responsibility for negotiating any kind of City °partici- pation that might take place. The Council could not ;send money out into a vaccuum without some clear indication about how it would be managed over the=;,,longer ;.term. She concurred that it would be valuable to see the community "puts its money where its mouth was" with respect to support of the Winter! Club, People were reluctant to give money until it was known whether there was. a facility,, but she believed people could give pledges. Many groups used that mechanism for contingent gifts, and there should be some means to identify the level of support _ by way of firm pledges by people who wished to see the activity continue. She agreed that the Council would have to be hard -hosed in looking at the request with respect to the other. City programs. Councilmember Eyei'ly said that the closure of the Winter Club in April, as proposed by Mr. Williams appeared to be a stumbling block with the continuance to April 18 He real i xad how much effort was' put into raising funds >.:and Putting the proposal together last t year, and did not believe that Council : would have all the data it requested by April 18. He had ; no problem with continuing the matter to. April 18, but did not believe the Council 1 1 would be provided all the information it requested by April 18. He suggested that if the Friends of the Winter Club desired to continue the Winter Club, all of the City Council's requirements would have to be satisfied, and they would have to return to the Council on April 18 with some type of a written commitment from Mr. Williams to continue the club's operation until the Friendship Pavi l 1 i on could be on top of its request. Councilmember Cobb believed the subject land was unbelievably well -located for recreational purposes in the City, and said it had worked so well because small children could bicycle to and from their skating. The land was very special and the concept of some type of long-term recreational facility was fantastic if it could be put together. Councilmember Klein, said that accomplishing the amount of work to be done between now and April 18, would necessitate the involve- ment -of a lot of people. He did not believe it was necessary for Mr. Williams to continue the operation; however, the City needed to .see a firm plan about how the facility would be operated next year. He suggested that the possibility of the City operating the facility be looked at more seriously. If the City was going to be asked for a lot of money, the City should have a lot of control. He did not believe that point had been sufficiently addressed so far, and the burden of doing so was on those who wanted to main- tain the program.. Thera was a lot of work to be done, and the Council was rooting for them. Mayor Bechtel said it appeared as though the Friends of the Winter Club hoped the Council would take care of the problem for them. It was not that easy --the City had not implemented any new programs in the_ past five years, and had only maintained existing programs. The City ,, could not hand over a $200,000 check, which might have to be augmented year after year to keep the project going. There were no lease arrangements, and no money was tied down. She loved the Winter Club, but said a lot of people were able to attend meetings, and she wanted to see more people involved in making the proposal work. She saw 2,800 people who took the time to sign petitions, and all the ceildren who spent a lot of time carrying these petitions around. - If -each of . those 2,800 people put in $5 or $10, it would have meant a lot in terms of inspiring the City to see the viability o.f the organization and that it could actually generate some revenues. The Council wanted to see the club raise some: money and show that the organization had the management skills to make it operate. It would need more than one person for the organization to operate, and she: supported the motion to continue and encouraged everyone to try and enlist 30 others to make the Friendship Pavillion work, NOTION PASSED unanimously. ITEM #7 PUBLIC HEARING: PLANNING COMMISSION RECOMMENDATION RE Planning Commissioner John Sutorius said that the Planning Commis- ; sion considered the dilemma set forth on, page 6 of the Council's package. It boiled down to the fact that the site development regulations for the PF .district did not readily provide for the.. development of multi -story parking facilities. Two approaches were suggested to get around the di l emfa -i n terms of height limit's when involved with an adjacent residential district, and the day- light plane restrictions One alternative was to go forward as a PC whenever therewas a specific need or apph i cati on to, construct .a multi -story par*king:. lot, the other alternative was to make revisions to the PF zone. The, Planning Commission opted for the_. PC approach recognizing that either. the PF dr. PC would accomplish the necessary change, but that the PC apOroach wasthe most normal and above board, and the type of approach ° a private applicant would need to make when Confronted ` with the tame situation. -He 2 -9 9 0 2/28/83 Planning Commission recognized that ample public input and the involvement of the Commission and Council could be achieved with the PF alternative, but believed that PC was the way to go. Counci1member Renzel asked if any future problems were foreseen in terms of someone wanting to build a private parking structure if the Council fol l owed the Planned Community alternative (b) while i ncl udi ng speci fi c language wi th respelt to pub! i c parking struc- tures, Chief Planning Official Bruce Freeland said that the proposed amendment was intentionally limited to the public. If someone wanted to build a private parking structure and wanted to take advantage of the same provision it would not be there; and, if that were the problem, it would be a problem for the future pri- vate applicant. Ms. Lee said that in the event of an equal protection argument about public parking being treated differently than private parking, -public parking was treated differently in zoning ordi- nances all the time, and she was not concerned with potential problems in that respect. Council member Renzel clarified that even though a specific condi - tion existed under a PC- zone specifying what must happen with respect to public par'king garages, the PC zone --by its definition --was completely flexible with respect to what hap.- pened. Mr. Freeland said that the.PC zone was not completely flexible, and that was one of the problems staff encountered. The Planned Connunity.zone, while providing many fiexibilities, contained a number of specific requirements. One such requirement was the imposition of the 35 -foot height limit within 150 feet of any RM district. It was not an open slate. Mayor Bechtel declared the public hearing open. Receiving no requests from the public to speak, she declared the public hearing losed. MOTION: Counciimember Cobb moved, seconded by Kenxe1, approval of Planning Commission recommendation (8) to amend PC district height and daylight plan regulations for sites within 150 feet of a residential district specifically for parking facilities, and introduced the ordinance for first reading. ORDINANCE FOR FIRST READING entitled 'ORDINANCE OF THE Tr'b 0 ALTO AMENDING THE ZONING CODE (TITLE 18) WITH REGARD TO PARKING FACILITIES' MOTION PASSED unanimously. ITEM 18, PUBLIC H€ARING: PLANNING COMMISSION AND ARCHITECTURAL rETTEIrMITIrlrETIMEATTICTM—RE KII7LfrATIDli U' 5RXR1J CRAWFURQ Fad Chief Planning Official= Bruce Freeland_ clarified that the original staff report contained discussion about an alternative location for the ' tennis courts. The proposal was to place the tennis courts in, front of the hotel complex .along El Camino Real gen- erally in the, area between the central driveway to the complex and the ..northern boundary of ` the property along the El Camino frontage. Staff _ dlscussed an alternative location in the rear of the site, which met with a lot of neighborhood opposition, and was not_ recommended, by the ,Planning . Commission. The proposal was to have the tennis ,,court:t in the front -of -the ' complex, which was where the °`applicant ` desired. Further, a lot _ of._ conditions were not: listed in the, proposed ordinance: because the .final plans sub- mitted to the Council incorporated the conditions recommended 1 1 1 1 1 by the Planning Commission. There was a requirement that the "fence be of a black vinyl and that it have no windscreen. He could not find that condition written on the plans, and suggested that it would be appropriate to 'add it as a specific condition. The other features which were incorporated into the design which took the Planning Commission and ARB concerns into account were that the fence plus.the retaining wall around the tennis courts together would provide a 13 foot combined barrier which should be sufficient to keep tennis balls in the tennis playing area and off of El Camino Real. That -was the major design problem to be solved with the location. There would be a lot of landscaping including some 24 -inch box trees between the complex and the site towards Deriny's Restaurant, and all lighting would be confined to the -area of the complex. It was a requirement that the lighting not spill over onto El Camino Real. There was a technical change to the map-. The plans submitted listed elevations of the tennis court surface, and were generally listed at around 94 feet. Those elevations were not consistent with the cross sectional drawings, and staff suggested that the specific elevations be removed from the plans as part of the exhibit which would go with the ordi- nance. The dimensions on the cross section were accurate, and could be left in place and implemented. - Councilmember Cobb said one of the big issues discussed was the question of how high the fence should be to keep balls off of El Camino. 1e thought that putting trees along that line would solve a lot of the fence problems because tennis balls would not go through trees. He asked whether there would be a row of trees; and if so, why was the fence such a problem. Mr. Freeland said there would be a row of trees or very tall shrubs, between the fence and El Camino Real. The plant was called a "Catalina -Cherry,". and -it formed a dense screen.. In time, the plant probably would prevent balls from going onto El Camino, but a fence would definitely be needed for the first few years, Councilmember Renzel said the staff report contained a recommenda- tion by the Utilities Department that sodium vapor lights be used, and discussion was had that the .hours of use be 6:00 a .m. to . 11:00 p.m. Originally the hours were stipulated, but latervthe appli- cant requested some discretion in that regard. She asked how that was resolved. Mr. Freeland said he understood that the hours of play were not being restricted, which was • consistent with the belief that there were no immediately adjacent .residential uses. "T -he Redwoods" project on the Victoria Gardens site would be somewhat near one corner of the courts. He understood that no restrictions were built in. Councilmember Renzel said the building was already eight stories, and was built under a_ PC zone. She asked about the history of the zoning prior to the PC, and what the trade-offs were. Mr. Freeland said that regarding parking, a use permit' was previ- ously requiredwith a planned community zone. The use permit with the subject application called for 590 plus spaces, which was much more than a hotel would normally be required to provide. He believed the reason for that was that there were extensive banquet facilities, and the thought was to have enough parking for those large events. Even with the removal of the 49 spaces, there,would still, be more spaces than required under their original: use per- mit. Councilmember Renzel asked if the area was surveyed to determine whether there was . ample 'parking to permit deletion of the 49 spaces without any' -material effect on parking along El Camino. Mr. Freeland said staff believed that parking would be adequate. The area was surveyed and no complaints of overflow parking from major activities were on file. Mayor Bechtel declared the public hearing open. Alan Huntzinger, Civil. Engineer, 2443 Ash, represented the Hyatt House and Sharon Crawford. The item received the unanimous approval of the ARB, Planning Commission and the neighbors. A good percentage of the neighbors turned out for the Planning Commission hearing and were in favor of the tennis courts being out on the El Camino. The applicant had been bouncing back and forth with the City staff, ARB and Planning Commission for months and months, and was trying to bend over backwards to provide for all of the requested features. The tennis courts were lowered, and they were now down to four foot retaining walls al,ng the sides. Some concern was raised about the height of the fence, which was the only season he could think of to request that the tennis courts be lowered. The applicant was digging out the existing parking lot, and was now four feet below it and putting in the retaining walls. The fences would be on top of that. As suggested by the Parks Department, the wall and fence stuck out above the sidewalk about nine feet. When the Catalina Cherries were planted that ran 20 feet, no one would be able to see any- thing. They were talking about nine feet of black fence, and four feet of wall, which made the 13 feet recommended by the Parks Department to keep the balls from heading out towards El Camino. Staff mentioned the 13 foot high fence, and he clarified that it was only for the El Camino side. The applicant was not planning for anything higher than about nine or ten feet back toward the hotel. Mention was made about a discrepancy in the elevations. He did not know what that was about because he thought everything matched between the cross sections and plan view. He offered to clarify any questions. Mayor Bechtel declared the public hearing closed. MOTION: Councilmember Fletcher moved, seconded by Fazzino, approval of the Planning Commission and Architectural Review Beard recommendations as follows: 1. That the Planned Community Zone District be modified to allow the construction of two tennis courts; 2. That findings be made that the proposed amendment to PC dis- trict will not have a significant environmental impact; 3. That the ordinance be introduced for first reading; and 4. A further condition that the fence be black vinyl with no windscreen. ORDINANCE FOR FIRST READING entitled °ORDINANCE OF THE uoulgUIL UP THE CL IT OP PALO ALTO A➢iENDINP PC ORDINANCE. NO. 2005 APPLYING TO PROPERTY KNOWN AS 4290 :EL CANINO REAL'.' NOTION PASSED unanimously. ITEM 19, FINANCE AND PUBLIC WORKS F&PW COMMITTEE RECOMMENDATION Mayor Bechtel said the matter would be presented by Councilmember Witherspoon, : the former Chair of the Finance and Public Works Committee because Councilmember Klein was not Participating. Councilmember Witherspoon, Chairperson for the Finance and Public Works Committee at the time the matter was heard, said = that she and Councilmember Levy worked with staff in negotiating for a consultant. Staff did an outstanding job, nailing down a' very tight contract and getting Arnold & Porter to lower the financial cap on their professional services. • MOTION: Councilme.ber Witherspoon for the Finance and Public Works Committee moved as follows 1. That the Mayor be authorized to execute the agreement with the firm of Arnold IV Porter for professional cable consulting ser- vices in the amount of $107,100; 2. That staff be authorized to execute change orders to the agreement up to $10,710; and 3. That a budget ordinance in the amount of $117,810 approved. AGREEMENT Arnold i Porter ORDINANCE 3415 entitled "ORDINANCE OF THE COUNCIL OF THE ci rt QF Pau ALTO AMENDING THE BUDGET FOR FISCAL YEAR. 1982-83 TO PROVIDE FINDING FOR A CONSULTANT TO ASSIST THE CITY IN THE CABLE OWNER AND OPERATOR SELECTION PROCESS" City Attorney Diane Lee pointed out that the agreement contained a provision, at the direction of the F&PW Committee, that there be a cap on the consultant fee. The agreement also provided, on page 3, for the cap to be raised, but it would have to be the subject of negotiation. The situation could occur if the consultant advised that their fees were getting too high in relation to the services prepared. If a mutually satisfactory arrangement could not be negotiated, Section 9 on page 5 of the agreement, allowed the consultant to terminate the agreement. In other words, if the City did not agree to raise the cap, it was conceivable for the consultant to withdraw their services after providing the City with the requisite 30 days'` notice. Councilmember Cobb said he understood regarding the 15 -day termination, that if the City terminated the contract at any time before its normal course, all consultant expenditures would cease. He asked if the fee would then be prorated. Ms. Lee said yes. Counci lmember Cobb said the . budget amendment was in the amount of $117,810, and he asked whether that amount came from contingency funds or whether it was being transferred from some other program. Assistant to the City Manager Charles McNeely saidthat the money was comingfrom the contingency fund. Vice .Mayor Fazzino said he believed that staff and Cooncilmember Witherspoon had done an excellent job in developing a contract, which responded to the i sst e's raised by the former : F&PW Committee in December. He asked for clarification on the indemnity question raised in the:. report, and for a quick review about how the City and/or consultants would be held harmless , if sued by y an unsuccessful applicant, and the threshold for someone not being held harmless. Ms Lee responded that the bottom line standard was negligence which meant failing to act . as a re_ asonah ! e and prudent person under the cirCumstances. In that event, one would be considered to, be negligent., At one:. point in the negotiations, there was no provision'...for .negligence, and the City Attorney's office insisted that it be included. The agreement now provided for negligence . as a basis for indemnification, which was a less difficult standard to prove than intentional wrongdoing or recklessness. Vice .:Mayor Fazzino asked if the City Attorney's office would be required to defend the consultant. Ms. i_ee said that until a determination was made that the consul- tant was: negligent,-._ the possible scenario was that either the consultant or the _City would be sued. Either the City or the consultant would file a cross -complaint against the other and each party _ would bear its own costs. Once a determination was made either by way of the matn action: or some subsidiary action that one of the parties was `in fact negligent, that party would be required to -reimburse the other. Vice Mayor Fazzino, clarified that as long .as the consultant" was fulfilling the terms of the contract as stipulated by the Council, the City Attorney's offfice would be forced to represent the consultant. Ms. Lee said the City would not be required to represent the con- sultant only in the event of negligence, and then, the City would be able to recover its legal fees. There might be a coincidence of negligence in breach of contract, but it was likely. Vice Mayor Fazzino said the proposed schedule contained a decision date of November 15, 1.983, and he hoped that could be moved up to the degree -possible. It would nice to have such an issue resolved before the election campaign began in September. Even though he was not up for election in 1983, he believed it would nice to move the matter ahead as soon as possible ensuring the maximum amount of public participation. He said that in December, he expressed concern that the contract stipulate the consultant's appearance in Palo Alto whenever the need arose. It was important for the consultants to be full participants in the process which would necessitate a number of meetings over the next few months to start developing the Request for Proposal (RFP) . He wanted assurances that the consultant not be absentee and would participate fully. Mr. McNeely said Vice Mayor Fazzino's concerns were covered in the contract. The contract required the consultant to specifically be at City Hall at least three times, and thereafter whenever their presence was required for the City Council. Vice Mayor Fazzino said it was scheduled to cost $27,000 to develop the RFP, It was clear that a wealth of material already existed on the cable RFP's, and he encouraged staff not to have the consultant's completely reinvent the wheel. He recognized that it had to be specific for Palo Alto, but at the same time, many of the questions were already developed by a number of cities, literature for which was aVailable at an expensive cost. He recognized that $27,000 was the total cost which included the consultant's travel, etc.: Regarding whether the City staff would submit a formal "proposal, a newspaper report indicated that" City staff did not intent to submit a formal proposal:: He asked if any decision about that was. being made tonight, or whether it was something to be addressed later.. Mr. McNeely said: that issue would be addressed at another time, and the Council- would have the opportunity for debate. Councilraerber Levy. asked at what stage the evaluation participat on :in the project occurred. Mr. McNeely responded that it occurred during the fourth step- .Evalution and Selection. The consultant would not only be responsible for evaivati"ng private proposals, but joint proposals if =that was the Counci l 's desire, and any form: of citizen participation:. Counci lmember t.eyy ,,clarified that prior to: November 15, " staff would present a City p.rbposal. Mr. McNeely said not unless Cunci l directed staff to do so. City 2 9 9 5 2/28/83 Councilmember Levy clarified that since a lot of interest existed in a municipally owned system, staff would request Council direc- tion at some point to prepare a City response to the RFP. He asked how the issue of City ownership got into the process. Mr. McNeely said that would happen if staff were directed to do so. A Council decision would have to be made before the draft RFP was issued, but recommending to Council that staff prepare a pro- posal was another item. Council could direct staff to do so. Councilmember Levy said he talked with representatives from Stanford and Menlo Park specifically, and they were interested in participating in the process. He asked how the inclusion of adjoining jurisdictions entered into the pictur►. Mr. McNeely said that a staff report sent to the Council a number of weeks ago stated that there were a cumber of jurisdictions that were interested. Staff envisioned that once those fetters of intention were in and the Council officially expressed a posi- tion, they would be incorporated into the first step. Councilmember Levy clarified that the timetable envisioned the consultant also working with neighboring communities. Mr. McNeely said that was correct and that it would be included in the agreement. Councilmember Levy said he saw the process as being rather compli- cated.particularly if the Council opted for a municipal participa- tion. That arrangement would not be a simple one for the neigh- boring jurisdictions in terms of deciding how to involve them- selves with a municipally owned or operated Palo Alto system. He said he was pleased with the proposed dates and would be very happy if they were adhered to. He clarified that Arnold & Porter bought the dates and would be back to the Council for the various approvals --the first one to occur in six weeks, and the RFP to be issued in ten weeks. Mr. McNeely said the consultant had stated that the dates were realistic for them and that they intended to adhere to them. Councilmember Levy said he hoped staff would continue to keep neighboring jurisdictions tightly involved in order to keep those involvement from causing the dates to slip. Mr. McNeely commented that in terms of the municipal and private options and the other jurisdiction being talked to by the City, the letter of intent to be received from them would leave that door open. The ones received to date indicated aewillingn:ess to participate in a private, joint or municipal system. Councilmember Levy said he was pleased with the contract. The cost started out above $140,000 and was toned down by about 40 percent, ` and the City Attorney's' office• did a good job safe-, guarding the City in terms of budget and completion dates. Councilmember Eyerly said that No. 7 on Exhibit MAO stated that. the : consultant would write an RFP acceptable to the Council. The bidding on page 4, under Section C, stated that the consultant would also analyze the risk and benefits Of various forms of muni- cipal participation; in the . ownership and operation of a system, and that the consultant: would test the benefits of municipal own- ership and operation against those of private ownership and opera- tion and joint ventures. He .was .please to see those included, but . asked for assurances that the RFP would be written so that the City would have no problem submitting`a request for proposal which could give some comparisons against private ownership. Mr. McNeely said staff was comfortable that the consultant could evaluate all options fairly --municipal, joint, or whatever else the City would like them to look at. Councilmember Eyerly said it was indicated that Council would have to direct staff to submit an RFP at the proper time. He asked what staff would have to go through "if Council directed them to submit an RFP. Mr. McNeely said it was difficult to say what the process would entail because there was some concern on staff's part about being put in the position of being involved with the consultant and trying to put together a proposal. During the last meeting, Mr. Zaner indicated he did not want to be involved with that. Councilmember Eyerly said he hoped that possibility would be considered as time went on because he would be interested in the City's presenting some type of an RFP for municipal ownership. Ms. Lee said there were also some legal considerations with respect to any type of dual participation by the City in the process. Those considerations would be discussed with the administration at the end of tonight's meeting. Councilmember Fletcher said she carefully read the minutes, and the question was raised about now. a needs assessment and marketing survey would be conducted. Mr. McNeely said the needs assessment would be conducted by staff's obtaining information from community groups and institu- tions about their cable needs, and feeding that information into the RFP process. Neither staff nor the consultant planned to do a marketing survey, and during the last F&PW meeting, the consultant suggested that any marketing surveys be done by the cable com- panies. Councilmember Renzel said Councilmember Levy inquired about the possible participation of other jurisdictions. An order to respond to an REP, anyone would have to know how big a territory was being covered. At the same time, each jurisdiction was separ- ate and capable of .rejecting any or all bids independently. She said there were. probably benefits in serving- a larger market versus a smaller market, end _asked if those interconnections between cities would be done in such a way that if Menlo Park or Stanford, for example, did not like the terms of the proposal, that the portion of the proposal that Palo Alto might wish to deal with could still= stand, Mr. McNeely said some of those types of issues still needed to be. resolved. Staff had discussed with the consultant how the other jurisdictions could pull out of the process if they wanted to do so. Staff would be looking to the consultant to resolve some of those issues. Councilmember : Renzel said she believed that was very important because the City was : paying a lot of money for the process and ,systems design. While there were benefits to be derived by a larger market and the consolidation of communities, Palo Alto did not want to jeooardize what it was attempting to accomplish. Ms, Lee. believed `'tha.t an RFP could be structured- with a1 ternati i►ee so that ._any response could be based on a different market or geo- g raphl c area.: That possi bi 1. i ty would be' explored with the -.consul-, tarete It cou 1 d be. ; that _ some :of the details„ could. not be worked out, but • the voters actually gr rated fr•anch�lses. The -:way: -the 'City's_' Charter was' --presently worded, the Councll` WouId- make a recommendation to the voters. e Mr. ° .McNeely added that after reviewing what the consultant came up With, :the :'Council could well de<termi ne that a joint _ system was not something it wished to pursue. _ 2 9 9 7 2/28/83 1 1 1 1 1 Councilmember Fletcher said she would not support the RFP process. She was concerned that the City would receive proposals and impressive PR products from commercial cable companies with con- siderable resources, and that regardless of the consultant's recommendation, it would be perceived by the public and the Council as the way to go. That would not mean much in the end when the legislation was passed in Washington to retroactively nullify the franchise agreements. The temptation would be to go with the professional cable company because some of the costs, which would be otherwise lost, could be recovered by going commer- cial. The City could save a lot of time without the long RFP process, and the danger of extending the time to consider the matter was that the legislation could pass in Washington which would prohibit municipal ownership. The City had to move ahead before that legislation passed. She liked the idea of developing recommendations regarding basic objectives, minimum requirements, and system characteristics of a cable television system to meet the City's needs, but those could be developed without the con- siderable cost and the amount .of time involved with the proposed process. Councilmember Cobb asked if the Council could ensure some type of an ownership model for joint ownership between the public and private sector being included in the RFP, and that the consul- tant's were prepared to deal with that type of question as part of their choices. Mr. McNeely said yes. Councilmember Cobb said he intended to pursue that model as a solution for maximizing the City's control while minimizing its risk associated with the system. By going through the RFP pro- cess, he felt no constraints to decide upon a private sector model. An RFP process would enable the City to look at the entire picture and make a comparison of all the ownership models. The joint ownership model he was suggesting might be the way to go and he wanted to make sure it was included. Johns Kel ley, Director of the Cable Communications Cooperative of Palo''Alto, Inc., 371 West Portola, Los Altos, said he shared many of the sariie concerns alluded to by Councilmember Fletcher. If the City decided to go ahead with the RFP process, the Co-op wanted to see the RFP process and needs assessment work closely with groups in the community who were concerned with cable issues. He was hesitant to accept the timetable because he believed it called for specification of the system design by April 15, which left six weeks to conduct the needs assessment. He hoped the minimum system configuration would serve all of the community's identified needs, and he was not sure that six_ wee!:s was enough ti:-ie to do so. Given the amount of time the consultants would spend in Palo Alto, he was sceptical about the six week time limit. He pointed out that the Co-op was working actively to prepare a response to the RFP that would propose a joint ownership of the systme. He believed that even if RFP spoke to haali ng a " joint system, coopera- tion would be needed from the partners ofthe proposed joint sys- tem. The Coop would appreciate some direction from the City Council that staff should cooperate with those people who proposed joint systems in some manner. That would be the best way to develop the concept of a joint system, and without that guidance and cooperation, the likelihood of a successful joint system was diminished. In considering the consultant's report, he asked that the Council also cbnsl er_deyising'`means for the staff to cooper- ate with those groups who want d to propose joint ,ownership systems. Tom Passell, Chairman: of the Cable Communications Cooperative of Palo Alto, asked whether the consultant had enough past experience with .joint ownerships to clearly address the issues of joint own- e,rships. Ms. Lee said s ownerships. e was not aware of any other public/private joint 2 9. .9 8 2/28/83 Ms. Lee said she believed the issue was whether there were many joint public/private ownerships in the country and whether there was a pool of expertise from which to draw. Councilmember Cobb said he specifically remembered asking both of the potential consultants whether they were prepared to deal with the issue of joint ownership, and both responded affirmatively. Councilmember Renzel concurred with Councilmember Cobb. She believed the consultants indicated that they could handle the com- plex process and fully understood that there was a lot of interest in the community for a joint ownership mechanism. Vice Mayor Fazzino said that page 11 of the December F&PW minutes referred to the process in Jersey City, New Jersey, and the public ownership alternative evaluated by the group for the possibility of joint ownership. He suggested that Mr. Passel.' review those minutes and the background material presented by the consultant. NOTION PASSED by a vote of 7-1, Fletcher voting "no,' Klein 1°not participating.' REQUEST OF MAYOR BECHTEL TO BRING FORWARD ITEM 10-A OLD ITEM 5) MOTION Councilmember Fletcher moved, seconded by Fazzino, to bring forward Item 10-A (Old Item 5), Planning Commission recommendation re site and design approval at 930 Laurel Glen Drive. MOTION PASSED by a vote of 7-1, Levy voting 'no," Klein out of the room. ITEM #1O -A OLD ITEM 51, PLANNING COMMISSION RECOMMENDATION RE APPLII`:. k. ` ,. & DESIGN APPROVAL OF he SINGLE-FAMILY RtSTDENCE LOCATED 1T 930 1WUREL ALE Councilmember Klein .returned to the chambers. Mayor Bechtel commented that the Planning Commission recommenda- tion was unanimous, and that the only objection had to do .with the swimming pool, which the Commission recommended be black bot- tomed. Chief Planning Official Bruce Freeland Lee and Fan who were present earlier requested the use of a black and green not to have a jet black color. said he in the tile in spoke with Messrs. evening, and they the pool, in order Councilmember Renzel said regarding the design of the building, one of the covenants of sale of the property was that the building remain one story. The form of the building was clearly two-story, but was called a "mezzanine." When people talked about one story, they talked about whatever would be a normal roof height. She asked if the City had any guidelines for that and how a mezzanine escaped the one story rule. Mr. Freeland said that in retrospect, the 'people who'; placed the original covenant mir;}ht have done better to specify a maximum height of the structure. However, that was not done, and no limi- tation was placed on the height of the structure. The structure was not .offensively high to the neighbors, which was the original concern. Regarding the mezzanine, It was defined in the Building Code as definitely not a two-story building under the technical definitions by which the City operated. Councilmember Renzel asked for olarificiation that when someone specified a, covenant in the land which was not related to the City's . zoning code, it : would imply that a single story would reasonably approximate_: the height of a one-story structure as opposed to the technical City definition of a mezzanine. 2 9 9 9 2/28/83 Mr. Freeland said he believed the .covenant intended to limit the height, but that the wrong condition was included. If the -concern was that people not be able to look down from a second story and have visibility either way, the proposed design did not have any windows that would look onto neighborhood properties from the mez- zanine level. In terms of privacy, there was no conflict. Councilmember Renzel asked if. a request to add a window at some point in the future would have to go through site and design review. Mr. Freeland said it should. Brian Pegg, 945 Laurel Glen Drive, an immediate neighbor of the building, said that several years ago when the property was divided by -the City. Council, the covenant was included regarding the one story. The area was once open. land which was never to be built upon, and with that one story condition, it was perfectly all right Ito build. He suggested that it would be appropriate to continue the matter to a time when the developer could be present with his model. A large house was recently built on- Laurel Glen Drive, and was known locally as "Disneyland.", There was something on the order of 100 lights in the garden, and he hoped the Council would do something to stop that type of thing in the proposed single-family residence. He asked how high the trees would be which would shield the house, and whether they would be mature or new trees. Other questions and recommendations were as a result of the house which was built last year, where there was complete disregard for the other residents on the road. Complaints were made to the City, but nothing was done, and it was as if it was the neighbors' hard luck. He did not see the matter as one of hard luck --a lot of dirt being dropped on the road was a hazard as weli As an eyesore. He urged that the matter be continued to a later date when the developer could be present with his model, and the various questions could be answered. Mayor Bechtel said that one of the functions of the Plann4ng Commission and Architectural Review Board was to go over those details carefully. Staff was attempting to find out the size of the trees to be planted, and regarding the dirt which was dumped during .the construction, she understood. it was the responsibility of the contractor to clean up. Siee assured Mr. 'Pegg .that . City staff would stay close to the project to make sure that the con- tractor cleaned up the dirt. She could not guarantee the contrac- tor would be out there the next day, but said the contractor was ultimately responsible. Councilmember Cobb asked for clarification about the one-story covenant. Mr, Freeland said there was a covenant that the house be limited to a single story, and technically it was. Councilmember Renzel - .said it appearedthat the public had a common understanding of a single story, and she asked whether it would be Possible to oblige and investigate exactly what the zoning ordi- nance defined as a single story. She was concerned that the pub- lic relied on a common understanding, and that the. City was now coming up with, a technical glitch ` that a mezzanine, 20 feet high, was "a single story. She asked whether the City was obliged to pay attention to what people relied on as the basis for the subdivi- sion. Ms.' Lee said she, understood that ;a mezzanine was not a floor in. the traditional sense because it was not enclosed by four walls:; It„ was considered a loft or something like that:'which_ made it-,.`dif-` ferent than a floor. Councilmember :Renzel could see the rationale if. one ,were to di t• t ingui sh on the : basis of floor area and the amount of occupied space. She asked regarding height, which was the intent of the covenant, whether the City's technical definition would apply. . Mr, Freeland said a person could build a single story house with a - roof- at---the—maximum height of the district. The..condition • placed.. _On the subdivision Alas not precise and was not worded such -'that it was _useful in terms of .restricting -the size of the -building, Ms. • Lee said' the language would probably also not be easily enforced in the courts. The covenant would probably be construed more strictly as was usually the case. MOTION: Mayor Bechtel moved, seconded by Witherspoon, app,roral of the stuff and Planning Commission recommendation, contained in C R:193:3, with the understanding that the black bottom pool may be a green/black bottom pool. Councilmember Renzel said she would not support the motion because she believed it violated the spirit of the subdivision even though it might be technically within the City's ,ordinance, MOTION PASSED by a vote of 7-2, Eazzi no and Renzel voting *no COUNCIL RECESSED TO EXECUTIVE SESSION REGARDING PERSONNEL • AND ITEM #10, FINANCE AND PUBLIC WORKS COMMITTEE RECOMMENDATION RE Councilmemher Klein said that the matter concerned the Price Waterhouse Study with regard to the Utility Fund transfers to the General Fund. The Committee considered the study as well as staff's recommendation contained in CMR:143:3. The staff recom- mended three items, and the F&PW Committee ultimately recommended only two of them, with a slight modification to one,. MOTION: Counci l aeeber Klein for the Finance and Public Works Committee moved that the Council accept the Price Waterhouse Study. as a guideline for establishing future rates, , and that staff be directed to fully evaluate the implications of implementing the study recommendations. Staff to recommend an implementation approach to. Council prior to deliberations on the ' 1984.8S bedget. Councilmember Klein said the F&PW Committee believed that the full year would be necessary to put the recommendations into effect. The Committee implicitly rejected the third staff recommendation which referred to having some of the items =included in the 1983-84 budget deliberations. Ernie Mortenfon, partner of Price Waterhouse, Oakland, introduced himself to the City. Couhci l eounci lmee ber Witherspoon asked Assistant Director of. Utilities/ Administration t4arsk Harris. -whether he was comfortable with h' the recommendation .or whether he Would be -more: comfortable not 'going ahead as ;.originally recommended,. Mr. Harris said he was - comfortable= with waiting a ,year. The points were Well taken that there -Might be some trouble ._getting a full ispie,mentatton approach to the- 'Council this budget year. Counc Witherspoon a$,ked for ar-rundown» of °tee al ready .:bul t_ i rate increases- that.' r�ould i a�r`e\ to_ passed L'on. Mr. Harris•:.said. that- _tbe •:*ajor. i.flcrease _in u iftiers would be the• . slightly! lesf:. th h a -penny lncrea4e which ..:was_: pec ed en 'the G1ti's. owes :cots fro l es't_ern"°- Area.. Porer Admin;fatr`atltip' {WAPA) 1 1 The other item discussed, which was still in committee, was an increase in the Electric System. Improvement Reserve of about three mils to establish a reserve for interest during construction on the Calaveras Project. Those two would be combined in some fashion with a recommendation at budget time to increase ` rates in May of 1983. Councilmember Levy clarified that currently the City's rates were about 45 percent below. PG&E's, and that after the foreseeable increases, the City would still run about 40 percent below PG&E. Utilities Rates and Regulations Manager Randy Baldschun said that the City's rates for residential customers currently ran about 65 percent below PG&E's., With the WAPA .rate increase in May, plus the increase in the System Improvement Reserve Fund of three mils, the City's rates would be 61 percent below PG&E's. Counci l:nen1ber Levy clarified that currently the City rates were less than half those of PG&E and would continue to be well under half. Mr. Baldshun said that was correct. Councilmember Levy asked Mr. Mortensen if it was true that regard- less of which guidelines the Council chose to follow, the return to the City General Fund would be below that which was currently being transferred. Mr. Mortensen responded that an evaluation of the asset base was not done. It looked as if the electric utility would be less than it was now. Counciimember Levy asked how,much less in percent. Mr. Mortensen said .the consultant did not put an estimate together of the difference between the two, Mr. Harris pointed out that on the next to the last page of CMR:143:3, staff provided an extensive range based on some current ballpark figures. If the utility enterprise method of a lower limit of approximately a $2,000,00 transfer in 1983-84 and an upper limit of $7.8 million were adopted, the range would need refinement. The actual transfer in 1981-82, after being adjusted by the Council to return some money to the Electric System Improvement Reserve was about $7.4 million, and the 1982-83. proposed transfer was about $6.7 million. He hoped that provided some flavor of where the current figureaw would fall within that range. Councilmember Levy said that if the Council followed the guide- lines, the City would do a little better than what ``gas proposed for transfer, and the worst would be a shortfall of around $5,000,000 from what was currently being transferred. Mr. Harris said CoUncilnember Levy's understanding was reason- able.:: He pointed out that a target transfer : within that range would tend to be more at the lower end of the limit as opposed to the upper end. Co nc1lmember Levy clarified that the City eight fall short close to the $5,000, 000. Counci.inscriber -:Eyerly said that the- FIPW motion also directed staff to evaluate the, implications of fulling implementing the study recomfendatianse Me asked if staff anticipated conducting an -actual inventory of assets as well as recommendations regarding the 'percenta9e°; of: return on the investment. Further, he asked if -staff would address reserves. replacement,' improvements, and power. planning'or whateier,_.was Aeededr,.., 1 1 Mr. Harris said staff would be required to review a full financial plan for all utilities. The focus would probably be mainly on the. e lectric utility, but a method for developing some type of cost effective inventory would be recommended. He did not know that the recommendation would necessarily be to account for every meter, wire, and transformer in town, but it would recommend a way to get a handle on the value of the system. Staff would provide a number of materials and procedures in order to implement the recommendations, and as a last resort, and if absolutely war- ranted, staff might recommend some policy or Charter changes. A lot of the study was focused on some of the negative aspects of how to limit transfers, but from the positive aspect.: the study would help staff to develop a long-term financing plan and the transfers one could reasonably expect from the Utilities Department, and would aid in the overall financial planning for the City. That was an important positive aspect which had not entered into a lot of the discussions. Councilmember Levy asked if the City had ever been sued because of its electric rates or transfers to the General Fund. Mr. Harris said not that he was aware of. Councilmember Levy said he voted not to pursue the recommendations and guidelines from Price Waterhouse further. Since that vote, he reviewed the matter thoroughly and believed his vote was cor- rect The resulc of adopting guidelines from Price Waterhouse would basically be that the City would end up with something like $5,000,000, maybe less, lower revenues per year. He believed that was horrendous. The reason for doing so was to preclude a lawsuit sometime in the future. It was true that the City could be sued, however, it had not yet, and at the current rates of transfer and even with the proposed increases, the City's rates would be well u nder half the PG&E rates. It did not make sense for someone to sue a city which charged the lowest rates in the State. He believed it was unwise for the Council to pursue a course of action that would reduce the City's revenues by a substantial amount in order to preclude a possibility that had not yet occurred and which was vaguely off in the future. Rather than the benefit mentioned by Mr. Harris of being able to plan for revenue transfers in the future, the City would have to plan how to manage with substantially lower revenues.. Councilmember Klein said he respectfully disagreed. The majority o f the F&PW Committee had no intention to reduce City revenues by any amount, and it was really ,included , in the report which was submitted by Price Waterhouse. The Committee supported the recom- mendation because the City had been engaging in an ad hoc, unreasoned approach in determining rates, and how much 'money got transferred from Utilities to the .General Fund. The proposal attempted to add rationality to the process. He believed the City of Palo Alto was too big an orjan1zation with too many dollars at stake to go with an _ ad hoc, "seat of the pants," approach. The City' needed a rational approach which could be defended to the ratepayers, taxpayers and itself as one' which was well thought }out. He urged Council support--�of .the�- F&PW Committee . recommenda- tion. Councilmember Fletcher said that when the guidelines were . drafted and returned for actions the. Council had the option of sending them back to ` staff with a request that they be drawn to -reflect PO. loss in revenues.- She would not support the guildelines if.;they showed a loss to the General Fund. Councilmember Cobb thanked Councilmember ,Klein for.. his comments Me' asked Mr. Harristorespond to the $5,00.0,000. figure: !sirs —Harris said -:the $50000002 figure gourd occur i_f the strict gdnoeline ,was, to follow the .PVC's 'current actions.: A benchmarl. was provided in the- report for conrpa rtsopt - purposes . only. The main. _focus -`of: the report was to 'show that a ;range of- reasonableness could establish some flexibility and judgment when setting rates. It appeared to staff that the current transfers could fall within a range of reasonableness. There would be no need to cut back by the $5,000,000 except if the Council wanted to adopt a policy to follow exactly the procedures of the PUC when judging PG&E, Southern California Edison, or any other utility. F:. 1 Mayor Bechtel commended staff , for bringing the matter of what should be a reasonable rate transfer to the Council originally and for encouraging the consultant route. She thanked the representa- tive from Price Waterhouse for attending the meeting and for doing an•excellent report. Councilmember Eyerly said it was important to realize that the two raises from WAPA would not be the last. The Council, should realize that it was not uncommon for lawsuits to be structured against cities for the _transfer of excess funds, in the public's mind to the General Fund from high .utility rates, claiming that they constituted a tax. That usually happened when the rates were closer to the competitor. Palo Alto's were not there yet, but well might be before too many years. MOTION PASSED by a vote of R-1, Levy voting "no." ITEM #11, ARCHI-TECTURAL REVIE i GOARO ORDINANCE 2nd Readin MOTION: Councilmember Fletcher moved, seconded by Fazzino, approval of the ordinance for second reading. ORDINANCE 3416 entitled °ORDIMANCE OF THE COUNCIL OF THE C'ITT OF PALO ALTO AMENDING CHAPTER 16.48 .(ARCHITECTURAL REVIEW) REGARDING APPEALS OF ARR DECISIONS" (1st Reading 2/14/83, PASSED 8-0, Fazzino absent) AMENDMENT: Councilmember Cobb moved, seconded by Renzel, that publication be in the Times Tribune. Councilmember Cobb believed that four days notice was more appro- priate to the process than one day. The language of the ordinance indicated that, "...In no event, however, shall such a development schedule exceed five years from the original date of approval..... The time period for a project, including a phased project, may, upon application, "be extended once for an additional one year by the Director." He asked if the maximum time was five or six years. Ms. Lee said six years. Councilmember Levy asked if it was proper to nave a newspaper without having provided an open bidding process. Ms. Lee said she believed the Council wanted to publish "four days in 'advance of the meetings. She believed examples of newspapers were provided, but they were not taken to : be the ultimat` `_' The only way currently to provide four days notice was by using the Times.Tribune: Mayor Bechtel said the ordinance could be .adopted . as written,. and unless soMeone wanted to separate; it, she .:suggested.. that Council only -vote to adopt the ordinance as indicated with the four -day requirements ,Councilmember Renzel cl arif_led then: a phased"{.: projects would be - -de 1 fined,; ire . g el . a way t1 4 any. -,:phase n t= commenced, within the six year period ;wo ild- -be dropped' from," :the plansi nit -no further e_xteri"-' s Eons .would. he -possible and; that --any. new. plan would have to go through, the PC or'.ARO: process. 3:_-o 0.- 4'- 2/28/83 Chief Planning Official Bruce Freeland said it would depend upon the proposed phasing schedule. If it were proposed in the, same way as a planned community zone, which construction would start by a certain date and finish by a certain date, then it would seem to apply. In a more open-ended type of phasing, then it might not. He was not sure that the pozsi bi l i ty of going either way needed to be precluded on a phased project, because the way the ordinance was written, it would fall back on the -specificity of the phasing plan itself. Councilmember Renzel asked if a project were not begun or com- pleted within the six year period, what would happen. Ms. Lee said it depended upon how .much was completed and what the development schedule said. There could be a development schedule which allowed the completion of one phase one year, the second phase in the second year, etc., so that ,the five years was theo- retically a cap. The development schedule itself could not allow more than five years to complete. Councilmember Renzel asked what would happen if a building was partially completed on day --one of the seventh year. Mr. Freeland said an ARB approval keyed into the building permit process, so that the ARB approval period would be the time in which to obtain the building permits. The -building permits con- tained a one year with a one year extendable time period, and in fact, there were eight years to complete a project. Councilmember Renzel said that if a building permit had not been requested by the sixth year, then the applicant would have to start again. NOTION PASSED unanimously. ITEM 112, ORDINANCE AMENDING RENTAL HOUSING STABILIZATION TIi.[I, I S I ORS City Att.,orney Diane Lee said that recently, the City Attorney's office received a lot of inquiries regarding the issue of whether condominiums were included within the purview of th'e rental housing stabilization ordinance. Some research was done into Council minutes, and staff was unable to come up with anything conclusive with respect to the Counci l 's intent. Because of the nature of ownership, staff interpreted condominiums as being excluded. Because of some conversations with Councilmembers, staff believed the natter should be brought to the Council's attention to either address the issue or refer it to the Human Relations Commission for consideration. MOTION: Councilmember Fletcher moved, seconded by Renzel, to refer the issue •f whether condominiums should be covered by the rental housing stabilization ordinance to the - llamas Relations Commission. Councilmember Levy asked if the ordinance _ al ready contained, the terms community apartment, planned development, . or stock coopera- tive.. Ms. Lee said no. Councilmember Klein said he did not hel i eve the item was an appro- priate one to be referred to the HRC �3:a believed the question was_ straight up ; or down, and preferred that it be decided . by the Councll. ;die believed the: better 0ho:ice was 'to exempt condomfnlumt and Piece them in the mar e,,tategorles as single faiiily: houses '.in accordance with theinterpretation of the City:.Attorney's office. He could see where people <_could r<eadf ly ;differ o�n' 'the: i nter pteta.4 tion,'"but., hoped the motion would be defeated, and that Exhibit- "A" or ,"B" wouldbe voted on to decide the issue tonight. 1 1 1 Councilmember Fletcher said the hour was lat., and she could debate the issue for a long time. The Human Relations Commission could not only collect the history or any problems, but could gen- erate some public involvement if they felt so inclined. She lived in a condominium complex and 50 to 60 percent of them were routinely rented out. Many were owned by real estate or manage- ment firms, and she did not consider condominium rentals as single family homes. When the ordinance was discussed, she never con- sidered that condominiums would be exempted, because when those types of projects were before the Council, they were considered multi -family housing projects. She was completely opposed to exempting condominiums. Mayor Bechtel said that condominiums could be considered multi- family because they were built by one developer; however, they were considered to be single-family under the law. A condominium project required Council approval because it was considered to be a subdivision. In all definitions under state law, condominiums were considered to be single family. The first issue under the Mortgage Revenue Bond Act was for single family housing, and every project was a condominium development. She concurred with Councilmember Klein, and if it was too late to debate the issue now, she would rather it be continued than referred. She would not support the motion. SUBSTITUTE MOTION: Councilmember Cobb moved, seconded by Witherspoon, approval of :he ordinance for first reading under the form presented in Exhibit 'A,* of the Report from City Attorney, dated February 24, 1983. ORDINANCE FOR FIRST READING entitled 'ORDINANCE OF THE ALTO AMENDING CHAPTER 9.68 (RENTAL HOUSING STABILIZATION) OF THE PALO ALTO MUNICIPAL CODE REGARDING CONDOMINIUMS" Councilmember Fletcher pointed out that the City could write con- dominiums into its ordinance if so desired and did not have to be bound by the State definitions of single family. Vice Mayor Fazzino said he believed it was a lousy law to begin with, and did not want to bother whether it should be a single family definition or a multi -family. However., given the fact that Section I, Recommendation A, wa.s very much in line with the phil- osophy that as little as possible should be included under the definition of the law, he would support Councilmember Cobb's >. approach. He still believed the law was terrible, and that it created a lot of paperwork and .bureacracy, with very little of the kinds of impacts desired by its supporters. He encouraged support of Councilmember Cobb's substitute motion. Councilmember Renzel said she concurred with Councilmember Fletcher's analysis of how the matter should be interpreted, and supported the motion to refer the matter to the ",HRC. She believed the HRC was the most in touch with, the problems encountered :.by renters and that they would be able to explore whether there was any reason to distinguish a condominium rental from_ an apartment rental. She believed that clearly condominiums were built_ in multi -family zones, and that the distinction'fot Stat purposes in terms of title,` etc._ should not govern the City: Council in a mat- ter of whether tenants were protected, The Mortage Revenue Bond Act distinguished `:_-between- .":single and multi. -family because it depended upon " how many ' units for which' .one would obtain a mort- gage. :She ". found the comparison not to be apt, for " purposes of tenant protection and agreed with Councilmember% Fletcher that the manners in which apartments and .condominiums were managed were sufficiently: similar that the definitio_ ne_ should also be. She would suppgirt the main motion: and oppose the substitute. SUBSTITUUL0*1 NOTION' PASSED by o vote of 7-2, Fiettber and (hazel voting *ma. ITEM #14, APPROVAL OF DEVELOPER AGREEMENT FOR HOMEOWNERSHIP )1URTGAQt KtVENUL UUMU i'KUGRAN City Planner Glenn Miller had the following corrections to the Developer Agreement for the Kinney and Kinney Parking Lot Q project (attached to CMR:182:3): Table of Contents - The page number for Section 2.03 was omitted. Tf should be shown as being on page 9, and all subsequent page numbers on the Table of Contents should be increased by one. Page 1, first paragraph, last sentence, "the City whose nacre.... (the 'City") should be inserted between "(the Developer')" "and the County of Santa Clara." Page 3, fourth paragraph, second sentence should be stricken, "The Developer. Fee does..." Page 6, Section (d), the address for Security Pacific National Bank should be included in Section (c). Mr. Miller said there were two concurrent processes. The Mortgage Revenue Bond Program had proceeded to a point where it was time for a decision. The City was told that it needed to come up with a developer agreement within the next several weeks, or the Kinney and Kinney project would., not be able to qualify for mortgage revenue bonds. The bonds were intended for sale within the next several weeks because the time was such that it would be possible to acquire a low interest rate. Concurrently, the Kinney and Kinney Lot Q project was proceeding through the regular City reviews which involved the conceptual approval by the Council on January 10 1983, of Mr. Kinney's proposal which included prices consistent with the Mortgage Revenue Bond Program. The PC zone ch•_inge began on February 13, before the Planning Commission, and there was some confusion about the prices to be associated with the particular units. Staff was directed by the Planning Commission to try and come to some resolution on the prices for the units within the Lot Q development. The PC zone change was still at the Planning Commission level. Mr. Kinney would have to put up approximately $213,000 within the next severa1 weeks in order to participate in the Mortgage Revenue Bond Program without knowing the details of 'the prices to be included on his units. He, Mr. Diaz and Mr. Zimmerman were available to answer any ques- tions. Mayor Bechtel asked when the ARB would discuss the matter, the anticipated date when the project would be before the Planning Commission, and finally the City Council. Principal Planner George Zimmerman said that when the Planning Commission first considered the item, it was continued to March 30, and would probably be on the Council agenda for April 18. Real Property Administrator . Jean Di az said the Council . adopted a policy some time ago to try and expand affordable housing and public parking in the downtown :area. A convenient way to do that was the use of existing City -owned properties in the downtown area. Thus, the ' concept' of the air rights development. There were three primary forms of - consideratIOd in order for the City to allow a private developer or entity to use the valuable City real` estate assets. Those considerations included expanded affordable housing and a panded.._ public parking, and the residual was any monetary amounts that were left to balance the equation. Thecur- rent problem involved an impasse with the developer. In January, the .developer presented : a :concept to, the Council which included prices for the - units:which"arppeared to Vie very favorable given the current market prices.for other: cofidoiai�niums. Staff:_ understood that, Council _ accepted _:,those -prices were an important: form of the. consideration the City was obtaining as part of -.the pr=oject, and those prices were written' into the PC application. 1 i Mr. Kinney objected to those prices and indicated that he needed flexibility, and locking him an was unreasonable. Staff indicated a willingness to revise those prices, and, if at the time Mr. Kinney .exercised his option, a deficit was indicated at a 15 per- cent developer profit and overhead, he could raise the prices by up to 6.2 percent in order to reach the break point. Staff tried to include some flexibility to ensure the viability of the proj- ect. "Staff continued to believe that the way the project was presented to the Council and accepted, the issue of affordability on all of the units was an important form of consideration. That was the reason for the City's strong insistence on some form of price control. Councilmember Witherspoon asked if any other developer had been required to set a fixed price on their units. Mr. Diaz said the proposed air rights project was the first where a developer had come in to use City property as part of a project. Councilmember Witherspoon asked what' interest rate bond counsel was projecting. She believed it could become a new ball game because the price was not nearly as important as the financing. Mr. Miller said it was difficult to say what the price would be at any one time. It was intended that within the next two weeks, the price out to the buyer of the units could be as low as 9.5 to 10 percent. That could vary from day to day, but the prices of the present bond issues out to the mortgage buyer was about 9.5 percent. The actual yield on the bond was somewhat less. Councilmember Witherspoon asked. if one would pay points on top of the 9.5 percent. Mr. Miller said no, but rather a one-half percent_ _ insurance fee if the same format was used as, in the first issue, Councilmember Fletcher said there was a 15 percent cap on the project profits. Mr. Diaz said it was important to remember that the developer was not guaranteed any profits. The City wrote a formula into the option agreement which indicated that at the time the developer. exercised his option --or was ready to go ahead with construction --he had to come in with a documented estimate of project revenue, what the units would sell for, and project costs. One of the cost factors was a negotiated amount, which in the option agreement was 17 percent developer profit and overhead. That did not mean the developer would obtain that because it was done at the time he exercised his option. From that point for- ward, it was all the developer's risk and potential benefit. If costs were lower and if the project could be done sooner and more efficiently, he would generate a greater profit. If things- did not go as well, it could be lower. The factor was not guaranteed and the reason the City had I5 rather than 17 percent was that at the same time Mr. Kinney presented the proposed new concept to the Council with lower prices, he also indicated that he needed some- where in the range of 15 to 17 percent to make the` project satis- factory to proceed. Couric1Jmertber Fletcher -said_.: she -.believed, although she :could not do the financial' analysis, that the 15 percent cap would be . a ctn.. straint on the amount which couId be= cber9et for the condo- miniums. Mr., Diaz said, that -any time .a - cost was incurred, it affected the equation. Developer overhead was something a developer expected - 'Out of the project. If the City. glide ;its 15 percent, 'the, developer would have to determine, whetter- he could let enough out of the project to :make it worthwhile to : proceed., 1 Councilmember Fletcher did not understand why it was wrong for the developer to assume that because there was the cap on the amount of profit, that the condominium selling price was not going to be kept low. Mr. Diaz said he understood that Mr. Kinney was asking for no con- trols on the prices. Conceivably, he could come in and show the figures to the City, and go out into the marketplace and charge more. Councilmember Fletcher clarified that he could not walk away with more than a 15. percent profi . Mr. Diaz said there were no guarantees --the factor was included in the equation that was filled out, and based on documented costs at the time of the exercise of the options What. actually .happened was up to how well Mr. Kinney performed.. the project and got it going. There were no guaranteed profits in the project. Mayor Bechtel said that if Mr. Kinney was asking that there be no cap on the prices of the units, she understood that there was a cap for a participant under the Mortgage Revenue Bond Program. Mr. Miller said that if one used mortgage revenue bonds, there was a cap on the prices. A developer could not be required to use mortgage revenue bonds. For example, in last April's issuance, the participating developers had 13.75 percent interest on the units. The market rate interest, or conventional interest rate, went down significantly since that time, and it would have penal- ized a developer to be required to use mortgage revenue bonds. If Mr. Kinney went ahead and paid $200,000 and received a commitment of funds at an interest rate of 9.5 percent, and the conventional rate -went to six or seven percent, the buyer should have a choice between mortgage revenue bonds or the conventional marketplace. Councilmember Renzei clarified that the cap on the mortgage rev- enue bonds only applied if the developer chose that method. The City's agreement was to have the parking lot be used by the developer in exchange for the consideration of reasonably •priced units that may or may not be limited by some other mechanism; -She asked if the proposed planned community zone currently going through the process was contingent upon the air rights proposal and the mortgage revenue bond application. Mr. Diaz said that it would be difficult to try and look at the particular project and break it down into a number of different components. He believed it should be looked at as a ' whole, and he believed the Planning Commission, staff and City Council had done that by looking at what was being given up in exchange for what was being received. He believed density was figured in, and that the factors of the particular site were weighed into it. Further, there was the issue that the City was obtaining more public parking and was getting some affordable housing from the project. All of those factors weighed into the suggested densi- ties which had . so far been accepted by the Council and Planning Commission. To that extent, he _believed there was ,an important r.elationship,.. but did not know how much of the decision to allow higher density related to the housing affordability. Cot4lci!member Renzel said that . once a PC zone eppl i ed, it applied unless it was conditional regardless of - how the units were. priced. Nr Diaz said the Planning Department suggested .a `condition in the Pc' :app1icatiok..regarding the price lim.itations Which was what generated - the 'current .iiepasse Chuck Kinney of .,Kinney and -Kinney, 124 University, Avenue, said the "PAL.Q project Was often termed ;:as an ,experimental ,prkoject and. probably- rightly` so with the if'novative -characteristics of the 1 i 1 characteristics of the project as outlined by Mr. Diaz. However, "PAL -Q" was a real project, and was in its stretch run of the final City review, and necessary procedures for the change and modification of the parking district were under way as was the land lease with Southern Pacific Railroad and Stanford to secure temporary parking replacing Lint Q during the construction. Most importantly, a financial opportunity to secure below market mort- gages was available and was the topic of consideration tonight. Mr. Kinney said that "PAL: -Q" qualified for the County bond program, which required that the City of Palo Alto be a party to the developer agreement between the County and Kinney and Kinney. In so doing, the City approved the "PAL. -Q" project , for the County bonding program. He delivered a letter to each Councilmember which expressed his concerns regarding the issue. He referred to CMR:182:3, and commented that on page 1, paragraph 2, under "Developer Agreement for Kinney and Kinney, staff stated that the developer agreement was independent from the formal Council approval of the project. He attended tonight's meeting because he was concerned about staff'.s contention that the development agree- ment and the Council's formal approval were not independent. He could not risk another $214,750 or 4.5 points of the mortgage reservation without a clear understanding from the City Council regarding final project requirements, and he was in a time bind at this point. He did not see, the developer agreement and formal Council approval as being separate. Page 2, second paragraph from the bottom, stated, "the number of BMR units was not now con- sidered an extraordinary benefit when considering recent experi- ences with other residential developments." He said Glenn Miller clarified that clause to mean that there were a number of current developments under way and the percentage of units was being rounded off to the next higher number. For example, 10 percent of 112 units equalled 11.2, and 8MR's rounded off to the next numb( was 12 BMR's. Similarly to the "PAL -Q" project, 10 percent of 44 BMR units equalled 4.4, which was rounded off to 5 BMR units. Unlike the other developments, staff referred to the "PAL -Q" project as not requesting the City to put`` up the up -front County point money at the two-year interest free basis. When the Air Rights concept started in 1979, a number of developers provided in -lieu fees instead of BMR's. The BMR's he proposed to build would have been •considered extraordinary then, but staff did not now believe that to be the case. He added, in passing, that the three condominium developments on Forest were currently on .the market, and all provided in -lieu payments instead of BMR's. Page 3, paragraph 2, of the staff report stated, "The staff continued to believe that the establishment of a maximum unit price was consistent with the concept presented by Mr. Kinney and accepted by the Council." 4te had listened to the tapes of the January 10, 1983 Council meeting several times and `did not find where that was consistent He quoted from that meeting: Councilmember Levy said, "So what you are sa_ ing at 'this point is that none of this is definite, Prices could �'fluctuate."' Mr. Kinney responded "That is ` correct." Later, Kinney was quoted in' referring to some changes in cost, that "Some changes may occur, and , I may need to sell some units out of the County program." Mr. Kinney referred to his letter and said the option agreement called for market rate units. By definition that did not mean fixed prices. He believed the question of controls on final pricing was settled at the March 21, 1981 "Council meeting He quoted, CMR:208:1,` dated' March 19, 1981, If the package took away opportunities to maximize profit, but not decrease the investors risk, the package was significantly discounted,' Price fixing l=essened the potential to attain the.,egreed .:upon 17 percent profit. and in reased the -invest'ors risk., In the next two, weeks, he needed to deposit $213,750 with the County. That amount was- not refundable. The 'requirement :of price fixing would ..sake,, the task the task difficult. His lenders were not willing to participate if City approvals were not finalized. He believed from the pre- vious meetings, that there were questions regarding who would buy the units, their income levels, the price of the unit, etc. Councilmember Levy said he was continually confused about the median income in Palo Alto, and asked for the latest figures. Mr. Miller said the issue was cOnfusing because there were several different median incomes being used in various different pro- grams. Councilmember Levy asked what the census data indicated. Mr. Miller said the latest census data was from April, 1980, and he did not' have_ those figures off the top of his head. However, the figures were not used for the particular program. Mr. Zimmerman said he believed median family income was around $30,000, and median household income was around $24,000. Those reflected 1979 figures. Mayor Bechtel said she understood that the actual figures used for the Mortgage Revenue Bond Program were those which were done by an outside consultant who was hired as part of the study. Mr. Miller said that both figures used in Mr. Kinney's tables were the Santa Clara County figures. One were HUD figures used for the Below -Market -Rate Program, and the others were locally determined and used by the County for the Mortgage Revenue Bond Program. Mr. Kinney said he had no problem with the terms of the developer agreement of the County bond program. He wanted to commit to that agreement, but in order to do so, reqeested Council concurrence consistent with the terms of the option agreement --that the market rate units not be fixed in price. Further, he requested the con- sideration of the timing problem. When he and staff were working nut the timing for the various review procedures, the County advised him that the bonds would not be sold until the second quarter --perhaps the middle of April --which coincided with the City's timetable. When he went for the final ARB review on March 3, he hoped it could be finalized at that time, The. County bond money was technically due on March 10, and he was told that it could be extended for a week -. or perhaps ten -days. It was cur- rently scheduled for Planning Commission review on March 30, and he asked if that date could be pushed -up to March 9, with possible Council approval on March 14. He realized there were advertising requirements which perhaps would not fit the schedule, but said he would be somewhat relieved if he knew all of the ` requirements before putting out another $213,000. Director of Planning and Community Environment Ken, Schreiber said that the Planning -Commission continued the planned community _ zone public hearing -to a_date certain of March 30. To hold it on any other date would require a new public hearing process which required a minimum 15 -days notice for the public hearing. No feasible way existed to get the matter to the Planning Commission on March 9 because it had to be part of : the public hearing pro- cess. Mayor Bechtel asked if there was a specific reason for t'he Planning -Commission to held the meeting on March 3C,. Mr. Zimmerman said the date was to a/low sufficient review by _ the ARB in. the event that three sessio3 S .,were required as well as to p .re vide turnaround ,time for the. material from the ARP back to the Planning Commission. 1 1 1 Councilmember Renzel said staff indicated that generally speaking, a developer might not wish to use mortgage revenue bonds if the market rate interest went below the mortgage revenue rate.. Presumably, if that happened, the project would be -more profitable with the lower rate. Since Mr. Kinney was making application for the mortgage revenue bonds, he expected to be able to meet their price requirements. Staff proposed a contingency in the -event. Mr. Kinney found that his project was not feasible which ended up limiting the maximum price to the mortgage revenue bond price, and she asked what objections Mr. Kinney had to that particular limit. Mr. Kinney said he still saw that as a limit. His upper limit was being fixed with no guarantees of what he was anticipating for profit. When the option was signed in March, 1981, the matter was thoroughly discussed, and Councilmember Klein was concerned about the so-called "windfall" profits at the other end. At that time, he asked the Council to share the loss on the project with him, which settled the issue that if a limit was placed at the top end, the possibility of cost overruns, strikes, etc. could. only go down. He was concerned that at the price limit being fixed by staff, the unit was no longer market rate. Councilmember Renzel said she believed Mr. Kinney was before the Council tonight because he had to make a $215,000 deposit for the mortgage revenue bonds, and did not want to lose that money because the application was incorporated into the PC zone. If" that money was deposited, Mr. Kinney would have the incentive to use those mortgage revenue bonds which would limit him to the $143,400 price. Mr. Kinney said that was correct. Councilmember Renzel said that if the City made no limits, and Mr. Kinney went ahead and applied for the mortgage revenue bonds, he would subject himself to that price limitation or would forfeit the $200,000. Mr., Kinney said that was correct. Councilmember Renzel said that by app yi ne for the mortgage revenue bonds, Mr. Kinney was commiting - himself 'to those -price limits. Mr. Kinsey said that in the bond program he was. He needed some flexibility in the event that 90 percent first time buyers did not show up, he could not use the funds because he could not get enough first time buyers. For example, a County -wide sheetrockers strike could shut everything down for . two months, and affect not only his project, but every other one as well The marketplace would try and regroup the loss up to a point where it could not withstand any price increases. Some people were calling the units "affordable." The units were lower in -price) but were marketplace `prices now, and smaller units. The square foot sales price was probably comparable to a lot of units in town, but happened to be a smaller -design: ; He had some problems `with costing, the; -'market' absorption, strikes, etc., and some'units had, to be taken out of the program and sold higher to try and regroup any loss which might be sustained. He needed that flexibility, and if Council decided it didnot have that flexibility, he would no longer have market rate --units. The basis of the option agreement was that the a€arket rate units would provi de_ the payments for the public bene fits. ."`He noted that when he began the pro,lsect, the market rate units were in the $200,000: neighborhoods, and_ there " was< no Vi scus 'sion . about :affordable housing at that time. He believed he. tai lor'ed,rtthe► project and tried to get it :into'a more "affordable" arena -of ,pricing- andnow staff was coming down hard and saying ;he had to stay there,` ,. _ Councilmember Cobb said staff previously indicated an impasse with Mr. Kinney over the particular issue, which suggested that if the cap on price were retained, that the project might stop. Mr. Kinney said that was correct. Councilmember Cobb asked if anyone considered the project with a cap on profits rather than a cap the price. Mr. Diaz said staff wanted to negotiate an amount for profits during the option stage because it was more difficult to go back and look through records and trace things through. When leases were negotiated they were based on gross rent rather than net rents. Staff believed it was more important to deal with the affordability of the units rather than the actual profits Mr. Kinney might realize at the back end of the project. Mr. Kinney agreed. Councilmember Witherspoon said she did not have the impression that the prices were fixed although she believed staff's attempt to limit them was commendable. She did not think the rules could b.e changed in the middle of the game which had been ongoing for 2-1/2 years, She understood a .paragraph on page 3 of the agreement to say that Mr. Kinney could raise the price of the units up to a maximum of 6.2 percent if necessary to reach break even. She could not see the incentive to a build a project of the magnitude proposed to break even. Mr. Diaz said the incentive was to break .even including a 15 per- cent estimated developer overhead and profit. Councilmember Witherspoon asked what was meant by overhead. Mr. Diaz said it included the typical office expenses, stationery, etc. Councilmember Witherspoon clarified that those were over and above construction costs. Mr. Diaz said the 15 percent was of the actual construction costs of the entire facility. Councilmember 1Witherspoon said she understood that the option agreement would be written the same. She remembered 17 percent rather than 15 percent estimate, but that the concept was based on the fact that there would be below -market -rate units, at prices to be negotiated and fixed, and that the City' would obtain as many of those as possible. in actual units and not in -lieu payments. The City obtained all of those things, and she was sympathetic to Mr. Kinney that the rules keep being changed. Mr. Dian said that was Mr. Kinney's position. Staff believed that when Mr. Kinney returned to the City Council in 4anuary, he changed the scope of the project and included a .commercial element which was not contemplated when the option was : negotiated. Mr. Kinney proposed the revised . pricing str4cture `'and soldLt he project on the basis of the affordability of the housing units. Staff believed it was. Mr. Kinney, as -`much as the City, who was changing the. rules .of the game. Staff was attempting to respond to the Changes proposed by Mr, Ki nrtey , .and . which were _ accepted by the Planning Commission and Council. Councilmember ; Witherspoon WAS concerned that Mr. Kinney and the Coanctl were siamese triis. Mr. Kinney- could not go ahead with the project' without the City, and the City was not getting any- thing done. She did not, see why%'a - compromi se could not be reached in order to get :on' with the project. Mr. Diaz said the basic question was what the Council was willing to accept as consideration for letting Mr. Kinney use the valuable asset. 1 i Councilmember Witherspoon said she was happy with the original agreement. She understood that Mr. Kinney might have to move around somewhat, and that the project could not be finished or put on the market for almost a year. She did not know what the market conditions would be then, but trusted that Mr. Kinney would stay within the 15 percent cap. She agreed with Councilmember Fletcher -that the cap put an upside limit on the price and if Mr. Kinney used the mortgage funds, that also put a cap on his price. Mr, Diaz said that the 17 percent profit and overhead written into the option agreement did not act as a cap on the housing prices. Staff envisioned that Mr. Kinney would exercise the option based on the prices generally proposed to the Council, including the 17 percent role i t and overhead .figure. After conveyance, Mr. Kinney could go out into the marketplace without any limits on his prices, raise them, and there would be no way to control it. Councilmember Witherspoon clarified that his construction costs were "x," the 17 percent on top was "y," and he could sell them for "m.'o Mr. Diaz said there would be no control on what he could sell the units for--themarket would control that. Mr. Kinney had whatever limits were placed by the Council, or he might come in when he exercised his option, and go out and raise the prices after he gets out into the marketplace. If depended upon whether the Council required some assurances that the units would be afford- able as an important consideration. Ned Gallagher, Downtown Palo Alto, Inc., said that with regard to placing a cap on the unit prices, no considerations were made with respect to the market. There were many vacant apartments now in Palo Alto --not bought --because of the market. It was suggested that Mr. Kinney would make too much money. The market would con- trol the price of the units, and there was no indication that Mr. Kinney would make an excessive amount of money. Mayor . Bechtel commented first that the property belonged to the parking assessment district. The Council was trying to figure out the fair value of allowing a private developer to use that air right above the parking assessment district lot. The City would acquire some additional public parking spaces, and agreed a year ago to the affordability of the housing units. Staff attempted to negotiate a cap on the maximum price with the possibility of going up to $143,400 _1`f Mr. Kinney's agreed upon profits dropped lower than 15 percent. Mr.,Kinney now argued that he would like more flexibility. She could understand that, because there were cer- tain variables, but at the same time, believedthe Council's goal should be to assure that as many affordable housing units as pos- sible were part of - the development. The five below -market -rate units, .which would_ normally._ be required' of anydeveloper, was not sufficient public' benefit' in her mind, therefore, she recommended that : the -Council uphold the staff's recommendation and allow two units to go higher than the cap, which would allow for some flexi- bility. She would.. notagree to allowing _fi ex i bi 1 i ty, on all of the non below -market -rate units. NOTION Mayor Bechtel moved, seconded by `E rerly, to uphold the staff.. recommendations- to approve -'thy Developer Agreement beteed tke Ct t ►, iii aeay met' Kinney) and Santa`: Clara County with the exception of two snits, sock ,tWe malts to be detarmi end by Mr. DEVELOPED . AGREEMENT K tame/ aid ' C1,nee/, City of: Palo Alt*, said the County of 'Saa,ta Clara - - Councilmember Fletcher asked staff to comment about going along with the staff recommendation with an escape clause that if there were some unforeseen extreme circumstances, such as a prolonged strike in the construction industry, that Mr. Kinney could come back and renegotiate. Mr. Diaz said that in essence, Mr. Kinney had that opportunity up until the point when he exercised the option. Mr. Kinney was not compelled to exercise his option am continue with the project if it turned out to be uneconomic under the conditions. If Mr. Kinney, at the time he exercised the option, did not like the way it looked and could not live with it, he was always free to come back to the Council and request renegotiation based on the circum- stances at the time. He believed it would be a mistake to open renegotiation once the option was exercised and construction began. Councilmember Fletcher clarified that Mr. Kinney's point was that once the whole thing was in motion, he could not predict before completion of the project, what might happen to cause him to raise prices. Mr. Diaz said that situation was one faced by. all developers when dealing with a project. Once a project started, the commitments were made on the best possible decisions, and -the developer had to live with the way it turned. out. It was a business risk. Mr. Miller said that if the project could not go ahead at some later date, there were options for Mr. Kinney to recoup his losses. He could, in effect, sell his mortgage revenue bond com- mitment to another developer under a very constrained situation, which would require some City approval. The commitment could be sold at a higher cost if the market approved. The mortgage rev- enue bond funds were available to Mr. Kinney for three years -- either -for his own project, or to be sold to another developer through the processes mentioned. Councilmember Fletcher said that since soiiie leeway was open to Mr. Kinney, she preferred to completely support the staff recommenda- tion. Councilmember lenzel asked how the $200,000 related to actual mortgage bonds used. Mr. Miller said Mr. Kinney was paying 4.5 points or 4.5 percent of his reservation. He was asking for $4,750,000, and 4.5 percent of that was $213.750. Councilmember Renzel asked how many units that amount of .money • would_: cover. Mr. Miller said that was a guess on the developer's part dependent upon whether prices were set. If the prices were higher . and 'people took 95 percent mortgages, less would be available, and he mightonly be able to finance a : fewer : number. If everyone took a 60 or 70 percent mortgage with a lot of money to put down —which was unlikely -then he would have some reservation left over that he would have .to sell. Councilmember Renzel said the. proposal was before' the Council because : of the . need to commit the —$213,7.50, and the concern With the risks . involved. She believed al l cat! the risks having to do -pith cpnstructioe 'and 1abo interferences were: ones -that ; could occur regardless of. the : kinds of limitations.- placed- on-- the ; mort gage revenue„bonds by the City. The '$2130750 ►ioura \bare been •coOamitted-- anywa, by the _ i lme'. tho e risks:: were .ascertained. The mortgage revenue .bonds provided a -sign'i`ficant .benefit interest wise and were lntended;,te "apply -to all the units.. She believed ,Mayor Bechtel's freti_on was, fair:.: and reasonable `"in "-that respect, and she asked'Whether staff's`' contingency plan at the time the. Option agreement was exercised was' incorporated into the motion.. Mr. Diaz said he understood Mayor Bechtel 's motion to incorporate the staff recommendation. Councilmember Renzet said the recommendation appeared to be con- sistent with the developer's expectations. Mr. Kinney's position regarding the $200,000 deposit and all contingencies, would remain unchanged during the period before or after the PC approval , or at the time the option agreement Was exercised. In the event that buyers were not available, some flexibility was provided for. She would support the motion. Councilmember Klein said that if the staff proposal was adopted, and a unit under the agreement had to be sold for $155,000, what if the market was going up, and the unit would otherwise have been sold for $175,000. Would there be any limitation on what the buyer could resell for. Mr. Diaz said nothing was specifically set out for resale provi- sions. Councilmember Klein asked if that would not confer a windfall on the particular buyer where he could turn around and sell the next day for a $20,000 profit. Mr. Diaz said if it was outside the market and Mortgage Revenue, Bond program, that was correct. Councilmember Klein said that by doing the Mortgage Revenue Bond program, Mr. Kinney agreed to limit his prices and the resale limitation on the buyer. That scenario was provided for, and Mr. Diaz' only point of difference was on those people who used con- ventional financing. Mr. Diaz said staff's goal was to establish a stock of affordable housing. Councilmember Klein said he understood that, but the issue between staff and Mr. Kinney related only to conventional financing. Mr. Diaz said yes. The impasse came up at the Planning Commission meeting, and staff had tried to resolve the basic issue of the affordability of the units. Staff had not_ followed through on the issue of resale provisions because a logical extension of staff's position would follow. If the City controlled the initial prices, there Would be some provisions about the resale causing concern, hut probably consistent with the mortgage bond resale limits. Councilmember Klein said that right now there was nothing in the program to limit what the buyer., under conventional financing, could resell for. If there was an increase in market value, the buyer would .suet an absolute windfall, and .- he would rather`;. see the money go to Mr. Kinney who had taken the .risks than to someone who just walked in ---off the street. 'He would not support the motion, and would vote to uphold Mr. Kinney's- position. Councilmember--Eyerly asked if it -would be possible for the city to enact a right of first refusal on' conventional mortgage resales. There were the resale controls on the units. financed with mortgage revenue bonds, and he thought there;was--a right of first refusal with conventional financing. Mr. Diaz .said it Was an oversight. Staff was dealing with the basic issue of the initial price, and he believed it was a logical extension that if staff, was concerned about the initial price, theywould also be concerned about having some provision to take away or not have ,-a ..windfall situation created for subsequent sellers. He thought Cou_ ncii ember Eyerly's- comments were consis- tent with Caur:cilmember Klein's comments, that it would be a 1091 cal extension- to use soiiething similar to the mo rtgage bond resale. limits. Councilmember Eye.rly believed that Mayor Bechtel's motion needed to protect the City on resales in case mortgage revenue bond funds were not used. He considered the City's parking gain from the project to be minimal. The 62 spaces would congest the current parking, and would preclude the City or assessment district from obtaining more parking in the area if the need arose. The City was giving that up because presumably it .was acquiring housing. It was acquiring four below -market -rate units, which was small. Staff tried to assure affordable housing in the units, and in view of the City's providing the air rights, and a spot for the develo;per to. build his project, it must get the benefits being sought. Otherwise, the City was getting four .below -market -rate units and 60 plus parking spaces, which was not enough to give away the City's valuable. asset. He believed Mayor Bechtel's motion opened up the situation a little bit, and was as much give as the City should provide. AMENDMENT: Councilmember Eyerly moved, seconded by Renzel, that if units were financed by other than the Mortgage Revenue Bond program, that upon resale, the City would have the right .of first refusal. Mr. Diaz clarified that the right of first refusal would be under resale provisions similar to those in the Mortgage Revenue Bond program. . Councilmember Renzel -clarified that Mr. Diaz intended to further negotiate with respect to resale prices on market financed units. Mr. Diaz said the issue would have come up, but so much energy had been used trying to deal with the issue and all of the other things going on around City Hall, that it was an oversight. It was good for the issue to have surfaced tonight. Councilmember Klein said he shared Councilmember Eyerly's comments that the City hoped to acquire some moderately priced housing. He was concerned that creating a right of first refusal in conven- tional financing for market rate housing should be`distinguished sharply from the situation of dealing with BMR housing. In that event, when the property was resold, buyer #2, would. have to meet some type of criteria. There had to be a percentage of median income, but here, the City was dealing with market housing. He asked what the criteria would be when the City exercised its right of first refusal --to whom would the City sell. The program started out being market -rate, with the hope of it being lower, and the City was taking it out of market -rate and . putting it into some other program where people ,had to, qualify. Market conditions were supposed to dictate, who would live in the units, but now, if. the City exercised a right of first refusal at a lower price, and if it was going to pass on that bargain, people would have to qualify in some way or another. He believed the program .should be looked upon as an experiment. He asked if Me. Kinney had to disclose ..the selling prices of the units to the City. Mr.,. Diaz said as he recalled, there was nothing specific to require Mr. Kinney to report the sales prices of units, but that it was a matter of public record. Councilmember Klein said he believed that if Mr. Kinney departed. too far, the City would know that the appropriate system was . not used. He preferred to let the market do its thing, and said he was, always troubled by artificial constraints on too many things.' In this event, the City would create more problems than it would solve. Mr. Kinney said the agreement called for a strict reporting: of all costs and income at the end of the project. Vice Mayor Faz4ino said he believed Councilmember Klein's comments were excellent. Good public -policy was not generally made at 3 0 17 2/28/83 1 1 1 1 12:30 a.m. , and he had serious concerns about .continuing with the resale proposal until the Council had studied it in detail He was also concerned that conventional market financing was not appropriate for 8MR units, and that either Mr. Kinney or the City would have to absorb the loss during the transition from market rate to below market rate. He believed the project was laden with risks from the beginning. It represented a benefit to the City given the concept of the project itself, the parking, the actual BMR units, and the very strong statements made by Mr. Kinney about the prices of the other units. He believed Mr. Kinney must uphold the commitments he made to the City Council a few months ago. Those commitments were not set in concrete, but Mr. Kinney clearly had to shoot for them, or the City Council would oppose other like projects in expressing their displeasure. The Council had spent hours trying to undo what was done in prior meetings, and he did not think they should add another layer of bureacracy tonight. The project should be left to' proceed, with Mr. Kinney getting his money to develop the project. The good faith exhibited by Mr. Kinney in the past would see the project through, with the commit- ment on prices given to the Council a few months ago. He strongly encouraged his colleagues to oppose the motion and support the Kinney proposal as an alternative approach. Mayor Bechtel encouraged that the Council not support the amend- ment concerning resale restrictions because it was too late to think through the resale restrictions for the price of housing and how it should be handled. She believed the resale item could be continued and referred to staff for a report back. Councilmember Renzel said she concurred with Mayor Bechtel on the matter of resale, but urged those concerned Councilmembers to limit the prices and point out the City's public trust with respect to the land, and that it could not just be given away. The cost of the 60 parking spaces was also a part of the cost on which profit was computed so that those parking spaces were not given free either. She believed staff had made the point that any kind of normal development on a regular piece of land would have some BMR requirements, and that something additional was needed. When the air rights proposal was first discussed, the Council - members saw it as a way to use City lands to underwrite housing so that it would become a lower price. She believed staff had admon- ished the Council to look at is as an overall package. It was a PC zone, an option for air rights, and an application for mortgage revenue bonds. It was three intertwined items and she believed the Council was going to be inconsistent with its own rationale if it did not take it on good faith that the mortgage revenue . bonds. were intended to cover all of the units. The limitations were meant to apply, and the City had looked at it as an overall pack- age expecting that to be the case, and it would be irresponsible for the Council not to follow through on it. It was not a lack of good faith with respect to Mr. Kinney's intention, but rather the deal negotiated by the City. While it might not have been explicit, it was implicit that the City was going to get a sig- nificant amount of less than market rate housing due to the use of City land at no charge. She believed the Council needed to recog- nize that and support the main motion and ,oppose the amendment. Counci lmertber Eyerly asked if staff would have a chance to address the subject of resale on market rate mortgages' and the right of first :refusal, etc., within the PC complex if the matter were continued in order not to lose the issue. Mr.. -Diaz said_ -yes. ANEkDMENT-W1T$ORAWN BY COUNCILNEN$ERS EYERLY AND RENZEL. AMENDMENT: CorAci l.emeer Eyerty ached,- seconded by Renzel, that the matter= of resals .. en market rate A.ortgayes - be continued . sad staff to protride-' a report with:4 recommendation.. 3 0 2/288 Cor:rec.ed 6/05/83 AMENDMENT PASSED by a vote of 6-4, Cobb, Fazzino, Klein, Witherspoon voting "no." MOTION AS AMENDED PASSED by a vote of 5-4, Cobb, Fazzino, Klein, Witherspoon voting "no." ITEM #15, WILLOW ROAD EXTENSION: REIUEST OF STANFORD UNIVERSITY MOTION: Councilmember Witherspoon moved, seconded by Fazzino, to adopt the staff recommendation to authorize the City Manager to submit a request to the Metropolitan Transporation Commission for. inclusion of the Willow Road/ El Camino Real intersection for the 1983-84 Regional Transportation Improvement Plan and 1983-84 State Transporation Improvement Plan. This action would be based on the understanding of all parties that inclusion of the project in the STIP does not commit the City to approve the Willow Road extension and not not authorize CalTrans to undertake work on the project without City approval of the project. Councilmember Fletcher clarified that the original staff report regarding the procedures and deadlines were absolutely correct. It was after she contacted the MTC that they were willing to bend the rules in the situation because '.it was a privately funded project. It was an unusual procedure, if not unknown, to apply directly to MTC. She would oppose the motion because the City did not have a policy to go ahead with the extension of El Camino Real and had no information in the form of analysis or EIR's to say that the project should go forward. It was premature to enter a project into the STIP without having a policy to go along with it, Councilmember Renzel said she concurred with Councilmember Fletcher. Councilmember Eyerly said he did not see. the motion as setting any policies for Willow Road. The Council was talking about putting the matter into the plan so that if the Council decided to go ahead"with;,;the Willow connection at a later date, a year of con- struction would not be lost. That was the only issue being addressed, and he hoped the Council did not get into a discussion about Willow Road because they did not have any of the information or material before then to debate 1t. Councilmember Cobb commented that it was inconceivable that the Councfl could consider putting in 1,000 plus units at Stanford West, and not at least begin the process of addressing what to do about Willow Road. Councilmember Levy said he intended to keep his options open on Willow Road. He had not begun to analyze the issues involved, but if, in fact, the Council decided that it was wise to do something, they should have 'the benefit of not wasting an extra year in going ahead. On that basis, it was wise to support the motion, but at the same time, it should be clear ,in the City's communication with MTC that it had not i n . any way adopted any policy by the applica- tion. Vice Mayor Fazzino said it was also inconceivable to him that anyone did not believe there was a long history to the project. He had quite a series of EIR's going back to 1974 on the project, and as someone who had supported the connection from the start, he thought it was important for the Council to continue to keep :the option, open. They were not talking about any specific .intersec- tion plan, and in fact, some people in 1974-75 were tacking about a ; quarry intersection._ which was still, an intersection. Even if that alternative were ; supported, it would still have to appear in the statewide Cal Trans plan. He ,"encouraged Council .'Support of = the very technical approach which left all options open regarding the connection. Councilmember Klein said.he supported Councilmember Levy's com- ments. Mayor Bechtel said she was also interested in keeping her options open, and would not support the motion. She wanted to see what would happen with the EIR, and did not want to decide before she was ready. i 1 Councilmember Renzel said that for those who wished to keep their options open, they .should recognize that their options .were always open and that it was highly unlikely that construction coulc: take place within the year between October and. October. She believed that once the ,Council included it in the plan, it was there until the Council took it out. It was much better not to put it in until the Council knew whether it wanted to, and she urged the Councilmembers to reconsider their positions and vote against the motion. MOTION PASSED by a vote of 6-3, Bechtel, Fletcher, Renzel voting ITEM #16, JOBS TRAINING PARTNERSHIP ACT OF 1983 (CMR:175:3) MOTION: slice Mayor Fezzino moved, seconded by Klein, to adopt the staff recommendations to approve the Joint Exercise of Powers Agreement with the City of Sunnyvale for the delivery of employ- ment and training services under the Job Training Partnership Act of 1983 and authorizing the Mayor to execute the agreement on behalf of the City. Further, urge the City of Sunnyvale as fol- lows: 1. To work out an agreement between the MCC and Santa Clara County which allows service providers to offer employment and training services to Santa Clara County residents located out- side of the SDA; 2. Provide, (subject to Private Industry Council approval, fed- eral funding and demonstrated program effectiveness), to Palo Alto service providers with program funding at least equal to current funding levels; and 3. Establish an advisory mechanism that allows Palo Alto service providers to meet with prime sponsor to review program needs. JOINT EXERCISE OF POWERS AGREEMENT BETWEEN CITY OF PALO ALTO AND CITY OF SUNNYVALE NOTION PASSED unanimously. ITEM 117, ' REQUEST OF COUt4CILMEM8ER LEVY FOR RESPONSE TO RICHARD MOTION Councilmember Levy moved, seconded by Fazzino, to refer the question% raised in Richard Rosenbaum's letter of February 20, 1983, to the City Nanager and City Controller for response. MOTION PASSED unanimously. ITEM #18, .CANCELLATION OF MARCH 7 -1983 COUNCIL MEETING MOTION:.' ' New Bechtel moved, seconded by.., Klein, to cancel the City Council meeting of March 7, 1943. NOTION PASSED unanimously. ADJOURNMENT Council adjourned at 12:50 a.m. ATTEST: APPROVED: