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HomeMy WebLinkAbout1981-12-21 City Council Summary Minutes1 CITY CQUNCL MINUTES Regular Meeting Monday, December 21, 1981 ITEM Oral Communications Approval ofMinutes October 19, 1981 Confirmation of the Appointment of Anthony Bennetti as Senior Assistant City. Attorney Consent Calendar - Referral Consent Calendar - Action Agreement for Impermeable Material for ITT Property (CMR:573:1) Amendment No. Three to Northern California Power Agency Agreement (CMR : 56f : 1 ) Resolution Renewing Authority of City Manager to Change Gas Rates (CMR:561:1) Proposed Increases in Bail Schedule Ordinance re Conflict of Interest Chapters 2.10 and 2.11 (2nd Reading) Ordinance re Specific Plan Enablement (2nd Reading) Agenda Changes, Additions and Deletions PUBLIC HEARING: Planning Commission recommendation re Denial of the Application of Lloyd McVicker for a Parcel Map for Property Located at 3350 West Bayshore Frontage Road Solar rinancing Program - Approval of Loan Documents ProposedCalTrans/Southern Pacific Penin i Train Fare Increase (CMR:563 1) PUBLIC HEARING: Re Application of. Lloyd McVicker 'for a Parcel Map for Property, Located at 3350 West. Bayshore Frontage Road (continued from earlier in. meeting) Utilities Legal Services Contract Acquisition of Santa C1`ara County -Owned Birch/Grant Parcel (CMR:568:1) Amendment _ to. Chapter 9.68 re'kne Year Lease Agreement CITY OF PALO ALTO PAGE 1 5 4 2 1 5 4 2 5 4 2 1 5 4 3 1 .5 4 3 1 5 4 3 1 5 4 3 4 3 1 5 4 3 1 5 4 3 1 5 4 4 1 5 4 4 1 5.4 4 1 5 4 6 ITEM Reconsideration of the Application of Lloyd McVicker for a Parcel .Map at 3350 West Bayshore Road Request of Councilmerrber Renzel re Removal of Oak Creek Conversion from the County Housing Mortgage Revenue Bond Program Downtown Parking Management Plan Grant Applications (CMR:550;1.) Ballot Argument re Special Election for Initiative Petition California Avenue/Park Boulevard Request of Vice Mayor Fletcher re Palo Alto Bus Routes Adjournment 1 5 4 1 12/21/81 PAGE 1 5 6 1 1. 5 6 1 1 5 7 1 1 5 8 1 1 5 .8 1 1 5 8 2 Regular Meeting Monday, December 21, 1981 The City Council pf the City of. Palo Alto met on this date. in the Co-uncil Chambers at City Hall, 250 Hamilton Avenue, at 7:40 parr. PRESENT: Bechtel, Eyerly, Fazzino, Fletcher, Henderson, Klein, Levy, Renzel (arrived at 9:15 p.m.) ABSENT: Witherspoon ORAL COMMUNICATIONS 1. Dan Gernand, a resident of Palo Alto, said that at an earlier Council meeting a site for an office for a swim club was dis- cussed. He recommended that the existing recreation hut at Rinconada. He was also concerned about reckless drivers. 2. Bob Moss, 4010 Orme, presented Mayor Henderson with a pair of ear piuys and eye covers. He said that although he and Mayor Henderson had not , seen eye to eye 100% of the time, he appre- ciate the Mayor's service and dedication to the community. He knew how hard Mayor Henderson had worked on the Council and in the community. He expressed his appreciation for all Mayor Henderson had done. Mayor Henderson thanked Mr. Moss. 3. Vice Mayor Fletcher commented that this was the last meeting that Mayor Henderson would attend as a Counci lrnernber and as --Mayor. She appreciated his dedicated service over his eight years as a Counci linernber. She felt he had never failed to be very hardworking, concerned dedicated and fair. His leader- ship had been appreciated while he had been Mayor, and she felt that the Council had functioned well during that period... Mayor Henderson thanked Vice Mayor Fletcher. MINUTES OF OCTOBER 19; 1981 Councilrnerrber Fazzino had the following correction: Page 1364, second paragraph, fourth line, should read, "...such as "the First Baptist Church's Center and the Ventura area `,.child care fac lity." MOTION: Vice Mayor Fletcher moved, seconded by Fazzino, approval of the minutes of October 19, 1981 as corrected. MOTION PASSED unanimously, Renzel and Witherspoon absent. CONFIRMATION OF IHE APPOINTMENT OF ANT'ONY BENNETT' AS SENIOR MOTION: Counci i member Levy moved, seconded by Fazzino, to approve the appointment of Anthony Bennetti as Sanior Assistant City Attorney. Vice Mayor Fletcher asked. when Mr. Bennetti would commence his new position. City Attorney Diane Lee resOonded that. December 21, 1981. MOTION PASSED unanimously d started today`, Renzel and Witherspoon absent. CONSENT CALENDAR Vice Mayor Fletcher removed Item 6, proposed CalTrans/Southern Pacific Peninsula Train fare increase. Mayor Henderson removed Item 5, Approval of Solar Financing Pro- gram Loan Documents, at the request of a member of the public. MOTION: Vice Mayor Fletcher moved, seconded by Fazzino, approval of the Consent Calendar as amended. Referral None Action AGREEMENT FOR IMPERMEABLE MATERIAL FOR ITT PROPERTY (CMR:573:1) Staff recommends that Counci 1 authorize the Mayor to execute the five-year contract'- for impermeable soil with Stevens Creek quarry. AGREEMENT FOR IMPERMEABLE MATERIAL Stevens- Creek Quarry, Inc. AMENDMENT NO. THREE TO NORTHERN CALIFORNIA POWER AGENCY AGREEMENT i 3 . Staff recommends that the City Council approve the amendment to the NCPA Joint. Powers Agreement. AMENDMENT NO. THREE TO "NORTHERN CALIFORNIA POWER AGENCY JOINT POWERS AGREEMENT" REVISED AS OF APRIL I, 1973 RESOLUTION RENEWING -AUTHORITY OF CITY MANAGER TO CHANGE GAS RATES 1LMR:at1:I i Staff recommends that the City Council adopt the resolution autho- rizing the City Manager to adjust gas rates as required on a time- ly basis to avoid any loss in Palo Alto's Gas Utility revenues as a result of PG&E's rate increases. RESOLUTION 5982 entitled "RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO PROVIDING AUTHORITY TO THE CITY MANAGER TO EFFECT CERTAIN CHANGES IN GAS UTILITY RATES (SCHEDULE G-1 AND G-50) (AMENDING RESOLUTION NO. 5863) " PROPOSED INCREASES IN BAIL SCHEDULEw (CMR .574 1) ORDINANCE RE CONFLICT OF INTEREST CHA14ER'S 2.10 AND 2.11 ORDINANCE 3325 entitled "ORDINANCE OF .THE COUNCIL OF THE CITY OF PALO At.TO REPEALING CHAPTERS 2.10 AND 2.11 OF THE PALO ALTO MUNICIPAL CODE" (1st Reading 12/7/81, Passed 9-0) ORL)INIANCE RE SPECIFIC PLAN ENABLEMENT (2ND READING) ORDINANCE 3326 entitled "ORDINANCE OF THE COUNCIL OF THE; CITY OF PALO ALTO ADDING CHAPTER 19.06 TO THE PALO ALTO MUNICIPAL CODE ESTABLISHING A PROCEDURE FOR THE CITY TO ADOPT SPECIFIC PLANS" (1st Reading 12/7/81, Passed 9-0) MOTION PASSED unanimously, Renzel and Witherspoon absent. AGENDA CHANGES&. ADDITIONS AND DELETIONS Mr. Liner announced that Item 5, Approval of Solar Financing Pro- gram Loan Documents, would become Item 10-A; and Item 6, Proposed CalTrans/Southern Pacific Fare Increases, would become- Item 10 B. PUBLIC HEARING: PLANNING COMMISSION, BY A VOTE OF 5 IN FAVOR, 2 PPOSEi� REC0IM£NDS DENIAL OF THE API LICATION OF LLOYD MMc ICKER FOR A n- CEL M FOR ROM RTY LO FR N GE R AD MR: 1 Chairperson of the Planning Commission, Jean McCown-Hawkes said that the majority of the Planning Commission analyzed the appli- cation similarly to the action taken on .the application of Tab Products. In that case it was requested that the lot line be ad- justed which would have increased the likelihood of expansion on one parcel and increase the employment potential. She said tt,at in this case, there were three parcels, and theoretically, poten- tial development of an office building would be the same as if the three parcels. were developed separately or if they were merged. A majority of the Commission felt that as a practical matte r because of the very odd shape of Sterling Canal parcel , the 22,000 square feet of office space that was theoretically possible on that site would not be built; and therefore, by approving the merger, the employment potential on the three par- cels would be significantly increased in that 22,000 square feet. She said one discussion focused on the difference between this application and the application from Tab Products which was the issue of the adjoining residential neighborhood. The neighbor- hood was concerned with what could happen on Sterling Canal, and felt that this particular proposal went a• long way toward pro- viding protection to that neighborhood.- She said the trade off would be that the Sterling Canal parcel would be maintained in better condition than it was now and maintained as a permanent buffer between any development in the neighborhood. She noted that the Commission had discussed that the only way to guarantee that buffer would be if an express condition were added to the subdivision map providing that no improvements of any kind would be built on the Sterling Canal parcel. In any event, the major- ity of the .Commission' felt that any increase in . employment poten- tial was directly contrary to the No. 1 Policy of the Employment Section of the Comprehensive Plan, which was, "To continue the City's efforts to reduce employment potential in the City.&. Mayor Henderson declared the public hearing open. George Irabal ett 1068 Loma Verde Avenue, said he had ' lived at his current address for 19 years, and the corner property had been almost as bad for the 19 ;years as had all the others. He thought that when the property on the right side was zoned LM, it - en_ hanced his end of the block. Hethought the merger would, enhance his property. 'He spoke particularly for the neighbors along that block of Loma Verde= and the bulk of the property owners on .1 544 12/21/81 1 1 Kenneth. He said they had tried for a long time to get something pernranent.there, and it seemed that they -_were continually attend- iny Council meef,ings to oppose one proposal after another that would not beae i t theca. He urged approval of the merger. James Fouy, 290 Lowell Avenue, General Partner, West Bayshore Associates: the applicant, read: a -statement which said that approval of the application for the parcel map would merge three parcels_ into one for the, purpose of constructing an office bui]d- inu in -accordance with the existing- zoning. The Planning Commis- sion recommended denial of the application- in spite of the ` staff report which recommended approval.. He felt that the Commission focused exclusively on one portion , of the Comprehensive Flan, i.e., the jobs/housing imbalance, without examining the parcels and the potential for their development in the best interests of the neighborhood. He believed that the proposal, in view of the overall objectives of the Comprehensive Plan, was the best pos- sible use of all three parcels. He said- that Considering the possibility of an undesirable future development, they acgii i red the Canal parcel and proved it :to be a permanently maintained landscaped -open space --an asset to them and the neighborhood.. As part of their proposed developaente that _portion of the Canal land which was immediately contiguous to, the two other parcels would be -developed with 8,000 square feet`of landscaping, 20 feet wide, along the residential property line, and 12,000 feet of parking for use by the office building tenants. The remainder -of the Canal parcel that would be the residual to the south would be developed With 35,000 square feet of fully landscaped usable open space, . 50 feet .wide, and consisting of a picnic area and running path for use by the people in the building and possibly for use by people in the other buildings along. West Bayshore--the build- inys in the Li zone. Thus, the entire 1100- foot long strip of land would have 43,000 square feet, or 80% of landscaped open space, serving as a permanent buffer between the residential properties and the existing LM properties which would allow easier visual inspection by -police patrols. He agreed with the Staff report that the proposed development of the project, in- cluding the Canal parcel, was consistent with the City's Compre- hensive Plan, Councilmerber Levy said that what was requested was a transfer of the maximum allowable square footage from the Canal parcel to the total three combined parcels, and asked Mr. Foug if he would per- mit a smaller transfer of buildable footage than what was requested. Mr. Foug responded that they would have to examine the plus and minuses of the economics ofthe development, but it was possible that they would. Mayor Henderson, receiving no further requests from the public to speak, declared the public hearing closed. Vice Mayor Fletcher said she was quite shocked that at both the Planning Commission meeting and the Council meeting, with the ex- ception of Mr. Bramlett, the neighbors had not objected to the possible traffic impact and she wondered if - Mr. Bramlett had spoken to the neighbors along Loma: Verde and discussed the added traffic impacts that would be generated by the project, Mr. Bramlett responded that one of the things the neighbors as- certained froni the property that was already developed was that the property accessed on to lest Bayshore, which meant that the bulk of . the traffic would either be going north -or south, and 1 they noticed very little traffic going east or west on Loma Verde because there were so many stop signs along the way one tended to. yo along West Bayshore to get out on to the expressways. Vice Mayor Fletcher thought the situation was very unusual be- cause the applicant was asking for more than would normally be allowed without the approval and yet the neighbors did not appear to object. She was concerned about constantly increasing employ- ment in Palo Alto when there was no way to make up the housing differential. Councilmember Levy asked if the square footage that would be applied to the total parcel from the back lot could be restricted to less than the maximum called for in the LM zone. Chief Planning Official Bruce Freeland responded that it might be possible to put some kind of condition on the map although it was .an unusual condition for the City to impose. He said it would be cleaner if the applicants came forward with a proposal to add restrictive deed covenants that would limit the size of the buildiny that could placed.on the combined parcel. Councilmember Levy said that in analyzing the trade offs, he had the same concern as the Planning Commission. He appreciated the positive element of finally putting to rest the unus'd strip behind the homes on Kenneth and .Loma Verde. On the other hand, that strip was a very difficult parcel and one that was unlikely to be developed with anywhere near the job producing :rapacity of the proposed project, He was amenable to a continuance of the matter so that staff and the developer could explore a reduction in the square. footage to be applied from the back lot to the total combined parcel; but, if Council voted on the proposal as submit ced, he felt that the negative impacts of the job creation activity were such that he would vote in opposition. MOTION: Councilmember Levy moved, duly seconded, for a continu- ance to January 11, 1982 to allow for the developer and staff to. explore : a reduction in the square footage to be applied from the back lot to the total combined parcel. City Attorney Diane Lee said that the maximum continuance allow- able under AB 884 would be to the Cou_ncil's next meeting. on January 11, 1982, -the thirty -day deadline having started to run at the Council meeting of December. 14,-1981. Mr. Foug suggested a continuance until later in the meeting. SUBSTITUTE Councilmembere Klein moved, seconded by Fazzino; to continue -Item 10 to later in -the evening. MOTIOM° PASSED unanimously, Renzel and, Witherspoon absent. - SOLAR FINANCING PROGRAM - APPROVAL OF LOAM DOCUMENTS (CMR :-564 :1 ) Staff recommends that Council take the following actions: 1. Approve the resolution authorizing : the Mayor to execute the loan agreement with Bank of America, and 2. Authorize the budget amendment to reflect revenues" from loan application fees and technical service expenses _ associated with the loan processing. 1 1 1 Hugh Satterlee, 2399 South Court, urged that the Council deny the proposal. He felt only a few would benefit, and it was not right to burden the rest of the community with the cost of solar energy just so the price could be held artificially low for a few. The fact that a subsidy was being considered demonstrated that solar heating could not pay for itself and that taxpayers and rate payers at large were being asked to carry the costs. He said that it could be claimed that the subsidy was minimal, but how .could it be so when someone else had to be paid to use their money especially at current interest rates. When one paid off a mortgage at any reasonable interest rate, the total amount paid was substantially interest; and, in this case it would be paid by the taxpayers and rate payers of Palo Alto. Bob Moss, 4010 fume rebutted Mr. Satterlee's comments. He said he had a solar hot water and space heater which was financed by the City's program and it had been in service since early June and his gas bi l 1 s had dropped from about 50-55 cents per day to about 10 cents per day. During the Winter, when using it for space heating, his gas bills were running from a $1.60 to $1.80 per day and were now running from 75 cents to 90 cents per day dependent upon how much- cloud cover there was. He said the actual subsidy for a solar hot water heater was not the City's alone, it was the 40% write-off against the owner's State taxes and 15% write-off against Federal taxes. The City did not par- ticipate in that, and there was no cost to the City --that existed whether the loan went through or was defeated. He said that when he filed his income tax next year and received his rebate from the State and Federal government, shortly thereafter, a portion of his loan would be recaptured by the City. The City would be lenaino him the money for about nine months, and he would not' have been able to afford to make the installation if it had not been for the tax rebates. He said that the 10% loans the City was being asked to finance with the program was well worth it. The conservation in energy was well worth achieving, and the service he had received from the hot water system was excellent. He actually had more hot water and could operate more appliances simultaneously with the solar panels than when they just had the normal gas heating system. He thought the program was excellent, and he thought it should be supported. City Treasurer Mark Harris said that if the Council approved the loan agreement, the City's cost of money if it were received tomorrow would be approximately 9.86% because .the City had a tax exempt line of credit and the interest the City would pay would be tax exempt to them and therefore, they could afford to loan the City money at the low market rates. It was a common practice and was basically a municipal bond being invested for the good of the community. Further, as part , of the loan agreement,,: it was specifically stated that no taxpayer money was liable, it was strictly rate payer money. Any money the City would need to p4y back the loan, if : the payoacks from the lenders did not meet. the debt service requirements, would come from rate payers. Regard= ins the .fact that the solar program was not cost, effective, the City had good_ reason to believe that the cost of.. natural gas would rise substantially. He said that it had already to a de- gree and with the actual deregulation that`would occur within the next five years, dramatic increases in the price of natural gas would be seen. .;Regarding lower electric rates, he said that it could be true today, but that it might not be true in a few years, and to make' decisions based on a lower cost of --electricity for any sort of reasonable payback `:period would be a mistake,:ln 1 5 4 7 1.2/21!8] investment. He said that all of the programs the City had ,tried to develop in conservation or solar had been based on their cost effectiveness and staff felt the program was very cost effective. - By being able to arrange -creative financing through the Bank of America, the. City could provide- low interest loans without sub- sidizing the loans at all. 1 1 1 C:uncilmember Bechtel asked that staff meet with Mr. Satterlee to a'acertain if he had additional questions. She was convinced that it was a worthwhile program, and it was a program open to any Palo Al.tan.who wished to apply. The City was trying to encourage as many people as possible to sign up, and the reason for that particular loan arrangement with the Bank of America was the overwhelming amount of interested people. MOTION: Councilmember Bechtel moved, seconded by Fletcher, ap- proval of the loan documents, the resolution and budget amendment ordinance. - LOAN AGREEMENT - SOLAR FINANCING Bank of America RESOLUTION .5983 entitled "RESOLUTION OF THE THE CITY OF PALO ALTO AUTHORIZING THE MAYOR LOAN AGREEMENT WITH BANK OF AMERICA FOR, SOLAR FINANCING LOAN" COUNCIL OF TO EXECUTE $1,0.00,000 ORDINANCE 3324 entitled "ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 1981-82 TO PROVIDE ADDITIONAL FUNDING FOR THE SOLAR LOAN PROGRAM AND TO INCREASE REVENUE FROM LOAN APPLICATIONS" Councilmember Eyerly agreed .with Councilmember Bechtel and pointed out that the matter was considered in great depth in the Finance and Public Works Committee, and on November` 23, the City Council gave staff direction to' prepare the resolution and to proceed: with the financing arrangement. Vice Mayor Fletcher asked staff how many applications and instal- lations there had been, and why the additional loan was neces- sary. Solar Program Coordinator Rick McClure said there had been ap- proximately 161 solar installations which included eight multi- family buildings comprised of approximately. 300 units, and the remainder had been single-family dwellings, which essentially used up the $650,000 authorized` by the Council. Staff had pro- ceeded to find additional funds. He said that the funds the Council was considering tonight would enable the City to finance approximately 280 additional systems. Councilmember Levy concurred with the excellence of the solar financing program. He reiterated that there was no cost to the City, and that the economic decisions were all going to be made by the private individual ,citizens 'for themselves. They could take out: the loans or not, dependent upon their own economic sit- uation and the way they perceived the future costs of generating heat He thought the program was :a good one and that it should te continued. MOTION PASSED unanimously, Renzei Witherspoon absent. 1 5 4 8 12/21/81 1 PROPOSED.CAETRANS/SOUTHERN PACIFIC PENINSULA TRAIN FARE INCREASE (CMK:56J:1) - Vice Mayor Fletcher said she had been closely following what was going on with the development of the commute service. She at- tended the Project Management Committee meetings in San Francisco consistently and, watched the development of the proposals for both the schedule changes and the fare increases. She had quite a few problems with, the proposed staff recommendations for the Council to send to the Project Management Committee, and as a result of discussions ,with staff, substitute recommendations had been developed and she asked that Council consider adoption of the substitute recommendations to be sent to CalTrans: SUBSTITUTE RECOMMENDATIONS MOTION: Vice Mayor Fletcher shoved," seconded by Levy, the follow - lee: Palo Alto understands the financial position CalTrans is experi- encine in its operation of the Peninsula Rail Service and concurs with the stated need for a fare increase with the following pro- visions: I. Palo Alto requests that the proposed fares and the new zone structure be modified to lessen the impact particularly on persons commuting to and from the points North of Palo Alto. 2. Palo Alto requests that CalTrans retain the 20 trip ticket for commuters who cannot use the rail service on a daily basis. 3. Palo Alto requests that a comprehensive marketing program be developed to increase both peak period and off peak rider- ship. 4. Palo Alto approves of CalTrans' plans to make its Peninsula Commuter rail operations as .cost effective as possible in- cluding the elimination of inefficient operating procedures. Palo Alte'requests that when CalTrans evaluates the effects of its recent schedule changes, that it consider rescheduling those commute trains which had a large ridership and which were eliminated. 6. Further, that CalTrans be commended for its recent efforts to improve service particularly for its improvements to the reverse commute rvice and the periodic scheduling of off- peak train service. In summary, it is hoped that CalTrans a derstands that Palo Alto's overriding objectives on this issue ar.e the same as CalTrans, i.e., to improve service and increase riderstip in the most cost effective manner possible. Mayor Henderson " said he thought the problem was that Palo Alto was being moved into a Santa Clara County bracket, and the recom- mendation said everything north of Palo Alto. Vice Mayor Fletcher .responded that the intent was for passengers from and to Palo Alto to points North. In other words, Palo Alto was not seriously impacted if citizens travel within Santa Clara County under the proposed fare -revisions, , but since under the proposal, Palo Alto was to be put : into a zone'",with Santa Clara 1 1 County, the percentage of increase for the fares for people travel i ny from Palo Alto North was much greater than other. points along the line. Counci lmember Klein was concerned why some of the language con tained in the staff report was lost, i.e., the suggestion for a capital program, and a comprehensive long-range marketing strat- egy, etc. Vice Mayor Fletcher said the letter started with the City's re- quest that CalTrans defer all proposed fare and parking fee in- creases until various conditions were met. In order to meet the conditions, the fare increase would be. put off an incredibly long. time to develop all the various proposals. She said the propos- als included significant capital investments, which CalTrans could not possibly afford without the fare increases and that was her first problem. Regarding staff's first recommendation that all other revenue funding sources for the Peninsula rail service application be fully explored, etc., she said they had been fully explored and evaluated before the contract -was signed. She said that the funds being tapped were the only funds available, and that a grant had been approved for the initial, round of expendi- tures. Regarding staff recommendation #2 that a comprehensive operations plan/capital improvement program be prepared and adopted, she said a five year plan had been prepared, and CalTrans was working on it. Regarding the details, CalTrans was exploring them all, but_ they all would take a significant capital investment, which_ at this point, CalTrans did not have. No. 3, that the capital programs include plans for replacing the existing 50-60 year old passenger equipment with new rail cars, she said that CalTrans' first priority was to purchase new and used equip - merle L.; bring the fleet up to modern standards. CalTrans had the equipment listed in their grant application as to what they would spend the money on first. She said CalTrans was more eager to yet rid of . the old cars as anyone. The cars were so old and dif- ficult to maintain because the parts 'were not available anymore. She thought it was rubbing salt in the wound for Palo Alto to tell CalTrans ..that they should be doing it. The long-range mar- keting strategy had been talked about and it was re-ferred to. in her proposal. One of the problems up to now had been that CalTrans was dealing with it in-house, that CalTrans' personnel had been assigned to` deal with the peninsula commute service as well as perform their other functions. She said that about six months ago, CalTrans hired a specialist whodevoted full time to the long-range marketing strategy. He was a rallman, was thor- oughly experienced and very capable. Councilmeiuber Klein said he got the message. He felt that the staff proposal was far more critical of CalTrans while Vice a Mayor Fletcher's was very conciliatory and almost saying they were doing everything_.; they could. He was almost prepared to accept. it, but asked if there was anyone in Palo Alto who could light a fire under CalTrans, by saying they were not happy with the way thi nys were going? Mayor Henderson said : he thought Vice Mayor Fl etcher' s proposal sounded like CalTrans had done all they could and Palo : Alto wanted to help them do more, whereas the staff report said Palo Alto had a real problem with , the transportation system. Vice Mayor Fletcher said she thought CalTrans realized that they had a problem and were working_ on : it. _ She said CatYr°ans had inherited a system from Southern Pacific which h was dilapidated, and they were gradually trying to -bring it up to snuff. -She said they had changed the schedules to try and accommodate present day 1 5 5 0 12/211$1 needs, and implemented a fare increase in order to keep the ser- vice running and supply the capital equipment which was needed. Mayor. Henderson said that perhaps along the way an introductory sentence could be drafted which would indicate that Palo Alto was not at all satisfied with. the .present systems Councilmember Bechtel said she understood Vice Mayor Fletcher goal, and -that CalTrans needed,•additional revenue in order to snake the kind of capital improvements necessary. When she looked_ at the -sentence which -said to look for alternative funding sources the only alternative funding she could think of was at Santa Clara County, San Mateo County,_ and San Francisco County, as well as the State of California. She said if the costs of what commuters in other parts of the country were paying, as well as' the costs for train transportation, were compared with how much it -Post to drive an individual car, it would be found that although the increased price would hurt and would be a shock, it was necessary. She agreed with Councilrnenaber Klein's concern and thought that all of the, sentences which started with commenda- tions were absolutely _necessary, and suggested that a paragraph be added at the beginning which said something to the effect of "while sharing the concern of many of the commuters who would be affeeted by the fares, we feel there is no alternative and that it was a necessary and useful step in helping to improve .the various deficiencies of the current system." Council-rimember Eyerly felt that it was hard to bring the proposal together at the Council meeting without ha -Ong lice Mayor Fl etcher' s material in front of the Counci lmember~s. He thought that the 20 trip ticket should be mentioned, as well as the im- pact on Palo, Alto riders, but on the other hand, he thought some of the points in the staff recommendation had been somewhat side- stepped. He did not want to give the impression that Palo Alto was happy with the way things were, and that Palo Alto wanted to look at a capital improvement program because some of Palo Alto's ridership might run away if a program which committed to improye- rnent was not formulated. Further, he thought some study needed to be made concerning the commute service to see exactly"'what had happened. He would be happy to send the matter back to staff for a combination type letter to be written and then have it come back to Council on the.consent calendar. Councilr►rernber Klein suggested that a subcommittee be appointed to rewrite the material conbininy the staff'.s approach and Vice Mayor Fletcher's approach .and have it back on the consent calen- dar for the meeting of January 11, 3982. Principal Planner George Zimmerman said he had picked up the Council's comments and thought they were all relatively compat- ible and that staff .would put the report on a future consent calendar, as suggested by Councilmember-Fyerly. SUBSTITUTE MOTION: z ounc i liaember Klein moved, seconded by Fazzino, that item "come back on January 11, 1982 Consent Calen- dar. Vice Mayor Fletcher said the fares had to be approved by the PUC in late January, and CalTrans was hoping that they would_be im- plemented by February 1. She ,said it was possible to suggest that perhaps :the fare increase be instituted in .steps rather, than a large increase at one time. She felt that the fare was.,; bei ng kept artificially low considering the cost of the service. MOTION PASSED unanimously, Renzel and Witherspoon absent. 1 1 MOTION: Mayor Henderson moved, seconded by Klein, to bring back Item 10, the public hearing. MOTION PASSED unanimously, Renzel and Witherspoon ahsent. PUBLIC HEARING RE APPLICATION OF LLOYD McVICKER FOR A PARCEL MAP PR E R D on7�r"717 rom ear ier in ne mee Ong) -" James Foug said the applicants had considered the suggested reduction of square footage, and they were in a position to reduce the amount of square feet of building area which would be allocated -to the Sterling Canal parcel which was 22,000 square feet.. He said they would reduce it by about 33% down to 14,000 square feet, and instead of building a 71,000 square foot build- ing, they would build a 64',000 square foot building. He said that some of the considerations would require an agreement by the seller to reduce the price of the land. There were three fixed costs which did not yo down when tie size of the building went sown, i.e.,' the demolition of the existing concrete warehouse stayed the same, and the land would have to be surcharged because the soil was a Bay mud, and the improvements to the Sterling Canal would be the same. The applicant's position would be to allocate 14,000 square feet of building area to the canal rather than 22,000, and 27,000 and 22,000 square feet on the. other two parcels making a total of 64,000 square feet of building area on all three parcels combined. Mayor Henderson clarified that the original prop -sal was 71,612 square feet and all t 't could have been developed on the two lots was 49,31U square feet, and the applicants were now suggest- ing 64,000 square feet as the compromise. MOTION: Councilmember Klein moved, seconded by Henderson, to up- hold the Planning Commission recommendation to deny the applica- tion of Lloyd y+cVicker for a parcel map for property located at 3350 West Bayshore Frontage Road. Councilmember Klein said he appreciated the applicant's desire to compromise, and appreciated the concern of the neighborhood, but he felt this would be a bad arrangement for the City of Palo. Alto because the City would either be adding the 14,000 square feet or 22,000 square feet of office space and generating that many more Jobs, when it was not necessary. He did not feel the Sterling Canal parcel would be developed in the near future, and perhaps it was undevelopable from the commercial standpoint. In any event, he was willing to take that risk as opposed to allowing that number of new employees to be added to Palo Alto when the City had the tremendous housing shortage. He said the City had the Comprehensive Plan proposal to slow down employment growth, and here was an opportunity to do it, and he thought it should be done. He saw no benefits for the City to allow the addition of the extra 15,000 or 22,000 square feet -of: office space. He did not feel that improving the Sterling Cant l appearance was a,. reasonable trade off considering the: very serious nature of jobs/housing imbalance. Councilmember Eyerly opposed the motion. He thought that the reduction, of the canal 'area by one-third warranted acquiring the amenities -Oh the.. canal area which the developer was agreeable to. and which the neighborhood was desirous f. At the same time, he. said It , wo,uld _remove that long narrow strip,', and as the staff pointed out, if it were not reraved-,. it would remain the target 1 5 5,? 12/21/81 of a future development proposal which might impact the adjacent single family homes MOTION PASSEL) by a vote of 4-3 as follows: AYES: Klein, Fletcher, Henderson, Bechtel NOES: Eyerly, Fazz i no, Levy ABSENT: Renzel , Witherspoon Mr. Freeland advised that there were proposed findings to support a denial, and thought action on those findings should be taken. MOTION: Counci lmember Klein moved, seconded, by Henderson, to include a finding that the parcel map is inconsistent with one of the five main proposals of the Comprehensive Plan, "Slow down employment growth," (Page 2) because: " - 1) Without the parcel map development of , the Sterling Canal parcel is constrained in -that: a) Sideyard setbacks on this 50 foot wide parcel are 20 feet, which. -leaves a 10 foot wide building area; and b) A 30 inch con- crete storm drain pipe passes through the approximate center of the parcel, and development.cannot occur over it; and 2) The par- cel would facilitate employment growtth by increasing the number of square feet of building feasible on the site over what would be likely if each Jyf the parcels were developed individually by allowing the full area of the highly constrained Sterling Canal parcel to be applied to the floor area ratio calculation of the resultant combined parcel, Counc i lrriember Fazz i no said he was the one person in attendance at the Council meeting that voted for the Tab Products proposal, and since he thought that was a reasonable one, he clearly thought this was a reasonable proposal. He thought that if the Council was concerned about the zoning in that area, they should have yone after that zoning a couple of years ago. The applicant, in very good faith, went ahead and brought the proposal before the Council based upon long-standing zoning. He thought it was unfair to the applicant, and perhaps ,even more unfair to the neighborhood which was now hanging on tender hooks wondering what piecemeal proposals would come before the Council in the next 'year which would not only increase the jobs in that area, ,but increase the traffic problems, and perhaps create a problem with respect to the canal. He thought the compromise was very reason- able, and he was willing to go with the original proposal. He thought the Council misread the feelings of the neighborhood on the issue, and if the Council wanted to deny proposals of that type, he encouraged that they go back to the Planning Commission and give potential developers a clear direction on what zoning was in this town, otherwise he thought they -_were being very unfair to the applicants. Vice Mayor Fletcher said that the Council was not denying the zoning which was allowed under the present lot lines. further, she pointed out the findings were what the Planning Commission care up with. She said that the residents abutting the property on Kenneth and also Mr. bramlett from Loma Verde felt that if the proposal were not approved, that ,"long, narrow strip, which was 50 feet wide would be developed in some undesirable fashion. She said that -in addition, to the problems any developer would face,. there had to be a 10 -foot vide easement along the length of the ee parcel to accommodate storm drain pipe underground. She thought it was unlikely that any_ development would. occur on that long, narrow strip, -which was why, she' felt comfortable that the neighs hors would be protected. 1 5 5 3- 12/21/81 1 1 Mr. Foug said there was a storm sewer under the property, but no recorded easement. The storm sewer could be moved, and an ease- ment located to the left or right which would allow for a more reasonable building area, so that 22,000 feet allocated to the buildable area of that parcel was a valid allocation. It was not a$ if it could not take place. Mr. Freeland confirmed there was not a recorded easement, that. Mr. Foug was correct. He said the parcel was highly .constrained by the setbacks. MOTION PASSED by a vote of 5-2, Eyerly and Fazzino voting " Renzel and Witherspoon -absent. UTILITIES LEGAL SERVICES CONTRACT Councilmember Eyerly felt that City Attorney Diane Lee's report was a good one and stated the Council was in regard to support fur litigation in the Utilities Department. MOTION: Councilrnerrber Eyerly moved, seconded' by Fletcher, approve the Utilities Legal Services Contract. AGREEMENT - IJTILITIES LEGAL SERVICES Don Maynor MOTION PASSED unanimously, Renzel and ,Witherspoon absent. AC' SITION OF SANTA CLARA COUNTY -OWNED BIRCH/GRANT PARCEL Councilmernber Eyerly said that the precedence of having an interest -free loan totaling $330,000 bothered him because he did not believe that staff gave any statements as to what the impacts would be on the loan situation -how much would it increase the payments to the people that might have access to the loans. He wondered whether it was high- enough for the Council to take the precedent setting step. City Massager Bill Zaner said the amount attributable to each individual .person who took out a loan had not been computed. Staff's intent was to keep the cost of the units as low as possible on the ._ assumption that if it could be done,' there was a better chance of keeping the total cost of the project low. He said the loan was for a limited period of time, and it was antic- ipated that the units would be constructed, sold, and the loan repaid probably within an 18 -month period, so that it was not a long-term loss of funds. Counci lmernber Eyerly said that . the -impact on the general fund wool d be' to remove -the interest the ,City gathered at that time to help balance the budget. . Eie presumed that the impact upon a loan would be about 8%, which did not appear horrendous enough to take that step. Mr. Zaner commented that the amount of money was relatively insignificant. They were.. taking about the interest the City would lose on $330,000 for approximately one year. The loss to the City's General Fund in terms of interest revenue was not tremendous, but a small amount- of money on the loan that each individual would have; to make for the units could be significant.. He did; not know what the dol lars.s would:: translate into, but his Concern was that the project not be left too long. Councllmewber Eyerly said he noticed that it was marked for 1 1 1 action toniytit which indicated some time constraints. He pre- sumed that it could not be spoken to in finality on January 11, 1982. Mr, Zaner said the County had some timing problems, and staff was trying to meet them. Counci]rnember Eyerly said he had no problem with the general thrust of the recommendation, but was concerned with setting a precedent on a non -interest type loan, anch although it was not all that much money on this one, he had been reminded.on a number of occasions both by staff and Council, that precedent setting items should not be gotten into and without exploring further what was being looked ate he had problems voting for i t . Mr. Zaner said that if the interest costs were included on the $330,000 loan, in effect, they would be saying to the Housing Corporation that they would have to come up with that interest amount of money. The Housing Corporation's source of revenue was _the same source as the $330,000 --it came out of the _City trea= sury. He said it was a question of whether it came out of CDBG money or -general fund money, but the Housing Corporation's basic fund was the City fund. Councilrnernber Eyerly said he,had no problem with making the loan, but did have a problem of making a lower loan plus the interest. He would be willing to make a loan for whatever was necessary in the ranee, and asked if anyone from the Housing Corporation would be able to speak to his concerns. Lou Goldsmith, representing the Palo Alto Housing Corporation, said he thought it should be looked at as another example of land bankiny on which, in the past, ' there had been no interest pay- ments. He said if one were to assess interest against the $330,000, it was easy to calculate how much it would increase the cost of the units, if an interest figure could be named and if the fou ,ing Corporation could name a length of time. He said that Mr. Zaner had suggested 1.1/2 years, and he hoped the job. could be done within that length of time assuming that everything. went smoothly with the Mortgage Revenue Bonds. He did not see any problem getting something built within that time if they could get y:oi ng. I f one Were to take an interest rate of 15% -for 1-1/'2 years, it would be approximately $50,000 per year or $75,000 total, and would add approximately $2,000 per unit to the cost for whomever bought it. He said they were very close to the maximum that could be charged anyway because of the restraints of the revenue bond. In other words, no unit could be sold: for more than $110,000, but, there was another constraint that ke`pt the figure lower, i.e., that no one who occupied or bought one of the units _could have an income beyond. 120% of the median. Then, there would be the question of what percentage of their income would be paid for housing costs. He thought that the practical.. upper limit was about $95,000. He said the Housing Corporation's estimate at the present time, assuming an interest -free loan, was that the average -costs would be very close to $90,000. If some of the units were to be sold at around' $50,000, which must be done if . any CDBG nr ney was to be used, for that portion of the land they must have more than 50% of the units sell for a very low price. The only way that could be done was if some of the other units were sold at a price above the . average. As with almost every housing _ project the Housing Corporation had ever looked at, they were -on a very thin knife edge of being able to make the=, project work, and must latch onto evel^y kind of assist- ance possible. 1 1 1 Mayor Henderson was glad that land banking was mentioned. He mentioned past experience of using land bank- fu-nding and not get - tiny returns within 18 nonths, and in this case., it was a very short term loan, and the loss was over a very short period. Councilmember_Bechtel said that interest had not been accruing on land banking funds, and it made sense. The Council had been very supportive of housing efforts, and money was set aside for haus- iny, and she thought this was the right way to go. She said there was a real urgency because in order to be part of the Mort- gage Revenue Bond program, the project must be essentially at the tentative reap stage. An architectural firm had been hired who was preparing the drawings, and hopefully they would be ready by early January which was tremendously fast timing-. She said that the sales price of $700,000, which was tentatively agreed upon, was less than the appraised value of $740,000 which was made over one year ago. She understood that the value could now be sub- stantially higher, which was another reason for moving expedi- tiously. MOTION: Counci lrnember Bechtel roved, seconded. by Eyerly, to adopt a motion authorizing .the Mayor to send a letter to the Santa Clara County Board:of Supervisors requesting Board approval of the Housing Corporation's -acquisition of. the Birch -Grant par cel consistent with the $700,000 funding .paekage. The letter should .indicate the City's intent :to intake available, within approximately . 45 days_ of the Board's acceptance of the offer, a $330,000 loan to the PAHC to be used- as. the downpayment. Fur- ther, .the City would intend to make available $100,000 of 1982-83 Federal CDBG funds as soon --as required HUD approvals can be obtained. . Counci lmember Levy endorsed the staff recommendation. He appre- ciated Counciirnember Eyerly's concerns because it had to be recognized that the $330,000 loan also carried with it in essence a $50,000 gift because that amount would be lost. He thought it was important to recognize that, as the City's reserves were com- mitted. He said that about 1-1/2 years ago, the Council approved proving a house from property east .of Bayshore over to a location Rear the Rinco.nada Tennis Courts, and conveyed that to the House ing Corporation. He understood that the appraised value of that house was over 200,000, and that it was to be used as part of the Hous i ny Corporation's housing, but because of the high cost, the PAHC considered it as an asset to be expendable if there were better uses for their funds that could result in more housing. He wondered if any thought had been given to using that asset. COUNCILMEMBER r?ENZEL ARRIVED AT 9:15 p.rn. Mr. Goldsmith advised that the house in question twas.bought as -,part of the Rentat housing: Acquisition Program and had been rented ever since. He .:sal n i t was said - at. the time, that the house might be sold some day:. if there Were a dire need for cash in which event someone wopld buy it -Ode -live in it_ at.'$175;000 or 200,000 whatever it might be worth, -and- that the people now living in it would. ire displaced. ,MOTION PASSED unanimously, Witherspoon absent:. -AMENDMENT TO CHAPTER 9.68. RE ONE: YEAR LEASE AGREEMENT Mayor: Henderson said his goal was to add to the ordinance situation that after the one-year lease expired, if the landlord and tenant agreed,: to continue the rental relationship, that the landlord would have to offer a new one-year lease at whatever the newterms might be. The tenant could then accept or reject the one-year lease. He said that as he read the amendment to the ordinance, that was precisely what it did. MOTION: Mayor Henderson moved, seconded by Levy, introduce the ordinance amending Chapter 9.68 for first reading, and to include an additional change to be made by. the City Attorney. ORDINANCE FOR FIRST READING entitled "ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING CHAPTER 9.68 OF THE PALO ALTO MUNICIPAL CODE REQUIRING LANDLORDS TO OFFER CONTINU'tL ONE YEAR WRITTEN LEASES TO TENANTS OF RESIDENTIAL HOUSING" Assistant City Attorney Marlene Prendergast said that on Page 2 of the proposed ordinance, because of the various transposing and renuMberiny, there was a provision in the existing ordinance which would .disappear if the ordinance were approved. She said that on Page 2, Section 2(f)(3), it should read, "A rental unit occupied by a. tenant who subleases that unit to another tenant for less than one year; or (4) "A rental unit where tenancy is an express condition. . . " Bob Muss, 4010 Orme, said that when .the. ordinance was before the Council originally along with the Just Cause Eviction Ordinance, some concerns were raised that the way it was worded, the exten- sion of the one-year lease was primarily at the discretion of the landlord. He thought the one before Council tonight said the same thing --the landlord had to agree to make the offer, and the tenant had to agree to accept it. As he read the ordinance, the only change was the case of the tenant who nad refused a one-year lease offered previously, and continued to occupy the unit. Now,. the landlord had to offer the one-year lease again to someone who had previously rejected the offer. He thought that was strange because if a,:tenant wished to have a continued relationship with. the landlord, it should be at the tenant's option to continue that relationship. He did not think that the .ordinance, as drawn, was a tenant .protection ordinance. A second problem he saw with the ordinance was section 9.68.030(f)(4) regarding some- one who rented an apartment in relationship with their employ- ment. He pointed out that if apartments were built on the 46 acres .near Childrens' Hospital in the Stanford Shopping Center, which were to be rented or sold only t.o Stanford employees (which was the current proposal), or, if the Oak Creek Conversion went through and Stanford purchased 200 of those units for . Stanford employees, people living in apartments could be evicted if they quit their job at Stanford and went to work somewhere eIse. He thought the ordinance should be limited to on -site employment, i .e. , on -site manager, janitor, or other employees who had a direct business relationship with the property. Regarding the overall question of the ordinance which was defeated then revised and brought back tonight, whenthe majority of the Council voted not to adopt just cause eviction, a reason cited was that only a relatively small number of people had been unjustly evicted. He did not like that type of reasoning and felt that if an evil existed and injustice was created, the number of people who suf- fered the injustice should net be a factor. He thought that if it was wrong, the Council should remedy ;it Further, he felt it was wrong, and said no one who spoke in' opposition to the ordi- nance said things weren't happening that should :not be happening.: He said State law supposedly covered that,, adequately, but obvi- ously- it was not covered adequately because People, had been thrown out of their homes for unjust" and : trivial reasons. Regarding the objections that the law WAS too complex, that it 1 5 5 7 12/21/81 opened a can of worms, created problems, that the City of Palo Alto was not directly involved, and that it -<would only allow a tenant to sue --he suggested that the City of Palo Alto should not be incompetent to right wrongs, it. should not be inept and unable to create an ordinance which protected -the right of people to be secure. in their homes. It should not allow people to be unjustly ,evicted. He urged that one of the five members of the Council who.voted .on .the prevailing side vote to reconsider and bring back the Just Cause Eviction Ordinance. • Mayor Henderson said the ordinance was not intended to be a full tenant protection ordinance. It was a continued rental rate protection one year at a time. He, said that when the one-year period was completed the first year, and the tenant had a e - year lease, if the landlord and tenant agreed that they wia,lied the rental relationship to continue, then the landlord must again offer a one. -year lease to the tenant. The protection was that the tenant would not be subject to any unexpected mid -year rent increases. At least the tenant would be protected for one year. He said that was all he had sought, and that was what the amend- ment did. If it did not do that, someone should tell the Council so that changes could be made. Councilmember Eyerly said that with the discussion held one week ago, the amendment accomplished what the Mayor wanted to happen. He had no problem with the amendment and did not see it as a just cause eviction entry for discussion. He felt that any more con- straints on the landlords was another nail in the coffin for the possibility of increasing .the rental housing stock. Counciinember Fazzino said he had always thought the Just Cause Eviction Ordinance was dumb and he found this ordinance was even :gore dumb. he thought it was a terrible bureaucracy which did not work and did not meet the needs of many of the people who fell under the provisions of the program. It was a required one --year lease and that there was a lot of rental housing in Palo Alto for Stanford students who were totally disenfranchised by ,the proposal and could not enjoy the benefits of it because they only wanted six or nine-. months' rentals. He thought the ordi- nance provided an opportunity for landlords to review the rent price of a unit annually, and when the rent price was reviewed, it generally meant an increase in rent. He said a -number of people spoke at the Council meetings last year when the ordinance was being proposed and said their rent had not been increased for four or five years, and that there was no need for a formal writ- ten relationship between them and their landlords. Suddenly, the. formality of the relationship was introduced by the Council, and, therefore, annual rent increases were also introduced. He thought the ordinance should be defeated. At the sane_ time he agreed that one good proposal had come out of the discussion, which was Mayor Henderson's proposal re a Rental Mediation Board where serious and real problems could be discussed. Counci lrxrember Renzel said,that regarding the notice provisions for a change in rent, was here also, a notice provision in the event the landlord or tenant did not wish to continue the rental ayreerrent, i.e., 60 day;s. Ms. Prendergast said no. The ordinance ,.only . applied to increases in' rent." Councilmeuber Renzel clarified that there was no stipulation indicatiny at what point the second one-year lease would be sego- t i a t"ei#. 1 5 5 8 12/21/81 Ms. Prendergast said generally the lease would terminate at a set date, and in normal circumstances, that sort of thing was negotiated prior to the termination date. Councilmember Renzel said she knew that typically it was a thirty -day notice, and she thought it made sense to require a sixty-day notice if a landlord or tenant intended to terminate` the rental relationship. She thought that would provide a tenant with some ability to start shopping around. Ms. Prendergast said she thought if a landlord did not intend to offer a second or subsequent lease, that notice of that intention could be included in the ordinance which would indicate that fact to the tenant 30 or 60 days before the expiration of the current lease. `MOTION: Councilmember Renzel moved, seconded by Fletcher, that sixty -days notice be required to the ,tenant if the landlord did not intend to extend the rental relationship. Mayor Henderson was concerned because he felt the Council was yettirjy down to every detail of every lease. He did not want anything changed except that any time a tenant and landlord got toyet per for a rental arrangement that there be the offer of a one-year lease. Councilmember Renzel said she felt that in the absence of just cause eviction, having the ones -year lease was ir desirable and reesonabie"solution. She thought that if the rental relationship was to continue, a tenant should be offered another one-year lease In response to some of the criticisms, it still left in the hands of the landlord, all of the terms of the -lease and whether or not they wished to continue the rental relationship at all with a tenant. She did not think the ordinance .infringed on the landlords other than in the case where it was desired to continue the rental relationship. She supported the ordinance. City Attorney Diane Lee asked for clarification of What the result would be if a landlord failed to give the sixty-day notice. Would it require the ,landlord to enter into a one-year lease, or would some other penalty he attached. She said the clarification was needed so that the Attorney's Office -could know: when it was being written because -the language would have to tie in. Councilmember Renzel said that without knowing the legalities, she thought that under existing law there was probably some general law of thirty -day notice that people would generally give. If it was not given, she thought it would allow the tenant to hold over at least for a period of time equal to sixty days fromthe time of notice. Ms. Lee said she thought that the current law was that at the. expiration of a fixed term lease there was holding over without the required giving of notice. The giving of notice on the land- lord's part would be to the tenant to qut the premises. She said no notice was needed unless the landlord required that the tenant vacate the premises under existing State law. She said a one-year lease :would be interpreted that when it expired, the tenant could remain on the premises. The landlord could raise the rent and would be required to give the tenant 'a thirty -day notice to, quit.- Councilmember Renzel said that if the Council wanted to gain sixty-day notice, what types of sanctions would be necessary in" 1 "5 5 9 12/21/81 order to make it work. She thought that at the most it would mean that they would be getting two months additional after the initial one-year lease. Ms. Prendergast said she thought that if the landlord did not give the notice, and the lease ended, the tenant would stay, The landlord would --have to proceed with an eviction proceeding, and the tenant, under the ordinance, would raise the violation of the ordinance as a defense. She said it was not known how a court would respond. Councilrnember Bechtel said' --she ebelieved the State law which allowed the thirty -day notice was sufficient, and she thought the Council would unnecessarily make the ordinance; more confusing if a sixty-day provision were added. She supported the Just Cause Eviction -Ordinance, which failed by a vote of 5-4, and knew that this ordinance was not doing .what some of the Councilmembers would have liked the Just Cause Eviction td .have done. However, it allowed a tenant to know what to expect ,and _to be able to plan and budget money for rent. She did not consider Palo Alto to be a terrible bureaucracy nor the ordinance to be a bureaucratic snafu-. She thought the ordinance would have. some benefit and that any landlord would be aware of how much rent was received each month -when the checks from the tenants were received and when loan payments were made. A lease was not needed each year to remind a landlord how much rent was collected. __ She urged that the 60 -day amendment not be supported, and urged support of the ordinance -as presented tonight. Vice Mayor Fletcher supported the amendment because thirty days was a very short time to find another living accommodation under the current housing shortage. She thought a sixty-day notice provision could be used to benefit a tenant in any court proceed- ings contesting an eviction proceeding. She. thought it was pos- sible that a judge may honor that sixty-day notice period. She was pleased at the Way the ordinance carne back and supported the main motion and the amendment. David Blumenthal, 1766 Willbw . koad, said he was familiar with situations where someone was given: th i rty-mays notice to vacate, and the tenant could not find another rental unit. He thought sixty -days would not be too much to ask a landlord to give some- one. He felt it was important t,o keep the rental amounts dowry to a minimum. Fortunately, he felt that the tenants -of Oak. Creek had been treated very fairly, and hoped it continued, Ms. Lee .clarified that the ordinance was with respect to the renewal of leases, and required that both the landlord and tenant wish to continue their rental relationship. In a sense;- the landlord had control, but what the landlord did not nave control of was that once At was agreed to continue the rental relation- ship, that rental relationship- had to be on an annual basis. -- AMENDMENT FAILED by a vote of -3 as; follows_ AYES Menzel, Fletcher, Levy NOES: Eyerly, .Klein, Henderson, A8SENT. Witherspoon MOTION PASSED by a vote of 6- Witherspoon absent. RECESS FROM 9:45 p.m. TO 10:069.m. RECONSIDERATION OF THE APPLICATION OF LLOYD MCVICKER FOR A PARCEL Councilmember Klein said that oh Item I0, the application of Lloyd McVicker for a parcel map at 3350 West Bayshore -Frontage road, it had come to his attention that the applicant had indi- cated.he might like to come up' with some further proposal. If that was the case, he thought it would be appropriate fog- the Council to listen to it. MOTION: Councilmeinber Klein moved, seconded_ by Fletcher, to reconsider Item 10, the application of Lloyd McVicker for a- par- cel- map at 3350 West BayshoreFrontage Road. MOTION PASSED unanimously, Witherspoon absent. MOTION: Councilmember Klein proved, seconded by Levy, to continue Item 10, the application of, Lloyd McVicker for a parcel map at 3350. West Bayshore Frontage Road,,. to January 18, 1982 Council meeting for purpose of applicant bringing in alternatives: Jaynes W. Fouy, the applicant, consented to the motion. MOTION PAUSED unanimously, Witherspoon absent. MOPION: Counci lmember Bechtel moved, seconded by Renzel, to bring forward Item 17, Removal. of Oak Creek Conversion from the County Housing Mortgage Revenue Bond Program. MOTION PASSED unanimously, Witherspoon absent, REQUEST OF COUNCILi1EMBER RENZEL RE REMOVAL OF OAK CREEK 1 '' OCRAM J1 Counci lmember Levy advised that because of his employment, he was unable to participate in the: item. Council;;ieanber Renzel said she raised this issue because it had tome to her attention that in the Mortgage Revenue Bond Program, the interest rate subsidies would probably be higher than the guaranteed rate the purchasers at Oak Creek already had for their units. Because she felt that housing funds should be channeled to those it was intended to benefit, and in this instance the people who should benefit already :had guaranteed loan provision;, the Council _should not attempt to take that allocation from com- munities with legitimate needs for home purchasers. MOTION: Counci lmember Renzel moved, " seconded .by Fletcher, to remove Oak Creek Conversion from the County Housing Mortgage Revenue Bond Program-. Lou Fein, 1540 Oak Creek Drive, endorsed the. Council's voting to exclude Oak Creek from the County Mortgage Revenue Bond Program whose : purpose was to help lower • income people who wanted to pr.r- chaSe a home and who did not have sufficient resources of their own and who needed low interest rates, taxfree revenue bonds to Rake the purchase possible.- He said Oak Creek residents who may buy rather than lease were two types --one being, -recent tenants who were paying extraordinarily high rents, who came in there expecting to buy at the terms promised and who clearly had the resources to do so. The others were the tenants : who annotated the conversion talk .which started about two years ago and after having weighed their option to buy or lease; --had ,decided: to buy, and clearly had already found the resources to do so. He said neither group was : needy, needed 'a ` federal hand out or deserved one, and was not the intended beneficiary of the MB . program. He said that to allow Oak. Creek to participate in the County Mort- yage Revenue Bond Pr'oyram would corrupt its purpose. He urged that the Council disallow Oak Creek from participating. Dick Rosenbaum, 717 Garland Drive, thanked Councilnenber Renzel for giving the Council the opportunity to reconsider the issue. His interest in tax exemp}t bonds and their uses came 'about years ago when he observed the industrial revenue bond program and its abuses that were openly tolerated. He said the industrial rev- enue bond program permitted cities to sell tax exempt bonds to provide construction funds to companies that were judged unable to_secure funds in the capital market. The intent was to provide jobs in the community. He said that it soon developed that two of the two major users of the program were:K-Mart _and McDonalds who were in the midst of rapid expansion programs. They would.go to the City Councils in the communities in which they proposed to 'build, and ask that revenue bonds be sold so that they could have low cost construction. Thus, a program with noble goals became a vehicle to provide subsidized loans to the more wealthy firms in the country. He was anyry at that, but was comforted in the fact that Palo Alto would never permit it. Then the idea to subsidize the Oak Creek conversion came along, and he was .face to face with "the ' D i y Mac' of the housing revenue bond program." He thought the narrower side of the issue concentrated. on the details of the particular proposal Assu+piny the other problems that the conversion. faced could be overcome, there were two possibilities-- either the conversion would go ahead regardless of whether it was allowed to partici- pate in the bond program, or the conversion depended upon parti- cipation in the program. In the first case, clearly no public purpose would be served by including the conversion in the pro- grant --buyers would get I1-3/4% loans one way or the other. If on the other hand, the Councilmembers felt the fate of the conver- sion wan held in- their hands dependent upon the vote, then what position should be taken. He was not proposing to open the ques- tion of whether the conversion should have been allowed, he had never been able to figure out whether rental er ownership units were preferable and was wiling to leave that question to the marketplace.. The City 'had- an ordinance which placed hurdles in the path of the converter which were designed to protect the ten- ants, and if the converter successfully jumped theme he was en- titled `to his conversion, but he did not -think the City should go beyond that position to the point of making federal subisidies available,, He pointed out that the Council was on record that the preservation of rental units in Palo Alto was so important that it took precedence over the zoning ordinance. He did not think that position could be reconciled with a purely discretion- ary legislative action 'that would make the 'loss 'of 700 rental units possible. -Mr. Rosenbaum said that-: regarding the broader- ei ssue, funds to substd;ze housing were limited in the national- context. He asked how close had the conversion come_ tothe model `people. had, in mina when they thought. of -Making hous i ne subsidies available. He askew- i€ there was -a Wider struggling to keep his crews -em- ployed building liOmes and then finding themselves en the verge of bankruptcy -because- buyers .could not- qual i€y --to buy the homes at, --market interest rates. He said that. was a ;situation where a sub- stdy Raoul d seem:_ Usti f.i ed. In this cases -,mere -was -"an apartment. c:owsiplex which had been depreciated for tax. ,purposes -to the point that it -no- longer made financial sense for he owner -,to. keep it,. ani he. proposed to convert it be _ause it was far @ore profitable than- atterptng to sell it as an apartment corrpl-ex. ind.eed,r ,if the, conversion was successful-, it would undoubtedly . be the- rdost - lucrative spngle real - es;tate tran=saction tn the county's history. lie .had nnoth1;ng against lucrative real , estate transactions, but no, hous#ng was being created, and there.:was', nothing in the conver lion process which_ was worthy of subsidy. He said that oak Creek 1 5 6 2 12/21/81 was. a prestigious address with rents to match. It would be hard to think of a group of people in Palo.,Alto who were less in need of federal subsidies. He asked if anyone really believed that a conversion of this sort was what people had in mind when the housiny revenue bond progran was. originated. Did someone really believe that the Oak Creek conversion was a proper object of housiny subsidies. He recognized that the regulations allowed it, but _the job of the Council was to make a judgment on ,suit- ability. He said Palo Alto was his city and the Council was his government. He used to be a Councilmember and felt strongly about it. The level of:intelligence he expected to see exhibited did not allow for awarding subsidies to projects like the Oak Creek conversion. Victor.. Lee, Senior Underwriter of A. G. Ber`er Company, repre- sented the County Mortgage Revenue Bond Program, and said he was available to answer. any questions regarding the mechanics of the proyram,. and specifically about including condominium conversion in a mortgage subsidy bond program. He said that as 'Mr. Rosenbaum acknowledged, there was no federal or state legislation that restricted the use of the funds for condominium conversions, but at the same time, the intent of the program was not only for low income tenants. He admitted that firms like McDonalds and K -fart had abused the tax exempt financing mechanism to finance construction of .their own plants, but at the same time, there had been abuses in the mortgage revenue bond area. The current law from the state and federal level had been rewritten as of the end of last year in such a way that those abuses had been greatly reduced He said that prior to the laws currently in operation, cities and.. -counties' could issue mortgage revenue bonds that were eligible to any and all incomes. That meant that there were no income restrictions, or price restrictions, and they were not targeted to any income groups. Currently, there was targeting of funds to everyone who'was below 120% of the median income. To have a project like Oak Creek included in a mortgage revenue bond program for the county benefited the overall program in that not all units in Oak Creek would be financed under the program, so there would be larger units that would be financed under whatever market rate there was, and at'the same time, there would be the low to middle income segment that would be aided in that they would have financing available through a mortgage subsidy bond. Mr. Lee said that they tried to provide their clients with com- prehensive. financing to aid d the localities in .providing housing to all the incomes. From a bond structuring standpoint, having a city like .Palo -Alto included in a mortgage bond program benefited the geographic dispersion that a rating agency would look at. He said knowing'that single studio type apartments included. in the program balanced off against large .,.units and spreading through the i ncgrne range from 120% down to 80% of the median income -af- fected the rating agencies perception about what the bond program -could do, . At 'the same time it helped the marketing of the bond program. He understood that if Oak Creek apartments were, not included in the proyrann, they -probably would not be converted., Counc lmember Renzel asked what was anticipated to be the per- centage interest that would be available to people buying under the mortgaye.revenue bond program. 14r. Lee said he could -not- predict the market 10O%; , it 'had been moving quite erra ieally. Fie thought, that in February, or March, the final _mortgage "rate should be -around 13 to 13-1/2%. Councllinember Renzel asked if in the allocation of the mortgage revenue bonds, the price per unit was evaluated against the size 1 5 6 3 12/21/81'. of the unit. Mr. Lee responded no, that regulation was not written into the treasury regulation governing the issuance of mortgage revenue bonds. Councilmember Renzel asked what the current family median income was for the County. Mr. Lee indicated that it was around $31,000, and that was with no designation for family size. Councilmember Renzel asked if most housing programs designated a median income and a farni.'y size. Mr. Lee:said that according to HUD, they usually went by a family: of four, but under the 'federal legislation, they went by family income. Under HOD it was called median family -income. Councilmember Renzel clarified that a single individual buying a unit at Oak Creek with an income of $31,000 would be competing for the funds with someone with a family _ of four with -the same - income. Mr, Lee 'said that .was correct, but he thought that a family of four in Palo Alto would probably have a higher median income than a single person living in Oak Creek. He said that disparity was accorrmodated.in the federal legislation in that median income was the median income of the standard metropolitan area.- In the County of Santa Clara, he thought the median income was lower than the median income for Palo Alto per se. Councilmember Menzel asked if there had been an excess of requests for the use of the funds over the amount of funds avail- able. Mr. Lee said he would not call it an excess, but there had been more than was anticipated to be issued. From a marketing stand- point, they advised the counties and cities participating that they probably would not want to issue more than $50 million at one shot, to avoid crowding out the market. He said a series of. issues were planned _to accommodate all the demands within the counties and cities. Councilmember. Renzel asked Mr. Lee if, in his opinion, in a proj- ect where the purchasers were already guaranteed 11-3/4% interest rate, if those purchasers would enjoy any specific benefit. Mr. Lee said it depended upon the assumptions made. If the pro- jects were converted regardless of the bond program, there would be no. benefit. But, if the current market ra.te for mortgages were looked at, t. current mortgage market was between 17 and 19% dependent upon what institution, was sought. From his .experi- ence representing not only Santa Clara County, but also Orange County and Los Angeles County in similar programs, and from the conversations he had " had with developers, chey did not build at the 17-197, range. The question `was whether there would be new housing stock coming on stream at the current market rate. If not, what, should be done to supply the locality with housing stock. All of his clients were looking into mort9ige revenue bonds. He thought the only way developers would survive or even supply new housing stock was_ through- this type of program. 1 5 6 4 12/21/81. Councilrnember Eyerly said that Mr. Lee had spoken to the initial issuance by the County of $50 million worth of bonds, and to con- tinue in segments like that depended upon the demand from -the County, and he presumed that no restrictions had been made on the amount of revenue bonds that could be issued. He had read com- ments that the federal government had been thinking about limit- ing the amount of revenue bonds which could be made. Mr. Lee said they were limited in that a ceiling to .the amount of , bonds that each state could issue had been allocated. There was a procedure --at the state level whereby each issuer applied for an allocation, and for the County of Santa Clara and the particiA pating cities, the allocation would be much greater than $50 rmillion. Counci lmermb.er Eyerly asked for comments about what the County would be 'authorized to issue, and if the -City didn't ask ,for that amount -of funding, would it dry up or go to other counties. Mr. Lee said that the process was that at the beginning of next year, all counties and cities eligible to issue_ mortgage revenue bonds under State Statute AB 1355 would apply to the Allocation Committee. Dependent upon the demand, they would be prorated on that demand. He said that right new as the law was stated, the county bad the:authority to issue $250 million worth_of bonds. Counci l member Eyerly said that from the interest which had been yenerated with the start, of the program, did Mr. Lee see the County using the entire $250 million. Mr. Lee said no. Councilmember Bechtel said that Mr. Lee had mentioned that with the yuarantee of the converter of 11-3/4% there was no difference for the actua'd .buyer, and asked him to outline what potential difference there might be of riot being involved with Oak Creek as far as the -price of the units on resale. Mr. Lee said that under the bond program,, anyone benefiting or receiving financing from the bond program was restricted to similar restrictions the original buyer was encumbered by, i.e., that the original buyer could not. have owned a home in the prior three years to purchasing this unit, and cou.l.d not exceed 120% of the median income. At the time of resale, the same type of qual- ifications that applied to him applied to the subsequent buyer. He said those restrictions were further restricted for condo- minium conversions in that the top income purchaser could be no greater than the median income. Otherwise, if new condominium units that were not condominium conversions were talked about, you would be looking at 120% and in a condo conversion scenario, only 100% was looked at. That was further restricted by the fact that 5O of those .units went to the median income and the other 50% went to 80;L of the median income. He said condo converted units were targeted to people basically` earning Median income and 80% of median income. Those units could - not be resold for more than 90% of thee average area purchase price. The average, area purchase `price for the County of Santa Clara was $110,000. On resale, they Would` have to sell to someone earning a median in- come ,-:or 801 of median income __ and no greater than . 90% of $110,000. 1 5 6 5 12/21/81 1 1 Councilmember Bechtel said that assuminy someone was not part of the mortgage revenue bond, they had a condo which was converted and they bought it for $100,000 with ;;he financing offered by the developer (11 -3/4;x -which' she understood was a 30 -year fixed interest rate loan), would there be any ;restrictions. Mr. Lee said there were no restrictions on the subsequent sale at 11-3/4% if it were financed by financing mechanisms other than the mortgage revenue bond. Therefore, if the house was worth $200,000 on the subsequent resale, it could be -sold et whatever market rate financing, the subsequent buyer could obtain at the $200,000 price range. Under the bond program, he would be -capped' only to who could buy the unit such that they would have to qual- ify under the Median income restrictions, and at the, same time - the price would be restricted to 90% of the average area purchase price. Councilmember Bechtel clarified that under the mortgage revenue bend, there would be a 'price control. Councilmember Renzel clarified that- there would be the price maintenance if the subsequent buyer wished to use the mortgage revenue bond financing. If they did not wish to use i t , then it would be in themarket the sane as any other unit. Mr. Lee said that was correct. Councilmember Renzel said that if a unit was selling at $150,000 two or three years from now, and presumably the market was friendlier financially, would those sellers sell to someone who was at 80% or 100% of median income, and at a reduced price. Mr. Lee said it depended on if tney qualified and where the aver - aye area purchase price had none in relationship to the $150,000 in two or three years. He said that Councilmember Renzel was riyht that the seller might not have the motivation to sell to someone under the restricted criteria of the mortgage revenue bond program. At the same time if .he was in the mortgage revenue bond. program, there was the requirement that the subsequent seller hopefully got cheaper financing. ,Mary Davey, County Housing. Advisor, commented that .in the past year the County had worked with the seven cities now partici- pating in the program, and one of the major keys which had brought them together for the public purpose of the program had been to achieve the lowest price home ownership units in the county, the deepest income penetration for .the consumers who wanted to buy those units, and to work with seven individual cities - to respect their wishes in the development of the program. She said that because the City of Palo. Alto chose to include the conversion along with the City of Santa Clara which also .had _ _a conversion which -was }rester than the one anticipated from Palo Alto, the Committee went : over the . concept of including' conver- sions in the issue. She said outside the below -market -rate units in the program in Palo Alto and Sunnyvale, this was the lowest cost unit in the issue --$58,600. Similar units_ were included in - other communities, but the City of Palo- Alto had the cheapest market rate unit in the issue. Because of , the nature of the con- version, the requirements were that the deepest income -penetra- tion was possible through the low price because the 'conversion required_ people whose income was between and 80%-100% of the median income. Palo Alto achieved, through this conversion, that public purpose oand though there were some concerns from other cities and others represented on the Committee, they deferred to Palo Alto's -interest and to the Overall interest of the County and the geographical and economic interests of the whole. For that reason, the County hoped that Palo Alto would continue to support the inclusion of the Oak Creek conversion within the issue. Finally, she said no one would lose any participation in the _issue because of the inclusion of the condominium conversion. The intent of the County all along with the support of the under- writers had been,to be inclusive; to welcome all the developers from Palo Alto through Gilroy to enter into the issue. No one would be excluded except by self -choice. It was a developer's choice when the chips were down and the points were necessary up front before the sale of the issue for them to make the business judgment to stay in the issue. She said that if there was to: be a cut because of external forces-- the market or the Bend Advi- sory Committee in Sacramento, and should the issue have to be cut and not be inclusive of all developers in the issue, then the Committee overseeing the program made a poolicy decision that if anyone was to be cut, any developer was -to be out, then the con- dominium conversions would be the first to be cut and the new construction the last. , They hoped that they would not face that choice, and that the self-selection• of those developers who wished to stay -with the issue would do that and go to market with the County_in February or March. She said Palo Alto's conversion met that deepest income penetration, it provided outside the BMR units the cheapest unit within the issue and that -.was a pretty good feat for the City of Palo Alto and the overall issue. No. one would lose any allocation of funds because of the condominium conversion in Palo Alto. With those major points, she.hoped the Council would stay with their original decision which the Bond Advisory Committee approved wholly as did the County. Councilmernher Renzel asked if there were other studio units in the issue that the County was offering. ;its. Davey slid there were studio issues and it ranged everywhere from single family detached to studios, condominiums, town- houses. Councilineinber Renzel asked if the lowest cost $58,000 unit was a studio unit, Ms. Davey deferred the question to City Planner Glenn Miller for response. City Planner Glenn Miller said that the proposed units were sub- ject to the confirmation of income of the various tenants and there were 37 two -bedroom units that were approximately 1100 square feet, 61 one -bedroom units, 850 square feet, and 13 studios which were 510 square feet and weuid represent the lowest f i yu re in terms of price. He said those would all .be sold within conversion.t he - ranjes for - price ::originally agreed upon upon in - the- condominium Counci lmember Renzel- asked Ms. Davey, that with the interest rates as they were and with the Oak Creek conversion already being guaranteed low interest rates, how she saw the program necessarily benefiting the tenants of Oak Creek Ms. -avey said - she saw the program benefiting the consumer in that it was the first 'time that a home buyer who qualified had the opportunity to buy into a diminishing .housing market. She saw them as the beneficiaries of the program because it was an incentive to developers 'to build a unit under $110,000 and: 1 5 6 7 12/21/81 1 because there was a cheaper source of mortgage money that helped him or her sell that unit, Ultimately, the beneficiaries were those people out in Santa Clara County who want to buy into the housing market. Councilnember.Renzel said she meant in a case where the condomin- ium conversion was approved and the units ' were already avail abl e at low interest and at fixed prices, what was the benefit to those purchasers and how would they otherwise be encouraged and allowed to purchase the units when they already had those guaran- teed figures. Ms. Davey said that at present market rate interest costs, the conversion would not take place unless cheaper moneys were avail- able to bring forward the conversion. The beneficiaries through that would be the consumer. Vice Mayor Fletcher -said she was thinking about the- nature of a first time homeowner. She believed many of the Oak Creek- tenants were retired and had sold their homes and did not want home own- ership and she asked if they would be eligible to purchase the units. Ms. Davey said if they had owned their own home within the last three years, they would not be eligible. Vice Mayor Fletcher asked if the control of the price and the in- come of the person buying it went on in perpetuity. Ms. Davey said that should the City want to exercise a resale control, it was at the City's disposal, Resale constraints could be set if the City desired, such as in the below -market -rate pro- gram. Vice Mayor Fletcher asked if the units were withdrawn from the issue, what would happen, would the amount of the issue be re- duced, or would those funds go elsewhere. Ms. Davey said the funds were not allocated elsewhere. The issue would be smaller. She said the County hoped the units would not be withdrawn because. `they enhanced the overall issue by having the lower priced unit for this income group in the City of Palo Alto, which was the high income area of Santa Clara County. Councilmember Klein .said the condominium conversion agreement contained Mr. Carey's agreement to provide 11-3/4% financing to purchasers of the condominium units. He said that Since 11-3/4% financing was more attractive than 13% mortgage money, who -was yoi ny-- to use the .13% money and why was the devel over interested in it at the -present time. Scott Carey, developer, Oak Creek Associates, 16.1. University Avenue, said he thought that the real issue was a ;misunderstand- ing of the Oak Creek scenario and the conception that the tenants had been guaranteed the 11-3/4% and were now buying or were ready to buy, and therefore, the project was under way and the issuance of revenue bonds in this case was'simply adding to the "profit" already there. He assured ...the Council that the project was started about 18 r= onths ago based on certain assumptions that had to``be made because of the process of going .through the City con -- version ordinance. Oak Creek Associates had to put down some guidelines for the people. He said that among other things, Oak Creek Associates made guesses about where the mortgage market would be .: today. and they also guessed that the project was not included in the SMR requirements and they guessed wrong. Fur- ther, they guessed wrong or: 'these they thought mortgage financing, would be. At the time their judgment was made, the market was 1 5 6 8 12/.21/81 at 14% roughly fixed rate for thirty years. Today, if financing could be obtained, it was 15-1/2% to 16% variable and no fixed- rate mortyayes existed from any institution they could find. Oak Creek Associates did not have a mortgage commitment one year ago and did not have one today. Had there been a mortgage commitment at 11-3/4% or 12-3/4% and they were going to buy it down a point, then he would agree that they ought not be there and ought not to have applied. He Said Oak Creek Associates were looking for reve- nue sources to meet or closely meet the requirements and promises they made those tenants. At present, they could not find any af- fordable financing. It was not a question of something that was already under way. Council €member Klein asked if there were any promises within the, agreement for financing for present tenants. Mr. Carey responded that when the consent process was started, they gave a number of "promises." They were net guarantees and Oak Creek Associates would be broke if they had made guarantees and were , forced to proceed with the conversion. What was said during the consent process was here were the price outlines, the mortgage. terms and the lifetime lease °ter nts, etc., and all of those things were considered when the consents were obtained. He said they were not guarantees in the sense that if the approval were obtained form the city and from the State that they would automatically proceed regardless. That could not be done because Oak Creek Associates did not have any mortgage commitment, and could not .yet a mortgage commitment even close to that document talked about 18 months ago. He said the revenue bonds would help, bet only represented about 25% of the total mortgage reve- nue commitments they had to try and find. It was a step and might help with the University because many of their people qualified under the BMR guidelines. Councilwermber Klein clarified that Oak Creek Associates he'd no ob- 1 iyat.ion whatsoever to any tenant to provide financing at any particular level. Mr. Carey responded that Oak Creek Associates had no obligation to proceed •with the conversion regardless. If they did proceed with the conversion, Oak Creek Associates must meet all the prom- ises given to those tenants. If any of_the promises were changed, Oak Creek Associates could not change them unilaterally --the ten- ants would have to agree to any changes. He said that the promise with regard to financing one year ago was an 11-3/4% fixed loan not variable. That type of loan document was no longer written today so there was a problem right away with that promise as it was writtenbecause it does not exist. Councilmember Klein asked if the extra 1-1/2 points would be sub- sidized by Oak Creek Associates. Mr. Carey ansvered yes. When OakCreek Associates originally ran their a"ne.iysis:on Oak Creek, they anticipated that they would have to buy down the rate, probably to the extent of one, to 1-3/4 points, but they also assumed there would be fixed rate loans they could buy down against. There were now two problems --one, that there were no fixed rate loans so, therefore, you -can't bey down because a variable rate cannot be bought . down because you don't know how it would vary. Second, the spread between the 11-3/4% and today's market rate was far greater than Oak Creek Associates''. j roJect i ons. They could not bey down the eap of some four points today and proceed with the conversion because they would proceed ,by going bankrupt. He said Oak Creek Associates would not proceed given today's ecoeonic market and today's _,mortgage rate based on 1 1 those terms -because they could not. The revenue bond application which Oak Creek -Associates made on the very last day and made reluctantly would be some assistance if they qualified and if they proceeded. He said it would not give all the answers to the financing problems. Councilrnernber Klein asked what they were goingi o do with the Other 75% of the purchases. Mr. Carey said they did not know. They wrote the tenants last week essentially advising them of the two problems --one with the university and one with financing. He said they asked the ten- ants for Some feedback as to whether they should abandon the con- -version entirely or whether they should continue with some other kind of mortgage financing. He said they were An the process of getting the replies. If the tenants said to abandon the conver- sion, it would be abandoned. Councilmember Klein asked if it would be abandoned before the bond issue? Mr. Carey said he hoped so because if they committed to the reve- nue bonds, they would have to post about $750,000 in fees. He did not want to do it and lose that kind of money. Vice Mayor Fletcher said she understood some of Mr. Rosenbaum's concerns and one that persuaded her to possibly reverse her pre- vious vote was the fact that that type -of mechanism could be used to further additional conversions. On the other hand, she thought the Counci 1 had the control over each particular revenue bond issue. She saw the primary benefit here as the fact that once those units were sold under the issue, the price would be modified from the normaliescalation and the people who qualified for purchasing would be those who needed it most. Although she had seconded the motion, she would oppose it. Councilmember Renzel clarified that while the taesumable loan feature of the revenue bond mortgages was a tie to restraints on price increase, there. was no obligation on the part of the seller to sell to a person who would assure that loan or qualify for it, and the seller would be happier- to sell the units at market rates.. Ms. Davey said Vice Mayor Fletcher was correct that the City es- tablished the resale controls. Councilmember Renzel asked if that was bond program. the mortgage revenue Ms. Davey said that it was not in the program itself --the option was there for any jurisdiction to establish those resale controls just as in the BMR program. She said there were cities and reve- nue bond programs throughout the state that had resale controls. She said it was being .considered by the City of Sunnyvale as well as Cempbell. The City could control the resale of those units. Councilmember Renzel said, that that was tied only to the mortgage revenue bond. Ms. Davey . said that for those who participated in the bond pro- gram, the resales could be under control --at the Council's dis- cretion. Councilmember Bechtel said that the function of the restriction, the price control, was the matter of the market. For example, financing was not the chief obstacle in, selling a home, 'so that 5 7°_0 12/21/81 owner -financing, at a lower rate than a bank or a savings and loan could offer, made --possible the sale of a horse. Obviously, if the loan rate dropped dramatically from the current 17% or 18% down to something unbelievable like 7% or 8%. the program would no longer have the same attraction. In that case, the price of the home would go up, but that was extremely unlikely. She thought that the only way people would be able to sell their homes would be to :provide that -kind of financing. A 30 -year fixed interest rate loan would be very attractive so there would be buyers available who would be attracted by that financing and would have the income that'would qualify them, and the seller would be willing to sell at that restricted sales price. Mr. Rosenbaum said it had to be remembered that the people who were promised mortgages were not promised any control on their future profit. Ile was certain there would be an instant rebel- lion on the part of people at Oak Creek if they were told they were going to buy a unit, but when it came time to sell, the City had instituted a limit on what they could sell it for. Mayor Henderson asked if the tenants had to take the loans be- cause they qualified. The situation was voluntary. Ms.,Davey said they did not have to take the loan or participate. A simple matter of control for the resale of those units would be to state that the units would be under resale controls --the house would not sell for 90% of the average house costs of .the pre- ceding year which was in the federal legislation, and that the units would be sold only to people whose income was 100% of the median income and below. Those two resale constraints would have the effect that Vice Mayor Fletcher was talking about. MOTION FAILED by a vote of 6-1, Renzel voting "nos°" Levy not par- ticipating, Witherspoon absent. Councilmeniber Renzel said she would feel much better using limited housing mortgage funds to finance a developer's interest buy down at Oak Creek apartments if it meant that in the long term those loans and the restricted price would be available to subsequent buyers. MOTION: Counci lmember Renzel moved, seconded by Bechtel, to direct the City Attorney to prepare an ordinance that would pro- vide for limited controls for those people who chose to finance under County Housing Mortgage Revenue Bond Program. MOTION PASSti3 unanimously, Levy not participating, Witherspoon absent. DOWNTOWN: PARKING MANAGEMENT PLAN GRANT APPLICATIONS (CMR:550:1) Director of Transportation Ted Noguchi stated that the tentative staff_ report was to provide the Council with the background which lead to the adoption of the Parking Management Plan, to identify for the Council the details' included in the final grant applica- tion documents being .;submitted to the Urban Mass Transportation Administration (UMTA), and further to request- Counci l . approval for submittal of the final grant application and to accept the grant uponreceipt of UMTA approval. He said in past discussions Copncilnnembers had raised probing questions" about the need for even inatitutir.r what seemed to be a punitively priced parking permit system, as proposed for the downtown residential areas. Staff felt it was important: for the Council' to be cognizant that. past professional studies and federal deinonstration projects had shown conclusively that sole reliance ontransit and ride sharing as a way to reduce commuter auto trips and commensurate parking dewands would only produce a few percentage points reduction. He said that where priced -parking had accompanied transit and ride sharing efforts, as high as a 20% reduction in solo driving by commuters had resulted. Mr, Noguchi said that if Council wished to successfully institute the parking policies and programs as they were .expressly adopted in the Comprehensive Plan, staff believed that the techniques stipulated in the Downtown Parking Management Plan were essential. ..The demonstration, project pro- posed provided for an nadvanted operation of the parking and ride shuttle service before institution of priced parking permit sys- tems. That was in. accordance with a _directive of Council on January 26, 1981. ` Finally, the grant application was only for a two-year federally funded demonstration program and did not com- Snit the Council to a continuation or for its funding beyond the end of the two-year period. He said Council could Jialt the demonstration project if a good faith effort did not produce the desired results. Councilmember Eyerly said that the report did not spell. out the park and ride lots as far as the funding and how soon they might be available. Mr. Noguchi said that at the -present time, the City had an option from the County and that the County lot identified .was at the corner of Page Mill and Birch. That was the one big lot with .approximately 90 spaces. The other location identified was the old Urban Lane location, next to the Holiday Inn. Councilmember Eyerly -asked if Park and Ride lots had been nego-, tiated with SP. Mr. Noguchi said Park and Ride lots required negotiation with both SP and Stanford. The precedent had already been set because the recent upgrade and the transfer facility that were built to the south of the circle included a small parking lot onto the south of the circle,. When the upgrade occurred north of the circle, negotiations were entered into with Stanford and SP, and Cal Trans received approval to build the lot. Counciimember Eyerly asked what the parameters were on the accep- tance of the grant. As he understood the Council direction to the : staff, the park and • ri de lots were to be activated ahead of any permit type parking in the residential area, etc. He asked if the grant had to be accepted right away or could the City wait until the Council's desires were accomplished. Mr. Noguchi said the plan was to have the shuttle service in operation at least four months prior to institution of any kind of a pricing.. permit system. He said the actual lease negotia- tions with . the County should not be commenced until the City had received approval from UMTA or the application Counci1member Eyerly asked about the funding for the lot at the SP on the old Urban Lane. He understood that would have to be funded outside _tie grant. Transpo rtati bn Planner Joan Thompson said City funds would have to be used to prepare the lot.,:. However, the lease costs and maintenance,of the lot would be covered by the UMTA grant. , C ounci lrnember Eyerly asked if she had any, figures available on how much money it would take to prepare the lot. Ms. Thompson said it depended upon how the City decided to proceed with the lot --whether it would be paved or whether it 1 5 7 2 12/21/81 would be more temporary in nature. She said the costs would vary considerably dependent upon whether it was a permanent paved lot. Councilmernber Cyerly said -there was a figure that the City was 2,000 employee spaces short in the downtown area, and he asked staff to reiterate how those figures were arrived at so he could be sure they were viable, Ms. Thompson said those figures came from a report done by a con- sultant.in 1978, Alan Voorhees & Associates. She said they came up with the 2,000 space shortage which was reconfirmed by the people doing the parking structure study. She said it was de- rived from looking at the _, demand by the land use in the downtown area and looking at the public and private supply in the affected districts. Counci lmer ber Eyerly clarified that the 2,000 spaces did not represent the shortage on the streets within the residential areas. It spoke to the total employee situation where sore of there were on private lots in other areas and not necessarily within the residential areas where the City: was thinking of enacting the permit system. Mr. Noguchi said Council must realize that there were about 7,500 employees in the downtown area --in the assessment district it- self. There were about 4,900 parking spaces within the district, both public and private spaces, so by deduction the deficiency could be;seen clearly. He said even if a vehicle occupancy rate of 1.2 persons per vehicl'o were used, by subtracting and dividing that into 7,500 and subtracting 4,900 from that there was still a substantial deficiency. Councilmernber Eyerly said he realized there was a big deficiency in parking spaces for employees downtown, however, he thought the f i aura he would like surfaced was the amount of onstreet parking by employees within the residential areas. He thought that was who they were trying to ;,rove with the proyram and was that around Ms. Thompson said the exact figure of 1,700 that were -parking on the streets' came from the assessment district, another 100 from SP park i ny, another. 100 f roam the auto row area, and another 100 around the clinic, . for a total of 2,000 which were parking en. the residential streets. She said that was in surplus to the number of workers downtown using short term parking spaces, and parking illegally and moving their car ever few hours. _ Mayor Henderson asked if staff felt it was realistic to talk about a $15 per month parking fee as being any deterrent on on- street parking, Mr. Noguchi said that problem was addressed in the application. He said staff left it somewhat flexible and intended to start off with the .$15- because that would provide the recovery for the coasts being incurred. However, staff . recognized that there had to be more income than just the recovery costs and wanted to look at the disincentive, approach of trying to make it a little more. costly for those people that parked at the present time. He said the grant application talked about a $15 initial charge and staff recommended that Council allow staff to increase that rate if it seemed like there was not enough shift to the shuttle service in the park and ride lot Vice Mayor Fletcher said she noticed that all the emphasis was on the shuttle service and that there was no mention made of the - 1 5 7 3 12/21/81, existing bus lines and she thouyht that should be corrected. She said she had not fo .lowed the status of the current study on the downtown parking structure and asked at what stage it was and whether the consultant had come up with a suggested number of spaces that could be accommodated in the structure, ,and the cost per space. Ms. Thompson said the consultant study would be completed by the end of January and some figures that they had come up with were that it would cost approximately $7,000 per stall if a structure were built either at Lot J, which was one of the City parking lots, or behind the Holiday Inn in the Urban Lane area. The ap- proximate number of spaces varied, depending upon how many levels were put in the Urban Lane area, but assuming absolute maximum number of levels in. Lot J, there would be approximately 420 spaces, and Urban Lane, dependent upon how many levels, 200.to 300 spaces. 1 1 Ned Gallagher, representing Downtown Palo Alto, Inc. said that his remarks represented the feelings of his organization. He thought everything contained in the report was favorable, but there were many serious considerations made in the past 1-1/2 years which did not appear. He said the observations were not intended to be negative, or obstructive, but were intended to bring to the Council's attention a review of those factors. He understood that the Council. was not approving the Parking Manage- ment Plan tonight, that staff was requesting the authority to go ahead with a grant application. He thought the magnitude of the yrant was a major step in the direction of implementing the plan, and the momentum generated by the grant if awarded would be strong and difficult to reverse although it could be done. If the yrant was awarded and the plan implemented, some of the im- pacts in the downtown area would be that some people parked in the residential area north of Lytton, who were in many cases en- try level employees with very little income, would find the in- crease of park i ny fees on their annual expenses would be consid- erable. It would also exacerbate the employment situation with regard to those entry level employees for the employers in the downtown area. He said hiring to fill these positions was a cur- rent problem not just with merchants, but with the banks, savings and loans, for example, hiring tellers, He said those kinds of people at the entry level were not able to come to work in Palo Alto. He Said they had some reservations about a plan that was principally justified on a cost revenue analysis. He thought it ignored a great deal of the public's concerns and complaints ex- pressed at public meetings of many constituencies during the great outreach problem, conducted by staff during 1980. Mr..,: Ca l l agher said that regarding the program Objectives and Elements on page 4 of the report, the ge:rera1 ' tone , of the report was . favorable, it was hard to resist and very, persuasive. He re- minded the Council that if they .;went ahead ;and obtained the, grant and implemented the program, there was the likelihood that the issues raised in the outreach program would be raised again "be- cause they were not covered adequately in the report. The report said that one of the objectives of the plan was to reduce com- muter on -street parking in the neighborhoods around the downtown area by reducing the subsidy of free parking on' the Street. He saw nothing wrong with the subsidy --at was done for 19 years with the City's lots, and the objective of attractive parking downtown was to make it free. He said another objective of the plan was to provide attractive alternatives to the automobile._ There were no attractive alternatives to the automobile. . The industry and the state of -the industry had ,produced a .vehicle which was -prob- ably the most convenient tran-sportation which 'ever came to reran- kind. It provided a: car that was air conditioned, had music, convenient. in the way Of time, not expensive, and the proposed a l ternat i_ves were not attract-i ve--cal pool i ng, bus, train-, bi cy- cle and walking.. Mr. Gallagher said that regarding the rationale for federal assistance, one feature of the federal assistance said that the proposed project while promising an approach to reduction of parking problems was relatively untried and would provide other cities with Vital lessons about impact costs and implementation. The report also said it was difficult to predict the revenue range and that fortunately there were several variable's which could be manipulated during the' demor,stration to adjust cost in revenues. The permit price and the citation fine: could be charged .on the revenue side. On the cost side, shuttle service could.be -varied which he presumed meant reduced. He felt there were so many factors in the plan which were untried, assumed and speculative, that he had concerns about the reaction by the pub- lic, which had already been demonstrated. They believed that the wide -spread objection to the plan which surfaced during the out- reach effort and the nature of the disincentive could easily be construed as punitive by those who had difficulty in paying, and suyyested a strong note of caution in_ going forward with a re- quest -to the federal government to support a plan which stated, "the i1MTA ' grant motleys would provide the City with :time to research and experiment with the various elements :of a parking prlc my alternative mode." Downtown Palo Alto, Inc: urged that any and all steps:take'n in regard to the Downtown Parking Manage- ment Plan not have any impact on the commercial aspects of the downtown community. Vice Mayor .Fletcher said she thought Mr. Gallagher would agree that the current pattern was for commuters to take up shoppers' spaces and keep moving their cars. Further, the Council had been told that the proposed parking structure or structures could not accommodate- the 2,000 -space shortfall which' was projected. If this plan was unacceptable, she asked if Downtown Palo Alto, Inc. had an alternative. Mr. Oallayher said he was not saying the plan was unacceptable nor did he have an alternative. He thought the plan had merit, and he had stated that his comments were not intended to be nega- tive nor obstructive. The plan with regard to the multi -level parkiny structures was not in any way intended to be a solution to a 2,U0O shortfall in parking. Bill byxbee, Chairman of the Parking/Traffic Committee for Down- town Palo Alto, Inc., said that the cost benefit ratio for the proposed park and drive program appeared uneconomic. He .said that implementation of a plan for moving just 200 commute vehicles from parking onstreet in the contemplated parking zone for the University Avenue area to an outside parking lot located at Page Mill and Birch would require an initial federal tax sub- sidy approximating $400,000 and costs of maintenance thereon would possibly involve a monthly charge of $25 per month for all commute vehicles remaining parked 'onstreet. He said that today approximately 1,800 commute vehicles parked onstreet in the af- fected parking zone, and the anticipated costs, which removed conceivably 200 of the 1,800 vehicles, as described in the staff' repo: t, appeared excessively expensive.. .He purposely ignored the Urban Lane lot since it -had not been part of the program in accordance with'the comment on page 4 of the staff report which said that the Urban Lane area would require paving at a cost to the City which could run anywhere from $40,000 to $50,000 for a temporary Job, to something .in, excess of $125,000 to $150,000 if the lot was brought up to -.standard. Staff indicated a possible commute permit parking fee of $25 per month in lieu of an origin- ally suggested $15 .per_ month. He ,thought a $25 fee was in the ri,ght sector to meet the cortempl aced costs of tho park and . ride system' as described in the current report. He said that as a 1 commercial area downtown' Palo Alto did not compare to San Francisco and as an employment center it competed against other local areas which provide employee parking at no cost or at best for a minimal cost. There was no question that a $25 per month fee would be a burden to many. He said staff indicated a round trip:•of 15 minutes for the shuttle buses running between the pro- posed parking lot at Page Mill Road and the downtown. He. thought 25 minutes seemed_ more -practical particularly when buses would experience delays in the embarking and disembarking of passen- gers. An employee using the parking lot could probably figure on an additional .30 to 45 minutes in round trip commute time from. his home to work, which increase would prove to the.detriment of the park and ride program. The shuttle -buses would only operate during commute hours, and employees would Allot have access to their -cars parked in the lot at Page -Mill Road during the day= which could also have an adverse effect on. the use of the lot. He thought there must be more innovative ways to remove commute vehicles from residential areas.- Within any commercial district there were traffic and parking problems and mitigation of those problems required compromises, but it gust be noted than, 'people would drive automobiles to work as long as there was gasoline. Programs to control the disposition of employee vehicles must prove to be convenient and reasonable. He said within the park- ing zone it must be rioted that neighboring :residences had not made onstreet parking a significant issue thus better types of plans could be worked out. He said the City Council turned away from the park and ride concept 1-1/2 years ago, and considering the costs to implement the plan at this time in comparison to the benefits derived, the -plan should once again be turned away by the Council. Counc i linewber Renzel said that since she started serving on the Planning Commission she had been concerned about the parking problem in both downtown and California Avenue and was concerned about the apparent inability of the assessment district mechanism to provide adequate parking for the demand created, She said clearly the information the Council had was confirmation of that problem --it was not a new one and would not go away. The only way the Council could do anything about it was to take steps and attempt to make changes both in peoples behavior and the Coun- cil's ability to provide transportation system. She thought the Voorhees report which came out in 1978 was one of the best com- prehensive proyra:ns she had ever seen in terms of the complicated subject. She thought ,the modified version before the Council was probably reasonable given the various objections heard at that time. She pointed out that Council continued to talk in terms of a deficiency of approximately 1,700 to. 2,000 long term spaces in downtown and reminded the Council that 50% of the 4,000 nffstreet. spaces downtown were privately held, and there was no obligation on the part of the owners to continue those spaces in parking at any point. With the real estate market being what it is the City was bound to lose more and more of that parking to office buildings and stores which would create additional demands for parking. ' She thought it was urgent that the Council pursue some sort of transportation program. It 'would not be easy and there would be objections, it would disrupt people's usual patterns, but if nothing was done now, there would be no options to do any- thing later. MOTION: CouncilMember Renzel moved, ; seconded by . Fletcher, to adopt staff recommendations (1) that the proposed UMTA project will have no significant environmental impact; 2) direct staff -to submit a _final application for $345,000 to UMTA for a parking pricing/alternative mode program -> 3) approve the future use of 412,000 to pay for a portion, of the UMTA demonstration's 1 5 7 6 12/21/81 start-up' shuttle costs; 4) authorize staff to' increase the $15/month on -street commuter permit parking fees to $25/month if the diversion to alternative modes does not reach 16% within_six months after the permit system is implemented; 5) accept the FHWA grant in the amount of $107,000 for Palo Alto's proposed trans- portation systems management program. Councilmember Eyerly called the Council's attention to the staff's attachment #5 to the staff report, pages 632 and 635 which were a portion of the minutes when the Council discussed the Downtown Parking Management Plan six months or so ago. Under Section 3, on page 632, Section (a) of Section 3, there was a recommendation fielded by the Policy and Procedures Committee which read "implement a residential and commuter permit system with alternative mode programs as presented..." and then__ on page 637 at the bottom of the e page there was an amendment which spoke to that section of the Policy and Procedures Committee recommend- ation and amended that section to include at the start of the paragraph, "When a park and ride lot or other transportational alternatives are established..." He said the. staff report had doubled up on that somewhat. -It was his feeling when that amend- nient was made, that the park and ride lots would be in, be used and eventually what ability there was to move people into the park and ride lots would be -analyzed before a request for the permit system. He felt that if the Council enacted the -staff proposals, there would be a tremendous reaction from several groups of people. He had not heard from the residential comrnuni- ty surrounding the downtown area regarding the parking situation as it was now,- which did not mean it should not eventually be corrected, but he did not feel any urgency on that section of the community. The employees which he had heard from would react which in turn would bring a reaction from. the employers and prop- erty owners, and there would be a lot of trouble. He thought the the _cart was ahead of the horse in the way Council was proceed- ing. First, before the permit system started, resources should be reinforced for -policing of -the .limited parking areas'. He said there was no policing on Saturdays. and the program should be beefed up to include that; .and if the employees cool d not be kept out of those restricted areas, he thought a more frequent police ing was needed, or, see if there might not be some other methods for moving those employees. But before getting into that, he thought the park and shuttle lots on the outside -of the downtown area must be provided so that there was someplace to move those people. the Council needed to see the feasibility of the parking structure before going into the permit system. He was not ready to go with the permit system and -notion as it presently stands`, but .could vote 'for_ it eventually if other things happened first. _ ice Mayor Fletcher said that a lot,. of the spaces in the lots had been restriped for .compact cars because there were more and more compact tars on the roads, but Aikewise had riot .bee n „done on the streets. She asked i.f it was feasible .;to doe that on the streets. Mr. Noguchi said staff looked at that in the past, and the diffi? coil ty was that if a small car space were marked, it did not pre- clude a larger car from parking in there. When that happened, the space really became one anyway. Vice Mayor Fletcher also wondered why staff suggested a four - month start up period for the shuttle before the on -street permit program got underway. 1 1 1 i 1 Mr. i oyuchi felt it was yet people used to the that people were aware addition, the TSM grant up time which helped to would provide. almost a minimum time in which to try and idea and to do an effective outreach so of the program and would use it. In provided for at least two months of start supplement the amount that the UMTA grant Vice Mayor Fletcher felt that the $15/month for the on -street parking permit was less per day than it would cost a person to ride the bus. AMENDMENT: Vice Mayor Fletcher moved that the $15/month fee for on -street parkingbe raised to $20/month. AMENDMENT FAILED for lack of a second. Vice Mayor Fletcher said she saw in some of the information that there was to be a full-time coordinator, and asked if that was correct. Ms. Thompson_ said that under the TSM grant there would be a full time downtown coordinator that would encourage people to car pool and ride the shuttle. Under the UMTA grant, there would be a coordinator of the :whole program and part of those duties would be to advertise the availability of alternative modes as well as implement the residential permit program. Vice Mayor Fletcher was somewhat disappointed that this was to be a City imposed program whereas she felt that the program needed to involve the people downtown. She said the success in the industrial areas had been that the employers had found it worth- while to assign an employee to do the coordination and to work with the employees within the plant. She urged that: a gradual shift be made so that, hopefully, the employers downtown would feel it worth their while to work with the City and join in try- ing to get the computer cars off the downto.we streets. She said they would benefit by opening up those spaces for the shoppers who bring themoney downtown. She thought that one of the most important things was to make the incentive widely disbursed an&. as accessible to the employees as possible. One reservation she had was the success of the shuttle service versus other ways of getting around because of the very close proximity of where most. of the employees worked. She said it was the reverse because most people. came .from a very. long distance, and downtown 62% of the employees lived within five piles and if they were.. asked to go to a parking lot and wait for a shuttle, it would probably double their travel time. She was in favor of trying it, but had reservations.. Councilrenber Bechtel asked how the residents who lived along a street which would have the permit system would be notified, how they would be able to apply for a resident permit, and would there_ actually be a big time-consuming process of verification of residency. Tom:Niygins. Consultant-, said that the model to look at to get a feel of how residents might be treated preferentially through residential permits, guest permits, etc. came from San Francisco. If you looked at that city, there was a . so-called resident pref- erential where residents had to apply, certify that they were residents' by a utility bill ._ or some, such thing, in order to receive= a preferential permit to park on -street. He said it was alot _,,a simple process, but that they were free permits to residents. In most preferential parking programs, thee was a nominal cost. He said there were some administrative dealings which must take place to certify that one was a resident. Councilmember Bechtel wanted to be sure that residents were noti- fied in a timely manner, and that the process was easy because they would be impacted substantially --half of them would not be allowed to park in front of their own homes during the day and . would have to find a place across the street. She appreciated Downtown Palo Alto Inc.'s concerns'and thought the Council also wanted to make sure that retail was kept viable. She was con- cerned about the fact that two hour parking spaces were filled much of the time particularly the ones most convenient to the shops. She thought those were occupied in part by employees who found it, easier to move their cars than to pay for a permit or to park four or five blocks away and she thought the program should be pursued. She had previously supported a parking, garage and would continue to do so, but only about 200-250 more spaces would be provided where the shortfall was closer to 2,000. She thought the earlier comments reflected many of the objections of the property owners and tenants when the original proposal went from the Creek all the way to Embarcadero. Atthis point, she would support the $15 because she was concerned that it would be such a surprise to have to pay to park in the street, and maybe so un- popular that those particularly ambitious employees may find it preferable to park on the other side of the Palo Alto Clinic or get to the Palo Alto Clinic early and park. Councilmember Levy asked if shuttle bus service was operating somewhere else in the country and its effect. Mr. Higgins responded that generally transit expansion alone, whether it was shuttles, busways or a lot of other methods, had decreased solo driving less than 5%. Where it had been done, it had only been a short time. Ceunciimember Levy asked if anyone had tried the combination of shuttle buses plus charging to park on tha streets. Mr. Higgins said that in his report he used the only available data he could find on the effects of moving the parking subsidies to project what he thought would be the impacts. He sai=d that the data relied upon experiences in Los Angeles and Ottawa, Canaia, and in part on the modeling of the Voorhee study done in 1978, He said that in 0ttowa when the subsidy was removed, a lot of transit was added --not park and ride, but beefed up routes for regular transit. A decrease in solo driving- was found in that case somewhere around 20%. He said that in Los An9eles, a study of drivers who drove and paid for parking versus a compar- able set of people who drove and parked for free showed that a difference in the drive -alone portion was on the order of 30%- 40%. He, thought that the best to be expected in this case was on the order of a 30% reduction, and at the least,.. about 16%. He said that allowed not onl y. for diversions to -the shuttle, but also for a better utilization of off-street spaces. Councilmember Levy said that regarding the 200 spaces to be created at a cost of --$900,000 over two years, he calculated that to be something like $4,500 per space for those two years He had heard that it . cost approximately $7,000 eto build a parking space, and if so, if it cost the City $2,200 per year per space to be created, he thought it made more . sense to build new parking spaces at $7,000 as a one-time capital cost. Those spaces would pay for themselves in 3-1/2 years. He said the City could still go ahead and implement the_: disincent:i ves:of charging for park=ing in the close -ill areas on the street. leather than shuttle buses `,l 5 7 9 12/21/81 i to outlying parking areas, it made more sense to him to use the close -in areas to build garages --hopefully .they would be built attractively. He thought some kind of disincentives should be tried, i.e., charging for parking in the close -in street areas, and that the Council would be smarter to spend $7,000 per space and try and build parking close -in rather than the elaborate sys- tem of shuttles to parking lots in outside areas. Mr. I4oguchi said that was not just the cost of the parking spaces, it included the cost involved with the parking pricing program itself in the residential areas --the enforcement costs, the costs of the.. special permits which would have to be created, and the administration costs. Mayor Henderson said he was skeptical about the success of the program although he had no alternatives to offer. Councilmember Klein said he was opposed to what the Council had before them even though he had, no alternatives to offer. Besides people in dire economic straits, he could not see people using the program very much. Fifteen -minute headways were a problem, as well as the distance. He thought gas would have to be a lot more expensive, and the parking problems much worse_ before a pro- yram like this would succeed, and he was worried that the Council was so far ahead of where human nature was Mr. Laner urged the Council to vote for the program. He said it was an experiment, and that the same discussions had been had over and over again. He admitted that the program was not per- fect and that it had all kinds of problems, but the program was flexible and adjustments could be made as they went along. Fur- ther, the City had the ultimate flexibility of stopping the pro- gram or any portion thereof anytime it wished at almost no lia- bility to the City. If something with the program .was not done to find out how it worked and what pieces should be moved around, the Council would be sitting there in a year and a half trying to deal with the same program as had been done since 1978. He urged the Council to let staff apply for the grant, try the program, adjust it a5 necessary, and if it was unsuccessful, staff would know, and they would turn it off. Vice Mayor Fletcher pointed out that from her observations, down- town was the fastest growing employment area in the City. If something was not done about the parking, she thought a freeze,_ should be imposed on all future downtown development. MOTION PASSED by a vote of 5-3, as follows AYES: Renzel, Fletcher, Henderson, Bechtel, Levy NOES: Eyerly, Klein, Fazzino ABSENT: Witherspoon Councilmember Eyerly : said that _ regarding the problem of parking in the downtown. area, the program just enacted did not -speak>' to the .sleeper parking problem in the limited parking` time areas of. the downtown areas. He saw nothing that would change or givenew direction to trying to solve the problem. Mr. Noyuchi said that the present plan did not contemplate any particular change as far as the, immediate assessment district parking lots were concerned, but the plan envisioned additional enforcement, or parking monitors for the residential. area. He thought: it might fit in to the overall program as long as additional staffing would be provided through a demonstration program to hit the other parking lots at the same time. Councilmember Eyerly said he realized that it might have a rub off with all the people that would be employed in the program to give a little better policing action, but wondered whether the City would not be wise to look at the sleeper problem in the limited parking areas and suggest a program that aright come up with suggestions for more limited parking, the assessment dis- trict picking up some of the expenses ofthe extra monitors which might be necessary, etc. He said that .problem had been wrestled with for a number of years, and as he saw this program, it did not directly speak to it, and he thought that was a major problem in the downtown area. MOTION: Councilmember Eyerly moved that staff provide a report suggesting a program to correct the sleeper parking problem in the limited parking time areas -in the downtown area. MOTION FAILED for lack of a second. BALLOT ARGUMENT RE SPECIAL ELECTION FOR INITIATIVE PETITION - Mayor Henderson commented that after having read_ the direct bale lot argument opposing Measure A, which was prepared by Council - members Klein, Witherspoon and Levy, he felt it. was excellent. MOTION: Mayor Henderson _.moved, seconded by Fazzino, to approve the wording for the Ballot Argument. City Clerk Ann Tanner advised that she gave each Councilmember a siynature sheet, and since the law required approval by individ- uals whose name was used in an argument, she asked that they be signed and returned to her. City Attorney Diane Lee suggested that in any motion, the Council move to have anyone's name deleted from the argument who did not sign a signature card which would obviate any need to come back. Ms. Tanner said five votes were needed 'to Jiave the argument placed on the ballot signed by the Mayor for the Palo Alto City Council. Councilmember Klein said the language was correct, but noted com- mencing with the words, "This initiative sterns..." should be a new paragraph. MOTION PASSED by a vote of 7-1, Renzel voting "no," Witherspoon absent Councilmember Levy said that Councilmember Witherspoon was a co- author of the argument and asked that the City Clerk be sure and, obtain her signature card. RE UEST OF VICE MAYOR FLETCHER RE PALO ALTO. BUS ROUTES Vice Mayor Fletcher said she was not confident about the accuracy of a recent study of use of the County bus routes in .Palo Alto, and asked the City staff to conduct their own accounting. She said Mr. Lefler had had some contact with the Director of Trans- portation and had worked out an agreement. She deferred to him for further information. 1 1 Mr. Zaner said that the Director of the Transportation Agency had agreed to have his top staff meet with Palo Alto's transportation people, present the data they collected and give City staff a chance to look at the data and analyze the data with them. Staff proposed to return to the Council with that data along with their findings. At that time, if the Council was uncomfortable with what the County had done, the City could then go into its own surd-ey, MOTION: Vice Mayor Fletcher moved, seconded by Renzel , that staff be. directed to meet with the appropriate representatives of the County Transit District to review Palo Alto bus patronage data, and to report back their findings as soon as possible. MOTION PASSED unanimously, Witherspoon absent. ADJOURNMENT Council adjourned at 12:25 a.m. ATTEST: APPROVED;