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HomeMy WebLinkAbout2011-03-07 City Council Agenda PacketCITY OF PALO ALTO PROCLAMATION NATIONAL ARBOR DAY AND CALIFORNIA ARBOR WEEK WHEREAS, it is important that all citizens acknowledge the role that trees play in our lives, whether by providing oxygen, offering shaded places to rest, or contributing to the splendor and viability of our City; and WHEREAS, our community values the Urban Forest not only for its majestic natural beauty, but also for its essential public health, environment, and economic benefits; and WHEREAS, we recognize the commitment needed to grow a vital, thriving, healthy and sustainable mix of tree species that can adapt to potential threats such as natural pests, improper tree care, urban development, budgetary pressures, and climate change, and this community has engaged in preparing an Urban Forest Master Plan to address these challenges; and WHEREAS, each year, “NATIONAL ARBOR DAY” is celebrated by people throughout the nation in recognition that trees and humans share an interdependence that should be nurtured, in remembrance of famed horticulturists Sterling Morton and Luther Burbank; and the permanent inspiration of Nobel Peace Prize Laureate, Professor Wangari Maathai during her visit with our community in 2006; and WHEREAS, during March 2011, the City of Palo Alto is observing “CALIFORNIA ARBOR WEEK,” with inspirational activities led by Canopy and City Staff, to reflect upon our trees and encourage all citizens to join in this celebration at a neighborhood park planting; and WHEREAS, the City of Palo Alto has been recognized as a “Tree City—USA” by the National Arbor Day Foundation for 26-consecutive years and desires to enhance its green goals and continue to achieve this honored distinction. NOW, THEREFORE, I, Sidney A. Espinosa, Mayor of the City of Palo Alto, on behalf of the City Council, do hereby proclaim March 7-12, 2011, as “PALO ALTO ARBOR WEEK” and urge all citizens and young adults to support efforts to care for our trees and surroundings, to support our City’s multi-faceted community forestry program, and to plant trees to gladden the hearts and promote the well-being of present and future generations. Presented: March 2011 ____________________________________ Sidney A. Espinosa Mayor RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO EXPRESSING APPRECIATION TO WAYNE FLUSS UPON HIS RETIREMENT Whereas, Wayne Fluss has served the City of Palo Alto from April 28, 1980 to November 30, 2010 as Tree Maintenance Assistant, Tree Trimmer Line Clearer Assistant, Tree Trimmer/Line Clearer, Heavy Equipment Operator, and Heavy Equipment Operator Lead; and Whereas, Wayne Fluss has enhanced the quality of life for the citizens of this community by trimming trees, repairing sidewalks, cleaning storm drains, maintaining pump stations and wet wells and keeping Public Works Operations prepared; and Whereas, Wayne Fluss has faithfully and continually responded on nights and weekends to provide 24 hour emergency response during winter storms; and Whereas, Wayne Fluss, in his 20 years of service with the tree section of Public Works Operations, helped to provide the citizens of Palo Alto with a safer, greener tree city; and Whereas, Wayne Fluss, in his 10 years of service with the Storm Drain section of Public Works Operations, has taken part in clearing approximately 1.9 million linear feet of storm drain lines; the equivalent of one line from Palo Alto to Las Vegas, Nevada; and Whereas, Wayne Fluss, has taken a leadership role in all of the positions he has held in Public Works; and Whereas, Wayne Fluss has provided his expertise, training, guidance and support to fellow employees in the Public Works Department; and Whereas, the City of Palo Alto desires to recognize the meritorious service of Wayne Fluss; and NOW, THEREFORE, BE IT RESOLVED that the Council of the City of Palo Alto hereby commends the outstanding public service of Wayne Fluss and records its appreciation as well as the appreciation of the citizens of this community for the service and contribution rendered during his 30 years of employment with the City. INTRODUCED AND PASSED: March 7, 2011 ATTEST: APPROVED: ___________________ ______________________ City Clerk Mayor APPROVED AS TO FORM: ____________________ ______________________ City Attorney City Manager CITY OF PALO ALTO PROCLAMATION March 2011 Peace Corp Month WHEREAS, The Peace Corps has become an enduring symbol of our nation's commitment to encourage progress, create opportunity, and expand development at the grassroots level in the developing world; and WHEREAS, More than 200,000 Americans have served as Peace Corps Volunteers in 139 countries since 1961; and WHEREAS, Over the past 50 years, 27,300 men and women from the state of California have responded to our nation’s call to serve by joining the Peace Corps; and WHEREAS, More Peace Corps Volunteers have come from California than any other state; and WHEREAS, Peace Corps Volunteers have made significant and lasting contributions around the world in agriculture, business development, information technology, education, health and HIV/AIDS, and the environment, and have improved the lives of individuals and communities around the world; and WHEREAS, Peace Corps Volunteers have strengthened the ties of friendship and understanding between the people of the United States and those of other countries; and WHEREAS, Peace Corps Volunteers, enriched by their experiences overseas, have brought their communities throughout the United States a deeper understanding of other cultures and traditions, thereby bringing a domestic dividend to our nation; and WHEREAS, It is indeed fitting to recognize the achievements of the Peace Corps and honor its Volunteers, past and present, and reaffirm our country's commitment to helping people help themselves throughout the world. NOW, THEREFORE, I, Sid Espinosa, Mayor of the City of Palo Alto, on behalf of the City Council do hereby proclaim March 2011 as Peace Corp Month in Palo Alto. Presented: March 2011 ______________________________ Sidney A. Espinosa Mayor 01/18/2011 Special Meeting January 18, 2011 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:05 p.m. Present: Burt, Espinosa, Holman, Klein, Price, Scharff, Schmid, Shepherd Absent: Yeh CLOSED SESSION 1. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Dennis Burns, Lalo Perez, Joe Saccio, Sandra Blanch, Marcie Scott, Roger Bloom, Darrell Murray) Employee Organization: International Association of Fire Fighters, Local 1319 Authority: Government Code Section 54957.6(a) The Council reconvened from the Closed Session at 7:49 p.m. and Mayor Espinosa advised no reportable action. STUDY SESSION 2. City of Palo Alto Service Efforts and Accomplishments Report Fiscal Year 2010. The Council held a Study Session to discuss the Service Efforts and Accomplishments (SEA) Report for Fiscal Year 2010. The Study Session began with a presentation, from Acting City Auditor Mike Edmonds. He spoke on the results of the annual citizen survey, including Palo Alto’s national benchmark ratings and results of the survey by geographic area. 2 01/18/2011 The City Auditor’s Office identified an error in the Fiscal Year 2009 Geographic Subgroup Comparison results provided by the survey company and was working with the vendor to correct the error. An updated report would be provided to the Council, and updated on the City Auditor’s website. Senior Performance Auditor, Ian Hagerman presented expenditure and performance data for each City department, the second annual Citizen- Centric Report, and highlighting key data from the SEA Report. Council expressed interest in utilizing the SEA Report throughout the year, and stated it was a valuable resource to help inform their discussions regarding future priorities. Council expressed an interest in outreach to the community, and within the City, regarding the SEA Report. Council suggested reviewing the presentation of staffing levels in comparison to other local jurisdictions to ensure that staffing levels were precisely portrayed. ORAL COMMUNICATIONS Mark Petersen-Perez spoke on his public record requests, community member Victor Frost, and his First Amendment rights. He requested free access to the same media press releases that his competitors received. CITY MANAGER COMMENTS City Manager, James Keene spoke on the City’s 28th Annual Toys for Kids drive. The Palo Alto Art Center will showcase a monumental, site-specific willow sculpture by Patrick Dougherty. APPROVAL OF MINUTES MOTION: Council Member Shepherd moved, seconded by Council Member Price to approve the minutes of November 8 and 22, 2010, and December 6, 2010. MOTION PASSED: 8-0 Yeh absent CONSENT CALENDAR MOTION: Council Member Holman moved, seconded by Council Member Scharff to pull Agenda Item No. 3 to become Agenda Item No. 7a. MOTION: Council Member Klein moved, seconded by Council Member Shepherd to approve Agenda Item Nos. 4-7. 3. Adoption of a Budget Amendment Ordinance for the Fiscal Year 2011 in the Amount of $57,761 to Allocate Funds to Capital Improvement Project PG-09002 for the Replanting of Trees at Eleanor Pardee Park. 3 01/18/2011 4. Approval of an Exchange Agreement and Quit Claim Deed for the Exchange of a 1,525 Square Foot Portion of Public Street Right-Of-Way Land Along San Antonio Road for a 28,098 Square Foot Privately Owned Parcel of Land Located Under the San Antonio Road Overpass to Secure and Maintain a Public Access Road to the Former Mayfield Mall Site at 200 San Antonio Road. 5. Recommendation that the City Council Refer the Percent for Art Policy and Procedure to the Policy and Services Committee for Recommendation to the City Council. 6. Resolution 9138 entitled “Resolution of the Council of the City of Palo Alto Authorizing the Exploration of Consolidated and/or Shared Services and Assets Between the Cities of Palo Alto, Sunnyvale, Mountain View and Los Altos.” 7. Approval of a Contract with MV Transportation in the Amount of $480,744 to Provide Community Shuttle Service for the Crosstown Shuttle Route for up to Three Years and Amendment to the Peninsula Corridor Joint Powers Board Agreement to Terminate Provision of Crosstown Shuttle Route Service. MOTION PASSED for Agenda Item Nos. 4-7: 8-0 Yeh absent AGENDA CHANGES, ADDITIONS, AND DELETIONS 7a. (Former No. 3) Adoption of a Budget Amendment Ordinance 5113 for the Fiscal Year 2011 in the Amount of $57,761 to Allocate Funds to Capital Improvement Project PG-09002 for the Replanting of Trees at Eleanor Pardee Park. Council Member Holman spoke on her appreciation for Staff’s responses to her questions regarding this Agenda Item. It was her belief the description for the final design was an implementation of Phase Two, rather than a comprehensive design or fresh look at the site. When she compared the old design with the new one, it was Phase Two with a shifting of the valley oak tree toward the corner of the park, near Channing Avenue and Center Drive. She inquired on the possibility for one more community meeting to gain input on Council’s proposal from their meeting on January 10, 2011. She indicated there was no mention on the effort to engage the community on contributing to the purchase of trees. Director of Community Services, Greg Betts spoke on his understanding of the Council’s direction from last week’s meeting. He spoke on the placement of the valley oak tree, and the proposed adjustment of trees along Channing Avenue. The Eleanor Pardee Park Landscape Plan (Plan) was a result of two 4 01/18/2011 public meetings held on December 1 and December 8, 2010. All donations received, through the Adopt a Park Fund, would be moved to the Infrastructure Reserve Fund. The hope for fundraising was three pronged as follows: 1) following up with participants at the community meetings on how they could contribute to the Palo Alto Parks; 2) display a project sign at the site that would include how to volunteer or donate; and 3) install a widget on the Eleanor Pardee Park webpage on how to make contributions via PayPal. Mayor Espinosa inquired whether the Plan was originally the Master Plan, and whether it necessitated a return of a Phase Two. Mr. Betts stated the Plan, presented last week as Attachment D, was the Master Plan. Last week Staff presented two drawings. One was a partial first phase depicting the removal of six trees along Center Drive, and the second one was the Master Plan depicting the removal of all the trees. The Plan, presented in the Staff report, was revised to incorporate comments made by the Council at the meeting held on January 10, 2011. Council Member Scharff stated the revised Budget Amendment Ordinance proposed the removal of ten eucalyptus trees. It was his belief the Plan illustrated the removal of eleven existing eucalyptus trees. Mr. Betts stated there was a total of sixteen eucalyptus trees along Channing Avenue and Center Drive. Six trees have been removed to date, and Staff’s recommendation was to remove the remaining ten trees. Council Member Scharff wanted to ensure that the Plan and Budget Amendment Ordinance matched. Executive Director for Canopy Incorporated, Catherine Martineau, spoke on the community’s involvement and fundraising efforts on the replanting of the eucalyptus trees. She was unclear whether the Plan had received enough attention, and urged the Council to extend the timeline to examine the location on the planting of new trees. Council Member Schmid stated the valley oak tree was moved eighteen feet, and the distance between the valley oak tree and the corner of the park was approximately thirty-five feet. The existing trees being removed were 130 feet in height, and would be replaced by a row of trees twenty-five feet in height. It was his belief the Plan would create an abrupt and dramatic change. He recommended holding a public meeting on the Plan. Council Member Holman stated the Plan was constrained in nature. The Plan would be intact for more than 50 years, and the public should have every opportunity to voice their input. She felt the valley oak tree would not 5 01/18/2011 create a majestic corner because it was not close enough to the street’s intersection. MOTION: Council Member Holman moved, seconded by Council Member XXX to have Staff return the revised site plan to the landscape architect for reevaluation of the intersection located at Channing Avenue and Center Drive for development of a signature corner of planting. MOTION FAILED FOR LACK OF A SECOND MOTION: Council Member Scharff moved, seconded by Mayor Espinosa to adopt the Budget Amendment Ordinance for the Fiscal Year 2011 in the amount of $57,761 to allocate funds to Capital Improvement Project PG- 09002 for the replanting of trees at Eleanor Pardee Park. Mayor Espinosa spoke on his appreciation for the interest in reexamining the Plan. It was his belief that sufficient opportunity on public commenting had taken place. AMENDMENT: Council Member Schmid moved, seconded by Council Member XXXX to have Staff make an interactive website available that would include the Plan. Mr. Betts stated Staff attempted to track all the actions and project plans developed in the community meetings, including the Arborist’s report. He stated the City had a specially-designed webpage on the Plan. Council Member Schmid stated his recommendation was to have an interactive webpage. Council Member Scharff spoke on his disapproval for an interactive webpage. AMENDMENT FAILED DUE TO LACK OF A SECOND Mr. Keene spoke on the difficult budget decisions made last year. This project was an unbudgeted and unplanned Capital Improvement Project. He indicated that at least $50,000 had been spent on Staff time supporting the community process. It was his belief additional time spent on this project took away from community programs. MOTION PASSED: 7-1 Holman no, Yeh absent 6 01/18/2011 ACTION ITEM 8. Adoption of the Energy Risk Management Policy. City Manager, James Keene stated this Agenda Item was Energy Risk Manager, Karl Van Orsdol’s last presentation to the Council before his retirement. Director of Administrative Services, Lalo Perez stated the Administrative Services Department oversaw the monitoring and risks associated with the City’s commodity transactions. Energy Risk Manager, Karl Van Orsdol stated the City’s Energy Risk Management Policy (Policy) served as the overriding document for the management, monitoring, and hedging of risks associated with the City’s commodity transactions. In line with the Policy requirement to submit the Policy to the Council for approval each year, Staff requested that Council approve the Policy. The Utilities Advisory Commission approved the proposed 2011 Policy. He gave a PowerPoint presentation that reviewed the approval process, Policy’s importance, key risk management documents, key roles and responsibilities in risk management, risk management oversight structure, risk management objectives, and an overview of risk assessment. Council Member Schmid spoke on Section III, Page 2 of the Policy - Energy Risk Management Philosophy. He stated dependable returns to the City was mentioned multiple times. He inquired whether dependable returns was more important than other factors mentioned in the Philosophy. Mr. Van Orsdol stated the Utilities Department was fundamentally a business. Possessing no dependable returns, to the City, would require the rate payers to make up the financial difference in a loss. The key in emphasizing dependable returns was to ensure that there would be no rapid changes in rates. Council Member Schmid spoke on the Policy’s mission statement. Staff attempted to balance the value to customers, and financial return to the City. He inquired whether it was Staff’s intent to keep these two principles balanced. Mr. Van Orsdol stated that was correct. Council Member Schmid stated basic premise, as stated in the philosophy, was a new term. Mr. Van Orsdol stated the term basic premise was a fundamental underlying component of the Policy, and its intent was to ensure that the City was not exposed to unduly risks. 7 01/18/2011 Council Member Schmid inquired whether the intent of the term basic premise would override preceding statements in the philosophy. Mr. Van Orsdol stated it was absolutely fundamental that the City not expose itself to financial risks associated with energy commodities. Council Member Schmid stated basic premise was strongly stated. Basic premise was defined as having no activity related to the energy purchases and sales that would unduly expose the City to the possibility of financial losses. It was his belief that everything the Council approved had some risk attached to it. Mr. Van Orsdol stated commodity transactions had the greatest risk. In recent years, many municipal and private utility sectors have filed bankruptcy through Chapter 11. Council Member Schmid stated it was the possibility of failure that was being explained in the Policy, and not a given year that may experience financial losses. Mr. Van Orsdol stated that was correct. Council Member Burt inquired whether Council Member Schmid’s question was referring to the unduly exposure to risk. Mr. Van Orsdol stated that was correct. He stated risk could not be completely eliminated in energy transactions. Council Member Burt inquired why the Gas Utility Long-Term Plan (GULP) and the Long-Term Electric Acquisition Plan (LEAP) were not listed as key risk management documents. It was his belief there was a relationship between these documents and the Policy. Mr. Van Orsdol stated the GULP and LEAP were the Policy’s utilities implementation plans. Council Member Burt stated the GULP and LEAP were significant Council adopted policies. There was a debate, on gas utilities, regarding the projection of declining gas prices. The City had used a laddering system in the past that may not serve well moving forward. He inquired whether the City had the right balance of long-term ladder purchases, and short-term purchases. He read from Section 2 – Preserve a Supply Cost Advantage - Staff will endeavor to reduce exposure to potential adverse energy price movements. He stated Section 2 did not affirm that Staff would take advantage of favorable energy price movements. He inquired how this was a supply cost advantage. 8 01/18/2011 Mr. Van Orsdol stated taking advantage of favorable movement in supply costs was one action in reducing costs. This may increase risk. Risk management was focused on financial risks, opposed to costs associated with purchasing commodities. He stated there was currently no market view on the long-term laddering strategy. The laddering strategy was developed as a way to protect the City against risk. Council Member Burt inquired how that was a cost advantage. He felt the laddering system was an avoidance of risk. He spoke on his concern on the tradeoffs of the laddering system. The Council may choose a risk-adverse approach as a policy position. Mr. Van Orsdol stated a relaxed risk-averse policy that was hit with high costs associated with portfolio performance would lead to a higher cost to rate payers. Council Member Burt did not see an alignment between the title and substance matter contained in the Emergency Risk Management Objectives No. 2 – Preserve a Supply Cost Advantage. The objective was focused on minimizing risk. With a long-term gas rate decline there would be an important policy issue to struggle with on how much risk should be taken, versus cost advantage. Council’s proposed goal was to change that formula somewhat, and this was not reflected in the Policy. Mr. Van Orsdol stated Council’s new goal was presented subsequent to the preparation of the Policy. When a new strategic plan is approved, along with the GULP and LEAP, the Policy would be changed. Staff’s intention was to recommend that the Council adopt the Policy, knowing that there may be changes made to the Policy. Council Member Burt stated his concern was that Staff’s work was out of sequence. Mr. Perez stated contingent plans were needed on how to cover risks to the organization with the retirement of Mr. Van Orsdol. The Council had the discretion to postpone the Agenda Item, and hire an outside consultant to amend the current Policy to incorporate changes reflected in the GULP and LEAP. This option may require reconsideration if the project was delayed for an extended period of time. Council Member Burt stated Staff’s new recommendation acknowledged that the Policy may be modified shortly. Mr. Perez stated the Agenda Item was originally scheduled to be heard in December 2010, and it was a matter of calendaring items that postponed it. 9 01/18/2011 Council Member Scharff stated he had the same concerns that Council Member Burt spoke on. The Finance Committee discussed the laddering strategy, and whether it was beneficial to continue it. He inquired why Staff recommended the approval of the Policy before the discussion on the laddering strategy, and the GULP and LEAP were finalized. Mr. Van Orsdol stated it was a Council policy to approve the Policy annually. Some years brought many changes to the Policy, and other years brought minimal changes. There were proposed changes throughout the year, from the Utilities Advisory Commission and Administrative Services Department, which returned annually for the Council’s consideration and approval. Council Member Scharff stated his intent was to ensure that the various documents were not misaligned. The Council could continue the Agenda Item until the GULP was approved, or the Agenda Item could be approved with the provision that the Policy would return with modifications once the GULP was finalized. Mr. Perez stated, given there were no significant changes in the Policy, it would be satisfactory for the Council to postpone the Agenda Item. Mr. Van Orsdol stated the Policy was just one document that he oversaw. An outside consultant would specialize in the required quarterly financial reports, assess exposure on the City’s portfolios, and oversee the daily activities of the City’s Risk Management Program. Council Member Scharff inquired whether Staff recommended a postponement of the Agenda Item. Mr. Perez stated yes. Council Member Klein inquired whether the 2009 Policy would remain in effect. Mr. Perez stated that was correct. Council Member Klein stated he was uncomfortable with Staff’s recommendation to hire an outside consultant to modify the Policy. It was his belief that an outside consult may be needed for the analysis and creation of the quarterly reports. He inquired why the Administrative Services Department generated the Policy, and why it was not generated by the Utilities Department. Mr. Perez stated Staff wanted a segregation of duties. 10 01/18/2011 MOTION: Council Member Klein moved, seconded by Council Member Scharff to continue this item to the same Council meeting that the Gas Utility Long- Term Plan (GULP) is scheduled. MOTION PASSED: 8-0 Yeh absent Mr. Perez thanked Mr. Van Orsdol for his years of service. COUNCIL MEMBER QUESTIONS, COMMENTS, AND ANNOUNCEMENTS Mayor Espinosa reminded the public that the next two meetings were the Council Retreat, at the Baylands Interpretive Center, and the State of the City Address, at the Cubberley Community Theatre. He adjourned the meeting wishing Vice Mayor Yeh a speedy recovery. ADJOURNMENT: The meeting was adjourned at 10:12 p.m. Special Meeting January 31, 2011 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:03 p.m. Present: Burt, Espinosa, Holman, Klein, Price, Scharff, Schmid, Shepherd, Yeh Absent: ORAL COMMUNICATIONS Art Kraemer spoke regarding adding a guiding principle for public safety. He asked to include riding bicycles on sidewalks in business districts. Mark Petersen-Perez spoke regarding his First Amendment Rights and having been denied equal media access by the City Attorney’s Office. SPECIAL ORDERS OF THE DAY 1. Proclamation Expressing Appreciation to Jay Thorwaldson for Outstanding Public Service. Mayor Espinosa read the Proclamation into the record. Jay Thorwaldson expressed his appreciation for the opportunity of working with so many great people and that his work had been a labor of love and joy. He said he was proud of the people he was leaving behind as they continued to make the Palo Alto Weekly what it is today. He thanked everyone and wished the Council the best. Council Member Klein spoke regarding Jay’s editorial in 1970 which was instrumental in creating the Midpeninsula Regional Open Space District (MROSD). He said Jay was not only a journalist and a critic but was an 2 1/31/2011 advocate in finding ways for a better society and in promoting a better place to live. He spoke of Jay’s role in the creation and engaging citizens into an emergency response program. He acknowledged and thanked Jay for being a fine journalist and an outstanding member of the community. Council Member Price read a quote by Joseph Pulitzer in honor of Jay. “Put it before them briefly so they can read it, clearly so they will appreciate it, picturesquely so they will remember it and above all accurately so they will be guided by its light.” Council Member Holman spoke regarding Jay’s remarkable memory of Palo Alto’s historical facts and expressed her appreciation for his knowledge and retention of the community’s history. Jeff Blum said Jay took his historical knowledge of Palo Alto and applied it in insightful and intelligent ways. He thanked Jay for being his mentor and all he had done for the City. Daryl Savage spoke regarding the impact Jay had made in the community. Bert Rose spoke of his relationship with Jay dating back to the 1960’s and 70’s. He thanked Jay for his mentoring abilities and expressed his respect and appreciation for his honesty, as a fine journalist, and as an outstanding individual. Betty Gerzrd spoke of Jay’s editing and evocative writing skills and spoke of his accomplishments. She said in 1991 Jay worked on the First Conference on Computers, Freedom, and Privacy and was well ahead of where we are today regarding broader implications on communication. Mark Petersen-Perez spoke of Jay’s writings and asked for equal access to the media. Carroll Harrington spoke of Jay’s many accomplishments and how he was leaving the community in a better place than when he found it. Becky Beacom thanked the Council for recognizing Jay and thanked Jay for his accomplishments and the love he had for the community. Larry Horton thanked Jay for his many contributions to the community. He spoke of Jay’s integrity, his hard work in finding the facts and calling the shots as he saw them. He spoke of his efforts in saving Stanford Theater, a jewel in the community. 3 1/31/2011 Robert Moss spoke of Jay’s work as exemplary and through his writings made the world a better place. He was quick to identify problems and solutions such as in the Open Space District and getting High Speed Internet access in Palo Alto. Lisa Van Dusen spoke regarding the years she worked with Jay. She spoke of his grasp on history and ways that needed to be paved for the future. She said he was a print journalist and spoke of her indebtedness for his commitment and willingness to plunge into an electronic future. Mayor Espinosa thanked Jay for his leadership, honesty, and humor and in making Palo Alto a better place to live. COUNCIL MEMBER QUESTIONS, COMMENTS AND ANNOUNCEMENTS Council Member Klein reported on the Bay Area Water Supply and Conservation Agency (BAWSCA) Board of Directors meeting. He said the Hetch Hetchy Watershed had received 90 percent of its yearly average and had the most precipitation ever received by December 31st. There would be no water supply problems this year. Usage of water in the Bay Area had declined and had the same average usage level in 1993-1994. The water usage in 1986 was 185 million gallons per day. That comparable number in 2011 was 144 million gallons per day, a drop of 25-30 percent in a 25-year period. The drop had been precipitous in the last few years from 151 million gallons per day in 2010 down to 144 million gallons in 2011. It was good and bad news. Bad news translated as an increase in water rates due to lower water usage. San Francisco Water had advised they would be raising water rates by 30-40 percent this year and the final figures would be provided by spring. The increase did not translate as 30-40 percent increase to Palo Alto customers because the price of water was approximately a third, but the City should expect a significant increase in the rates. San Francisco had been charging their retail customers a 15 percent increase per year. The East Bay water system had a similar decline. Palo Alto was playing a major role with BAWSCA in San Francisco to determine the decline. Palo Alto was being used for its data because Palo Alto has all the utilities and could compare water usage to electric and gas. He said he was named Chairman of the BAWSCA Policy Committee equivalent to BAWSCA’s Steering Committee. STUDY SESSION 2. Stanford University Medical Center (SUMC) Mitigations Measures and Development Agreement Update. 4 1/31/2011 Council Member Klein advised he would not be participating in this agenda item due to his wife being on faculty at Stanford University. He left the meeting at 6:45 p.m. Staff provided an overview of the SUMC Project (Project) timeline since 2006, an overview and status of the Environmental Impact Report (EIR), including analysis of a Tree Preservation Alternative, an overview of the street intersections that were studied and affected by the Project, and a summary of the proposed Transportation Demand Management (TDM) program. Staff then provided an update of the Development Agreement negotiating process, including a comparison of the SUMC’s original June 15, 2009 offer, the City’s March 29, 2010 counter offer, and SUMC’s January 18, 2011 revised offer. Staff highlighted those portions of the offer that could be categorized as environmental mitigations vs. community benefits. Staff described the differences between the fiscals studies performed by Stanford and the City’s consultants and outlined the schedule of payments included in SUMC’s latest offer. Staff presented a tentative 2011 review timeline that outlined the public process that would take place up through the City Council’s final decision, which is expected to occur in April 2011. Michael Peterson, V.P of Special Projects at SUMC and Bill Phillips, Senior Associate Vice President with the Stanford Land Management Company, provided an overview of the purpose and goals of the Project and the Development Agreement. Staff requested that Council comment on the adequacy of the January 18, 2011 offer, the issue of mitigations vs. community benefits, revenue guarantees, and flexibility with regard to how community benefit monies should be used. Members of the public were then invited to address the Council. The Council expressed general support for the Project and its purpose. Individual Ccouncil Members asked questions and commented upon elements of the Development Agreement offer, including the costs & benefits to the City, revenue guarantees, the review schedule, the need for flexibility in the use of funds, and transportation demand management programs. The City Council took a break from 8:04 p.m. and returned at 8:23 p.m. Council Member Price left the meeting at 9:13 p.m. ADJOURNMENT: The meeting adjourned at 9:55 p.m. 1 02/07/2011 Special Meeting February 7, 2011 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:01 p.m. Present: Burt, Espinosa, Holman, Klein, Price, Scharff, Schmid, Shepherd, Yeh Absent: CLOSED SESSION 1. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Dennis Burns, Lalo Perez, Joe Saccio, Sandra Blanch, Marcie Scott, Darrell Murray) Employee Organization: Palo Alto Police Officers Association Authority: Government Code Section 54957.6(a) 2. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Dennis Burns, Lalo Perez, Joe Saccio, Sandra Blanch, Marcie Scott, Darrell Murray) Employee Organization: Police Managers Association Authority: Government Code Section 54957.6(a) 3. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Lalo Perez, Joe Saccio, Russ Carlsen, Sandra Blanch, Marcie Scott, Darrell Murray) Unrepresented Employee Group: Management, Professional and 2 02/07/2011 Confidential Employees Authority: Government Code Section 54957.6(a) 4. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Dennis Burns, Lalo Perez, Joe Saccio, Sandra Blanch, Marcie Scott, Roger Bloom, Darrell Murray) Employee Organization: International Association of Fire Fighters, Local 1319 Authority: Government Code Section 54957.6(a) 5. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Dennis Burns, Lalo Perez, Joe Saccio, Sandra Blanch, Marcie Scott, Roger Bloom, Darrell Murray) Employee Organization: Palo Alto Fire Chiefs’ Association Authority: Government Code Section 54957.6(a) 6. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his designees pursuant to Merit System Rules and Regulations (James Keene, Pamela Antil, Lalo Perez, Joe Saccio, Sandra Blanch, Marcie Scott, Darrell Murray) Employee Organization: Service Employees International Union, Local 521 Authority: Government Code Section 54957.6(a) The City Council returned from the Closed Session at 7:45 p.m. and Mayor Espinosa advised no reportable action. SPECIAL ORDERS OF THE DAY 7. Staff Report from the Community Services Presentation by Palo Alto Art Center Foundation. Mayor Espinosa explained the new procedure; for the beginning of a Council meeting there will be five minutes given to a nonprofit organization within the City to highlight the work they do and the partnership they have with the City. 3 02/07/2011 Jeannie Duisenberg, Palo Alto Art Center Foundation, explained what the Palo Alto Art Center Foundation’s function was and why it has been a good partnership with the City. The Art Center was founded in 1973 where it took residence in the previous City Hall. She stated the nonprofit status provided the ability to attract grant monies, the City adopted the status in the early 1990’s and since then the Art Center Foundation had been providing cash contributions to the City to off-set the cost for the Look Project which started 30 years ago. The Look Project enables the youth in the community to view the art work completed by those who had come before them and allows them to receive hands-on art experience. Teri Vershel, Co-President Palo Alto Art Center Foundation, stated the Art Center Foundation had been undergoing renovations for a period of ten years while planning and raising funds. She expressed how this project highlighted what a public/private partnership could accomplish. Neither the Foundation nor the City could have accomplished alone what together has become a wonderful project for the community. Mayor Espinosa thanked the Art Center Foundation and the community for stepping forward to renovate what was City Hall and has been the home for the Art Center Foundation. The amount of funding raised and the community support has been outstanding over the years. 8. CAO Report from the City Clerk Appointments for Three Positions on the Library Advisory Commission for Three Year Terms Ending January 31, 2014. First Round of voting for three positions on the Library Advisory Commission for three year terms ending January 31, 2014: Voting For Michael Gonzalez: Klein Voting For Leonardo Hochberg: Burt, Espinosa, Holman, Klein, Price, Scharff, Schmid, Shepherd, Yeh Voting For Eileen Landauer: Burt, Espinosa, Holman, Price, Scharff, Schmid, Shepherd, Yeh Voting For Mary Beth Train: Burt, Espinosa, Holman, Klein, Price, Scharff, Schmid, Shepherd, Yeh 4 02/07/2011 City Clerk, Donna Grider announced that Leonardo Hochberg with 9 votes, Mary Beth Train with 9 votes, and Eileen Landauer with 8 votes were each appointed to the Library Advisory Commission for Three Year Terms Ending January 31, 2014. CITY MANAGER COMMENTS City Manager, James Keene announced the distinguished speaker series would be hosting AB32 (the climate action plan passed by the California Legislature) The View From Europe on February 9th; and the MLB World Series trophy would be on display from 4-6 p.m. at Lytton Plaza on February 15th. He noted there were more seagulls near the Baylands and the landfill due to the implementation of the fast fill plan to fill the landfill to its capacity at an expedited rate to essentially close it. ORAL COMMUNICATIONS Wynn Grcich spoke regarding fluoride in the drinking water, and bio- chemical cremations. Diane Preinitz spoke regarding her water bill discrepancies. Jan St. Peter spoke regarding the original California Avenue fountain and requested Council overturn the Public Art Commission recommendation for replacement. Mark Petersen-Perez spoke regarding the Palo Alto Patch news media, Palo Alto Freepress.com, and his public records requests to Acting City Attorney, Don Larkin. Robert Moss spoke regarding emergency preparedness and the importance of earthquake awareness in regards to the structures throughout the City. Herb Borock spoke regarding Council e-mails being viewed, forwarded, and available to the community. Mayor Espinosa reiterated the Council Protocol for people addressing the Council during Oral Communications was that they were to address the Council as a body and not individuals. 5 02/07/2011 9. APPROVAL OF MINUTES MOTION: Vice Mayor Yeh moved, seconded by Council Member Shepherd to approve the minutes of December 13, 2010, and January 4 and 10, 2011. MOTION PASSED: 9-0 CONSENT CALENDAR MOTION: Council Member Schmid moved, seconded by Council Member Holman to pull Agenda Item Number 14 to become Agenda Item Number 16a. MOTION: Council Member Burt moved, seconded by Vice Mayor Yeh to pull Agenda Item No. 10 to become Agenda Item Number 16b. MOTION: Vice Mayor Yeh moved, seconded by Council Member Price to approve Agenda Item Numbers 11-13, 15-16. 10. CAO Report from the City Clerk Resolution Setting Council Vacation. 11. Staff Report from Administrative Services Finance Committee Recommendation to Adopt Ordinance 5114 entitled “Ordinance of the Council of the City of Palo Alto Authorizing the Closing of the Budget for the 2010 Fiscal Year; Approval of 2010 Comprehensive Annual Financial Report (CAFR).” 12. CAO Report from the City Auditor Finance Committee Recommendation to Accept Maze & Associates’ Audit of the City of Palo Alto’s Financial Statements as of June 30, 2010 and Management Letter. 13. Staff Report from Utilities Finance Committee Recommendation to Adopt Resolution 9140 entitled “Resolution of the Council of the City of Palo Alto Amending Utility Rate Schedules G-10 and G-3 of the City of Palo Alto Utilities Rates and Charges Pertaining to Gas Rates.” 14. Staff Report from the Community Services Approval of a Construction Funding Agreement in an Amount Up to $2 Million between the City of Palo Alto and the Palo Alto Art Center Foundation For Upgrades to the Palo Alto Art Center Renovation 6 02/07/2011 Project (PF-07000, Art Center Electrical and Mechanical Upgrades); Approval of Amendment No. Three to Contract No. C08126592 between the City of Palo Alto and the Palo Alto Art Center Foundation to extend the term of the agreement and increase the scope of work to Permit Reimbursement in an Amount Not to Exceed $142,432. 15. Staff Report from Public Works to Approve and Authorize the City Manager or His Designee to Execute Amendment No. 1 to Contract S09128287 with Northgate Environmental Management, Inc., for an Additional Amount of $89,619 for Phase II Environmental Site Assessment Work at the Palo Alto Airport. 16. Staff Report from Utilities Approval of a Utilities Advisory Commission Recommendation to Adopt Resolution 9141 entitled “Resolution of the Council of the City of Palo Alto Approving a New Tier II Water Shortage Allocation Plan Pursuant to Section 3.11(C) of the 2009 Water Supply Agreement with San Francisco.” MOTION PASSED for Agenda Item Nos. 11-13, 15-16: 9-0 AGENDA CHANGES, ADDITIONS, AND DELETIONS 16a. (Former No. 8) Staff Report from Community Services Approval of a Construction Funding Agreement in an Amount Up to $2 Million between the City of Palo Alto and the Palo Alto Art Center Foundation For Upgrades to the Palo Alto Art Center Renovation Project (PF-07000, Art Center Electrical and Mechanical Upgrades); Approval of Amendment No. Three to Contract No. C08126592 between the City of Palo Alto and the Palo Alto Art Center Foundation to extend the term of the agreement and increase the scope of work to Permit Reimbursement in an Amount Not to Exceed $142,432. Council Member Schmid asked for clarification on Staff Report 1308, Attachment A, Exhibit H - cost share ratio. His confusion was Exhibit H stated the City portion was $3.4 million, while the Staff Report indicated the resources used would not exceed the availability in the current CIP which was merely $2.6 million. Karen Kienzel, Director of Palo Alto Art Center Foundation, stated she needed to make the Council aware of Section 6. Calculation of 7 02/07/2011 Proportionate Funding; item 6.1 indicated the City share would be 73.1 percent and item 6.2 explained how changes could be made to the cost sharing ratio. She noted Staff would return to Council with a Budget Amendment Ordinance (BOA) request if further funding assistance was necessary. MOTION: Council Member Schmid moved, seconded by Council Member Scharff to: 1) approve a Construction Funding Agreement in an amount up to $2 million between the City of Palo Alto and the Palo Alto Art Center Foundation for upgrades to the Palo Alto Art Center Renovation Project (PF-07000, Art Center Electrical and Mechanical Upgrades); 2) approve Amendment No. Three to Contract No. C08126592 between the City of Palo Alto and the Palo Alto Art Center Foundation to extend the term of the agreement and increase the scope of work to permit reimbursement in an amount not to exceed $142,432. MOTION PASSED: 9-0 16b. (Former No. 10) CAO Report from the City Clerk Resolution 9142 entitled “Resolution of the Council of the City of Palo Alto Setting Council Vacation.” Council Member Burt addressed his concern for the Council summer break not coinciding with the Palo Alto Unified School District summer break. He recommended moving the break back by one week. MOTION: Council Member Burt moved, seconded by Council Member Shepherd to change the summer break to August 2, 2011 through September 2, 2011. Council Member Shepherd asked how prepared Staff was if the date shifted by a week. City Manager, James Keene stated Staff was prepared to adapt any agenda items to fit into the adjusted scheduled time. City Clerk, Donna Grider stated the deadline to put an item onto the 2011 November election ballot was August 12, 2011. Council Member Klein asked whether the Motion was suggesting a special Council meeting for Tuesday, September 6th since the break ended on Labor Day, September 5th, which was a Monday. 8 02/07/2011 Council Member Burt stated he had not suggested there be a special meeting and noted the schedule was set by the Mayor and City Manager. Council Member Klein stated if there was not a special meeting scheduled for the Tuesday Council returns, the next meeting would not be until September 12th, essentially adding an additional week to the break. Council Member Burt stated if there was a need to schedule a special meeting for the 6th of September it would be done, if not then the regular rules would apply. Council Member Klein suggested scheduling a special meting on the 6th of September noting if there were not sufficient items on the agenda the meeting could be cancelled. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND THE SECONDER to include that a special Council meeting would be called on Tuesday, September 6, 2011. MOTION PASSED: 9-0 STUDY SESSION 17. Staff Report from the City Manager Fire Department Services, Resources & Utilization Study Presentation Of Findings By International City/County Management Association and Systems Planning/Tri Data Consultants. Thomas Wieczorek, ICMA Public Safety Consulting Services and Stephen Brezler, Systems Planning/Tri-Data Division provided an overview of the Palo Alto Fire Department Resources, Services and Utilization Study - Final Report. The consultants provided an update on the completed study highlighting the study's 48 recommendations based on the data pulled, interviews conducted, and research completed during the course of the study. Council Member Shepherd left the meeting at 11:11 p.m. 18. Staff Report from the Planning and Community Environment Introduction of the Urban Forest Mater Plan for Palo Alto Council Member Questions, Comments, and Announcements. 9 02/07/2011 Curtis Williams, Director of Planning and Community Environment, introduced Jim Clark of HortScience, who talked about the status of the project, including a recap of the very successful community outreach accomplished with the online survey. He also reviewed the extensive inter-departmental interviews conducted by the project team and summarized that currently, tree management responsibilities were to diffuse and sometimes dependent on informal agreements between Staff. Mr. Clark’s main message to the Council was to highlight the City’s opportunity to establish its trees as an asset and to establish a more formal—if not more centralized—plan for managing that asset. Susan Ellis, Chair of Canopy, also indicated that organizational support for development of the Plan was critical, specifically noting the need to provide for "canopy equity" throughout the city, to consider water conservation in tree selection, to develop sustainable funding sources for maintenance, and to provide for citizen oversight. Mr. Clark asked the Council Members for their input and several Council Members described sustainability issues they’d like to see covered in the plan including carbon sequestration, water conservation, and a balance between tree retention and new development. It was emphasized that privately owned trees are a significant part of the urban forest and that the plan should seek to engage property owners as stewards of the urban forest along with the City. And, although the plan is focused on the urban forest at least one Council Member requested that the plan cover trees in the open space as well. Council Members noted the need to coordinate the Urban Forest Master Plan and the Comprehensive Plan and there was a specific request for the plan to review and make recommendations for updating the zoning landscape ordinance. Finally, the Council noted the need for the plan to candidly describe any funding implications associated with recommendations and implementation of the plan. COUNCIL MEMBER QUESTIONS, COMMENTS, AND ANNOUNCEMENTS Council Member Holman spoke about the involvement and work that the City Clerk’s Office did for the Mayor’s State of the City event. Mayor Espinosa also thanked City Clerk Staff for their work on the Council Retreat. He spoke about the upcoming release of the Mayor’s Message, a letter that will come out the first of each month via e-mail. 10 02/07/2011 Council Member Klein thanked Acting City Attorney, Don Larkin for the changes he made with regards to City Council meetings. ADJOURNMENT: The meeting was adjourned at 12:03 a.m. City of Palo Alto (ID # 1403) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 4 (ID # 1403) Title: Utility Rule 29 Changes Subject: Adoption of a Resolution Amending Utility Rule and Regulation 29 (Net Energy Metering Service and Interconnection) From:City Manager Lead Department: Utilities RECOMMENDATION Staff recommends that the City Council adopt a resolution amending Utility Rule and Regulation 29 as attached. The amended rule, if approved, would become effective March 1, 2011 EXECUTIVE SUMMARY Assembly Bill 920 (AB 920) (2009) modified the Public Utilities Code’s terms and conditions for Net Energy Metering (PUC Section 2827). Staff identified revisions to the billing system to implement AB920-related changes as they are currently described in Utility Rule and Regulation 29. During the Council’s review of the required changes on December 6, 2010, and with the understanding of the minimal customer benefits involved (estimated to be $51 annually for each of the current 42 customers, or $2,154 in total) and potentially significant costs (estimated over $300,000 for a fully automated billing solution), the Council directed staff to limit implementation costs to $10,000 or 100 hours of staff time, whichever occurs first. The proposed revisions to Utility Rule and Regulation 29 achieve this objective by continuing the current practice of billing customers monthly and allowing customers to carry forward bill credits valued at the retail rate. This avoids the need for the expensive reconfiguration of the billing system. Staff will make manual adjustments for customers who do not want to carry forward their bill credits at the end of the year. BACKGROUND AB 920 modified the Public Utilities Code’s terms and conditions for Net Energy Metering (PUC Section 2827). AB 920 requires electric utilities to compensate customers with a solar photovoltaic system or a wind turbine, who generate electricity in excess of their use for their net excess generation in a 12-month period. In December 2010, the City Council established a Net Surplus Electricity Compensation Rate Schedule (E-NSE-1), and revised Utility Rule and Regulation (Rule) 29 governing Net Energy Metering Service and Interconnection for qualifying customer-generators (CMR 425:10). At the same time, the Council directed staff to limit implementation costs to not exceed $10,000 or March 07, 2011 Page 2 of 4 (ID # 1403) 100 hours of staff time, whichever first occurs. DISCUSSION While it is feasible to implement all of the requirements to comply with AB 920 through a comprehensive and fully automated billing solution, the external SAP consultant estimated its cost to be $327,000. This cost is clearly not justified for the small number of customers affected and the small dollar value of the total amount of net generation citywide. Staff has identified a simplified solution that leaves most existing billing procedures in place.As staff estimates the number of eligible customers and applicable compensation amounts to be small, the proposed approach is expected to have no negative resource impact. The impact to Net Energy Metering customers is also expected to be minimal. The elements of the solution include the following: 1.Annual vs Monthly Billing California laws and regulations pertaining to Net Energy Metering require CPAU to bill residential and small commercial customers annually and provide monthly information regarding their net consumption and charges owed. The law also states that utilities shall permit customers to pay monthly for net energy consumed. Currently, CPAU bills its Net Energy Metering Customers monthly, and provides information regarding their credits, if any, in a separate letter to the customers. The reason is that the CPAU billing system is currently not configured to show monthly credits as part of the bills issued. The implementation of annual billing will require considerable staff time and resources that are not now supported by the limited budget. Therefore staff recommends continuing with the current monthly billing approach for all Net Energy Metering customers. Staff also proposes to continue with issuing monthly statements to provide customers with information regarding cumulative bill credits. 2.Annual Settlement California law requires annual settlements for each customer, but currently CPAU does not perform annual settlement. Instead, CPAU carries forward customer bill credits indefinitely or until customers use up such credits. While bills will continue to be issued monthly, settlement of any net generation will be conducted annually starting January 2011. This will be done by adding certain information into the billing system for Net Energy Metering customers. CPAU will then manually make the necessary adjustments to correct for monthly billing and calculate the credit for the small subset of net surplus generator customers,who have billing credits that remain at the end of the customer’s annual cycle and who have elected the compensation option. 3.Compensation of Net Surplus Energy Starting January 1, 2011, and in compliance with AB 920, Net Energy Metering customers, who have generated more electricity than they have consumed, have the option of being compensated for annual net surplus electricity at the new E-NSE-1 rate, or electing to carry forward excess kWh into the new settlement period to offset future electric charges. March 07, 2011 Page 3 of 4 (ID # 1403) While implementing the monetary compensation option is feasible and relatively straightforward, carrying forward negative kWh values from one settlement period into the next is complex and requires significant staff time for configuration and testing. Staff proposes to monetize the kWh to be carried forward as a dollar value and offer it as a bill credit for eligible customers. All Net Energy Metering customers choosing the carry forward option will retain the dollar value of their bill credits towards future electric kWh charges. Customers who chose compensation (cash out) will be compensated at the published E-NSE-1 rate. The first option (carry forward) is currently more favorable for Net Energy Metering customers as it values kWh credits at retail rates instead of the E-NSE-1 rate. The resource impact of this proposal is small. For the twelve-month period ending June 2010, there were 409 Net Energy Metering customers and only 42 of these had bill credits totaling combined net surplus electricity of 36,871 kWh. The value of the 36,871 kWh at the E-NSE-1 rate of $0.05841 per kWh is $2,154. The valuation of the same net surplus electricity at the average retail rate of $0.116 per kWh amounts to $4,277. This represents a gross resource impact of $2,123 if all customers choose to carry forward the credit instead of the cash-out option. This increased annual cost to CPAU of $2,123 is more than compensated for the elimination of the requirement for an expensive billing solution compensated by the elimination of the more costly implementation requirements. Staff plans to evaluate the level of program participation and the value of carry forward credits annually. If and when the resource impact for the proposed option reaches a cross-over point between value offered to program participants versus implementation costs saved for non- participants, staff will propose additional revisions to Rule 29. Proposed changes to Rule 29 were not taken to the Finance Committee since the overall changes due to AB 920 had already been reviewed by the Finance Committee before being approved by the City Council in December 2010. Furthermore, the implementation of the net surplus compensation must become effective with customer bills issued in March. This additional change to Rule 29 is in response to the Council direction to limit implementation costs to $10,000 of hours of staff time. RESOURCE IMPACT No material negative resource impact is expected due to the proposed changes to Rule 29. POLICY IMPLICATIONS This recommendation does not represent a change to current City policies. ENVIRONMENTAL REVIEW Adoption of this resolution does not meet the California Environmental Quality Act’s definition of a project, pursuant to California Public Resources Code Section 21065. Therefore, no environmental assessment is required. March 07, 2011 Page 4 of 4 (ID # 1403) Attachments: ·Attachment A: Resolution for Rule and Regulation 29 (DOC) ·Attachment B: Utility Rule and Regulation 29 (DOC) Prepared By:Ipek Connolly, Sr. Resource Planner Department Head:Valerie Fong, Director City Manager Approval: James Keene, City Manager ATTACHMENT A Not Yet Approved 110125 jb 0073496 Resolution No. _________ Resolution of the Council of the City of Palo Alto Amending Utility Rule and Regulation 29 (Net Energy Metering Service and Interconnection) Governing Electric Service The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1.Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Rule and Regulation 29 (Net Energy Metering Service and Interconnection) is hereby amended to read as set forth in the amended Rule and Regulation 29, attached hereto and incorporated herein by reference. The foregoing Rule and Regulation, as amended, shall become effective March 8, 2011. SECTION 2.The Council finds that the adoption of this resolution does not meet the definition of a project under California Public Resources Code Section 21065.Thus,no environmental review is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ______________________________________________________ City Clerk Mayor APPROVED AS TO FORM:APPROVED: ______________________________________________________ Acting Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services ATTACHMENT B NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 0231-08-2011 Sheet No. 1 A.APPLICABILITY 1.This Rule and Regulation 29 is applicable to any customer-generator of CPAU who signs the Net Energy Metering and Interconnection Agreement. A customer-generator includes: (1) an “eligible customer-generator,”as that term is defined in Section 331(h) of the California Public Utilities Code to refer to a residential or small commercial Customer,and, (2) a customer-generator who is other than a residential or small commercial Customer, as defined,of CPAU, which includes a medium commercial and a large commercial (industrial)Customer, who uses a solar or wind turbine electrical Generating Facility,or a hybrid system of both. The facility must be located on the customer-generator’s owned, leased or rented Premises, must have a capacity of not more than one (1)megawatt (or 1,000 Kilowatts),must be Interconnected and operated in parallel with CPAU’s Electric utility Distribution System, and must be intended primarily to offset part or all of the customer-generator’s own Electric Service requirements. 2.The customer-generator will be required to sign a Net Energy Metering and Interconnection Agreement (NEMIA) or an agreement containing substantially the terms and conditions of the referenced NEMIA and agree to be subject to applicable Utility Rates and Charges and Utility Rules and Regulations in order to be eligible for Net Energy Metering Service provided by CPAU.CPAU will make available all necessary forms and contracts for Net Energy Metering Service for download from the Internet. 3.CPAU shall process a request for the establishment of Net Energy Metering and Interconnection from the customer-generator within the time period not exceeding that for Customers requesting new Electric Service. Such time period will not exceed thirty (30) days from the date of (1) receipt of a completed Application form for Net Energy Metering Service and Interconnection from the customer-generator, (2) Electric inspection clearance from CPAU,and (3) building inspection clearance from the City of Palo Alto Building Inspection Division.If CPAU is unable to process the request within the thirty-day period or other applicable period, then CPAU shall notify the customer-generator of the reason for its inability to process the request and the expected completion date. ATTACHMENT B NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 0231-08-2011 Sheet No. 2 B.TERRITORY: Within the jurisdictional boundaries of the City of Palo Alto. C.SPECIAL CONDITIONS: 1.Net Energy Metering Net Energy Metering means measuring the difference between the electricity supplied through CPAU’s Electric utility Distribution System and the electricity generated by the customer-generator’s facility and delivered to CPAU’s Electric utility Distribution System over a specified twelve-month period. 2.Metering Equipment Net Energy Metering shall be accomplished by using a single Meter capable of registering the flow of electricity in two different directions. If the customer-generator’s existing Meter is not capable of measuring the flow of electricity in two directions, then the customer- generator shall be responsible for all expenses involved in purchasing and installing a Meter that is able to measure electricity flow in two directions. In lieu of one Meter, an additional Meter to monitor the flow of electricity in each direction may be installed with the consent of the customer-generator, at the expense of CPAU. The additional Meter shall be used onlyto provide the information necessary to accurately bill or credit the customer-generator and/or to collect solar or wind Electric generating system performance information for research purposes. 3.Billing for Net Energy Metering a.At the end of each twelve-month period following the date of Interconnection of the facility, or for a Customer with a date of Interconnection of the facility commencing prior to February 1, 2010, the day after CPAU’s receipt of the Customer’s net surplus electricity election form,and at each annual settlement anniversary date thereafter, ATTACHMENT B NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 0231-08-2011 Sheet No. 3 CPAU will determine whether the customer-generator is a net electricity consumer or a net surplus customer-generator, as such terms are defined in California Public Utilities Code sections 2827(h)(2) and 2827(h)(3) during that period. CPAU will bill the customer-generator for the electricity used during that twelve-month period, whether the customer-generator is considered a net electricity consumer or a net surplus customer-generator. b.At the end of the twelve-month period, where the electricity supplied by CPAU during that period exceeds the electricity generated by the customer-generator’s facility during that same period, the customer-generator is a net electricity consumer during that period, and the customer-generator will owe compensation to CPAU. The compensation shall be calculated according to the terms and conditions of the NEMIA or other applicable contract referred to in Section A above and/or to the applicable utility rates and Charges for baseline quantity of electricity, to which class of utility Customers the customer-generator would be assigned. The net balance of money owed by the net electricity consumer to CPAU will be carried forward as a monetary value until the end of the twelve-month period in the case of a residential or small commercial Customer, or the residential or small commercial Customer may elect to pay the balance due at the end of the month immediately following the twelve-month period. If the customer-generator is a medium commercial or large commercial (industrial) Customer, then payment of any net balance due shall be made on a monthly basis. c.At the end of the twelve-month period, where the electricity supplied by the customer-generator’s facility during that period exceeds the electricity supplied by CPAU during that period, the customer-generator is a net surplus customer-generator during that period. Upon the City’s receipt of the customer-generator’s affirmative election, CPAU either will provide net surplus electricitycompensation, as such term is defined in California Public Utilities Code section 2827(b)(8), in accordance with Electric Utility Rate Schedule E-NSE-1, for any net surplus electricity generated during the prior twelve-month period, or will allow bill credits due to the net surplus electricity to be applied as a credit for electricity (expressed in Kilowatt-hours) related charges subsequently supplied by CPAU to the customer-generator. If the customer-generator fails to make an affirmative election to receive Service pursuant ATTACHMENT B NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 0231-08-2011 Sheet No. 4 to net surplus electricity compensation, then CPAU shall retain any excess electricity (expressed in Kilowatt-hours) generated during the prior twelve-month period, and it shall not be obligated to pay net surplus electricity compensation nor shall it be obligated to allow the application of net surplus electricity to be used as a credit for Energy subsequently supplied by CPAU. d.CPAU will allow a Customer to change the election option once each settlement period provided that the Customer provides notice to CPAU one month prior to the beginning of new settlement period. e.CPAU shall provide the customer-generator with net electricity consumption information with each monthly bill; that information shall include either the current monetary balance owed to CPAU or the current amount of excess electricity produced since the last twelve-month period. f.A Residential or Small Commercial Customer may elect to pay the electricity Charge (measured in Kilowatt-hours) portion of the billing statement each month, or at the annual settlement. For a Residential or Small Commercial Customer who does not elect billing at the annual settlement or medium commercial or large commercial (industrial) Customer, electricityCharges are due and payable per applicable monthly billing schedules. For the customers electing billing at the annual settlement, tThe customer-generator’s bill payment will not be considered delinquent, unless the customer-generator does not pay a final billing statement within twenty (20) days of the date of issuance of that final billing statement. g.For Residential Customers electing single billing for the twelve-month settlement period, for each monthly period, the net balance of moneys owed to the electric service provider for net consumption of electricity or credits owed to the customer- generator for net generation of electricity shall be carried forward until the end of each twelve-month period. Any excess kilowatt-hours generated during the billing cycle shall be carried over to the following billing period, calculated according to the procedures set forth in this section, and appear as a credit on the customer-generator's account, until the end of the annual period when paragraph (3) of subdivision (b) shall apply. ATTACHMENT B NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 0231-08-2011 Sheet No. 5 h.For all customer-generators on monthly billing, and for each monthly period, the net balance of moneys owed to the electric service provider for net consumption of electricity shall be paid in accordance with the electric service provider's normal billing cycle, except that if the residential and small commercial customer-generator is a net electricity producer over a normal billing cycle,any excess kilowatt-hours generated during the billing cycle shall be carried over to the following billing period, calculated according to the procedures set forth in this section, and appear as a credit on the customer-generator's account, until the end of the annual period when paragraph (3) of subdivision (b) shall apply. h.If an electric service provider providing net metering to a residential or small commercial customer-generator ceases providing that electrical service to that customer during any twelve-month period,and the customer-generator enters into a new net metering contract or tariff with a new electric service provider, the twelve- month period,with respect to that new electric service provider, shall commence on the date on which the new electric service provider first supplies electric service to the customer-generator. i.If the customer-generator terminates the contractual relationship with CPAU, then CPAU shall reconcile the customer-generator’s consumption and production of electricity during any part of the twelve-month period following the last annual settlement and reconciliation.If the electricity supplied by the customer-generator’s facility during that period exceeds the electricity supplied by CPAU during that period, the customer-generator will be deemed a net surplus customer-generator during that period, and compensation will be provided in accordance with Electric Utility Rate Schedule E-NSE-1.If the electricity supplied by CPAU during that period exceeds the electricity generated by the customer-generator’s facility during that same period, the customer-generator is a net electricity consumer during that period, and the customer-generator will owe compensation to CPAU based upon the applicable Electric Rate Schedule. 4.Safety Standards ATTACHMENT B NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 0231-08-2011 Sheet No. 6 The facility will meet all applicable federal, state and local safety and performance standards, including those established by the National Electrical Code, the Institute of Electrical and Electronic Engineers, and accredited testing laboratories such as Underwriters Laboratories and, as applicable, the rules of the California Public Utilities Commission regarding safety and reliability. The customer-generator whose facility meets those standards and rules will not be required to install additional controls, perform or pay for additional tests, or purchase additional liability insurance. 5.Interconnection Standards (Design) a. Customer-Generator will conform to the applicable National Electric Code (NEC) Standards [NEC 690] and applicable building codes. b.Customer-Generator will have a dedicated circuit from the inverter to the Service panel with a circuit breaker or fuse [NEC 690-64(b)(1)]. c. Customer-Generator's overcurrent device at the Service panel will be marked to indicate solar power source [NEC 690-64(b)(4)]. d.Customer-Generator's inverter will establish the following minimum specifications for Parallel Operation with CPAU’s Electric utility Distribution System. e.Customer-Generator will install a visible break, lockable AC disconnect switch in the dedicated circuit to the inverter. This switch will be located where it is easily accessible by CPAU personnel and will be equipped with a CPAU padlock [CPAU Rule and Regulation 27]. f.Customer-Generator’s inverter will be UL 1741-aprpoved and have the following specifications for Parallel Operation with CPAU’s Electric utility Distribution System: 1.Inverter output will automatically disconnect from CPAU’s utility source upon the loss of CPAU’s utility voltage and will not be reconnected until at least five (5) minutes after normal utility voltage and frequency have been restored [UL 1741]. 2.Inverter will automatically disconnect from CPAU’s utility source within 120 ATTACHMENT B NET ENERGY METERING SERVICE AND INTERCONNECTION RULE AND REGULATION 29 CITY OF PALO ALTO UTILITIES RULES AND REGULATIONS Issued by the City Council Effective 0231-08-2011 Sheet No. 7 cycles (2 seconds)if CPAU’s utility voltage isles than 106 volts or greater than 132 volts on a 120-volt base [UL 1741]. 3.Inverter will automatically disconnect from CPAU’s utility source within 10 cycles (0.17 seconds) if CPAU’s utility frequency fluctuations is less than 59.3 hertz or greater than 60.5 hertz [UL 1741] cycle. 4.Inverter output will comply with IEEE 519 standards for harmonic distortion [CPAU Rule and Regulation 27]. City of Palo Alto (ID # 1358) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 2 (ID # 1358) Title: Status of Energy Risk Management Policy Subject: Deferral of Status of Energy Risk Management Policy From:City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Council delay approval of the City of Palo Alto’s Energy Risk Management Policy until after it adopts the Gas Utility Long-term Plan, the Long-term Electric Acquisition Plan, and the Utilities Strategic Plan. Background The City of Palo Alto’s Energy Risk Management Policy serves as the overriding document for the monitoring of risks associated with electric and gas commodity transactions. This Policy must be reviewed by the City Council on an annual basis. On January 18, 2011, staff requested that the City Council review and approve this Policy (CMR:101:11). At that meeting, the Council continued the item and directed staff to return with the Energy Risk Management Policy at the same meeting that the proposed Gas Utility Long-term Plan (GULP) is on the agenda. Discussion The purpose of this report is to inform the Council that staff plans to delay approval of the Energy Risk Management Policy until after the adoption of the GULP, the Long-term Electric Acquisition Plan (LEAP), and the Utilities Strategic Plan. This will enable staff to incorporate the changes resulting from these plans into the Risk Management Policies. By doing so, staff will ensure that the annual Energy Risk Management Policy is consistent with these initiatives. Staff anticipates returning to Council with an updated Energy Risk Management Policy prior to the end of fiscal year 2010-11. Attachments: ·Attachment A: CMR 101:11 Adoption of the Energy Risk Management Policy (PDF) Prepared By:Melissa Cavallo, Financial Analyst March 07, 2011 Page 2 of 2 (ID # 1358) Department Head:Lalo Perez, Director City Manager Approval: James Keene, City Manager City of Palo Alto (ID # 1291) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 3 (ID # 1291) Title: Amend Admin Penalty re Parking Cite Fee Subject: Adoption of a Resolution Amending the Administrative Penalty Schedule to Update Parking Violation Penalties to Implement a State Mandated Surcharge Identified in Senate Bill 857 From:City Manager Lead Department: Police Recommendation Staff recommends Council adopt the attached resolution amending the Administrative Penalty Schedule for certain violations of the Palo Alto Municipal Code and California Vehicle Code to add $3 to each violation to account for the new surcharge required by Senate Bill 857. Background In 2002, the Trial Court Facilities Act established the State Court Facilities Construction Fund. Over the years since, the State has continued to add a number of additional penalty surcharges to each parking violation. The current State assessment is as follows: County Courthouse Construction Fund 76100 CGC $2.50 County Criminal Justice Facilities Construction 76101 CGC $2.50 Fund Immediate and Critical Needs Account of State 70372 CGC $3.00 Court Facilities Construction Fund State Court Facilities Construction Fund 70372 CGC $1.50 __________ Pre-SB 857 Total $9.50 Prior to the passage of Senate Bill 857, $9.50 of each parking citation was transmitted to the County Treasurer, who in turn transmitted the State portion to the California Treasurer. March 07, 2011 Page 2 of 3 (ID # 1291) In order to address the continued funding shortages of the court system, last year the State increased various court fees, including filing fees and penalty assessments. Senate Bill 857 (Budget and Fiscal Review Committee, Stats. 2010, ch. 720), the judiciary budget trailer bill, enacted Government Code 76000.3, which imposes an added penalty of $3 per parking violation. Supplemental fees collected pursuant to these provisions will be deposited to the Trial Court Trust Fund. The additional $3 penalty will be distributed as follows: State Trial Court Construction Fund 76000.3 CGC $3.00 __________ Total-all state assessments $12.50 Section 76000.3 provided the surcharge be effective 60 days after the enactment of the 2010 Budget Act. The Budget Act was signed on October 8, 2010, and the parking penalty surcharge was imposed on December 7, 2010. Therefore, currently $12.50 of each parking penalty is transmitted to the County Treasurer, who in turn transmits the State portion to the State Treasurer. Discussion Parking penalties are approved as part of the City’s Administrative Penalty Schedule (Resolution No. 9015).In past years the City of Palo Alto has increased parking fines in line with the additional penalties imposed by the State on parking violations, and the amounts set forth in the Penalty Schedule currently include the $9.50 state surcharge. Staff recommends amending that schedule to add $3.00 to all parking violations of the Palo Alto Municipal Code, including section 10.28.110(a) enacted for violations in the College Terrace Residential Parking Permit area, and California Vehicle Code to account for the new mandatory surcharge imposed by the Senate Bill 857 and allow the City to remain revenue neutral in the area of parking citations. At this time, SB 857 will sunset on July 1, 2013 unless extended. Resource Impact SB 857 adds a $3 parking penalty surcharge for each offense where a parking penalty is imposed. This charge is not accounted for in the City’s Administrative Penalty Schedule because it was approved by the Legislature after the City adoped the most recent update to the Penalty Schedule. It affects all citations issued by the City after December 7, 2010. The City of Palo Alto issues approximately 50,000 parking citations per year. Failure to approve the resolution will result in a potential general fund loss of revenue in the amount of approximately $150,000 if the new surcharge is not added to the existing penalty schedule. March 07, 2011 Page 3 of 3 (ID # 1291) Policy Implications This procedure is consistent with existing City policies. Attachments: ·RESO SB 857 Parking Increase (DOC) Prepared By:Barbara Teixeira, Administrative Assistant Department Head:Dennis Burns, Police Chief City Manager Approval: James Keene, City Manager * NOT YET APPROVED * 110301 sh 8261535 1 Resolution No. _____ Resolution of the Council of the City of Palo Alto Amending the Administrative Penalty Schedule to Update Parking Violation Penalties to Implement a State Mandated Surcharge Identified in Senate Bill 857 WHEREAS, California Vehicle Code Section 40200 et seq.authorizes cities to impose and collect civil fines and penalties for violations of any regulation pertaining to the standing or parking of a vehicle; and WHEREAS,civil parking penalties in the City of Palo Alto (“City”) are adopted as part of the Administrative Penalty Schedule (last updated in Resolution No. 9105); and WHEREAS,Senate Bill 857 (2010) added section 76000.3 to the California Government Code, requiring cities to remit an additional three dollars ($3.00) per parking penalty, fine, or forfeiture as a surcharge for civil parking citations; and WHEREAS, the City desires to update the parking penalties in the Administrative Penalty Schedule to add $3.00 per parking violation in order to offset the SB 857 surcharge. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1.Resolution 9105 is hereby amended to add an additional three dollars ($3.00) per penalty for Palo Alto Municipal Code section 10.28.110 and each parking offense listed in Sections 2 (Municipal Code Civil Penalties) and 3 (Vehicle Code Civil Penalties)of said resolution. // // // // // // // // * NOT YET APPROVED * 110301 sh 8261535 2 // SECTION 2. The Council finds that adoption of this resolution is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ________________________________________________________ City Clerk Mayor APPROVED AS TO FORM:APPROVED: ________________________________________________________ Sr. Deputy City Attorney City Manager ______________________________ Police Chief ______________________________ Director of Administrative Services City of Palo Alto (ID # 1415) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 2 (ID # 1415) Title: High Speed Rail Committee Name Change Subject: Approval of High Speed Rail Committee Name Change to Rail Committee From:City Manager Lead Department: City Manager Recommendation The High Speed Rail Committee recommends that the Council approve changing the Committee’s name to “Rail Committee.” Discussion The High Speed Rail Committee met Thursday, February 3rd. The Committee is recommending to the City Council that the High Speed Rail Committee name be changed to Rail Committee. This change reflects the broader scope of the Committee’s discussions on rail which include Caltrain and the short and long-term viability of this critical rail transportation system. Issuance of the California High Speed Rail Authority (CHSRA) Peninsula HSR environmental impact report (EIR) will be delayed up to a year according to a CHSRA February 3, 2011 press release. Therefore, the Committee anticipates that in the near term there will likely be a greater priority on discussion of Caltrain and general rail operations on the Peninsula rather than HSR. Discussion of other rail issues is consistent with the scope and guiding principles originally established for the HSR Committee, which provided that the Committee would advise the Council on HSR as well as “related rail transit matters” and stated the City’s support for “Caltrain and the commuter rail service at present or improved levels of service.” This name change more accurately reflects the scope of the Committee. On a related matter the Committee also took action to change their meeting schedule from two meetings per month to one meeting per month. The new meetings are to take place the second Thursday of each month. March 07, 2011 Page 2 of 2 (ID # 1415) Prepared By:Richard Hackmann, Department Head:James Keene, City Manager City Manager Approval: James Keene, City Manager City of Palo Alto (ID # 1432) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 3 (ID # 1432) Title: Resolution to Accept Rubberized Asphalt Grant Subject: Approval of a Resolution to Authorize the City Manager to Submit Application(s) and Related Agreement(s) for the California Department of Resources Recycling and Recovery (CalRecycle) Rubberized Asphalt Concrete (RAC) Grant Program From:City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve a resolution (Attachment A) to authorize the City Manager or his/her designee to submit recycled tire related and rubberized asphalt concrete grant applications to the California Department of Resources Recycling and Recovery (CalRecycle) and to sign related grant program agreements and amendments. Background The California Department of Resources Recycling and Recovery (CalRecycle) receives an annual appropriation from the California Tire Recycling Management Fund (Tire Fund) to administer the California Tire Recycling Act (Senate Bill 930) (Public Resources Code Section 42860 et seq). The Rubberized Asphalt Concrete (RAC) Grant Program offered by CalRecycle is designed to promote the use of rubberized pavement while encouraging the recycling of California-generated waste tires to reduce landfill disposal or stockpiling. The RAC Grant Program provides competitive grants to local governments. The grants fund public works projects that use RAC or rubberized chip seal materials from 100% California-generated waste tire material. March 07, 2011 Page 2 of 3 (ID # 1432) The specific RAC Grant Program that the City will be applying for is the Targeted Rubberized Asphalt Concrete Incentive (Targeted) Grant which is aimed at assisting first- time or limited users of RAC. Eligible projects must use a minimum of 3,500 tons of RAC which meets American Society of Testing and Material (ASTM) standards for Asphalt- Rubber Binder. Grant awards in this program are based on the differential cost of using RAC versus conventional asphalt concrete by the tonnages of RAC used up to a maximum grant award of $250,000. The City Council approved a similar grant application to California Integrated Waste Management Board (CIWMB), now known as CalRecycle, in April 23, 2007 (CMR:214:07). The City received the Targeted Rubberized Asphalt Concrete Incentive (TRI) Grant for FY 2008 for the 2008 street resurfacing project; however,the contractor’s bid price for the rubberized asphalt paving work exceeded the grant funding. Therefore, the rubberized asphalt work was deleted from the program that year and no grant money was encumbered. Discussion Staff proposes submitting a Targeted grant application to acquire the additional funds needed to include RAC as part of the upcoming street maintenance project scheduled to begin in the summer of 2012. This street maintenance project is estimated at $2 million, and will include a bid add-alternate for rubberized asphalt concrete that could replace the normal asphalt concrete used for street rehabilitation and overlays. RAC material is more expensive than the typical asphalt concrete as it is a recycled product, but may prove to be more durable, flexible and provide a longer life span than the typical 20 year life span of asphalt concrete. If the lowest responsible bidder provides an RAC bid price within budget, combined with the funds supplied by the grant, the RAC bid add-alternate will be included in the annual 2012 Street Maintenance project contract for Council’s consideration to award next year. Staff anticipates that a Targeted grant of $250,000 will cover the additional cost of using RAC so the City can maintain streets at the current level. If the RAC is more expensive than expected, the resurfacing project will continue with the use of asphalt concrete so as to not impact or decrease the number of streets resurfaced, unless Council approves an additional expenditure to pay the additional cost beyond the $250,000 of grant funds March 07, 2011 Page 3 of 3 (ID # 1432) anticipated. Resource Impact If a supplemental grant of $250,000 is awarded to the City, an Exhibit B adjustment to the FY 2012 Capital Improvement Program will be required to budget grant funds and authorize expenditures. The grant requires City expenditures of funds which will be reimbursed by the State. No net impact on the General Fund or Infrastructure Reserve is expected. The remaining funds for the project are included in the proposed FY 2012 Capital Improvement Program budget, PE-86070, Street Maintenance. Staff will submit the application, administer agreements and amendments, and submit for reimbursements periodically during the project as required by the grant conditions. Policy Implications This grant program is consistent with the City Council’s Top 5 priority, Environmental Sustainability, promoting sustainability and the reduction of materials put into the waste stream and Sustainable Budget, by seeking outside funding sources for City infrastructure projects. Environmental Review The street maintenance project is exempt from the the California Environmental Quality Act (CEQA); therefore, no environmental analysis is required. Attachments: ·Resolution: CalRecycle RCA Grant Program (DOC) Prepared By:Mike Nafziger, Senior Engineer Department Head:J. Michael Sartor, Interim Director City Manager Approval: James Keene, City Manager Not Yet Approved 1 110214 jb 0130677 Resolution No. _____ Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Submit Application(s) and Sign Related Agreement(s) for the California Department of Resources Recycling and Recovery (CalRecycle) Rubberized Asphalt Concrete (RAC) Grant Program WHEREAS, Public Resources Code sections 40000 et seq. authorize the Department of Resources Recycling and Recovery (CalRecycle), formerly known as the California Integrated Waste Management Board, to administer various Grant Programs (“grants”) in furtherance of the State of California’s (“State”) effort to reduce, recycle and reuse solid waste generated in the State thereby preserving landfill capacity and protecting public health and safety and the environment; and WHEREAS, in the furtherance of the authority CalRecycle is required to establish procedures governing the application, awarding, and management of the grants; and WHEREAS, CalRecycle grant application procedures require, among other things, an applicant’s governing body to declare by resolution certain authorizations related to the administration of CalRecycle grants. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1.The Council authorizes the submittal of application(s) to CalRecycle for Targeted Rubberized Asphalt Concrete Incentive (Targeted) grant for which the City of Palo Alto is eligible. SECTION 2.The City Manager, or his/her designee is hereby authorized and empowered to execute in the name of the City of Palo Alto all grant documents, including but not limited to, applications, agreements, amendments and requests for payment, necessary to secure grant funds and implement the approved grant project; and / / / / / / / / / / / / Not Yet Approved 2 110214 jb 0130677 SECTION 3.These authorizations are effective for five (5) years from the date of adoption of this resolution. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST:APPROVED: _____________________________ ________________________ City Clerk Mayor APPROVED AS TO FORM:______________________________ City Manager _____________________________ ________________________ Senior Assistant City Attorney Director of Public Works City of Palo Alto (ID # 1463) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 2 (ID # 1463) Council Priority: Emergency Preparedness Title: Amendment to agreement with Sys Planning/Tri Data Subject: Approval and Authorization for City Manager to enter into amendment No. 1 to contract with Sytems Planning Corporation/Tri Data Divisionto add $40,000 for preparation of an EMS study for a total contract amount not to exceed $87,000. Authorize the City Manager to sign an amendment to the agreement with Systems Planning Corporation/ Tri Data Division in the amount of $34,500 to complete the City of Palo Alto Emergency Medical Services Resources, Services and Utilization Study From:City Manager Lead Department: City Manager Recommendation Approval and Authorization for City Manager to enter into amendment No. 1 to contract with Systems Planning Corporation/Tri Data Division, to add $40,000 for preparation of an EMS study for a total contract amount not to exceed $87,000. Background This study was originally approved by the Fire Department in the fall of 2009 for completion by a different company. Unfortunately, the company that was originally hired to complete the EMS Study was terminated in November 2010 for non-performance. As a result, it is now necessary for the City to engage another firm to conduct the study. Staff recommends that Council authorize the City Manager to sign an amendment to the agreement with Systems Planning Corporation/Tri Data Division in the amount of $40,000 ($34,500 plus expenses) to complete the City of Palo Alto Emergency Medical Services (EMS) Resources, Services and Utilization Study. Discussion In January 2011, Systems Planning Corporation/Tri Data, along with the International City/County Management Association Consulting group, completed the Fire Department Resources, Services and Utilization Study for the City. Because the firm has knowledge of the City of Palo Alto, the fire department and its staff, as well as collected quite a bit of data March 07, 2011 Page 2 of 2 (ID # 1463) through the City's computer aided dispatch (CAD) system, it follows that the firm could get a jump start on completing this very important, overdue study for the City. In addition, Tri Data has successfully completed similar EMS operations studies for other jurisdictions. Staff requested a proposal from Tri Data and the cost will be $40,000 ($34,500 for consulting and not to exceed $5500 for expenses) and will be paid through the Fire Department contingency/consulting services line item. This is consistent with what staff has received in terms of costs from other firms when the original RFP was issued in fall 2009. The original contract with Tri Data was $47,000 and this amendment to completed the EMS Study will bring those costs to $87,000 total. A copy of the scope of work and task steps are included as Attachment A. Timeline The consultant will begin the work immediately following approval by Council and estimates that the study will be completed by the end of the fiscal year. Attachments: ·Tri Data EMS Work Plan (PDF) Prepared By:Pam Antil, Assistant City Manager Department Head:James Keene, City Manager City Manager Approval: James Keene, City Manager PROPOSAL Emergency Medical Services Add-on ! to Current Fire Services Utilization ,I " and Resources Study Submitted to: Greg Pustelnik, Purchasing Manager City of Palo Alto Purchasing and Contract Administration - M Level 250 Hamilton Avenue, Mail Stop MB Palo Alto, CA 94301 Submitted by: Philip Schaenman, President TriData Division, System Planning Corporation 3601 Wilson Boulevard, 5th Floor Arlington, VA 22201 (703) 351-8300 ,~ I J Proposal-City of Palo Alto, CA Emergency Medical Services Add-on Dr. Harold C. Cohen, another TriData senior project manager. Dr. Cohen has managed many TriData studies, including the EMS studies listed above He has over 30 years of EMS and fire service experience, including 22 years with a large, combination, fire and EMS system. Harold has a Ph.D. in Health Services, M. S. in Emergency Health Services Administration and Management, and was an IAFCINFPA Fellow to the Harvard University/JFK School of Government in the Senior Executives in State and Local Government programs. He is a graduate of the National Fire Academy Executive Fire Officer Program and instructs with this program. Harold is also a Fellow of the American College of Healthcare Executives (ACHE) and is board- certified in Healthcare Management. Dr. Cohen will report to Steve Brezler in the manner that other staff and consultants are currently doing fire study. TriData's administrative staff will provide project support. JeffDyar, is a senior TriData consultant who specializes in EMS system planning and evaluation. Mr. Dyar is the former chair of the National Fire Academy EMS Curriculum and Acting Branch Chief for Executive Programs. He was awarded the James O. Page EMS Leadership Award by the International Association of Fire Chiefs. Jeffhas also been a firefighter and paramedic, rising through the ranks to battalion chief. Mr. Dyar has served on several TriData projects including, the New Jersey State EMS System Evaluation, the Orange County, FL EMS study, and the City of Alameda, CA EMS study. SCOPE OF WORK The scope of work section contains specific areas that will be research. Also included is a list of tests related scope of work. Current Status of EMS in Palo Alto Our evaluation begins with the initial stage of emergency response, 911 access and identifies each constituent group within the township. Excluding any stage of EMS response limits the township from seeing the complete picture and often leads to faulty recommendations. EMS Dispatch-We will examine each primary and secondary access and dispatch points to determine the effect that call processing time has on EMS response. Our examination of medical priority dispatch (or similar programs) will help determine the efficiency of weight of response, and possibly find ways to reduce unnecessary responses that effect safety, cost, and control overuse of valuable volunteer human resources. Fire Service First Response -we will examine current first responder service provided by the Palo Alto Fire Department including, response times, service forecasting, and level of TriData Division, 2 System Planning Corporation I~ J Proposal· City of Palo Alto, CA Emergency Medical Services Add-on service provided. Level of service provision includes determining the need for providing basic or advanced life support. EMS Transportation -TriData will evaluate EMS transportation provided by the city and by the County EMS provider. We will attempt determine whether the City and County is meeting their response time goals and providing appropriate levels of service. County EMS System -California operates on a County-based EMS where local municipalities usually depend on the County EMS transportation. Palo Alto is one of the small number of cities that provides full-service EMS. We will examine relationship between Santa Clara County EMS system and City fire department. This will include the administrative, operational, and financial dealings between these government agencies. All ofTriData's EMS system assessments emphasize a systemic approach, with citizen concerns and participation at all levels. Weare experienced at conducting community-based participation and mediation, having done so in our New Jersey and Lee County, Florida EMS studies. At each level, we assure the opportunity for all constituents to offer input into the evaluation and recommendation process. Risk and Demand One of TriData's premier services is a risk and demand assessment for the communities that we serve. We use the latest assessment technologies, including ARC 9.3 GIS mapping, and SPSS 15 statistical software to produce quantitative and qualitative measurements to guide current and strategic initiatives. Most of the risk and demand section leader or the fire department study. Our addendum focuses on specific EMS. Possible Future Delivery Models The township is interested in determining its EMS needs for the next decade. Any model proposed will be operationally and financially sound, with citizen needs being a priority. We will examine several possible EMS models including career, volunteer, fire-based, municipal service, . hospital, commercial, or a combination of these models. Determining Possible Delivery Models -Our approach is to offer models that (\ demonstrate resonant simplicity that is operationally and fiscally sound. These EMS delivery models often require a strategic mixing of different first responder and EMS transportation services that promote quick response, high levels of care, and cost effectiveness. Any reasonable EMS delivery model will be considered. Any suggested transitions will be data-driven, and scientifically-based, but will be practical for the City. In addition to operational models, we will also recommend possible administrative oversight models. These models will include planning and executive management, and managing day-to-day administrative services. TriData Division, 3 System Planning Corporation t Proposal· City of Palo Alto, CA Emergency Medical Services Add-on • Initial data we would like to obtain is as follows: • Map of the entire EMS protection area • EMS department organization charts • Map of each EMS squad area • Land use, zoning and demographic data, especially population projections and future land use plans • Personnel deployment (number of personnel on each unit) • Several annual reports (if any) • Expected major capital improvements that would present new risks or affect existing risks or travel times (e.g., major roads) • Capital improvement and ambulance replacement programs used by each squad • EMS, hazmat, and rescue, and trend data for the past 5-10 years • Response time profiles for EMS calls, by geographic area. Alternatively, a database from which this can be computed is satisfactory. • EMS vehicles by station (age; manufacturer; type; last major refurbishment, if any), including front-line and reserve units • Mutual and automatic aid agreements • General obligation bond commitments and promises • General information about the ambulance stations, e.g., size, year built, construction, number of bays, etc. For the response time analysis we will need: • CAD data, to include incident number, date, address, call type, time received, time dispatched, units dispatched, en route times, arrival times, clear times, and in station times. If CAD data is not available, the equivalent data will need to be assembled into an Excel document. • NEMSIS data from EMS patient care reports, removing any patient identifiers. Review of this above information serves as "homework" before the first series of meetings with fire department and city officials. It also tells us about data availability. Some of this data will be collected during the course of the study if not readily available at the triage visit. After reviewing the initial background information, we will conduct a two-day triage of issues visit. The project team will meet first with the township leadership and emergency TriData Division, 5 System Planning Corporation Proposal· City of Palo Alto, CA Emergency Medical Services Add-on services officials, including the township manager, EMS chiefs, EMS medical director, and other career and volunteer public safety officials. We would also like to meet with planning officials to get a better idea of future expectations. The main purposes of our visit are to become familiar with EMS aspects in Palo Alto, and to bridge the gaps between the fire and EMS portions of the study. We conclude our visit with a meeting between TriData's EMS researcher, and the township project EMS team to debrief the visit and to verify any details concerning the project. We will perform a comprehensive, systematic evaluation of all aspects of EMS starting with the 91 I system and dispatch (including Medical Priority Dispatch), continuing with EMS administration and operations, and also including hospitals, and support organizations. Our evaluation will include interviews, review of documents, and meetings with key leaders of appropriate organizations. Our assessment will include meetings with County EMS officials, medical directors, healthcare administrators, labor leaders, and other participants to assure that each interested party has an opportunity to provide input. These meetings will be similar to those we held during our State of New Jersey, Southwest Lee County, Florida, and other studies. Another aspect of our evaluation will include as assessment of between 5 and 10 local EMS systems, comparing them to the current Palo Alto model. This will include operational measures, clinical proficiency, and financial perspectives. After gathering the data, we will make appropriate conclusions and recommendations. These initial recommendations will focus on any immediate needs that the City of Palo Alto Our analysis will be a continuation of the work began during the fire suppression phase. Based on the information gathered above, TriData will: • Identify trends affecting fire and emergency protection in the township, including population growth, demographics, and risk. • Analyze trends in the number and size of, EMS first responder, and other incidents in the past 5 years. • Analyze incident reports or dispatch data to identify the run frequency by area of the township and by EMS agency. TriData Division, 6 System Planning Corporation Proposal' City of Palo Alto, CA Emergency Medical Services Add-on • Use statistical extrapolation and expert judgment regarding the factors of influence to develop projections of future demand for EMS calls, and other rescue incidents over the next 10 years • Convert the demand estimate to an estimate of workload by unit and location The future demand for service is the product of demand per capita and population served. One needs to consider both elements in projecting demand, not just increase in population. We estimate future demand in two ways to form an envelope of projections. The high estimate projects the trend in demand per capita, multiplied by the projected population for each year. The low estimate assumes that per capita demand will remain about at its current level, and that demand will therefore be approximately proportional to population growth. We project trends by type of call. We disaggregate demand estimates by area of the township, where possible. We consider the types of high-hazard occupancies that exist but may not have had any serious incidents, and the hazards that are likely to be built in the near future. The results of this analysis are compared to the existing capabilities to determine present unmet needs, and projections on when additional resources might be needed. The results of this task will be used in the EMS station location, EMS unit, and staffing analysis. We will consider the degree to which demand for service needs vary throughout the township. We use township planning projections for growth in population, business, and any new risks expected to be introduced in the next decade. TriData analysts will discuss with the City the current response time goals in light of national standards such as NFP A. We will consider the desired goals but also what is feasible and affordable. Where appropriate we will indicate the costs to meet national standards, and any evidence in terms of fire injuries, deaths, and dollar loss that the current system is or is not posing a problem. Response times includes call processing and dispatch time, time to turnout, and the drive time. We will analyze the actual response data for the past 5 years. We will compute the average response times overall and by area of the township, and the cumulative frequency distribution of response times or fractile response times (i.e., the percent of calls responded to in 4 minutes, 6 minutes, 8 minutes, etc.). We review response times by area of the township and by type of call (EMS first response, and rescue). This is based on the existing fire response data, and assumes it is available in machine-readable format. We consider not only response times for first-due units, but also second-in times and the time needed to assemble an adequate force for different types of risks. We consider simultaneity of calls and the availability of back-up resources. We consider how demand varies by area of the city, time of day, and day of week. This response time analysis is applied to the operational analyses where the alternatives are evaluated. TriData Division, 7 System Planning Corporation Proposal· City of Palo Alto, CA Emergency Medical Services Add-on TriData will also evaluate current automatic and mutual aid agreements. These agreements are important in determining where station locations and service will be needed. We will identify weak areas and suggest ways to improve cooperation as necessary. We will develop an EMS master plan to include each major component of the EMS process. This includes designing a service model, staffing, capital expenses, and quality management. The plan will be presented in phases, and include specific milestones and time goals. We will base our recommendations based on quantitative and qualitative data, political considerations, and finances. We will create a suggested timeline for implementation based on realistic expectations. Our recommendations will also consider legislative requirements that are often challenging in California. TriData firmly believes that financial considerations are an integral part of any recommendations, and that they do not stand alone. Due to economic constraints and the complexity of the township EMS system, we feel that in this case, a separate section is warranted. It is often difficult to appreciate the true cost-benefit of a specific EMS model, but we have the experience to understand the nuances of these financial challenges. For example, in Orange County, FL, we showed how the County assuming additional services could increase revenues without increasing taxes. Conversely, we showed in Southwest Florida, that local jurisdictions would not financially benefit from providing full EMS service. We cite these opposing examples to emphasize that we provide a professional, honest, thorough approach that is tailored toward our customer, and not the views of a particular organization. Our financial evaluation will be based on models including: NFP A 1710, the American Ambulance Association, the Center for Public Safety Excellence, and the Commission on Ambulance Accreditation. These models are used only as guidelines, because our recommendations are tailored to our client's needs. TriData's financial recommendations will include human resource needs, capital projects and equipment, and projected revenue possibilities. In many cases, services can be increased and costs reduced by consolidation of equipment and services or combining delivery profiles. TriData Division, 8 System Planning Corporation City of Palo Alto (ID # 1395) City Council Staff Report Report Type: Action Items Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 7 (ID # 1395) Council Priority: Title: Palo Alto Commons PC Amendment Subject: Public Hearing: Approval of a Mitigated Negative Declaration and Adoption of an Ordinance to Amend the Existing Palo Alto Commons Planned Community (“PC”) to Add a 0.83 Acre Site and Rezone it to PC from CN and RM- 15 for a New 3-story Building Providing 44 Senior Assisted Living Rental Units at 4041 El Camino Way From: City Manager Lead Department: Planning and Community Environment Recommendation Staff, the Architectural Review Board (ARB), and the Planning and Transportation Commission (P&TC) recommend that City Council: 1.Approve the Initial Study and Mitigated Negative Declaration (Attachment L), in accordance with the California Environmental Quality Act (CEQA); and 2.Adopt the proposed Ordinance (Attachment A), an amendment to the existing Palo Alto Commons Planned Community (PC-3775) zone district to add the 0.83 acre site (subject property) to the existing 1.7 acre site, and construct a senior assisted rental housing facility to replace the existing buildings at 4041 El Camino Way. Executive Summary This report conveys to the City Council the unanimous recommendations of the Architectural Review Board, Planning and Transportation Commission, and staff to approve the proposed 44- unit senior assisted living rental project as an amendment and addition to the existing Palo Alto Commons Planned Community Zoning District. The City Council’s review includes the Mitigated Negative Declaration/Environmental Assessment of the proposed project and the amendment of PC-3775 to include a 0.83 acre site with a new building with 44 new units. The project furthers the City’s housing diversity goals and retains six protected oak and redwood trees onsite. Concerns expressed in earlier meetings about the mass of the proposed building and the number of proposed parking spaces were addressed by the applicant and were discussed in hearings with the Architectural Review Board and the Planning and Transportation Commission. Background March 07, 2011 Page 2 of 7 (ID # 1395) Existing Conditions Palo Alto Commons is an existing senior assisted housing facility developed on a 1.7 acre site based on Planned Community (PC) Zone 3775, approved by City Council in 1987. Palo Alto Commons consists of 121 senior rental units (with 140 beds), totaling 81,200 square feet of floor area. The existing 2-and 3-story facility contains a dining facility, kitchen, and activity rooms on the first floor, and both surface parking and below grade parking facilities providing 55 parking spaces. The public benefit was considered to be intrinsic to the existing PC, an assisted living facility needed by the community. The proposed expansion site, located immediately west of the existing senior facility, is comprised of three developed properties located on El Camino Way between West Meadow Drive and El Camino Real, with El Camino Way addresses 4037, 4039, 4041, 4043 and 4045. The expansion site contains a single-family home and two small commercial buildings on three lots. The front half of the site is currently zoned Neighborhood Commercial (CN) and the rear half of the site is zoned Low Density Multiple Family Residential allowing up to 15 units per acre (RM- 15 zone district). The site’s existing zoning is consistent with the Comprehensive Plan land use designations for the site, Neighborhood Commercial and Multi-Family Residential. The properties to the east are zoned Single-Family Residential (R-1), the property to the north is zoned Multi-Family Residential (RM-15), and the property to the south is the existing Palo Alto Commons facility Planned Community. Project Description The applicant’s project description and development program statement for the proposed PC district zone change are provided in Attachment E. The proposed 44-unit senior assisted housing facility (aka Commons Addition) would include 8 studio apartments, 17 one-bedroom apartments and 19 two-bedroom apartments. The new building would provide common areas and recreation facilities, including a lounge, fitness room, indoor pool, common bathroom, and dining room. The below grade parking facility would provide 38 parking spaces. Three parking spaces and a drop-off area would be provided at grade. The total proposed floor area is 56,672 square feet, which is a 1.57:1 floor area ratio (FAR) for the site, resulting in an overall FAR of 1.17:1 when combined with the existing Palo Alto Commons. The area of the below grade parking facilities is not included in the FAR. The vehicle access from El Camino Way to the new underground parking facility would be provided using the access to the existing parking facility on the Palo Alto Commons site, with new driveways provided for the at grade parking and drop-off areas. The layout and location of the proposed building have been dictated primarily by the location of the existing protected, mature oak trees on the site and the applicant’s intention to reduce visual impacts on adjacent residential neighbors. The variable height and architectural treatment of the project are in response to the existing context. March 07, 2011 Page 3 of 7 (ID # 1395) Discussion Zoning The proposed project is submitted as a Planned Community zone because this type of small unit, rental housing facility for seniors, with age in place care, does not fit within any of the land uses defined within the zoning code. A zoning comparison table is included as Attachment D and shows a comparison to RM-30, as the most applicable zone for this use, and CN, the existing zoning designation for the site. Staff is recommending the Planned Community Zone for this type of project because its public benefit is truly integral to the project, and because small senior units and their unique character were not taken into consideration in the Zoning Code. The proposed units per acre is above what is allowed in zoning, but the 86 persons per acre, is within the 8 to 90 persons per acre allowed within the site’s (Multiple Family Residential) designation in the Comprehensive Plan. The need for a PC zone for this type of project can be clearly seen in that there hasn’t been any senior housing facility successfully approved in Palo Alto without use of a PC zone. Below Market Rate (BMR) housing requirement The City does not have any BMR Requirements applicable to rental housing. Board/Commission Review & Recommendations The Architectural Review Board considered the proposed project at three hearings. The applicant responded to the August 19, 2010 preliminary ARB comments by submitting revised designs, which the ARB formally reviewed and approved on November 4, 2010 (Staff Report included as Attachment I). The ARB requested six follow-up items return for consent calendar review (architectural and landscaping details, report out on conversations with neighbors over oak tree locations, and fencing adjacent to Jacobs Court). The ARB unanimously recommended approval of the plans after reviewing the follow-up items (Staff Report included as Attachment J). The Planning and Transportation Commission (P&TC) considered the proposed project at two hearings. The preliminary hearing and project initiation occurred on June 16, 2010 (Staff Report included as Attachment H), where the P&TC comments focused on the environmental review, feasibility of the project without a PC, project need for a PC, project design, parking, and economic impacts. For the formal P&TC hearing on January 26, 2011 (Staff Report included as Attachment K) these issues were addressed through a revised environmental document, discussion of project conflicts with zoning and provision of public benefits, the revision of the design during ARB review, additional parking analysis (available online at http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=26075), additional economic analysis described in the project description (Attachment E), and the Resource Impacts section, below. The P&TC unanimously recommended approval of the draft ordinance, project plans, and environmental document. Public Benefit Public benefits are required for any Planned Community zone. The existing PC, Palo Alto March 07, 2011 Page 4 of 7 (ID # 1395) Commons, was approved with an acknowledgment that the use itself, senior housing, was a public benefit. The public benefit of this project is primarily the rental senior housing with facilities for aging in place. In addition to this primary benefit, the applicant proposes pedestrian improvements and facilities along El Camino Way between East Meadow and El Camino Real to the north, upgrades to the existing bus stop on El Camino Real, extensive planting, new walkways and a crosswalk in front of the Commons Addition development, and a $100,000 donation to Avenidas to be ear-marked for the age-at-home program for low-income seniors. Green Building This project is one of the first projects to participate in the City’s LEED-ND Pilot Program under PAMC 18.44. The goal of the program is to promote sustainable neighborhoods by looking at how a single parcel can enhance a community’s access to alternative transportation, resource efficiency and environmental sensitivity. The project’s LEED-ND scorecard, modified for Palo Alto, is provided as Attachment F to this report. According to the applicant, the current design meets all of the prerequisites of the LEED-ND program and achieves 28 of the 30 points targeted by the pilot program. Many of the points were achieved through its location, having access to many diverse uses and housing. The applicant identified an additional 11 points which could be applied, but not without extra expense to the project. For example, dedicated space would be needed for local food production and for the amount of secured bicycle storage to obtain those points. Projects reviewed this year are not yet required to comply with the LEED- ND program, but rather only to submit documentation showing the level of compliance. This provides information that Council will evaluate at the end of the year in determining whether to implement or change the program to make it mandatory. The project will also be required to meet the Build It Green, GreenPoint Rated program at the time of building permit and throughout construction under PAMC 16.14. The project must meet all of the program’s prerequisites and achieve at least 70 points. A significant amount of points are being claimed for a design that provides for significant energy efficiency measures. Timeline Initiation by P&TC June 16, 2010 Preliminary ARB Hearing August 19, 2010 ARB Hearing (Approval)November 4, 2010 ARB Hearing (Approval on Consent)December 2, 2010 Formal P&TC Hearing January 26, 2011 City Council Hearing March 7, 2011 Resource Impact Revenues The new Palo Alto Commons project has a number of one-time and ongoing General Fund revenue impacts once built. The following ongoing revenue estimates are net of revenue streams from the current site. Expected revenues are as follows: March 07, 2011 Page 5 of 7 (ID # 1395) Revenues One-Time Ongoing Impact Fees (1)$299,740 Documentary Transfer Tax (2)$ 14,025 Property taxes (3)$17,673 Utility Users Tax (4)$ 4,627 Sales Taxes (5)$ 3,800 Total Revenues $304,559 $26,100 (1)These consist of traffic, park, community center and library impact fees. The fees are estimated based on the number and size of the units and on trips generated by the new development. A final calculation is completed and fees are paid at building permit issuance. PAUSD impact fees are not included in the above calculation but will be paid to the school district. (2)Transfer of ownership for the property occurred approximately 3 years ago so the City has already recognized the transfer tax revenue. Amount cited above is based on the purchase value. (3)Ongoing property taxes were calculated based on the estimated future value of property and improvements less the assessed value of property at time of purchase. It should be noted that current property owner is appealing the assessed value so the estimated ongoing tax could be lower if appeal is successful. (4)The Utility Users Tax is based on expected gas, electric, and water usage based on square footage and estimated telephone expenses. (5)Once residents occupy units and workers attend them, there will be taxable expenditures in the City. Above estimate is based on anticipated spending patterns of residents and workers. The businesses on the current site provide services and do not generate sales taxes that are material to the analysis. It should be noted that the developer has estimated, based on $7.0 million in construction costs, that the City could realize $70,000 in one-time use taxes. Staff is reluctant to confirm this estimate because appropriate use tax direct payment permits must be obtained and used by prime and/or sub-contractors to report taxes to the State. Thus, realizing the $70,000 will take diligence on the part of the developer and contractors; staff will encourage them to implement the measures necessary to achieve this goal. Expenses March 07, 2011 Page 6 of 7 (ID # 1395) This is a cost-recovery project; the applicant is reimbursing the City’s costs to cover staff expenses involved in analyzing the proposal, preparing environmental documents and reports for public hearings, and checking building permit plans. At this time, the new Commons project will not result in any additional direct costs for the City. As noted in prior housing development proposals, the cumulative addition of housing units will have an impact on City costs such as police services. Since this project serves seniors, for example, it can be expected that calls for paramedic services will increase. Paramedic fees, however, should recoup the cost of service. It is difficult to calculate the cost consequences of individual developments to the General fund, but it is important to realize that that additional service expenses may be needed at a future date and will offset revenues generated by projects such as the new Commons units. Policy Implications The proposed project is consistent with the Comprehensive Plan land use designation and policies and staff believes there are no other substantive policy implications. A table of applicable Comprehensive Plan policies is included as Attachment C. Environmental Review This project is subject to the California Environmental Quality Act (CEQA) requirements. The draft Initial Study and Mitigated Negative Declaration was available for public review between June 11 and July 1, 2010. Revisions were made in December, 2010, to include regulations regarding GHG thresholds developed since the release of the initial draft, and in consideration of comments received at public hearings, but no new impacts were found, and no new mitigation measures were needed, so no recirulation was necessary. The mitigation measures to address potential impacts in the areas of Biological Resources (Protected Trees), Hazards and Hazardous Materials (potential existing asbestos-containing materials and lead-based paint materials, potential water contamination), Noise (rooftop equipment, interior noise, construction & delivery hours), and Transportation and Traffic (parking & driveway design, bicycle parking) have been accepted by the applicant. COURTESY COPIES Sandy Sloan Stephen Reller Attachments: ·Attachment A: Palo Alto Commons PC Ordinance and Exhibits (PDF) ·Attachment B: Location Map (PDF) ·Attachment C: Comprehensive Plan Policies (PDF) ·Attachment D: Zoning Comparison (PDF) ·Attachment E: Project Description (PDF) ·Attachment F: LEED-ND Checklist(PDF) March 07, 2011 Page 7 of 7 (ID # 1395) ·Attachment G: Oak Tree Impact Analysis(PDF) ·Attachment H: June 16, 2010 P&TC Staff Report and Minutes (PDF) ·Attachment I: ARB Staff Report November 4 (PDF) ·Attachment J: ARB Staff Report December 2 (PDF) ·Attachment K: Jan. 26, 2011 P&TC Staff Report and Minutes (PDF) ·Attachment L: Environmental Review (PDF) ·Attachment M: Plans (Hardcopies provided to Councilmembers and Libraries Only)(TXT) Prepared By:Jennifer Armer, Planner Department Head:Curtis Williams, Director City Manager Approval: James Keene, City Manager * NOT YET APPROVED * 1 110112 sh 8260510 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Section 18.08.040 of the Palo Alto Municipal Code (the Zoning Map) to Amend PC-3775 (Palo Alto Commons, 3075 El Camino Way) to include the Palo Alto Commons Addition, involving a Change in the Classification of Properties Known as 4035, 4037, 4039, 4041, 4043, 4045, and 4075 El Camino Way from RM-15 and CN, to PC Planned Community for a New Building to House a 44-Unit Expansion of the Existing Senior Assisted Rental Housing Facility The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. (a) Stephen Reller (“the Applicant” or “the Property Owner”) formally applied on December 9, 2009, to the City for approval of a rezoning application (“the Project”) of property known as 4035, 4037, 4039, 4041, 4043, 4045, and 4075 El Camino Way (“the Subject Property) and zoned RM-15 and CN, to Planned Community and join the subject property with the existing PC-3775 for a single combined lot for a Senior Assisted Rental Housing Facility accommodating the uses specifically set forth in Section 4 of this Ordinance. (b) The Planning and Transportation Commission (PTC), after a duly noticed public hearing held on June 16, 2010, initiated the Project and forwarded it to the Architectural Review Board (ARB) for review and recommendation. (c) The ARB, after duly noticed public hearings held on August 19, 2010, and November 4, 2010, reviewed the project design and recommended that the City Council approve the project with the associated draft conditions of approval ‘Exhibit B.’ (d) The PTC, after a duly noticed public hearing held January 26, 2011, reviewed the project, including the Draft Mitigated Negative Declaration and this Ordinance, and recommended that Section 18.08.040 (the Zoning Map) of the Palo Alto Municipal Code be amended, subject to conditions of approval (Exhibit B), to rezone the Subject Property to Planned Community to permit construction of the proposed project located as shown on ‘Exhibit A,’ attached to this document and incorporated by reference. Draft conditions of the project approval ‘Exhibit B’ attached to this document and incorporated by reference were presented to the PTC for review and comments. (e) The Council, after a duly noticed public hearing held on ______________, and after due consideration of the proposed project, the Mitigated Negative Declaration and Mitigation Monitoring Program, the analysis of the project by City staff, and the recommendations from the PTC and the ARB, finds that the proposed Ordinance is in the public interest and will promote the public health, safety and welfare, as hereinafter set forth. * NOT YET APPROVED * 2 110112 sh 8260510 (f) The Council finds that (1) the Subject Property is so situated, and the use or uses proposed for the site are of such characteristics that the application of general districts or combining districts will not provide sufficient flexibility to allow the Project; and (2) development of the Subject Property under the provisions of the PC planned community district will result in public benefits not otherwise attainable by application of the regulations of general districts or combining districts; and (3) the use or uses permitted, and the site development regulations applicable within the district shall be consistent with the Palo Alto Comprehensive Plan, and shall be compatible with existing and potential uses on adjoining sites or within the general vicinity. SECTION 2. Section 18.08.040 of the Palo Alto Municipal Code, the “Zoning Map,” is hereby amended by changing the zoning of the Subject Property from “CN Neighborhood Commercial”, “RM-15 Multifamily Residential” to add the Subject Property to the existing “PC Planned Community 3775” creating a new “PC Planned Community ________”. The terms related to the existing PC remain in effect in Ordinance 3775 and the terms related to the Subject Property are contained in this Ordinance. SECTION 3. The City Council hereby finds with respect to the Subject Property that the project (“the Project”) as depicted on the Development Plans dated December 21, 2010, incorporated by reference, comprises a senior rental housing development that includes the following components: (a) The replacement of 4071 square feet of existing commercial space and one existing single family residence with 56,609 square feet of rental senior housing space, including support uses; (b) Forty-four (44) rental senior housing units, comprising 48,950 square feet; (c) New underground parking garage containing 38 parking spaces on one level; (d) New surface parking and drop-off area accommodating three parking spaces; (e) Retention of the 81,200 square foot senior housing facility, including underground parking garage and a surface parking lot with 55 parking space total; (f) Removal and replacement of all street trees along the El Camino Way frontage of the new property; (g) New automobile driveways along El Camino Way to access new surface parking and drop-off area; and (h) Retention and protection of three oaks on site (two to be relocated), and three redwoods. SECTION 4. The Development Plan dated received December 27, 2010, and any approved supplemental materials, for the Subject Property, as submitted by the applicant pursuant to Palo Alto Municipal Code Section (PAMC) 18.38.090, shall be subject to the following permitted * NOT YET APPROVED * 3 110112 sh 8260510 and conditional land uses and special limitations on land uses, development standards, parking and loading requirements, modifications to the development plans and provision of public benefits outlined below, and conditions of approval, attached and incorporated as “Exhibit B”. (a) Permitted and Conditionally Permitted land uses for the Subject Property shall be allowed and limited as follows: Permitted Uses: (1) Senior Housing; (2) Eating and Drinking Services for use by residents, employees, and their guests; (3) Personal Services for use by residents, employees, and their guests; (4) Retail Services (excluding liquor stores) for use by residents, employees, and their guests; (5) Recreational Facilities for use by residents, employees, and their guests; (6) Administrative Offices for administration of Palo Alto Commons; (7) Parking Garage and surface parking lot for use by residents, employees, and guests, with a combined parking ratio of 0.9 spaces per unit; (8) Medical care for residents as is customarily associated with senior assisted living facilities; and (9) Accessory Uses. (b) Development Standards: Development Standards for the Subject Property site shall comply with the standards prescribed for the (PC) zone district (Chapter 18.38), and as modified in Section 4(a) above. (c) Modifications to the Development Plan and Site Development Regulations: Once the project has been constructed consistent with the approved Development plan, any modifications to the exterior design of the Development Plan or any new construction not specifically permitted by the Development Plan or the site development regulations shall require an amendment to this Planned Community zone, unless the modification is a minor change as described in PAMC 18.76.050 (b) (3) (e), in which case, the modification may be approved through the Minor Architectural Review process. Any use not specifically permitted or conditionally permitted by this Ordinance shall require an amendment to the PC Ordinance. (d) Public Benefits: Development of the Subject Property under the provisions of the PC Planned Community District will result in public benefits not otherwise attainable by application of the regulations of general districts or combining districts. The * NOT YET APPROVED * 4 110112 sh 8260510 Project includes the following public benefits that are inherent to the Project and in excess of those required by City zoning districts: (1) Rental senior assisted housing (with provisions for aging in place); (2) Roadway, pedestrian, and bus stop improvements; and (3) A contribution of $100,000 to Avenidas to be ear-marked for the age at home program for low-income seniors. (e) Development Schedule: The project is required to include a Development Schedule pursuant to PAMC 18.38.100. The approved Development Schedule is set forth below: Construction of the Project shall commence on or before June 2012, unless a change in the development schedule is approved by the Director of Planning and Community Environment. Any approved schedule extension shall not exceed one year and only one such extension without a hearing shall be allowed, pursuant to PAMC 18.38.130. The project shall be constructed and occupied by June 30, 2014, unless extended by the Director to June 30, 2015. SECTION 5. Council approves the Architectural Review, finding that: (a) The design is consistent and compatible with applicable elements of the City's Comprehensive Plan in that the site is designated Commercial/Multiple Family Residential and the Comprehensive Plan Table indicates compliance with applicable policies; (b) The design is compatible with the immediate environment of the site in that the project is the expansion of a rental senior housing facility located between existing residential and commercial development; (c) The design is appropriate to the function of the project in that the design responds to the adjacent residential uses, while providing a welcoming and comfortable environment for the seniors to live in and providing improved pedestrian amenities for their use; (d) In areas considered by the board as having a unified design character or historical character, the design is compatible with such character. The proposal is a new building located near but not on El Camino Real and providing a buffer between that busy corridor and the low density residential located behind; (e) The design promotes harmonious transitions in scale and character in areas between different designated land uses. The proposed project is located along El Camino Way, just back from El Camino Real, and provides a buffer between that busy corridor and the low density residential located on the parcels to the rear of the site; * NOT YET APPROVED * 5 110112 sh 8260510 (f) The design is compatible with approved improvements both on and off the site in that the proposed project includes a new building, new sidewalks and crosswalks, and improvements to the nearby existing bus stop; (g) The planning and siting of the various functions and buildings on the site create an internal sense of order and provide a desirable environment for occupants, visitors and the general community in that the proposed project provides a comfortable entrance through the port cochere, a central gathering area around the existing mature oak, and significant common rooms for residents and visitors to use; (h) The amount and arrangement of open space are appropriate to the design and the function of the structures in that program focuses more on common shared spaces, both external and internal for the use of the residents while providing some small private space for most residential units; (i) Sufficient ancillary functions are provided to support the main functions of the project in that the proposal includes significant common areas including dining room, kitchen, swimming pool, fitness room, and lounge. Additionally, the project also proposes improvements to the sidewalks, crosswalks, and bus stop in the area for access to the area for non-drivers; (j) Access to the property and circulation thereon are safe and convenient for pedestrians, cyclists and vehicles in that the proposal includes improvements to the pedestrian access, bus stop, and is conditioned to meet the bicycle parking requirements; (k) Natural features are appropriately preserved and integrated with the project in that the existing healthy oak tree central to the site is preserved, and the building designed around it. Two other oaks are also proposed to be kept, but relocated onsite; (l) The materials, textures, colors and details of construction and plant material are appropriate expressions of the design and function in that the proposed design includes a combination of materials that helps in breaking up the mass of the building; (m) The landscape design concept for the site, as shown by the relationship of plant masses, open space, scale, plant forms and foliage textures and colors create a desirable and functional environment and the landscape concept depicts an appropriate unity with the various buildings on the site, in that the landscaping has been kept simple to accent the existing mature trees and provide outdoor areas for the residents to enjoy; // * NOT YET APPROVED * 6 110112 sh 8260510 (n) Plant material is suitable and adaptable to the site, capable of being properly maintained on the site, and is of a variety which would tend to be drought- resistant and to reduce consumption of water in its installation and maintenance once conditions are met to reduce planning beneath the existing oak tree; (o) The project exhibits green building and sustainable design that is energy efficient, water conserving, durable and nontoxic, with high-quality spaces and high recycled content materials. The following considerations should be utilized in determining sustainable site and building design: (1) Optimize building orientation for heat gain, shading, daylighting, and natural ventilation; (2) Design of landscaping to create comfortable micro-climates and reduce heat island effects; (3) Design for easy pedestrian, bicycle and transit access; (4) Maximize on site stormwater management through landscaping and permeable paving; (5) Use sustainable building materials; (6) Design lighting, plumbing and equipment for efficient energy and water use; (7) Create healthy indoor environments; and (8) Use creativity and innovation to build more sustainable environments. The design incorporates energy conservation measures through green building techniques. (p) The design is consistent and compatible with the purpose of architectural review, which is to: (1) Promote orderly and harmonious development in the city; (2) Enhance the desirability of residence or investment in the city; (3) Encourage the attainment of the most desirable use of land and improvements. (4) Enhance the desirability of living conditions upon the immediate site or in adjacent areas; and (5) Promote visual environments which are of high aesthetic quality and variety and which, at the same time, are considerate of each other. The design is consistent for all of the reasons and findings enumerated above. SECTION 6. Indemnification. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside, or void this Ordinance or any permit or approval authorized hereby for the project, including (without limitation) reimbursing the * NOT YET APPROVED * 7 110112 sh 8260510 City its actual attorneys fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its choice. SECTION 7. Acceptance by the applicant. If the Applicant does not accept and agree to the terms of this Ordinance in writing prior to the second reading of the Ordinance and within 30 days of the Council’s adoption, the question of the appropriate zoning of the Subject Property shall be referred to the PTC for their consideration and recommendation. SECTION 8. A mitigated negative declaration (MND) for this project was prepared in accordance with the California Environmental Quality Act and circulated for public review for a 20- day period beginning June 11, 2010. The City Council considered and approved the MND and Mitigation Monitoring Program at its meeting of ________________. SECTION 9. This Ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: ___________________________ __________________________ City Clerk Mayor APPROVED AS TO FORM: __________________________ City Manager __________________________ Senior Deputy City Attorney __________________________ Director of Planning and Community Environment EXHIBIT B DRAFT CONDITIONS OF APPROVAL 4041 El Camino Way 09PLN-00000-00292 ________________________________________________________________________ PLANNING & COMMUNITY ENVIRONMENT Planning Division 1. The plans submitted for Building Permit shall be in substantial conformance with plans received and date stamped December 21, 2010, except as modified to incorporate these conditions of approval. 2. The ARB approval letter including all Department conditions of approval for the project shall be printed on the plans submitted for building permit. 3. The proposed project shall comply with the requirements of the Palo Alto Green Building Ordinance prior to submittal for building permit. 4. Staff shall evaluate painting “Keep Clear” on the roadway in front of the exit from Jacobs Court. 5. Applicant shall fund translucent glazing of bathroom windows facing the new Palo Alto Commons building in residences adjacent to the proposed project on Wilke Way and Jacobs Court for any residents who request it. 6. Applicant shall work with City staff to create a TDM program with an initial 6- month review after construction is complete. 7. Development Impact fees (including Park Fees, Community Facilities, Library, and Citywide Transportation Impact Area fees) with an estimated total of $281,494 must be paid prior to building permit issuance. This is an estimate and the final total may change based on date of building permit submittal. Transportation Division 8. A 6’ x 4’ sight triangle should be maintained between each of the driveways and the sidewalk. Refer to Figure 6 of 18.54.070 of the PAMC. The proposed solid 5’ walls may need to be modified and set back from the driveway aisles. 9. The egress driveway from the surface parking area will be restricted to right-turns only due to the sight distance issues with the median island and roadway curvature of El Camino Way. The project should include a regulatory traffic sign and pavement marking stating this. Also note that U-turns are not allowed at El Camino Real. 10. Include a stop sign and pavement markings (Stop bar and lettering) at the exit of the ramp at the intersection with the ramp to the existing garage 11. Two long-term bicycle parking spaces should be provided either in the form of bicycle lockers, or a secure bicycle room. 12. (already shown on plans) Short term bike parking (inverted-U type racks or similar) within 50 feet of the main entrance on the street level. 13. Consider changing parking stalls #1-14 and #18-32 to 17.5 feet long. This would provide an extra 6 to 12 inches of aisle width. (ADA Stall #17 must remain 18.0’ long) Building Division 14. A minimum of two (2) accessible parking spaces shall be provided when there 39 parking stalls in the Basement Level (as on sheet A2.00). 15. Certificate of Compliance will be applied for to combine all the adjoining parcels into one parcel that includes the proposed Palo Alto Commons addition structure with the existing Palo Alto Commons structure. This will eliminate the property line between the (E) structure and the (N) addition structure and will remove the restrictions for the exit discharge between the adjoining (N) and (E) structures. Planning Arborist 16. The proposed project shall conform to the requirements for tree protection and care stated in the submitted arborist report, prepared by David L. Babby of Arbor Resources, dated October 29, 2009. 17. Prepare a Tree Preservation Report for all trees to be retained. Activity within the dripline of ordinance-regulated oak trees requires mitigation to be consistent with Policy N-7 of the Palo Alto Comprehensive Plan. An updated tree survey and tree preservation report (TPR) prepared by a certified arborist shall be submitted for review and acceptance by the City Urban Forester. For reference clarity, the tree survey shall include (list and field tag) all existing trees within the project area, including adjacent trees overhanging the site. The approved TPR shall be implemented in full, including mandatory inspections and monthly reporting to City Urban Forester. The TPR shall be based on latest plans and amended as needed to address activity or) within the dripline area of any existing tree to be preserved, including incidental work (utilities trenching, street work, lighting, irrigation, etc.) that may affect the health of a preserved tree. The project shall be modified to address recommendations identified to reduce impacts to existing ordinance-regulated trees. The TPR shall be consistent with the criteria set forth in the tree preservation ordinance, PAMC 8.10.030 and the City Tree Technical Manual, Section 3.00, 4.00 and 6.30 http://www.cityofpaloalto.org/environment/urban_canopy.asp. To avoid improvements that may be detrimental to the health of regulated trees, the TPR shall review the applicant’s landscape plan to ensure the new landscape is consistent with Tree Technical Manual, Section 5.45 and Appendix L, Landscaping under Native Oaks. 18. Comply with the solar access study (SAS) of short and long term effects on protected oak tree #13. Study shall include a qualified expert team (horticulturalist, architect designer, consulting arborist) capable of determining effects, if any, to foliage, health, disease susceptibility and also prognosis for longevity. The SAS should provide alternative massing scenarios to increase solar access and reduce shading detriment at different thresholds of tree health/decline as provided for in the study. The SAS adequacy shall be subject to peer review as determined necessary by the City. The SAS design alternatives shall be of specific discussion at all levels of review in conjunction with project sponsor, city urban forester and director until final design is approved. 19. Prepare a Tree Relocation Feasibility Plan for Protected Oaks #3 and #9. Because of inherent mortality associated with the process of moving mature trees, a Tree Relocation and Maintenance Plan (TRMP) shall be prepared subject to Urban Forester’s approval. The project sponsor shall submit a TRMP to determine the feasibility of moving the Protected Trees to an appropriate location on this site. Feasibility shall consider current site and tree conditions, a tree’s ability to tolerate moving, relocation measures, optimum needs for the new location, aftercare, irrigation, and other long-term needs. If the relocated trees do not survive after a period of five years, the tree canopy shall be replaced with a tree of equivalent size or security deposit value. The TRMP shall be inclusive of the following minimum information: appropriate irrigation, monitoring inspections, post relocation tree maintenance and for an annual arborist report of the condition of the relocated trees. If a tree is disfigured, leaning with supports needed, in decline with a dead top or dieback of more than 25%, the tree shall be considered a total loss and replaced in kind and size. The final annual arborist report shall serve as the basis for return of the tree security deposit. 20. Provide a Tree Preservation Bond/Security Guarantee. The natural tree resources on the site include significant protected trees and neighborhood screening, including two trees proposed for relocation. Prior to building permit submittal, the Tree Security Deposit for the total value of the relocated trees, as referenced in the Tree Technical Manual, Section 3.26, Security Deposits, shall be posted to the City Revenue Collections in a form acceptable by the City Attorney. As a security measure, the project shall be subject to a Memorandum of Understanding between the City of Palo Alto and the Applicant describing a tree retention amount, list of trees, criteria and timeline for return of security, and conditions as cited in the Record of Land Use Action for the project. The applicant and project arborist shall coordinate with the City Urban Forester to determine the amount of bonding required to guarantee the protection and/or replacement of the regulated trees on the site during construction and within five years after occupancy. The applicant shall bond for 150% of the value for the relocated trees (#3 & 9), and 100% of the value of ordinance size trees (#13, 29,38, 39 and 40) to be protected during construction (as identified in the revised and final approved Tree Protection Report). The applicant shall provide the proposed level of bonding as listed in the Tree Value Table, with the description of each tree by number, value, and total combined value of all the trees to be retained. A return of the guarantee shall be subject to an annual followed by a final tree assessment report on all the relocated and retained trees from the project arborist as approved by the City Urban Forester, five years following final inspection for occupancy, to the satisfaction of the director. 21. Retain protected screen trees redwoods with focused site planning. The redwoods along property line are currently growing on an established landscape area. The project may require modification to include non-conventional site planning elements such as berm, retaining walls or other creative elements to reduce the potential impacts to a less than significant level. 22. Provide optimum public tree replacement for loss of trees #43-46. Four publicly owned trees are growing in the right-of-way along the El Camino Way frontage. As mitigation to offset the net loss for years of public resource investments and minimize the future years to parity with infrastructure benefits (Co2 reduction, extended asphalt life, water mgmt., etc.) currently provided by the trees, the new El Camino frontage should be provided maximum streetscape design and materials to include the following elements:  Consistency with the Street Trees for El Camino Project, in consultation with Canopy, Inc.  Provide adequate room for tree canopy growth and root growing volume resources.  Utilize city-approved best management practices for sustainability products, such as permeable ADA sidewalk, Silva Cell planters, engineered soil mix base, and services due to being situated within the public right-of-way along El Camino Way. PRIOR TO DEMOLITION, BUILDING OR GRADING PERMIT ISSUANCE 23. BUILDING PERMIT SUBMITTAL REVIEW. Prior to submittal for staff review, the plans submitted for building permit shall be reviewed by the project site arborist to verify that all the arborist’s recommendations have been incorporated into the final plan set. The submittal set shall be reviewed by the project site arborist, as verified by a certification letter that the plans have incorporated the following information: a. Revise the draft Inventory & Evaluation. Prepare a Final Tree Protection Report (TPR) reviewing design changes and preservation measures. Tree Protection Guidelines, Section 6.2 are general, and must be modified based on detailed plans provided to the arborist consultant. Provide verification letter (see above.) b. The area beneath and around the mature valley oak #13 shall be low impact to roots, soil profile and canopy. Use on non-vegetative materials, such as synthetic turf, is highly recommended to avoid long term disease problems. c. Palo Alto Tree Technical Manual Standards, Section 2.00 and PAMC 8.10.080. d. Outstanding items. Itemized list and which plan sheet the measures are to be located. e. Landscape and irrigation plans are consistent with CPA Tree Technical Manual, Section 5.45 and Appendix L, Landscaping under Native Oaks and PAMC 18.40.130. 24. TREE APPRAISAL & SECURITY DEPOSIT AGREEMENT. (Reference: CPA Tree Technical Manual, Section 6.25). Prior to the issuance of a grading or building permit, the applicant shall prepare and secure a tree appraisal and security deposit agreement stipulating the duration and monitoring program. The appraisal of the condition and replacement value of all trees to remain shall recognize the location of each tree in the proposed development. Listed separately, the appraisal may be part of the Tree Survey Report. For the purposes of a security deposit agreement, the monetary market or replacement value shall be determined using the most recent version of the “Guide for Plan Appraisal”, in conjunction with the Species and Classification Guide for Northern California. The appraisal shall be performed at the applicant’s expense, and the appraiser shall be subject to the Director’s approval. a. SECURITY DEPOSIT AGREEMENT. Prior to grading or building permit issuance, as a condition of development approval, the applicant shall post a security deposit for the the appraised replacement value of the following trees: (Valley Oak #13: $36,000; Relocated Oak #3; Relocated Oak #9: TBD-the installed cost of replacing a similar sized trunk tree.), to be retained and protected.. The total amount for this project is: $_TBD_. The security may be a cash deposit, letter of credit, or surety bond and shall be filed with the Revenue Collections/Finance Department Forestry Fund in a form satisfactory to the City Attorney. b. SECURITY DEPOSIT MONITORING PROGRAM. The project sponsor shall provide to the City of Palo Alto an annual tree evaluation report prepared by the project arborist or other qualified certified arborist, assessing the condition and recommendations to correct potential tree decline for trees remain and trees planted as part of the mitigation program. The monitoring program shall end two years from date of final occupancy, unless extended due to tree mortality and replacement, in which case a new two year monitoring program and annual evaluation report for the replacement tree shall begin. Prior to occupancy, a final report and assessment shall be submitted for City review and approval. The final report shall summarize the Tree Resources program, documenting tree or site changes to the approved plans, update status of tree health and recommend specific tree care maintenance practices for the property owner(s). The owner or project sponsor shall call for a final inspection by the Planning Division Arborist. c. SECURITY DEPOSIT DURATION. The security deposit duration period shall be two years (or five years if determined by the Director) from the date of final occupancy. Return of the security guarantee shall be subject to City approval of the final monitoring report. A tree shall be considered dead when the main leader has died back, 25% of the crown is dead or if major trunk or root damage is evident. A new tree of equal or greater appraised value shall be planted in the same area by the property owner. Landscape area and irrigation shall be readapted to provide optimum growing conditions for the replacement tree. The replacement tree that is planted shall be subject to a new two-year establishment and monitoring program. The project sponsor shall provide an annual tree evaluation report as originally required. 25. SITE PLAN REQUIREMENTS. The final Plans submitted for building permit shall include the following information and notes on the relevant plan sheets: a. Sheet T-1_Tree Protection-it's Part of the Plan (http://www.cityofpaloalto.org/environment/urbancanopy.asp), Applicant shall complete the Tree Disclosure Statement. Inspections and monthly reporting by the project arborist are mandatory (check #1-7.) b. The Tree Preservation Report (TPR). All sheets of the final TPR approved by the City, (Dave Babby, Arbor Resources Final Tree Preservation Report, 2010, ) shall be printed on numbered Sheet T-1 (T-2, T-3, etc) and added to the sheet index. c. Protective Tree Fencing Type. Delineate on grading plans, irrigation plans, site plans and utility plans, Type II fencing around Street Trees and Type I fencing around Protected/Designated trees as a bold dashed line enclosing the Tree Protection Zone (per the approved Tree Preservation Report) per instructions on Detail #605, Sheet T-1, and the City Tree Technical Manual, Section 6.35-Site Plans. d. Site Plan Notes. Note #1. Apply to the site plan stating, "All tree protection and inspection schedule measures, design recommendations, watering and construction scheduling shall be implemented in full by owner and contractor, as stated in the Tree Protection Report on Sheet T-1 and the approved plans”. Note #2. All civil plans, grading plans, irrigation plans, site plans and utility plans and relevant sheets shall include a note applying to the trees to be protected, including neighboring trees stating: "Regulated Tree--before working in this area contact the Project Site Arborist at (Dave Babby, Arbor Resources, 650-240-0770"; Note #3. “Basement foundation plan. Soils Report and Excavation for basement construction within the TPZ of a protected tree shall specify a vertical cut (stitch piers may be necessary) in order to avoid over-excavating into the tree root zone. Any variance from this procedure requires City Arborist approval, please call (650) 329-2441.” Note #4. Utility plan sheets shall include the following note: “Utility trenching shall not occur within the TPZ of the protected tree. Contractor shall be responsible for ensuring that no trenching occurs within the TPZ of the protected tree by contractors, City crews or final landscape workers. See sheet T-1 for instructions.” 26. LANDSCAPE PLANS. a. Under Valley Oak #13, consider synthetic grass or other non-irrigated material. All vegetation, fine grading and improvement materials shall be approved by the project arborist and city arborist to benefit the tree. b. Provide a detailed landscape and irrigation plan encompassing on-and off- site plantable areas out to the curb shall be approved by the Architectural Review Board. A Landscape Water Use statement, water use calculations and a statement of design intent shall be submitted for the project. A licensed landscape architect and qualified irrigation consultant will prepare these plans, to include: i. All existing trees identified both to be retained and removed including street trees. ii. Complete plant list indicating tree and plant species, quantity, size, and locations. iii. Irrigation schedule and plan. iv. Fence locations. v. Lighting plan with photometric data. vi. Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. vii. All new trees planted within the public right-of-way shall be installed per Public Works (PW) Standard Planting Diagram #603 or 604 (include on plans), and shall have a tree pit dug at least twice the diameter of the root ball. viii. Landscape plan shall include planting preparation details for trees specifying digging the soil to at least 30-inches deep, backfilled with a quality topsoil and dressing with 2-inches of wood or bark mulch on top of the root ball keeping clear of the trunk by 1-inch. ix. Automatic irrigation shall be provided to all trees. For trees, PW Detail #513 shall be included on the irrigation plans and show two bubbler heads mounted on flexible tubing placed at the edge of the root ball. Bubblers shall not be mounted inside an aeration tube. The tree irrigation system shall be connected to a separate valve from other shrubbery and ground cover, pursuant to the City's Landscape Water Efficiency Standards. Irrigation in the right-of-way requires a street work permit per CPA Public Works standards. x. Landscape Plan shall ensure the backflow device is adequately obscured with the appropriate screening to minimize visibility (planted shrubbery is preferred, painted dark green, decorative boulder covering acceptable; wire cages are discouraged). c. Planting notes to include the following mandatory criteria: i. Prior to any planting, all plantable areas shall be tilled to 12” depth, and all construction rubble and stones over 1” or larger shall be removed from the site. ii. Note a turf-free zone around trees 36” diameter (18” radius) for best tree performance. d. Mandatory Landscape Architect (LA) Inspection Verification to the City. The LA of record shall verify the performance measurements are achieved with a separate letter of verification to City Planning staff, in addition to owner’s representative for each of the following: i. Percolation & drainage checks have been performed and is acceptable. ii. Fine grading inspection of all plantable areas has been personally inspected for tilling depth, rubble removal, soil test amendments are mixed and irrigation trenching will not cut through any tree roots. iii. Tree and Shrub Planting Specifications, including delivered stock, meets Standards in the CPA Tree Technical Manual, Section 3.30- 3.50. Girdling roots and previously topped trees are subject to rejection. 27. TREE PROTECTION VERIFICATION. Prior to demolition, grading or building permit issuance, a written verification from the contractor that the required protective fencing is in place shall be submitted to the Building Inspections Division. The fencing shall contain required warning sign and remain in place until final inspection of the project. DURING CONSTRUCTION 28. EXCAVATION RESTRICTIONS APPLY (TTM, Sec. 2.20 C & D). Any approved grading, digging or trenching beneath a tree canopy shall be preformed using ‘air-spade’ method as a preference, with manual hand shovel as a backup. For utility trenching, including sewer line, roots exposed with diameter of 1.5 inches and greater shall remain intact and not be damaged. If directional boring method is used to tunnel beneath roots, then Table 2-1, Trenching and Tunneling Distance, shall be printed on the final plans. 29. PLAN CHANGES. Revisions and/or changes to plans before or during construction shall be reviewed and responded to by the project site arborist, (Peter Lockhart), with written letter of acceptance before submitting the revision to the city for review. 30. TREE PROTECTION COMPLIANCE. The owner and contractor shall implement all protection and inspection schedule measures, design recommendations and construction scheduling as stated in the TPR, and is subject to code compliance action pursuant to PAMC 8.10.080. The required protective fencing shall remain in place until final landscaping and inspection of the project. Project arborist approval must be obtained and documented in the monthly activity report sent to the City. A mandatory Monthly Tree Activity Report shall be sent monthly to the City beginning with the initial verification approval, using the template in the Tree Technical Manual, Addendum 11. 31. TREE DAMAGE. Tree Damage, Injury Mitigation and Inspections apply to Contractor. Reporting, injury mitigation measures and arborist inspection schedule (1-5) apply pursuant to TTM, Section 2.20-2.30. Contractor shall be responsible for the repair or replacement of any publicly owned or protected trees that are damaged during the course of construction, pursuant to Title 8 of the Palo Alto Municipal Code, and city Tree Technical Manual, Section 2.25. 32. GENERAL. The following general tree preservation measures apply to all trees to be retained: No storage of material, topsoil, vehicles or equipment shall be permitted within the tree enclosure area. The ground under and around the tree canopy area shall not be altered. Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. PRIOR TO OCCUPANCY 33. LANDSCAPE INSPECTION. The Planning Department shall be in receipt of written verification that the Landscape Architect has inspected all trees, shrubs, planting and irrigation and that they are installed and functioning as specified in the approved plans. 34. TREE INSPECTION. The contractor shall call for an inspection by the Project Arborist. A final inspection and report by the project arborist shall evaluate all trees to be retained and protected, as indicated in the approved plans, the activity, health, welfare, mitigation remedies for injury, if any, and for the long term care of the trees for the new owner. The report shall provide written verification to the Planning Department that all trees, shrubs, planting and irrigation are installed and functioning as specified in the approved plans. The final arborist report shall be provided to the Planning Department prior to written request for temporary or final occupancy. The final report may be used to navigate the security guarantee return process, when applicable. 35. PLANNING INSPECTION. Prior to final sign off, contractor or owner shall contact the city planner (650-329-2441) to inspect and verify Special Conditions relating to the conditions for structures, fixtures, colors and site plan accessories. POST CONSTRUCTION 36. MAINTENANCE. All landscape and trees shall be maintained, watered, fertilized, and pruned according to Best Management Practices-Pruning (ANSI A300-2001 or current version). Any vegetation that dies shall be replaced or failed automatic irrigation repaired by the current property owner within 30 days of discovery. PUBLIC WORKS DEPARTMENT Engineering Division 37. SUBDIVISION APPLICATION: The applicant needs to complete a Certificate of Compliance with the Public Works Department concerning the merger of existing parcels within the project site. This must be approved prior to building permit issuance. 38. STORM WATER TREATMENT AND DRAINAGE: The plans need to show the calculations on the pre-development and post-development storm water flow rate. Furthermore, show on the plans what existing City storm drain system the new drain will tie into. All storm water leaving the site needs to be treated including the water from the basement driveway access and area drains at the frontage of the building paved with hardscape. Specify what types of permeable pavers/grass celled material are proposed and more specific details for the bio-filter sections. 39. SIDEWALK, CURB & GUTTER: The applicant must install all new sidewalk, curb, gutter, driveway approach and planter strip in the public right-of-way along the property frontage per Public Works standards. 40. STREET TREES: The applicant may be required to replace existing and/or add new street trees in the public right-of-way along the property’s frontages. Contact Public Works’ arborist, Eric Krebs (650-496-6095) to determine what street tree work will be required for this project and then include that work in plans submitted for Board or Commission review. 41. STREEET RESURFACING: The applicant must resurface the street frontage per Public Works’ direction out to the centerline of the street at the conclusion of construction. Include in plans submitted for a building permit: 42. BASEMENT DRAINAGE: Due to high groundwater throughout much of the City and Public Works prohibiting the pumping and discharging of groundwater, perforated pipe drainage systems at the exterior of the basement walls or under the slab are not allowed for this site. A drainage system is, however, required for all exterior basement-level spaces, such as lightwells or stairwells. This system consists of a sump, a sump pump, a backflow preventer, and a closed pipe from the pump to a dissipation device onsite at least 10 feet from the property line, such as a bubbler box in a landscaped area, so that water can percolate into the soil and/or sheet flow across the site. The device must not allow stagnant water that could become mosquito habitat. 43. BASEMENT SHORING: Shoring for the basement excavation, including tiebacks, must not extend onto adjacent private property or into the City right-of- way without having first obtained written permission from the private property owners and/or an encroachment permit from Public Works. 44. DEWATERING: Basement excavations may require dewatering during construction. Public Works only allows groundwater drawdown well dewatering. Open pit groundwater dewatering is disallowed. Dewatering is only allowed from April through October due to inadequate capacity in our storm drain system. The geotechnical report for this site must list the highest anticipated groundwater level. We recommend a piezometer to be installed in the soil boring. The contractor must determine the depth to groundwater immediately prior to excavation by using the piezometer or by drilling an exploratory hole if the deepest excavation will be within 3 feet of the highest anticipated groundwater level. If groundwater is found within 2 feet of the deepest excavation, a drawdown well dewatering system must be used, or alternatively, the contractor can excavate for the basement and hope not to hit groundwater, but if he does, he must immediately stop all work and install a drawdown well system before he continues to excavate. Public Works may require the water to be tested for contaminants prior to initial discharge and at intervals during dewatering. If testing is required, the contractor must retain an independent testing firm to test the discharge water for the contaminants Public Works specifies and submit the results to Public Works. Public Works reviews and approves dewatering plans as part of a Street Work Permit. The applicant can include a dewatering plan in the building permit plan set in order to obtain approval of the plan during the building permit review, but the contractor will still be required to obtain a street work permit prior to dewatering. Alternatively, the applicant must include the above dewatering requirements in a note on the site plan. Public Works has a sample dewatering plan sheet and dewatering guidelines available at the Development Center and on our website. 45. GRADING & DRAINAGE PLAN: The plan set must include a grading & drainage plan prepared by a licensed professional that includes existing and proposed spot elevations and drainage flow arrows to demonstrate proper drainage of the site. Adjacent grades must slope away from the buildings a minimum of 2%. Downspouts and splashblocks should be shown on this plan, as well as any site drainage features such as swales. Grading will not be allowed that increases drainage onto, or blocks existing drainage from, neighboring properties. Public Works generally does not allow rainwater to be collected and discharged into the street gutter, but encourages the developer to keep rainwater onsite as much as feasible by directing runoff to landscaped and other pervious areas of the site. 46. STORM WATER TREATMENT: This project shall comply with the storm water regulations contained in provision C.3 of the NPDES municipal storm water discharge permit issued by the San Francisco Bay Regional Water Quality Control Board (and incorporated into Palo Alto Municipal Code Chapter 16.11). These regulations apply to land development projects that create or replace 10,000 square feet or more of impervious surface. In order to address the potential permanent impacts of the project on storm water quality, the applicant shall incorporate into the project a set of permanent site design measures, source controls, and treatment controls that serve to protect storm water quality, subject to the approval of the Public Works Department. The applicant shall identify, size, design and incorporate permanent storm water pollution prevention measures (preferably landscape-based treatment controls such as bioswales, filter strips, and permeable pavement rather than mechanical devices that require long-term maintenance) to treat the runoff from a “water quality storm” specified in PAMC Chapter 16.11 prior to discharge to the municipal storm drain system. In addition, the applicant shall designate a party to maintain the control measures for the life of the improvements and must enter into a maintenance agreement with the City. The City will inspect the treatment measures yearly and charge an inspection fee. There is currently an $800 C.3 plan check fee that will be collected upon submittal for a grading or building permit. 47. GRADING & EXCAVATION PERMIT: An application for a grading & excavation permit must be submitted to Public Works when applying for a building permit. The application and guidelines are available at the Development Center and on our website. 48. STORM WATER POLLUTION PREVENTION: The City's full-sized "Pollution Prevention - It's Part of the Plan" sheet must be included in the plan set. Copies are available from Public Works at the Development Center or on our website. Also, the applicant must provide a site-specific storm water pollution control plan sheet in the plan set. 49. SWPPP: If the proposed development will disturb more than one acre of land, the applicant will be required to comply with the State of California’s General Permit for Storm Water Discharges Associated with Construction Activity. This entails filing a Notice of Intent to Comply (NOI), paying a filing fee, and preparing and implementing a site specific storm water pollution prevention plan (SWPPP) that addresses both construction-stage and post-construction BMP’s for storm water quality protection. The applicant is required to submit two copies of the NOI and the draft SWPPP to the Public Works Department for review and approval prior to issuance of the building permit. Also, include the City's standard "Pollution Prevention - It's Part of the Plan" sheet in the building permit plan set. Copies are available from Public Works at the Development Center. 50. IMPERVIOUS SURFACE AREA: The project will be creating or replacing 500 square feet or more of impervious surface. Accordingly, the applicant shall provide calculations of the existing and proposed impervious surface areas with the building permit application. The Impervious Area Worksheet for Land Developments form and instructions are available at the Development Center or on our website. 51. WORK IN THE RIGHT-OF-WAY: The plans must clearly indicate any work that is proposed in the public right-of-way, such as sidewalk replacement, driveway approach, curb inlet, storm water connections or utility laterals. The plans must include notes that the work must be done per City standards and that the contractor performing this work must first obtain a Street Work Permit from Public Works at the Development Center. 52. LOGISTICS PLAN: The contractor must submit a logistics plan to the Public Works Department prior to commencing work that addresses all impacts to the City’s right-of-way, including, but not limited to: pedestrian control, traffic control, truck routes, material deliveries, contractor’s parking, concrete pours, crane lifts, work hours, noise control, dust control, storm water pollution prevention, contractor’s contact, noticing of affected businesses, and schedule of work. The plan will be attached to a street work permit. Engineering Division 53. Site improvements shall include: a. Shifting the new sidewalk closer to the property line (to 12” off the PL) to increase the depth of the existing planting strip. b. Mitigation of compacted soil/rooting area around trees (for installation of hardscape such as sidewalk, driveways, etc.). Currently we are recommending Silva Cells, but the developer may also consider structural soil or root paths under the sidewalk to connect the planting strip to irrigated planting areas on the other side of the sidewalk. c. Providing irrigation to new trees in the planting strip. d. The maximum number of trees shall be planted in the planting strip given that they follow City planting guidelines. Underground utilities (sewer and water laterals, gas lines, electrical vaults, etc.) may require relocation to accommodate new trees. We ask the developer to please consider grouping the utilities to maximize planting area. e. One to two trees shall be planted in the planting strip where tree #46 currently stands (no trees are currently proposed for this location). Both the public and the residents of the facility, with its proximity to El Camino Real, will benefit from the screening that public street trees will provide. 54. New street trees shall follow these guidelines: a. Trees shall be a minimum of 10 feet from any underground utility and any driveway apron, and shall be a minimum of 25 feet from each other. b. New trees shall be Chinese elm cultivar (Ulmus parvifolia ‘Allee’ or ‘Athena’), 15 gallon size. c. Indicate underground utility locations and their distances from proposed tree locations on the planting plan. d. Trees and planting sites shall be inspected by a City arborist prior to installation. Water Quality Control Plant 55. PAMC 16.09.180(b)(11) Carwash Required: Residential buildings with 25 or more units provide a covered carwash area for vehicle washing by residents. The carwash area is required to drain to an oil/water separator with a minimum capacity of 100 gallons, and to the sanitary sewer. (Note: this requirement has typically been exempted for senior housing. Any hose bibs must be fitted with lock-outs or other connections controls and signage indicating that car washing is not allowed.) 56. PAMC 16.09.180(b)(9) Covered Parking: Drain plumbing for parking garage floor drains must be connected to an oil/water separator with a minimum capacity of 100 gallons, and to the sanitary sewer system 57. PAMC 16.09.180(b)(10) Dumpsters for New and Remodeled Facilities: New buildings and residential developments providing centralized solid waste collection, except for single-family and duplex residences, shall provide a covered area for a dumpster. The area shall be adequately sized for all waste streams and designed with grading or a berm system to prevent water runon and runoff from the area. 58. PAMC 16.09.180(b)(14) Architectural Copper: On and after January 1, 2003, copper metal roofing, copper metal gutters, copper metal down spouts, and copper granule containing asphalt shingles shall not be permitted for use on any residential, commercial or industrial building for which a building permit is required. Copper flashing for use under tiles or slates and small copper ornaments are exempt from this prohibition. Replacement roofing, gutters and downspouts on historic structures are exempt, provided that the roofing material used shall be prepatinated at the factory. For the purposes of this exemption, the definition of "historic" shall be limited to structures designated as Category 1 or Category 2 buildings in the current edition of the Palo Alto Historical and Architectural Resources Report and Inventory. 59. PAMC 16.09.180(b)(5) Condensate from HVAC: Condensate lines shall not be connected or allowed to drain to the storm drain system. 60. PAMC 16.09.180(b)(b) Copper Piping: Copper, copper alloys, lead and lead alloys, including brass, shall not be used in sewer lines, connectors, or seals coming in contact with sewage except for domestic waste sink traps and short lengths of associated connecting pipes where alternate materials are not practical. The plans must specify that copper piping will not be used for wastewater plumbing. 61. 16.09.180(12) Mercury Switches: Mercury switches shall not be installed in sewer or storm drain sumps. 62. PAMC 16.09.205(a) Cooling Systems, Pools, Spas, Fountains, Boilers and Heat Exchangers: It shall be unlawful to discharge water from cooling systems, pools, spas, fountains boilers and heat exchangers to the storm drain system. 63. PAMC 16.09.165(h) Storm Drain Labeling: Storm drain inlets shall be clearly marked with the words "No dumping - Flows to Bay," or equivalent. 64. For Designated Food Service Establishment (FSE) Projects the following requirements shall be met: A. Grease Control Device (GCD) Requirements, PAMC Section 16.09.075 & cited Bldg/Plumbing Codes 1. The plans shall specify the manufacturer details and installation details of all proposed GCDs. (CBC 1009.2) 2. GCD(s) shall be sized in accordance with the 2007 California Plumbing Code. 3. GCD(s) shall be installed with a minimum capacity of 500 gallons. 4. GCD sizing calculations shall be included on the plans. See a sizing calculation example below. 5. The size of all GCDs installed shall be equal to or larger than what is specified on the plans. 6. GCDs larger than 50 gallons (100 pounds) shall not be installed in food preparation and storage areas. Santa Clara County Department of Environmental Health prefers GCDs to be installed outside. GCDs shall be installed such that all access points or manholes are readily accessible for inspection, cleaning and removal of all contents. GCDs located outdoors shall be installed in such a manner so as to exclude the entrance of surface and stormwater. (CPC 1009.5) 7. All large, in-ground interceptors shall have a minimum of three manholes to allow visibility of each inlet piping, baffle (divider) wall, baffle piping and outlet piping. The plans shall clearly indicate the number of proposed manholes on the GCD. The Environmental Compliance Division of Public Works Department may authorize variances which allow GCDs with less than three manholes due to manufacture available options or adequate visibility. 8. Sample boxes shall be installed downstream of all GCDs. 9. All GCDs shall be fitted with relief vent(s). (CPC 1002.2 & 1004) 10. GCD(s) installed in vehicle traffic areas shall be rated and indicated on plans. B. Drainage Fixture Requirements, PAMC Section 16.09.075 & cited Bldg/Plumbing Codes 11. To ensure all FSE drainage fixtures are connected to the correct drain lines, each drainage fixture shall be clearly labeled on the plans. A list of all fixtures and their discharge connection, i.e. sanitary sewer or grease waste line, shall be included on the plans. 12. A list indicating all connections to each proposed GCD shall be included on the plans. This can be incorporated into the sizing calculation. 13. All grease generating drainage fixtures shall connect to a GCD. These include but are not limited to: 14. Pre-rinse (scullery) sinks (direct connection) 15. Three compartment sinks (pot sinks) (direct connection) 16. Drainage fixtures in dishwashing room except for dishwashers shall connect to a GCD (direct connection) 17. Examples: trough drains (small drains prior to entering a dishwasher), small drains on busing counters adjacent to pre-rinse sinks or silverware soaking sinks 18. Floor drains in dishwashing area and kitchens 19. Prep sinks (indirect connection) 20. Mop (janitor) sinks 21. Outside areas designated for equipment washing shall be covered and any drains contained therein shall connect to a GCD. 22. Drains in trash/recycling enclosures 23. Wok stoves, rotisserie ovens/broilers or other grease generating cooking equipment with drip lines (indirect connection) 24. Kettles and tilt/braising pans and associated floor drains/sinks 25. The connection of any high temperature discharge lines and non- grease generating drainage fixtures to a GCD is prohibited. The following shall not be connected to a GCD: 26. Dishwashers (direct connection) 27. Steamers (indirect connection) 28. Pasta cookers (indirect connection) 29. Hot lines from buffet counters and kitchens (indirect connection) 30. Hand sinks (direct connection) 31. Ice machine drip lines (indirect connection) 32. Soda machine drip lines (indirect connection) 33. Drainage lines in bar areas (indirect connection) 34. No garbage disposers (grinders) shall be installed in a FSE. (PAMC 16.09.075(d)). 35. Plumbing lines shall not be installed above any cooking, food preparation and storage areas. 36. Each drainage fixture discharging into a GCD shall be individually trapped and vented. (CPC 1014.5) C. Covered Dumpsters, Recycling and Tallow Bin Areas PAMC, 16.09.075(q)(2) 37. New buildings constructed to house FSEs shall include a covered area for all dumpsters, bins, carts or container used for the collection of trash, recycling, food scraps and waste cooking fats, oils and grease (FOG) or tallow. 38. The area shall be designed and shown on plans to prevent water run-on to the area and runoff from the area. 39. Drains that are installed within the enclosure for recycle and waste bins, dumpsters and tallow bins serving FSEs are optional. Any such drain installed shall be connected to a GCD. 40. If tallow is to be stored outside then an adequately sized, segregated space for a tallow bin shall be included in the covered area. D. Large Item Cleaning Sink, PAMC 16.09.075(m)(2)(B) 41. FSEs shall have a sink or other area drain which is connected to a GCD and large enough for cleaning the largest kitchen equipment such as floor mats, containers, carts, etc. Recommendation: Generally, sinks or cleaning areas larger than a typical mop/janitor sink are more useful. E. GCD sizing criteria and an example of a GCD sizing calculation (2007 CPC) Sizing Criteria: GCD Sizing: Drain Fixtures DFUs Total DFUs GCD Volume (gallons) Pre-rinse sink 4 8 500 3 compartment sink 3 21 750 2 compartment sink 3 35 1,000 Prep sink 3 90 1,250 Mop/Janitorial sink 3 172 1,500 Floor drain 2 216 2,000 Floor sink 2 Example GCD Sizing Calculation: Note:  All resubmitted plans to Building Department which include FSE projects shall be resubmitted to Water Quality.  It is frequently to the FSE’s advantage to install the next size larger GCD to allow for more efficient grease discharge prevention and may allow for longer times between cleaning. There are many manufacturers of GCDs which are available in different shapes, sizes and materials (plastic, reinforced fiberglass, reinforced concrete and metal)  The requirements will assist FSEs with FOG discharge prevention to the sanitary sewer and storm drain pollution prevention. The FSE at all times shall comply with the Sewer Use Ordinance of the Palo Alto Municipal Code. The ordinances include requirements for GCDs, GCD maintenance, drainage fixtures, record keeping and construction projects. FIRE DEPARTMENT Quantity Drainage Fixture & Item Number DFUs Total 1 Pre-rinse sink, Item 1 4 4 1 3 compartment sink, Item 2 3 3 2 Prep sinks, Item 3 & Floor sink, Item 4 3 6 1 Mop sink, Item 5 3 3 1 Floor trough, Item 6 & tilt skillet, Item 7 2 2 1 Floor trough, Item 6 & steam kettle, Item 8 2 2 1 Floor sink, Item 4 & wok stove, Item 9 2 2 4 Floor drains 2 8 1,000 gallon GCD minimum sized Total: 30 65. Install a NFPA 13 fire sprinkler, NFPA 14 standpipe and NFPA 72 fire alarm system. 66. Provide an onsite engineered all-weather Fire Department access road meeting the requirements of the Palo alto FD. 3. An approved access walkway shall be provided to each egress/rescue window. 67. An approved access walkway shall be provided to each egress/rescue window. 68. When the Main Electrical Shutoff is located in the interior of the building, an exterior shunt trip or other approved means of emergency shutoff shall be provided. 69. Elevator car shall be sized for Fire Department gurney access requirements based on gurney dimensions of 24 in. x 84 in. plus a minimum of two emergency response personnel. 70. All sprinkler drains, including auxiliary, inspector’s test and main drain, shall not discharge within the building. Water discharged from these points shall be directed to an approved landscape location or to the sanitary sewer system. NOTE: The maximum flow capacity of sanitary sewer in the area is 30 gpm. Main Drain test discharge flow rate shall be impounded and attenuated to below sanitary sewer capacity before discharge. 71. All stairways will be required to provide roof access w/ a fixed ladder or stair. UTILITIES DEPARTMENT Electrical GENERAL 72. The applicant shall comply with all the Electric Utility Engineering Department service requirements noted during plan review. PRIOR TO ISSUANCE OF DEMOLITION PERMIT 73. The applicant shall be responsible for identification and location of all utilities, both public and private, within the work area. Prior to any excavation work at the site, the applicant shall contact Underground Service Alert (USA) at 1-800-227- 2600, at least 48 hours prior to beginning work. THE FOLLOWING SHALL BE INCORPORATED IN SUBMITTALS FOR ELECTRIC SERVICE 74. A completed Electric Load Sheet and a full set of plans must be included with all applications involving electrical work. The load sheet must be included with the preliminary submittal. 75. Industrial and large commercial customers must allow sufficient lead-time for Electric Utility Engineering and Operations (typically 8-12 weeks after advance engineering fees have been paid) to design and construct the electric service requested. 76. Only one electric service lateral is permitted per parcel. 77. This project requires a padmount transformer; the location of the transformer shall be shown on the site plan and approved by the Utilities Department and the Architectural Review Board. 78. The padmount transformer will require a public utility easement: 10 ft wide x 10 ft long (3 ft clear space on three sides and 8 ft clear space in front for opertation). 79. The customer shall install all electrical substructures (conduits, boxes and pads) required from the service point to the customer’s switchgear. The design and installation shall be according to the City standards and shown on plans. 80. Location of the electric panel/switchboard shall be shown on the site plan and approved by the Architectural Review Board and Utilities Department. 81. All utility meters, lines, transformers, backflow preventers, and any other required equipment shall be shown on the landscape and irrigation plans and shall show that no conflict will occur between the utilities and landscape materials. In addition, all aboveground equipment shall be screened in a manner that is consistent with the building design and setback requirements. 82. For services larger than 1600 amps, the customer will be required to provide a transition cabinet as the interconnection point between the utility’s padmount transformer and the customer’s main switchgear. The cabinet design drawings must be submitted to the Electric Utility Engineering Department for review and approval. 83. No more than four (4) 750 MCM conductors per phase can be connected to the transformer secondary terminals; otherwise, bus duct must be used for connections to padmount transformers. If customer installs a bus duct directly between the transformer secondary terminals and the main switchgear, the installation of a transition cabinet will not be required. 84. The customer is responsible for sizing the service conductors and other required equipment according to the National Electric Code requirements and the City standards. Utilities Rule & Regulation #18. 85. Any additional facilities and services requested by the Applicant that are beyond what the utility deems standard facilities will be subject to Special Facilities charges. The Special Facilities charges include the cost of installing the additional facilities as well as the cost of ownership. Utilities Rule & Regulation #20. 86. Projects that require the extension of high voltage primary distribution lines or reinforcement of offsite electric facilities will be at the customer’s expense and must be coordinated with the Electric Utility. DURING CONSTRUCTION 87. At least 48 hours prior to starting any excavation, the customer must call Underground Service Alert (USA) at 1-800-227-2600 to have existing underground utilities located and marked. The areas to be check by USA shall be delineated with white paint. All USA markings shall be removed by the customer or contractor when construction is complete. 88. The customer is responsible for installing all on-site substructures (conduits, boxes and pads) required for the electric service. No more than 270 degrees of bends are allowed in a secondary conduit run. All conduits must be sized according to National Electric Code requirements and no 1/2 – inch size conduits are permitted. All off-site substructure work will be constructed by the City at the customer’s expense. Where mutually agreed upon by the City and the Applicant, all or part of the off-site substructure work may be constructed by the Applicant. 89. All primary electric conduits shall be concrete encased with the top of the encasement at the depth of 30 inches. No more than 180 degrees of bends are allowed in a primary conduit run. Conduit runs over 500 feet in length require additional pull boxes. 90. All new underground conduits and substructures shall be installed per City standards and shall be inspected by the Electrical Underground Inspector before backfilling. 91. The customer is responsible for installing all underground electric service conductors, bus duct, transition cabinets, and other required equipment. The installation shall meet the National Electric Code and the City Standards. 92. Meter and switchboard requirements shall be in accordance with Electric Utility Service Equipment Requirements Committee (EUSERC) drawings accepted by Utility and CPA standards for meter installations. 93. Shop/factory drawings for switchboards (400A and greater) and associated hardware must be submitted for review and approval prior to installing the switchgear to: Gopal Jagannath, P.E. Supervising Electric Project Engineer Utilities Engineering (Electrical) 1007 Elwell Court Palo Alto, CA 94303 94. Catalog cut sheets may not be substituted for factory drawing submittal. 95. All new underground electric services shall be inspected and approved by both the Building Inspection Division and the Electrical Underground Inspector before energizing. Marketing Services 96. Please be advised that new construction and renovation projects with more than 2,500 square feet of landscape modifications shall be reviewed by Utility Marketing Services, a division of the Utilities Department. Prior to issuance of either a Building Permit or Grading Permit, the applicant will need to comply with the State (DWR) Water Efficient Landscape Ordinance requirements. The following items shall be submitted when applying for your Building and/or Grading Permit: o Water Efficient Landscape Worksheet o Water Use Calculations o Irrigation Plan o Grading Plan o Landscape Design and Planting Plan All documents and information to comply with the Landscape Water Efficiency Standards can be found on the City of Palo Alto Utilities website at www.cityofpaloalto.org/les. If you have any further questions, please contact Amanda Cox with Utility Marketing Services at (650) 329-2417. 97. The City of Palo Alto’s new recycled water ordinance (Ordinance No. 5002) became effective on June 12, 2008. This ordinance has requirements for irrigation and dual plumbing that are effective immediately for certain types of projects in Palo Alto. For most projects, this requires a separate irrigation system utilizing purple irrigation pipe, appropriate fittings and the installation of an approved backflow prevention device. Please visit www.cityofpaloalto.org/les for more information on the recycled water ordinance. Water Gas and Wastewater PRIOR TO ISSUANCE OF DEMOLITION PERMIT 98. Prior to demolition, the applicant shall submit the existing water/wastewater fixture unit loads (and building as-built plans to verify the existing loads) to determine the capacity fee credit for the existing load. If the applicant does not submit loads and plans they may not receive credit for the existing water/wastewater fixtures. 99. The applicant shall submit a request to disconnect all utility services and/or meters including a signed affidavit of vacancy. Utilities will be disconnected or removed within 10 business days after receipt of request. The demolition permit will be issued by the building inspection division after all utility services and/or meters have been disconnected and removed. PRIOR TO SUBMITTAL FOR BUILDING PERMIT 100. The applicant shall submit a completed water-gas-wastewater service connection application - load sheet for City of Palo Alto Utilities. The applicant must provide all the information requested for utility service demands (water in fixture units/g.p.m., gas in b.t.u.p.h, and sewer in fixture units/g.p.d.). 101. The applicant shall submit improvement plans for utility construction. The plans must show the size and location of all underground utilities within the development and the public right of way including meters, backflow preventers, fire service requirements, sewer mains, sewer cleanouts, sewer lift stations and any other required utilities. 102. Utility vaults, transformers, utility cabinets, concrete bases, or other structures can not be placed over existing water, gas or wastewater mains/services. Maintain 1’ horizontal clear separation from the vault/cabinet/concrete base to existing utilities as found in the field. If there is a conflict with existing utilities, Cabinets/vaults/bases shall be relocated from the plan location as needed to meet field conditions. 103. The applicant must show on the site plan the existence of any auxiliary water supply, (i.e. water well, gray water, recycled water, rain catchment, water storage tank, etc). 104. The applicant shall be responsible for installing and upgrading the existing utility mains and/or services as necessary to handle anticipated peak loads. This responsibility includes all costs associated with the design and construction for the installation/upgrade of the utility mains and/or services. 105. Sewer drainage piping serving fixtures located less than one foot above the next upstream sewer main manhole cover shall be protected by an approved backwater valve per California Plumbing Code 710.0. The upstream sewer main manhole rim elevation shall be shown on the plans. 106. Flushing of the fire system to sanitary sewer shall not exceed 30 GPM. Higher flushing rates shall be diverted to a detention tank to achieve the 30 GPM flow to sewer. 107. Sewage ejector pumps shall meet the following conditions: 1. The pump(s) be limited to a total 100 GPM capacity or less. 2. The sewage line changes to a 4” gravity flow line at least 20’ from the City clean out. 3. The tank and float is set up such that the pump run time not exceed 20 seconds each cycle. PRIOR TO ISSUANCE OF BUILDING PERMIT 108. The applicant's engineer shall submit flow calculations and system capacity study showing that the on-site and off-site water and sanitary sewer mains and services will provide the domestic, irrigation, fire flows, and wastewater capacity needed to service the development and adjacent properties during anticipated peak flow demands. Field testing may be required to determined current flows and water pressures on existing water main. Calculations must be signed and stamped by a registered civil engineer. The applicant may be required to perform, at his/her expense, a flow monitoring study of the existing sewer main to determine the remaining capacity. The report must include existing peak flows or depth of flow based on a minimum monitoring period of seven continuous days or as determined by the senior wastewater engineer. The study shall meet the requirements and the approval of the WGW engineering section. No downstream overloading of existing sewer main will be permitted. 109. For contractor installed water and wastewater mains or services, the applicant shall submit to the WGW engineering section of the Utilities Department four copies of the installation of water and wastewater utilities off- site improvement plans in accordance with the utilities department design criteria. All utility work within the public right-of-way shall be clearly shown on the plans that are prepared, signed and stamped by a registered civil engineer. The contractor shall also submit a complete schedule of work, method of construction and the manufacture's literature on the materials to be used for approval by the utilities engineering section. The applicant's contractor will not be allowed to begin work until the improvement plan and other submittals have been approved by the water, gas and wastewater engineering section. After the work is complete but prior to sign off, the applicant shall provide record drawings (as-builts) of the contractor installed water and wastewater mains and services per City of Palo Alto Utilities record drawing procedures. 110. Existing wastewater laterals that are not plastic (ABS, PVC, or PE) shall be replaced at the applicant’s expense. 111. The applicant shall pay the capacity fees and connection fees associated with the installation of the new utility service/s to be installed by the City of Palo Alto Utilities. The approved relocation of services, meters, hydrants, or other facilities will be performed at the cost of the person/entity requesting the relocation. 112. Each unit or place of business shall have its own water and gas meter shown on the plans. 113. Each parcel shall have its own water service, gas service and sewer lateral connection shown on the plans. 114. A separate water meter and backflow preventer shall be installed to irrigate the approved landscape plan. Show the location of the irrigation meter on the plans. This meter shall be designated as an irrigation account an no other water service will be billed on the account. The irrigation and landscape plans submitted with the application for a grading or building permit shall conform to the City of Palo Alto water efficiency standards. 115. A new water service line installation for domestic usage is required. For service connections of 4-inch through 8-inch sizes, the applicant's contractor must provide and install a concrete vault with meter reading lid covers for water meter and other required control equipment in accordance with the utilities standard detail. Show the location of the new water service and meter on the plans. 116. A new water service line installation for irrigation usage is required. Show the location of the new water service and meter on the plans. 117. A new water service line installation for fire system usage is required. Show the location of the new water service on the plans. The applicant shall provide to the engineering department a copy of the plans for fire system including all fire department's requirements. 118. An approved reduce pressure principle assembly (RPPA backflow preventer device) is required for all existing and new water connections from Palo Alto Utilities to comply with requirements of California administrative code, title 17, sections 7583 through 7605 inclusive. The RPPA shall be installed on the owner's property and directly behind the water meter, within 5’ of the property line. Show the location of the RPPA on the plans. Inspection by the utilities cross connection inspector is required for the supply pipe between the meter and the assembly. The applicant shall provide the City with current test certificates for all backflows. 119. An approved reduced pressure detector assembly is required for the existing or new water connection for the fire system to comply with requirements of California administrative code, title 17, sections 7583 through 7605 inclusive. reduced pressure detector assemblies shall be installed on the owner's property adjacent to the property line, within 5’ of the property line. Show the location of the reduced pressure detector assembly on the plans. Inspection by the utilities cross connection inspector is required for the supply pipe between the City connection and the assembly. 120. A new gas service line installation is required. Show the new gas meter location on the plans. The gas meter location must conform with utilities standard details. 121. A new sewer lateral installation per lot is required. Show the location of the new sewer lateral on the plans 122. All existing water and wastewater services that will not be reused shall be abandoned at the main per WGW utilties procedures before any new utility services are installed. 123. All utility installations shall be in accordance with the City of Palo Alto utility standards for water, gas & wastewater. ComfortInn May Flower Motel GoodwillIndustries The Barclay Apartments Camino Court Apts Su Hong Restaurant Building 1 Palo Alto Commons Clubhouse B2 B1 B3 B4 FLORALES DRIVE GEORGIA AVENUE E L C A MIN O R E A L OND STREET MACLANE WILKIE WAY WEST MEADO W DRIVE VICT O RIA PLACE EL CAMINO WAY E L C A MIN O R E A L CAM INO C T E L C A MINO WAY T H AIN W A Y THAIN WAY E L C A MIN O R E A L MAYBELL AVENUE PENA COURT WEST MEADOW DRIVE DAVENPORT WAY JA M ES R OA D WILKIE W AY WILKIE CO URT TEN NESS EE LANE W EST C HA RLEST O N R O AD TREET PARK BOULEVAR D TE NNESSEE LA NE WILKIE W AY CAR OLINA LA NE W ES T CHA RLEST O N R OA D CA R OLIN A LANE REAL (PRIVATE) (PRIVATE) VE SA DRIVE VISTA AVENUE WISTERIA LANE VILLA VISTA (PRIVATE) BAR CLAY C OU RT W ES DRISCOLL PLACE VERDOSA DRIVE JAC O BS C O URT (P RIVATE) INTERDALE WY PENINSULA SP RU C E LAN E RICKEY'S WAY E L C A MIN O R E A L EL C A MIN O REAL E L C A MIN O R E AL RM-15 RM-15 RM-30 2930 RM-30 R-1 CN PC-3775 PC-3023 PC-4511 PC-3041 RM-15 PF PC-5034 RM-30 CS CS(H) RM-15 PC-3133 RM-40 RM-30 PC- 4190 R-1(S) R-1 C S(L) PF CS CS(AD) RM-15 R-1(7000) R-2 This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. 0' 298' Palo Alto Commons & Proposed Addition CITY O F PALO A L TO I N C O R P O R ATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors. ©1989 to 2010 City of Palo Alto jarmer, 2011-02-09 11:13:33 (\\cc-maps\gis$\gis\admin\Personal\Planning.mdb) ______________________________________________________________________________ ATTACHMENT C APPLICABLE COMPREHENSIVE PLAN POLICIES 4041 El Camino Way 09PLN-00000-00292 ______________________________________________________________________________ Land Use and Community Design Element Multiple Family Residential: The permitted number of housing units will vary by area, depending on existing land use, proximity to major streets and public transit, distance to shopping, and environmental problems. Net densities will range from 8 to 40 units and 8 to 90 persons per acre. Density should be on the lower end of the scale next to single family residential areas. Densities higher than what is permitted by zoning may be allowed where measurable community benefits will be derived, services and facilities are available, and the net effect will be compatible with the overall Comprehensive Plan. The proposed project is the addition of 44 senior care housing units on a 0.83 acre property, which is 54 units per acre, greater than that described in the Multiple Family Residential designation in the Comprehensive Plan, however, due to the nature of the facility, the 44 units contain 72 beds, which results in a persons per acre of 86, within the range allowed by this designation. Goal L-1: A well-designed, compact city, providing residents and visitors with attractive neighborhoods, work places, shopping district, public facilities and open spaces. The proposed project replaces two older commercial buildings with a new facility providing an important service to city residents and would create an improved pedestrian environment. Policy L-5: Maintain the scale and character of the City. Avoid land uses that are overwhelming and unacceptable due their size and scale. The proposed project is significantly more dense than the existing facilities, but the project is designed to locate most of the building size toward El Camino Real, providing a buffer for the residential located behind the project site. Policy L-7: Evaluate changes in land use in the context of regional needs, overall City welfare and objectives, as well as the desires of surrounding neighborhoods. As discussed in the housing section below, this proposed project would serve an important need within the City and the region for housing designed specifically to serve the needs of seniors. Goal L-6: Well-designed buildings that create coherent development patterns and enhance city streets and public spaces. The proposed project would continue the development pattern of the existing Palo Alto Commons facility, and would therefore increase the coherence of the development on this street. Policy L-48: Promote high quality, creative design and site planning that is compatible with surrounding development and public spaces. The proposed project would provide a transition between the commercial and high density of El Camino Real, and the low density residential to the rear. Goal L-9: Attractive, inviting public spaces and streets that enhance the image and character of the City. The proposed project includes significant improvements to the street and pedestrian facilities in the vicinity. Transportation Element Goal T-3: Facilities, services and programs that encourage and promote walking and bicycling. The proposed project includes significant improvements to the street and pedestrian facilities in the vicinity. Policy T-19: Improve and create additional, attractive, secure bicycle parking at both public and private facilities, including multi-modal transit stations, on transit vehicles, in City parks, at public facilities, in new private developments, and other community destinations. The proposed project would include both long term and short term bicycle parking. Policy T-23: Encourage pedestrian-friendly design features such as sidewalks, street trees, on-site parking, public spaces, gardens, outdoor furniture, art, and interesting architectural details. The proposed project includes significant improvements to the street and pedestrian facilities in the vicinity including new street trees, sidewalk improvements, and crosswalks. Housing Element Goal H-3: Housing Opportunities for a Diverse Population, Including Very low-, Low- and Moderate-Income Residents, and Persons with Special Needs. Senior housing, especially in a facility that can provide graduated levels of care, is a special kind of housing in great need within the bay area, and is specifically called out in the Housing Element. Policy H-17: Support opportunities for Shared Housing and other innovative housing forms to promote diversity and meet the needs of different household types and income levels. The proposed project is specifically designed to meet the needs of seniors with community facilities, units designed for one or two residents, and the ability to provide graduated levels of care when needed. Policy H-18: Support housing that incorporates facilities and services to meet the health care, transit, or social service needs of households with special needs, including seniors and persons with disabilities. The proposed senior care housing facility is specifically for seniors and has available graduated levels of care when those become needed by the residents. Goal C-3: Improved Quality, Quantity, and Affordability of Social Services, Particularly for Children, Youth, Seniors, and People with Disabilities The proposed senior care housing facility is an important social service with graduated levels of care for seniors with increasing disabilities. Community Services and Facilities Element Policy C-15: In residential or neighborhood commercial development projects, strongly encourage child care and/or senior care facilities, along with measures to mitigate potential conflicts between these facilities and surrounding uses. The proposed project is a senior care facility which would provide much needed facilities for city residents. ______________________________________________________________________________ ATTACHMENT D ZONING COMPARISON TABLE 4041 El Camino Way 09PLN-00292 ______________________________________________________________________________ Table 1: COMPARISON WITH CHAPTER 18.13 & 18.16 (RM-30 & CN DISTRICTS) Regulation Proposed Proposed (Combined with existing) RM-30 CN Minimum Site Area 36,134 s.f. 111,061 s.f. 8,500 s.f. NA Min. Site Width 150 ft (approx) 375 ft (approx) 70 s.f. NA Min. Site Depth 260 ft (approx) 260 ft (approx) 100 s.f. NA Min. Front Setback 18 ft 10 in 14 ft 0-20 ft 0-10 ft to create a 8-12 ft effective sidewalk width Min. Interior Side Yard 17 ft 8 in 10 ft 10 ft 10 ft when abutting residential Min. Rear Setback 16 ft 9 in 10 ft 10 ft 10 ft when abutting residential Max. Floor Area Ratio 56,684 s.f. (1.57:1) 129,766 s.f. (1.17:1) 0.6:1 0.9:1 mixed use Max. Residential Density 53 units per acre (44 units) 64 units per acre (161 units) 30 units/acre 15 units/acre Max. Lot Coverage 57% (20,572 s.f.) 47% (52,072 s.f.) 40% 50% Max. Building Height 37 ft, 3 stories 37 ft, 3 stories 35 ft 35 ft 1 Min. Open Space 11,368 (31%) NA 30% 35% Min. Usable Open Space NA NA 150 s.f./unit 150 s.f./unit Min. Common Open Space NA NA 75 s.f./unit NA Min. Private Open Space 18.75 s.f./unit (825 s.f.) NA 50 s.f./unit NA 1 For exclusively non-residential development the limit is 25 feet and 2 stories. Table 2: CONFORMANCE WITH CHAPTER 18.52 (Off-Street Parking and Loading) Parking Spaces Required Proposed Combined Conformance Multi-Family Residential 1.25 spaces/studio 1.5 spaces/1-bedroom 2 spaces/2-bedroom (80 spaces for proposed, 172 spaces for existing) 41 spaces, plus 2 drop-off 98 spaces Proposal Conforms with 50% reduction2 Guest 1 space plus 10% of units (8 spaces for proposed, 17 spaces for existing) 2 With director’s approval of parking adjustment reduced by 50% in required spaces as allowed for housing facilities for seniors, given that a parking analysis justifying the reduction is provided and approved. 12/20/2010 12:50 PM 1 ATTACHMENT E 4041 El Camino Way PC ZONE PROJECT DESCRIPTION _______________________________________________________ I. PROJECT APPLICANTS. The project applicants are William and Stephen Reller. William and Carolyn Reller developed Palo Alto Commons in 1989. In addition to developing Palo Alto Commons, they developed several condominium projects in Palo Alto in the 1970s and 1980s. Both William and Carolyn served on many non-profit boards. Together they received the Tall Tree Award and raised their three children (including Stephen) in Palo Alto where they live today. Stephen began developing homes in Palo Alto fifteen years ago and is currently working on his company’s twenty-fifth project. He moved back to Palo Alto five years ago where he and his wife will raise their three young children. II. INTRODUCTION. 4041 El Camino Way consists of three parcels facing onto El Camino Way totaling 36,134 square feet or 0.83 acres.) The proposed development (the “Commons Addition”) at 4041 El Camino Way will be combined with the existing senior living rental community located directly adjacent and south of the Project at 4075 El Camino Way and known as Palo Alto Commons. Palo Alto Commons is PC Zone 3775 adopted in 1987 replacing the underlying zones that were CN and RM-2. Palo Alto Commons consists of 117 senior rental units (with 140 beds,) totaling 81,200 square feet on a parcel totaling 74,927 square feet (1.7) acres. Palo Alto Commons FAR is 1.1, its site coverage is 42%, and it provides 55 parking spaces or .5 per unit. Palo Alto Commons is three stories and 32’6” tall. The unit density is 71 per acre. The Commons Addition will operate under the existing Residential Care Facility for the Elderly (RCFE) license issued by the State of California to Palo Alto Commons. Units can include assisted living, memory/dementia care, as well as independent living for seniors. III. PROJECT LOCATION AND CONTEXT. 4041 El Camino Way is located on El Camino Way one parcel south east of the intersection of El Camino Real and El Camino Way that becomes Los Robles on the west side of El Camino. 4041 El Camino Way has 149’6” of street frontage and will be developed with a two to three-story building that will be at its highest point 35’ to 37’ tall. The three 4041 El Camino Way parcels have two zone districts – CN along El Camino Way and RM-15 to the rear of the parcels. 4041 El Camino Way is currently improved with two commercial buildings, a residential unit, a detached garage and a shed. All of the buildings are in poor condition. Adjacent and to the south is Palo Alto Commons that has a 225’6” street frontage and is a PC Zone. To the south of Palo Alto Commons is the Goodwill Store that is on the north east corner of El Camino Way and West Meadow Drive, has street frontage of 208’10” along El Camino Way and is in the CN Zone. To the north of 4041 El Camino Way is a 19-unit condominium project known as Jacobs Court. Jacobs Court is a two-story project that has a 215’ street frontage. All of the Jacobs Court units 12/20/2010 12:50 PM 2 are two-stories and about 27’ tall with covered parking spaces. Jacobs Court is zoned RM-15. The location of the 19 units is important to understand and is described in Section VII. North of Jacobs Court is the new Keys School that has a 153’ street frontage and that is about 35’ tall at its tallest point. The Keys School is zoned CS. To the east of 4041 El Camino Way are two R-1 single-family residences. There are eight R-1 single-family residences behind Palo Alto Commons. The owners of these residences participated actively in the design and setbacks of Palo Alto Commons during its approval process. The owners of the two single family residences east of 4041 El Camino Way did not respond to any notices of meetings with the applicants to provide input about the project and did not attend any of the public hearings on the project. One of these units appearas to be for sale. IV. APPROVAL PROCESS. The Commons Addition will proceed as a PC Zone Amendment. The three parcels at 4041 El Camino Way will be merged with the Palo Alto Commons single parcel. The current PC Zone 3775 for Palo Alto Commons will then incorporate the Commons Addition. V. THE COMMONS ADDITION. As a PC Zone, the Commons Addition establishes its own zoning parameters that do not establish precedent for any other site. a. Height. The Commons Addition will consist of a new building that is initially two-stories and about 25’ tall along the portion of the building facing the R-1 Zone and for 40% of the Jacobs Court adjacency. This two-story element provides a transition to these sensitive adjacent buildings. There is a third story above the second story portion and it is set back an additional 20’ from the neighboring properties. The remainder of the building is three-stories and between 35’ and 37’ tall. As described below, the 3-story portion of the building is about 48’ from the Jacobs Court building. The CN Zone permits a 35’ height and the RM-15 Zone permits a 30’ height. The height of the Commons Addition is comparable to the height of Palo Alto Commons, although slightly taller. Those portions that are higher than the original project are set back considerably from the neighbors. b. Unit Density Per Acre. There will be 44 senior rental units or 53 units per acre, considerably less than the density of the original project. When combined with Palo Alto Commons there will be 161 senior rental units or 64 units per acre. c. Site Coverage. The Commons Addition building footprint is 20,574 square feet on a parcel of land that is 36,134 sf with a resulting 57% site coverage. The current Palo Alto Commons parcel area is 74,927 with site coverage of 31,500 square feet or 42% site coverage. The combined site area is 111,061 square feet with 52,074 as the covered area, so the combined site coverage would be 47%. and is consistent with the 50% site coverage applicable under both the existing RM-15 and CN Zones d. Setbacks. The Rear Setback is 14’-0” when only 10’ is required. The Side Yard facing Jacobs Court is 33’-8” for a depth of 160’ from El Camino Way when only 10’ is required and 17’-9” for the rear 78’ of the parcel where only a 10’ setback is required. There will be no Interior Side Yard Setback relative to Palo Alto Commons since the 4041 parcels will be merged with the Palo Alto Commons parcel. The Street Front Yard setback is 18’-10” where only 12’ is required. This 12/20/2010 12:50 PM 3 Street Front Yard is necessary for the safe entry of vehicles for guest parking and for drop-off for senior residents. Palo Alto Commons satisfied its setback requirements. e. Daylight Plane. The Commons Addition satisfies the daylight plane with respect to Jacobs Court and the two R-1 neighbors. Palo Alto Commons satisfied its daylight plane requirements. f. Distance from Jacobs Court and R-1 Homes. The three-story portion of the Commons Addition is about 48’ from the face of the Jacobs Court building. The Commons Addition is setback 33’-8” from the property line in this area and the Jacobs Court building is setback approximately 14’ to 20’ from its property line. The two-story portion of the Commons Addition is about 35’ from the Jacobs Court building. The Commons Addition is setback 17’-9” from the property line in this area and the Jacobs Court building is setback approximately 14’ to 20’ from its property line in this area. The Commons Addition is about 35’ from both of the R-1 neighbors’ buildings. The Commons Addition is setback no less than 14’-0” from the rear property line and the R-1 buildings are setback about 20’ to 25’ from the same property line. g. Open Space. The Commons Addition provides 11,739 square feet of usable common open space. The Commons Addition provides 825 sf private open space. However, a majority of the units have patios or balconies that, due to their smaller size, are not recognized as such by the City’s Zoning code. If these private open spaces were included, there is actually 3,283 sf of private open space while only 2,300 sf is required. The feature common area will be the courtyard between the existing Palo Alto Commons and the new building. Centered in this courtyard is a large Valley Oak tree. Beneath its canopy will be seating and winding walkways where the existing and new buildings will be connected through several entrances to each building. The arborist, David Babby, has provided the attached letter indicating that the building has been designed in such a way that solar access for the oak tree is adequate for the long term health of the oak tree. h. Parking. Palo Alto has no parking standards for a senior community with graduated levels of care. The Commons Addition will provide 38 below grade parking spaces and three on-grade parking spaces for a total of 41 spaces, a 0.93:1 space to unit ratio. Two drop off spaces are also provided. There are 44 senior rental units, 19 of which are two bedroom units, 17 of which are one bedroom units and 8 of which are studio units. However, at the Commons no more than one car is allowed per unit, and very few residents maintain there own cars. In a non-senior project, 80 parking spaces would be required, but this number may be reduced by 50% since the housing is for seniors. Palo Alto Municipal Code Section 18.52. The 41 spaces provided exceeds the number allowed for a senior community.. A parking analysis prepared by Fehr & Peers is attached and concludes that not only is the parking adequate for the Commons Addition, but also that the expanded parking garage eliminates the slight shortage in parking that exists today. In addition to automobile parking there will be twelve bike parking stalls – six at grade and six in the garage. i. Floor Area Ratio. The Commons Addition will be 56,672 square feet, a 1.57 FAR. However, this includes many rooms located in the basement which do not add to the overall mass of the building. These areas add up to 6,373 sf and include the swimming pool, workout room, office and resident storage rooms. Furthermore, approximately 1620 sf is located on the existing Palo Alto Commons’ property (this property line will be eliminated.) If these areas were not included in the building mass calculation the FAR would be 1.35 When combined with the 81,200 sf of 12/20/2010 12:50 PM 4 the existing Palo Alto Commons, the total building area above the garage level would be 131,499 square feet and a 1.18 FAR. VI. SENIOR HOUSING NEEDS AND FACILITIES This Project Description does not present information about the demonstrated need throughout California, in northern Santa Clara County and in Palo Alto for senior independent and assisted living, and in particular rental senior housing. Demographic literature is extensive, current, and compelling about this need. Government Code §65915 specifically recognizes the need for “senior citizen housing” (35 units or more) and identifies benefits for senior citizen housing unrelated to affordability standards. If requested by Staff or P&TC members, the Applicant can provide literature about Palo Alto’s aging population, and the statewide need for assisted living because of the greater longevity of our population. Senior rental housing is in great demand. Palo Alto’s most recent senior citizen projects, the Hyatt Senior Living at Stanford, the expanded Channing House project and the Moldaw Senior Residences at the Taube-Koret Campus for Jewish Life are “equity” projects that require the equivalent of a purchase with initial payments for residences costing between $650,000 and $1,000,000 at the Moldaw Senior Residences. At the Hyatt Senior Residences at Stanford, the entrance fee costs are between $1,200,000 and $5,000,000. The Commons Addition with 44 new units will supplement the 117 units at Palo Alto Commons as one of the more affordable senior citizen housing communities with extensive care services in Palo Alto. Units on the first two floors will be available to all prospective residents, both ambulatory and non-ambulatory, while the third floor units will be limited to independent, ambulatory residents. There also is no entrance fee at the Palo Alto Commons or the Commons Addition. PC Zone 3775 specifically states: “Housing for the elderly...including residential care, is a public need, considering Palo Alto’s elderly population.” The 2004 PC Zone for Sunrise Assisted Living located at 2701 El Camino replaced underlying CN and RM-40 zone districts. That PC Zone states: “This type of housing would not be obtainable without the use of a planned community zone because the City has not addressed special needs housing in the Comprehensive Plan or ordinance.” The Council approved a full four-story building with a 1.51 FAR and a height of 45’ even though Sunrise was adjacent to existing residential units on two sides. For Sunrise, in 2004, the Council found: “This development would provide assisted living for seniors and care for persons living with Alzheimer’s. This is special needs housing which is under represented use in the community. Due to the reduced impacts associated with this type of use, exceeding the parameters established in the zoning and Comprehensive land use designations is appropriate.” The PC Amendment for the expanded Channing House project found that no additional public benefit was needed other than the intrinsic provision of needed senior housing and the upgrading of the units to better serve today’s seniors. 12/20/2010 12:50 PM 5 The Moldaw Family Residences were also part of the larger PC Zone for the Taube Koret Campus for Jewish Life approved in 2006. The CMR refers to the need for senior housing, particularly with assisted living, reminiscence units, and extended care. VII. MINIMIZING NEIGHBORHOOD IMPACTS. By adding units to Palo Alto Commons, citywide impacts are minimized. There is no location and no combination of services that could be created as efficiently as can the Commons Addition and its 44 new senior rental units. The CMR for Palo Alto Commons identified the three neighborhood concerns that had been addressed by the Applicant:  Adequate setback from R-1 neighbors has been solved by the zigzag pattern of the building and greater setback.  Privacy intrusions from second and third story balconies have been addressed with a taller fence, greater setbacks, reduced building height, and screening trees.  Traffic issues were addressed by the City’s traffic consultant that determined that the project would generate fewer trips than would a development under the current zoning, The neighbors, all of whom were R-1, appreciated the changes to setbacks and landscaping undertaken by the Applicant. The neighbors acknowledged that they could not reasonably expect that the Palo Alto Commons property would not be developed, even though this removed the pastoral experience of largely unimproved land. The rear portion of the Commons Addition adjacent to R-1 neighbors is two-stories tall, has a setback greater than required, and provides articulation of the building to avoid an “institutional” look. The Commons Addition has no greater impact on the R-1 neighbors than would a modest project consistent with the existing RM zoning. The Jacobs Court adjacency is also sensitive. We have met several times with neighbors whose units face onto 4041 El Camino Way. We understand the reasonableness of their concerns that any development (including a development consistent with existing zoning) will affect their view and sunlight because any project will replace an old single-family home, a detached garage, and a shed. Most of 4041 El Camino Way is a field with a few quality trees. Of course, the Jacobs Court neighbors cannot avoid reasonable development impacts. We believe the Commons Addition impacts will be less than impacts of an alternative development that would be consistent with current zoning standards. It is important to understand the location of the 19 Jacobs Court units:  Nine units face Keys School and are not impacted by the Commons Addition.  Three units are east of 4041 El Camino Way, adjacent to R-1 properties.  Three units will be adjacent to the two and three story rear portion of the building.  Four units will be adjacent to a three-story portion of the Commons Addition that would be consistent with the CN development standards with respect to daylight plane and setback related to these units. The Applicant initially presented Plan #1 that had 47 large units, was predominantly four-stories tall, and had 69,950 sf (not including any basement area.) Plan #2 consisted of 46 large units, 12/20/2010 12:50 PM 6 was largely five-stories tall along El Camino Way, and was 69,705 sf (not including any basement area.) The current plan, revised after neighbor input, as well as input from the P&TC and ARB, has been reduced in square footage to 56,672 sq. ft. (which includes 6373 sf in the basement) and has 44 units and consists of two-and-three story portions of the building. The two-story portion of the building is on the current RM-15 portion of the site and the three-story portion of the building is on the current CN and RM-15 portions of the site with greater setbacks on the RM-15 portion. The heights of these building elements are for the most part consistent with current zoning standards and, as requested by Jacobs Court neighbors, the kitchen and deliveries are located along the southern edge of the property, so that noise related to these uses are not impacting Jacob Court. Most recently, after the first noticed public hearing at the ARB, and at the request of the ARB, the applicants met with the interested neighbors to discuss the placement of the oak trees that will be relocated to the property line between the Palo Alto Commons and Jacobs Court. All in attendance discussed the balance between loss of sunlight, creating privacy and minimizing leaf debris on the private property at Jacobs Court. The neighbors were satisfied with the placement of the oak trees and none attended the second ARB meeting to raise any issues. Also, at that meeting, the neighbors asked that the property line fence between Jacobs Court and the proposed project be continued toward El Camino Way and then extended for approximately thirty feet on to the Jacobs Court property to create a private space for the condominium units. The applicants have agreed to this request. The Commons Addition fully parks itself and provides extra parking to address the current small parking deficit of the Commons. See parking analysis prepared by Robert Eckols of Fehr & Peers. In addition, now that the Commons management is aware that parking has been an issue for some neighbors, they are committed to managing the existing parking garage which is presently far under utilized. Three parking spaces along 4041 El Camino Way will be eliminated with the new project, but these are spaces that have usually been occupied by employees of or visitors to Palo Alto Commons as well as employees and customers of the current office building occupants. With the expansion of parking and management of the existing garage, these spaces will not be necessary. Materials will be delivered to the southern side of the Commons Addition, and many deliveries will be coordinated with Palo Alto Commons so most deliveries will take place at existing delivery locations away from Jacobs Court and other neighbors. VIII. NO BMR REQUIREMENTS UNDER CALIFORNIA LAW. The City has determined that under California law there is no BMR requirement for the Commons Addition because it is an entirely rental project. No BMR units are proposed. IX. PC ZONE FINDINGS; CANNOT BE DEVELOPED UNDER EXISTING ZONING. The Commons Addition property is so situated, and the use or uses proposed for the site are of such characteristics that the application of general districts or combining districts will not provide sufficient flexibility to allow for the Commons Addition. The Commons required a PC Zone and it is that PC Zone that will be amended. No project for seniors has been developed in Palo Alto without a PC Zone, because the Palo Alto Zoning Ordinance does not address senior projects. 12/20/2010 12:50 PM 7 X. PC ZONE FINDINGS: COMPREHENSIVE PLAN COMPLIANCE. The Sunrise PC Ordinance found Sunrise (with 97 residents and 81 units on a site less than one acre) to be compatible with the Comprehensive Plan and states: “The Comprehensive Plan allows for residential densities up to 40 dwelling units per acre and 90 persons per acre. This project is residential in nature, but it is not a typical residential development...The current general zoning standards and Comprehensive Plan land use designations do not account for special needs housing.” The Commons Addition and Palo Alto Commons are consistent with the Comprehensive Plan. POLICY H-2: Identify and implement a variety of strategies to increase housing density and diversity in appropriate locations. Emphasize and encourage the development of affordable and attainable housing. PROGRAM H-1: Increase housing density immediately surrounding commercial areas and particularly near transit stations by either increasing allowed densities or encouraging development at the higher end of the existing density range for sites within 2,000 feet of an existing or planned transit station or along two major transit corridors, El Camino Real and San Antonio Road, wherever appropriate. PROGRAM H-3: Encourage the conversion of non-residential lands to residential use to both increase the supply of housing, particularly affordable housing, and decrease the potential for the creation of new jobs that exacerbate the need for new housing. Land use and development applications that propose the conversion of non-residential land to residential or mixed-use development will be given preferential or priority processing to encourage such conversion. PROGRAM H-4: Allow increased residential densities and mixed use development only where adequate urban services and amenities can be provided and, in cases where the change in zoning is likely to lead to traffic congestion that will reduce levels of service below those acceptable to the City, adopt mitigation measures that will avoid this impact. POLICY H-18: Support housing that incorporates facilities and services to meet the health care, transit, or social service needs of households with special needs, including seniors and persons with disabilities. XI. PC ZONE FINDINGS: PUBLIC BENEFIT. The City has not required a new public benefit when a PC Amendment is requested, as long as the original public benefit is maintained. The PC Zone for Palo Alto Commons notes the benefit of providing senior housing, which will be maintained and expanded. This proposed amendment is similar to the PC Amendment for Channing House where, with the expansion, the provision of senior housing was maintained and no additional public benefit was required. Nevertheless, the applicant is offering additional public benefit by improving many of the pedestrian features along El Camino Way between East Meadow and El Camino Real to the north at a cost of approximately $150,000. On the city owned land between El Camino Way and El Camino Real, a landscaped transit plaza would be created. This would include upgrading the existing bus stop with a new covered bus shelter, new paving, additional seating and extensive planting. Also included in this area would be a walkway connecting El Camino Real to El Camino Way and a new crosswalk with ramps that would connect the new walkway to the existing sidewalk across El Camino Way. This crosswalk would have pedestrian activated, in- pavement flashing lights to alert motorists of crossing pedestrians. Additionally, the crosswalk 12/20/2010 12:50 PM 8 across East Meadow Dr. at El Camino Way would be repainted and the street trees in front of the Commons Addition would be replaced and/or added. In addition to the intrinsic benefit of providing needed senior housing and improving the nearby City land, the applicants will make a contribution that will benefit Palo Alto low income seniors who choose to remain in their homes as they age. After several discussions with Lisa Hendrickson, President and CEO of Avenidas, and learning that Avenidas employs a part time case worker to specifically assist low income seniors who choose to age at home, the applicants propose to donate $100,000 to Avenidas to be ear-marked for this program, directed at helping low income seniors. XII. PROJECT FINANCIAL CONTRIBUTIONS. A. Impact Fees. The Project will be responsible for the following impact fees:  Residential Park Fee: $6,527 @ 19 additional units (over 900 sf) = $124,013  Residential Park Fee: $3,300 @ 24 units (under 900 sf) = $79,200  Residential Community Center Impact Fee: $1,700 @ 19 units (over 900 sf) = $32,300  Residential Community Center Impact Fee: $858 @ 24 units (over 900 sf) = $20,592  Residential Library Impact Fee: $539 @ 19 units = $10,241  Residential Library Impact Fee: $296 @ 24 units = $7,104  Citywide Traffic Impact Fee: $2,861 @ 12 PM new trips = $34,332  Residential PAUSD Impact Fee: $.47 @ 43,938 new sf = $20,651 Total Impact Fees as of October 7. 2010 subject to future cost-of-living increases: $328,433 B. Property Taxes. The City receives 9.6% from increased property taxes, while the Palo Alto Unified School District receives over 53.7% of new property tax revenue. Under a pending re-assessment, the property currently has a value of $3,200,000 generating total property taxes of $35,000 of which the City receives $3,360 and PAUSD receives $18,795. The Commons Additions should have a future assessed value of about $22,000,000 generating $224,000 in annual property tax revenue with $23,000 allocated to the City and $131,000 allocated to PAUSD. Property taxes will increase by not less than 2% every year for the benefit of the City and PAUSD. C. Construction Period Sales Tax. To the extent allowed by law, the Project will identify Palo Alto as the site for construction related sales taxes. This could result in the allocation of as much as $7,000,000 in construction costs subject to sales tax. Palo Alto would receive 1% or a one-time sales tax allocation of $70,000. 12/20/2010 12:50 PM 9 D. Increased Sales Tax. The residents of forty-four senior units homes will generate taxable sales of $440,0000 (residents of each of the 44 units spending $10,000 per year in Palo Alto). Employees will generate taxable sales of $20,000 (20 shift employees spending $1,000 per year in Palo Alto). Total taxable sales would be $460,000. The City would receive $4,600 sales tax revenues E. Summary of Fees and Revenues: One Time Impact Fees and Revenues: $328,433 Construction Period Revenues: $70,000 Recurring Annual Revenues: $159,000 XIII. SUSTAINABLE DESIGN. The Project will satisfy the City of Palo Alto Green Building Ordinance standard. The Commons Addition will achieve a LEED-ND rating. XIV. PARCEL MAP AND MERGER. The Commons Addition will be merged into a single parcel with Palo Alto Commons. This will be accomplished as a parcel merger of four or fewer parcels through a certificate of compliance and will include elimination of the three parcels currently comprising the Commons Addition parcels. XV. DEVELOPMENT SCHEDULE. Per the below schedule, it is expected that the project will be completed in January 2013. 1. ARB November 2010 - Completed 2. Submit HUD Loan Application –December 2010 - Completed 3. Design Development continues through January 2011 - Completed 4. Planning and Transportation Commission – January 2011 – Completed 5. Completion of Certificate of Compliance – Submitted 6. City Council--March 2011 7. Construction Documents February – May 2011 for permit submission 8. Permit review and CD completion June – August 2011 9. HUD Loan Approval – July 2011 10. Construction August 2011 – January 2013 Palo Alto Pilot Program - 2009 LEED for Neighborhood Development (LEED-ND) Worksheet *Yellow cells to be completed by applicant. LEED-ND SLL and NPD Sections Credit Type Credit Description Possible Points Enter "Yes" for the prerequisites, and the number of points eligible for credits claimed. Explanation: How does the project meet or could easily meeting the requirement? Enter "Yes" for the prerequisites and the number of points eligible for credits claimed. Explanation: What would be necessary for the project to be able to meet the requirement? Enter "Yes" for the prerequisites and the number of points eligible for credits claimed. Explanation: What is in the way of the project meeting the requirement (i.e. state or local code, limited authority)? Possible Points: 27 19 6 20 Prereq 1 Required Y Palo Alto Commons is located near existing community and public transit infrastructure and complies with Option 4 since the project includes residential components greater than 30% of the project square footage and is within a 1/4 mile walk distance to at least Prereq 2 Required Y This site complies with Option 1: Biological surveys have determined that no imperiled species have been found at this site. Prereq 3 Required Y This site complies with Option 1 since it is not within 50 feet of wetlands or within 100 feet of water bodies Prereq 4 Agricultural Land Conservation Required Y This site is not located within a state or locally designated agricultural preservation district and complies with Option 3 since it is served by adequate public transit. Prereq 5 Required Y The project complies with Option 1: This site does not contain any land within a 100-year hight or moderate risk floodplain Credit 1 Preferred Locations 10 2 This project complies with Option 1b since it is located next to an adjacent site that is also a previously developed site. Credit 2 2 2 The project site is already determined, and is not a brownfield or high-priority redevelopment area Credit 3 Locations with Reduced Automobile Dependence 7 3 Credit 4 1 1 The project site is located on a Class II bike lane along El Camino Way, but there are only 4 enclosed bicycle storage lockers. Providing 1 one secure, enclosed locker for each unit (44 total) is not achievable on this small site without significant impact on the planting and residential storage and other program required spaces Credit 5 Housing and Jobs Proximity 3 2 This project complies with Option 2: Thirty percent of the the total building square footage is within 1/2 mile walk distance of what is assumed to be at leasst 44 jobs. Credit 6 Steep Slop Protection 1 1 This project complies with Option 1 since there are no existing slopes greater than 15% Credit 7 1 1 This project complies with Option 1 since there are no existing significant habitats or land within 100 feet of such a habitat. Credit 8 Restoration of Habitat or Wetlands and Water Bodies 1 1 The project does not comply with the requirements for this credit. The program design requirements does not allow for the restoration of the natural habitat. Credit 9 1 1 This project complies since the design centers around the preservation of the existing live oak tree and several of the redwoods. Bicycle Network and Storage Smart Location Imperiled Species and Ecological Communities Wetland and Water Body Conservation Floodplain Avoidance Brownfield Redevelopment Project Name : Palo Alto Commons Addition OPTION 3 - There is no way the project could meet the prerequisite or credit or it is out of the applicants control. Site Design for Habitat or Wetland and Water Body Conservation Long-Term Conservation Management of Habitat or Wetlands and Water Bodies Project Address: 4041 El Camino Way, Palo Alto, CA 94306 OPTION 1- The project is compliant or could easily comply with the prerequisite or credit. Smart Location and Linkage OPTION 2 - The project could only meet the prerequisite or credit with significant financial or time investment. LEED 2009 for New Construction and Major Renovations Project Checklist 1 of 3 Possible Points: 44 9 5 17 Prereq 1 Required Y This project complies with requirements "a" through "d" for sidewalks at the street frontage. Prereq 2 Required Y This project complies with Option 1a since there are more than 12 units per acre Prereq 3 Required Y This project complies with Option 2 for project without internal streets, but is located within 1/4 mile of area which is assumed to have 90 intersections per square mile Credit 1 Walkable Streets 12 1 This project complies with only two items under Option 2 for projects without internal streets: j) There are sidewalks on both sides of the street, and k) the ground floor dwelling units are no more than 24" above street grade. Credit 2 6 6 The project density does not comply with the requirements of this credit. Though there are 44 units/.83 acres (53 units/acre), the FAR of the non residental component (.42) does not appear on the table. The project density cannot be achieved without increasing the size of the building. Credit 3 4 4 It is assumed that there are at least 19 diverse uses within 1/4 mile of this project Credit 4 Mixed-Income Diverse Communities 7 7 The nature of this project does not allow for diverse housing types within the site. The residential component consists entirely of rental units for seniors Credit 5 2 1 This project does not comply with the requirements for this credit since there are only 4 enclosed bicycle storage lockers. Providing 1 one secure, enclosed locker for each unit (44 total) is not achievable on this small site without significant impact on the planting and residential storage and other program required spaces Credit 6 Street Network 1 1 This credit is not applicable to this project since there are no internal streets. Credit 7 Transit Facilities 2 2 Though the project site is located close to an existing transit corridor, it would only be possible to provide bike storage for public use at the expense of program required spaces. Credit 8 Transportation Demand Management 1 1 The project can comply with Options 1 and 2: TDM and provision of transit passes Credit 9 Access to Civic and Public Spaces 1 1 This site selection has already been determined and there are no parks or plazas within 1/4 miles of this project Credit 10 Access to Recreation Facilities 1 1 This site selection has already been determined and there are no outdoor recreation facilities or publicly accessible indoor recreational facilties within 1/2 miles of this project Credit 11 Visibility and Universal Design 1 1 All of the units will incorporate universal design, and this project complies with Option 1 of this credit. Credit 12 Community Outreach and Involvement 2 1 This project complies with Option 1 for community outreach. Neighborhood Pattern and Design Compact Development Connected and Open Community Compact Development Mixed-Use Neighborhood Centers Reduced Parking Footprint Walkable Streets LEED 2009 for New Construction and Major Renovations Project Checklist 2 of 3 Credit 13 Local Food Production 1 2 It is conceivably possible to comply with Option 2 for community supported agriculture, though this would have financial impacts on the operation of the facility. The project program requirements will not allow for square footage devoted to a green house on the proerty and is not within 1/2 mile of a farmers market, so this project will not comply with Options 1 and 3. Credit 14 Tree-Lined and Shaded Streets 2 1 New street trees will provide shade over 40% of the length of sidewalk within the project, and the project landscape architect has determined that the planting is appropriate. No trees will be planted on the opposite side of the street, however, so the second point for this credit will not be acheived. Credit 15 Neighborhood Schools 1 1 This intent of this point is not applicable to this project since it designed specifically as a senior residential facility and it is unlikely that occupants will be attending elementary, middle or high school. In any case, the high school is located further than 1 mile from the project site. Possible Points: 71 28 11 37 Applicant must show how 30 points could be achieved through Option 1 and/or Option 2. Total LEED 2009 for New Construction and Major Renovations Project Checklist 3 of 3 ARBOR RESOURCES professional consulting arborists and tree care p.o. box 25295, san mateo, california 94402 email: arborresources@comcast.net phone: 650.654.3351 fax: 650.240.0777 licensed contractor #796763 September 17, 1010 Stephen Reller R&M Properties 664 Gilman Street Palo Alto, CA 94301 RE: SHADING OF VALLEY OAK – TREE #13 Palo Alto Commons North 4041 El Camino Way, Palo Alto Dear Mr. Reller: This letter presents my review of how tree #13 will potentially be affected by shading that will be introduced by constructing a three-story building (to my understanding, 34 feet tall) at the above-referenced site; the plan reviewed for my evaluation is the Conceptual Site Plan, Sheet A11, dated 8/19/10. The subject tree is a valley oak (Quercus lobata) with a trunk diameter of about 35 inches, a height of nearly 45 feet, and a canopy that spreads an estimated 80 feet across. The majority of foliage is concentrated around the upper canopy. Existing shading elements surrounding the oak’s trunk are as follows: ƒ An existing building (Palo Alto Commons) at about 25 feet SE. ƒ A 55-foot tall deodar cedar, tree #11, at approximately 28 feet NW. ƒ A 30-foot tall California pepper, tree #12, at about 20 feet W. ƒ A 40-foot tall coast live oak, tree #9, approximately 38 feet SW (this tree is planned for relocation). ARBOR RESOURCES professional consulting arborists and tree care p.o. box 25295, san mateo, california 94402 email: arborresources@comcast.net September 17, 2010 4041 El Camino Way page 2 of 2 The proposed building forms a sizeable courtyard around the oak, with its footprint being the approximate following distances from the tree’s trunk: ƒ 37 feet to the NW (slightly beyond tree #11’s trunk). ƒ 40 feet to the SW (near tree #9’s trunk). ƒ 35 feet N and NE (in an unshaded area). Based on the previous information, construction of the new building will introduce shade predominantly to the north and northeast sections of the canopy, and it is my opinion that the shading will be minor and insignificant, and the oak will continue receiving sufficient levels of sunlight to maintain its health and vigor. Sincerely, David L. Babby Registered Consulting Arborist® #399 Board-Certified Master Arborist #WE-4001B phone: 650.654.3351 fax: 650.240.0777 licensed contractor #796763 Page 1 Planning and Transportation Commission 1 Verbatim Minutes 2 June 16, 2010 3 4 EXCERPT 5 6 7 4041 El Camino Way: Request by Stephen Reller for a Planned Community zone district to 8 establish a 45-unit, three-story, senior assisted housing facility on a 0.83 ± acre site, and a 9 Tentative Map to merge the lot with the adjacent 1.7 acre site as an expansion of the existing 10 Palo Alto Commons Planned Community. Environmental Assessment: An Initial Study has been 11 completed and a Draft Mitigated Negative Declaration has been prepared in accordance with 12 California Environmental Quality Act (CEQA) requirements. 13 14 Ms. Jennifer Cutler, Planner: Yes, thank you. Good evening. Tonight’s meeting is the 15 preliminary review of the proposed Planned Community rezoning of four properties. Two 16 commercial properties and one residential are proposed to be rezoned to Planned Community 17 and combined with an existing PC zone, the existing Palo Alto Commons Senior Assisted Living 18 Community. The proposed new building would supplement the existing Palo Alto Commons 19 with 45 additional age-in-place rental units. 20 21 The purpose of tonight’s review is for the Planning and Transportation Commission to determine 22 whether this Planned Community rezoning should be initiated or not, and to provide comments 23 and suggests to Staff and to the applicants. If the project is initiated by the Commission tonight 24 it would then be sent to the Architectural Review Board for their review, and would return to the 25 Planning and Transportation Commission for formal review of the PC rezoning, the Tentative 26 Map, and the environmental document for recommendation to City Council. 27 28 The proposed project includes the replacement of a limited amount of commercial space with 29 rental senior housing. The commercial space includes a lice removal service, a small 30 architectural firm, an African adoption agency, a barbershop, and all these total to 3,475 square 31 feet. The existing site is not a strong candidate for commercial because its location is set far 32 back from El Camino Real on El Camino Way, which parallels El Camino Real, and because of 33 the surrounding residential uses. 34 35 The proposed new use is a special type of housing. This type of senior care housing allows for 36 residents to age in place and receive varying levels of care depending on their needs. The new 37 additions will allow the existing facility to diversify the population that they currently serve. In 38 addition to the intrinsic public benefit of this type of specialty housing the applicant is also 39 proposing to install roadway and pedestrian improvements. Past practice has been that new 40 public benefit is not required for an extension or revision of an existing Planned Community 41 zone. 42 43 Based on the discussion in the Staff Report and the items just mentioned Staff believes that the 44 package presented by the applicant is sufficient so that we recommend initiation of this PC zone 45 Page 2 change, and request feedback from the Commission on what additional information should be 1 collected to assist in the determination when the project returns for further review. 2 3 We have the property owner, architect, and current property manager all here available to expand 4 on this information and answer any questions, as well as quite a few members who are interested 5 in the project. Thank you. 6 7 Ms. Julie Caporgno, Chief Planning and Transportation Official: We would like to suggest 8 putting another row of chairs in here if you will give us a minute or two. 9 10 Chair Garber: Absolutely, we can pause for a brief moment. As a point of order here, we expect 11 this item to last perhaps an hour and a half. If there are members in the audience waiting for 12 Stanford to begin you may want to come back if you don’t want to sit through and listen to this. 13 However, you are welcome to stay. How are we doing with the chairs? I don’t know if 14 everyone heard that but next door is the Cubberley meeting. So there are some seats up here if 15 you would like to come in. 16 17 Let’s move forward here. The Staff, Jennifer, has just given a brief overview of the project. The 18 applicant will have 15 minutes to make a presentation. I understand speaking first for the 19 applicant will be Steve Reller. 20 21 Mr. Steve Reller, applicant: Good evening Chair Garber and members of the Planning 22 Commission. I am one of the project applicants. The other applicant is my father, who along 23 with my mom developed Palo Alto Commons over 20 years ago. My father Bill is here tonight. 24 25 I live and work in Palo Alto and expect to for the rest of my life. Like you I want what is best 26 for our community, which includes the young and the old. The project before you tonight is the 27 addition of 45 units to Palo Alto Commons. The Commons is senior rental housing that includes 28 several care levels from independent living to dementia care to assisted living. At the Commons 29 we balance personal privacy with personal assistance some seniors need with daily tasks. 30 31 Senior housing and in particular senior rental housing is in great demand. As we live longer we 32 find that an increasing number of seniors need a helping hand with daily tasks and/or memory 33 support. Senior housing is also a good neighbor. This housing brings no children to impact 34 schools, very little noise, and relatively light traffic especially at peak times. 35 36 In designing this project we tried not only to meet the needs of senior but also to be good 37 neighbors. We had three meetings with neighbors to hear their thoughts and comments and try 38 to address their concerns in the project by reducing the project size and height. The project now 39 has 45 units and lot coverage of 50 percent. The height of the building steps down adjacent to 40 the neighboring residential owners so that it is mostly under the allowable current height limit for 41 the current zoning. The proposed building while larger than what would otherwise be allowed is 42 the best option for this parcel and for the city. An alternative development that would not require 43 a zone change while smaller in overall size could easily have greater impacts on the neighbors. 44 This is a great opportunity to add senior housing where it would otherwise be impossible. This 45 Page 3 type of community at this small scale only works because of its adjacency to the Commons and 1 the subsequent sharing of operations. 2 3 Our architect, Rob Steinberg, will explain the design in more detail. Also here to help answer 4 your questions is Sue Jordan, the Executive Director of the Commons. Robert Eckles is our 5 Traffic Consultant, and Sandy Sloan is our attorney. Thank you. 6 7 Mr. Rob Steinberg, Steinberg Architects, applicant: Good evening. We are happy to be here 8 with you tonight. I want to tell you that we have designed other senior housing communities in 9 Palo Alto. There is a huge need for senior housing. It is a wonderful community resource. 10 While we do have continuing care retirement communities, for sale communities, we have very 11 little rental options for seniors. I certainly don’t have to tell you that this very much consistent 12 with your Comprehensive Plan goals of providing housing for diverse populations. 13 14 The site that we will talk about is outlined in red. It is adjacent to multifamily housing, single 15 family, and the existing Palo Alto Commons. What is interesting about the site of course is that 16 it is on El Camino Way but almost very proximate to El Camino. 17 18 The site that you are seeing on the left is tucked back. There are a number of trees on the site, 19 which we would say is a real asset. We are sensitive that the existing site has been an open 20 meadow that neighbors and adjacent property owners have come to enjoy, and we want to be 21 thoughtful and sensitive to them as we move forward. To the north of us is Jacobs Court, a very 22 well designed two and three-story townhouse project. We have met with them a number of times 23 during this process. In fact we had a meeting scheduled last week to work with them and show 24 them the work that we had done, and will be shown tonight. No one showed up. 25 26 On the back of our site are three single-family homes. As you understand we are proposing 27 merging this development with the existing Palo Alto Commons. There is a huge need for this 28 kind of senior housing. In fact, Palo Alto Commons today has over 50 deposits of people 29 waiting to move in. The average age of the residents is about 87, and I certainly don’t have to 30 remind you that they are not taxing the schools, and they are not driving at rush hour if they are 31 driving at all. 32 33 I have the data but I think for purposes of this evening it has been in your reports and what have 34 you so I won’t go through all the data, but I am certainly available to discuss that if you want to 35 delve into some of the detail. 36 37 The initial design that was developed, El Camino Way is here, was a four-story concept. I will 38 tell you it was probably a little too aggressive relative to its setbacks. The neighbors in early 39 meetings pointed that out, and the developer agreed to change the scheme. 40 41 One of the interesting things about the site is a huge heritage oak tree that is located about here. 42 One of the things we were asked to look at is relocating that oak tree and moving the building, 43 which we did. Two things resulted from that. Number one, the City Arborist, as well as our 44 arborist were very much against this. They did not want the tree moved. Second, even though 45 we studied it we found that even though we could set the building back we had to actually go up 46 Page 4 another story to get the same amount of FAR that we had been looking at with the lower scheme 1 previously. 2 3 So tonight the current design we have I think lays out pretty well. I think it has the potential to 4 be a very positive transitional buffer where we can lower the heights and increase the setbacks as 5 we move towards the residential. So this is the first floor plan. This is that heritage tree that I 6 talked about just a moment ago. Basically the building is a C-shaped building that relates and 7 gives breathing room around the tree. 8 9 This is a roof plan of that same plan that you just looked over. As you can see the building is 10 three stories in the front, then the three stories step back, and along the back there is a two-story 11 element where the building steps down in order to increase the setbacks and the sensitivity to the 12 adjacent buildings. 13 14 This is a little more technical drawing but it is three sections through the site. Starting with El 15 Camino Way and go the longitudinal way, and then two sections going from Jacobs Court 16 through our site to the existing building, both in a three story condition and a two story 17 condition. The reason I prepared this drawing is the green is what the zoning would allow the 18 building to be designed to. We are not pressing the setbacks. We are not pressing the heights. 19 We tried to design a building that has enough adequate bulk that we can make it economically 20 viable, and to be sensitive to all of the neighbors. 21 22 We are part of the neighborhood. We have been part of the neighborhood, as you heard, for 20 23 or 25 years. We are not developers coming in. We want it to be a good neighbor. We have 24 looked at the parking and will tell you right now we believe today and in the future when we 25 build this that we not only have adequate parking but we have a surplus of parking. If you want 26 we are prepared to go into the details of that as well. We are not asking for any special 27 requirements or advantages relative to parking. 28 29 Then lastly I just want to say that in addition to providing a community resource that is in 30 demand and is consistent with our Comprehensive Plan goals we are proposing to do some 31 improvements to the community in terms of transportation and the bus stop along El Camino 32 Real. So we are proposing improving linkages from both the east side and the west side, as well 33 as crossing El Camino Way that would bring you to a new covered bus stop, the bicycle storage 34 with enhanced landscaping, and facilities to make that an asset not just to our property but the 35 whole neighborhood. 36 37 So Mr. Chairman that is our overall presentation, I think we would be happy to answer any 38 questions as you would like. 39 40 Chair Garber: Before we do that let us open the public hearing. We will have the public speak 41 and then we will come back to the Commission for questions and comments. Let me remind 42 those members of the public that would like to speak to fill out a speaker card and submit it to us. 43 At the moment we have eight speakers at three minutes apiece. The first speaker is Roger Smith 44 followed by Harper Betts. I will just mention again I am assuming all the speakers are here for 45 Agenda item number one. So you are all speaking about the housing project not Stanford. 46 Page 5 1 Mr. Roger Smith, Palo Alto: Thank you. I am very much in favor of this project for many 2 reasons. I am 69 years old. While a lot of our effort in town is for the children, in fact I think 3 that is one of the City Council’s objectives this year. You can’t forget us old folks. 4 5 The thing I also like about this is this is a rental project. I don’t know if you all have had a 6 chance to price the Hyatt. It is very expensive. Even Channing House is very expensive. So the 7 ability to rent a place is very key. 8 9 The other thing that I really like about this project is it is right on the bus 22. I have ridden the 10 22 bus and people riding that need to ride the bus but the workers can get here. Most of the 11 working families, the folks that would work here I would presume may or may not live in Palo 12 Alto. In fact I would guess that they come on the bus from other communities. 13 14 This has been a great organization for the last 20 years. I think a real asset to our city and I 15 would encourage you to move this forward. Thank you very much. 16 17 Chair Garber: Thank you. Harper Betts followed by Nancy Mueller. 18 19 Mr. Harper Betts, Palo Alto: Hello, I am one of the neighbors as part of the Jacobs Court 20 community, which is directly adjacent to the proposed build site. I would first like to urge you 21 all to read the letter that was prepared and attached to the report by Jacobs Court as well as all 22 the adjoining landowners on Wilkie Way, which is the street directly behind the proposed build 23 site. Every one of them signed the letter. 24 25 We have some serious concerns about this project. I guess the first initial point that I would 26 make is that they describe this as being on a commercial build site but it accurately should be 27 portrayed as a mixture of a residential site, which is directly adjacent to our properties and the 28 Wilkie Way properties on which they are going to have to change zoning on. To us the nature 29 and the character of the community is going to be drastically changed by the addition of this 30 building on what is traditionally a residential site. I think realistically we have to look at, we are 31 not expecting in the long term that it is going to remain a meadow, a pleasant place behind it. It 32 is going to be developed in some fashion. That said, I think the development that is being 33 proposed is far too large and is improper for the character of the site. 34 35 I am going to run down some points here because I know I have limited time. The first point I 36 would like to note is that the proposed building here was originally a massive building, which I 37 don’t think was a reasonable proposal which they have now cut down to a three story building 38 and a two story building, which is still massive in size but the original Palo Alto Commons, 39 which is I would remind the members if you have not seen this site before is directly adjacent to 40 a Goodwill Store. What it is looking over on that side is a Goodwill store rather than the housing 41 that we live in. That building was a sloped building that went from three stories at its maximum 42 on the front of the street down to actually one story in the back. They are not even trying to 43 provide a proposal that would be equal to the existing structure that they have. 44 45 Page 6 Another point that I think is important is we feel even if there is some sort of zoning change here 1 and that this structure would go forward this structure should be by far moved to the far side, to 2 the property that is going to be jointly owned by the same builders, the same community, the 3 same structures, rather than being placed directly against our residential community. I don’t 4 think the report and the proposal when they were talking in the beginning they were saying it is 5 far back from El Camino Real. I think they are trying to play it both ways here where they are 6 trying to say this is not on El Camino Real but at the same time they would like you to think that 7 it is close enough to El Camino Real that you can have a building of the El Camino Real size. If 8 you go and visit the site you can clearly see this is next to a bunch of residential houses, it is not 9 directly on El Camino Real. 10 11 The comparison locations that they used on the Bold Out Community as well as the Sunrise 12 Community that they used are both in very highly congested traffic areas that are not directly 13 adjacent to the housing that we are talking about here. People at the Bold Out Community, we 14 attached some pictures. I am sure most people are familiar with down on Charleston and I think 15 it is Rengstorff. It is next to a gas station, an oil change place, a lamp place, the Laurel Space 16 Systems manufacturing facilities. That is clearly not an accurate representation in comparing 17 that type of build side with a site that is directly adjacent to one-story and two-story housing. 18 They are basically going to have an enormous structure that is going to be directly adjacent to us. 19 20 Chair Garber: I am going to interrupt you. Apparently our beeper is not working so if you could 21 sum up. 22 23 Mr. Betts: Sure. I think the letter really sets forth our positions on this. We have concerns about 24 parking. We have concerns about noise. You have three or four police or fire engines every day 25 going by us with the current existing structure. We are still going to have senior housing in the 26 area. It is not like we don’t do our share in our area with senior housing, but we don’t think it is 27 reasonable to be putting another site in basically what is a residentially zoned area. Thank you. 28 29 Chair Garber: Thank you. Nancy Mueller followed by Margaret Fletcher. 30 31 Ms. Nancy Mueller, Palo Alto: I became aware of the Palo Alto Commons in 2000 when my 32 mother who had several strokes needs to live in a residential facility in order to ease the caring 33 for herself. I will tell you she did not want to go. She had had strokes but she was ambulatory. 34 She could dispense her own medicines. She needed her meals served. She was a widow. She 35 had an aide take her out four mornings a week to do things she would normally do. We found 36 that the Palo Alto Commons was the best alternative available to her at that time, and she is still 37 there. However, she didn’t feel comfortable in a residence of really old people. After all she 38 was only 82 and she was young compared to this group of people. 39 40 I will tell you we are likely to feel the same way when we get there. None of these people think 41 of themselves as being old. If a facility like this had been available to her in 2000, ten years ago, 42 at least six of the ten years that she has lived at the Palo Alto Commons would have been happier 43 years for her. Not on the fault of the Commons they are doing a fabulous job. We couldn’t 44 expect anything better, but she would have felt better with a younger group of people maybe 45 somebody there would be 81. Now she is really old and she fits in just fine. 46 Page 7 1 Palo Alto needs this facility. There really is nothing like it for not so old people. How we care 2 for our elders is a metric of the wellbeing of our society. We owe it to our parents to give them 3 the best care we can in their sunset, golden years. 4 5 I believe that the impact of this facility would minimal. Most of these people don’t drive and if 6 they do it is not very often. Fifteen homes would likely create more traffic, more noise than this 7 lovely residential facility for these seniors. The oak tree would be a blessing for them in that 8 beautiful courtyard. I urge you, I urge you to vote this project in. I think we will be really proud 9 of it. Thank you. 10 11 Chair Garber: Thank you. Margaret Fletcher followed by Tom Reese. 12 13 Ms. Margaret Fletcher, Palo Alto: Good evening. I just want to echo the support of this really a 14 kind of a buffer, and certainly a residential plan to add to the Palo Alto Commons. My mother 15 also, who is almost 92, lives at the Palo Alto Commons and could have moved in much earlier if 16 there had been that kind of flexibility. Even when she did move seven years ago we scoured 17 Palo Alto to find a rental space that felt residential, felt like a home. Because they have done 18 such a beautiful job in the currently existing building, I have seen the plans, but I also feel that 19 aesthetically and the sensibility of the people who own and have designed and have managed 20 Palo Alto Commons understand that they are building for residents, and this transition rental plan 21 is – I don’t know that it is perfect and obviously there are still design considerations that are in 22 transition. I am just tremendously proud of the current building, the current care, and the 23 physical aesthetics. So I urge you to continue this process at least at this stage especially move 24 approval for the project. Thank you. 25 26 Chair Garber: Thank you. Tom Reese followed by Steve Player. 27 28 Mr. Tom Reese, Palo Alto: I am standing here as a founder of Avenidas Village and as the first 29 Chair of Avenidas Village. Avenidas Village I believe you all will recall is an arm of Avenidas, 30 a senior center here in Palo Alto. Avenidas Village provides to senior who are living in their 31 homes the services that they would otherwise get from a Palo Alto Commons or a Channing 32 House or other assisted living facility. This is provided to assist those seniors, and believe me 33 there are many, who want to stay in their homes for as long as possible. Unfortunately, not all 34 will be able to either they or their spouse will need assisted living like Palo Alto Commons. It is 35 our information that with the cost of labor today the likelihood of any further standalone assisted 36 living facility like Channing House and so forth could be built in the Palo Alto area is very small. 37 The staff costs are incredible, and as I am sure you all have experienced in your dealings. This is 38 not a standalone it is an add-on and that makes a lot of difference. 39 40 I have been in Palo Alto for 60 years, and whether I die in my home or in an assisted living 41 facility I would like it to be in Palo Alto. 42 43 Chair Garber: Thank you. Steve Player followed by Robert Moss. 44 45 Page 8 Mr. Steve Player, Palo Alto: I am here to speak in support of the project. I have knows the 1 Rellers for almost 40 years, and know that when Palo Alto Commons was first constructed they 2 did it for a reason. The reason was it was appropriate for their parents to live in. When they 3 built this project they created a family, a proper place to live, and it has been continued ever 4 since. 5 6 My mother lived there for two years prior to her death. It is truly a family, and truly a residential 7 community where people truly care for each other. It allowed her to have free independence and 8 the freedom in the final years of her life, and to blossom and to grow with the camaraderie she 9 found with the fellow residents. So when you talk about this project remember it is a residential 10 project. There are people that are living there and that is their home, and will be their home 11 probably until the end of their life. 12 13 You have seen a lot of talk in support. I would like to speak about why I think this is a very 14 important type of housing. I was on the Channing House Board of Trustees for 18 years. I am 15 familiar with what the requirements are for a retirement care home like Channing House, like the 16 Forum, like the Hyatt. It is a buy-in, you are there for life, etc. There is no opportunity like the 17 Palo Alto Commons if you live longer than the requirements that it takes to move into Channing 18 House. This rental opportunity to go in was a lifesaver for my mother. When she moved into 19 the Commons she was beyond the age of a Channing House or of the Hyatt or of these other 20 facilities, which she would otherwise maybe got into. She was ineligible to do it. She was 21 eligible to move in on a month-to-month basis with out a major upfront exposure. 22 23 This is something that is needed. It is a public benefit. I have just recently gone through with 24 some friends of mine trying to locate a place for their aging parents to live. It is so scarce and so 25 difficult to find an appropriate place for this type of housing for these people to live. We should 26 have it here in Palo Alto. I really urge that you support it. The public benefit is there. I have 27 known the Rellers for so long. I know that they are good neighbors and cooperate with the local 28 neighborhood and Palo Altoans, and they are going to be Palo Altoans. This is the proper place 29 and a proper project. Thank you very much. 30 31 Chair Garber: Thank you. Robert Moss followed by Michael Griffin. 32 33 Mr. Robert Moss, Palo Alto: Chairman Garber and Commissioners. I have a different 34 perspective on this project than the other speakers. In this Mitigated Negative Declaration there 35 are a couple of problems with it. In Section G (b) it talks about sampling for VOCs and in the 36 explanation they are only worrying if they find more than five parts per million will they pursue 37 it. The most likely VOC they can find onsite in Palo Alto is TCE. The maximum limit for a 38 residential site is one part per million not five. So if VOC are found onsite there has to be 39 _______ barriers and mitigations to prevent the VOCs from getting into the residential 40 properties. In fact the EPA last year recommended reducing an allowable TCE from 1 to .7 parts 41 per million. So that should be put into the Mitigated Negative Declaration. I think the 42 probability of finding TCE onsite is extremely remote but if it is found you should have 43 something in the __________ that says here is how we treat it. 44 45 Page 9 The second thing is if VOCs are found onsite in the groundwater it depends on how high the 1 groundwater is. If the groundwater comes within two or three feet of a garage EPA would 2 recommend not having an excavated garage. So again I don’t think it is going to happen but you 3 should be aware of that because it should be corrected. 4 5 In the Section Q, on Section C on Environmental Effects the VOCs are not mentioned. Of 6 course if there are potential problems with the groundwater in Section G it should be mentioned 7 in Section Q. 8 9 My favorite one, in Section O, Mitigation 17, please fix all the typos. 10 11 Now, let’s talk about the project itself. Last year the City Council passed a resolution opposing 12 converting retail and commercial property to residential. The front of this site is commercial. In 13 this case I think it is quite reasonable to covert it to residential because first of all most of the 14 commercial onsite is offices. The barber could easily relocate there are three vacant stores 15 within two blocks of the site. I don’t know what the rents are but they are big and they are 16 available. So I think it is reasonable to convert this to housing. I think the senior housing is a 17 reasonable use for it. 18 19 The only concern I have about this proposal is the FAR being greater than 1.4 rather than 1.2 for 20 the existing property. Since this is directly adjacent to far more housing than the existing project 21 I think the FAR should be the same. That project should have the same FAR as the existing 22 property. If that means reducing the number of units by a few okay, if that means making them 23 smaller okay, but it doesn’t have a one story height adjacent to the residential that the other 24 project does, so it is going to be more obtrusive, and the FAR is a little high. So with that minor 25 change in design I think it is fine. 26 27 Vice-Chair Tuma: Thank you. Michael Griffin followed by Marlene Prendergast. 28 29 Mr. Michael Griffin, Palo Alto: Mr. Chairman could you please mark me down for item number 30 two? 31 32 Chair Garber: Alright. Marlene Prendergast followed by Mircha Panduru. 33 34 Ms. Marlene Prendergast, Palo Alto: I have several interests in this project. I am speaking as an 35 individual, however rather than related to my several interests. As a long time ago Assistant City 36 Attorney in Palo Alto working on planning and land use it occurred to me that in 1987 I was 37 actually the City Attorney for the Planning Commission the evening the original Planned 38 Community zone for Palo Alto Commons was approved. It was a first of a kind in assisted 39 living at that time. Both the City Staff didn’t know quite how to handle it and the developer had 40 to figure out what level of state regulation they wanted to incur and to provide the best housing. 41 It has been a very successful project and of course they are not a new animal anymore, but it has 42 really been an outstanding one. 43 44 I think the land use planning is just fine. It is a good location with access to transportation and 45 other services. It is a step back from the noise on El Camino for a quieter setting for elder adults. 46 Page 10 1 As a former Executive Director of the Palo Alto Housing Corporation and as I say I am speaking 2 individually because I am no longer there. It is nonprofit developer of affordable housing. I 3 know that this kind of housing is needed. The project will be a community asset because it 4 provides housing for elderly adults on a rental basis for rather moderate or middle-income folks. 5 This is an unmet need. We have affordable senior housing in Palo Alto although never enough. 6 The affordable housing serves a very low-income population. Then we have senior housing for 7 the more wealthy who are leaving their large homes and putting assets into a facility of some sort 8 like have been mentioned. 9 10 I do know the developers of the Palo Alto Commons and of this proposal and the property now is 11 privately owned, expertly and lovingly managed, and this new proposal has been put together by 12 very, very good people in the business. All are community members of long-standing and this is 13 not a nationwide chain that wants to plunk down this facility in the middle of Palo Alto like they 14 might have done in Belmont. No offense to Belmont. 15 16 I have known a number of folks that have spoken here tonight who have either been residents or 17 had their parents as residents in Palo Alto Commons and are appreciate of that opportunity and 18 that they were treated so well. 19 20 Finally, I am getting old myself. I have considered the Palo Alto Commons for my mother like 21 others in the room and it didn’t happen. Now I can envision it someday for myself, and I think I 22 would like one of those 45 extra units available. 23 24 Chair Garber: Thank you. Mircha Panduru followed by Christopher Mayor. 25 26 Mr. Mircha Panduru, Palo Alto: Good evening. I am the President of Jacobs Court, and I have 27 lived there since 1995. I am one of the neighbors who faces exactly the new development. I can 28 tell you honestly I don’t see myself waking up one morning and looking at the three-story 29 building right at 20 feet from my window. 30 31 We met repeatedly with the developers of this complex. We asked them to not exceed in height 32 our heights, Jacobs Court, or to treat them exactly like they treated Wilkie Way to slope down 33 the building to one or two levels. We really are not against an assisted living facility. We 34 support it but not as it was been designed and as it was presented here. It is too high. We asked 35 repeatedly for it to be reduced in size and instead it was increased. So I would say we are on a 36 slab cement foundation, now with all this digging the last project they added ten more parking 37 lots. So it means more digging there. I am concerned about this digging. I was warned when I 38 bought this place that there were gas tanks there. I would support the objections of Bob Moss 39 here and also all the neighbors in Jacobs Court and in Wilkie Way are opposed to such a size 40 development, not against the development but not such size. We want it to be reasonable to be 41 as people here mentioned to be good neighborly design. 42 43 Now I would like to ask everybody who is rationale here what type of magic you can wake up 44 one morning and see instead of one building, which is now and two shops there, see 45 or 50 45 units. This is not logic in my opinion. Of course money can justify this and that numbers and so 46 Page 11 forth but it is not reasonable. So I would say to reconsider this project and bring it to a 1 reasonable size, and hopefully we will be good neighbors. As it is right now it is not a good feel 2 for us to live there. Thank you. 3 4 Chair Garber: Thank you. Christopher Mayor followed by Sandy Sloan, our last speaker. 5 6 Mr. Christopher Mayor, Palo Alto: Good evening. I am a resident of Jacobs Court, a neighbor 7 to the proposed development. I would like to also state that the goals of this facility are 8 admirable. It is a good service that I think we can all get behind. The existing complex at Palo 9 Alto Commons has done a fantastic job of providing a service while blending into the 10 neighborhood. But based on the designs and the discussions we have had with the developer I 11 don’t believe that this new proposal meets the same goals that the existing one did. The Palo 12 Alto Commons stepped down to a one-story height where it came near residential areas with a 13 fence dividing, providing privacy, also with a tree line to shelter it. So if you drive by the area 14 you can see that it blends in very nicely with the residential areas that it abuts. 15 16 This new proposal amounts to a giant wall being erected feet away from our already tiny 17 backyards, and will greatly impinge on our privacy, our sunlight, and just general quality of life 18 of having to come outside and stare directly at a giant building straight up against where you 19 live. For those reasons I am against this proposal. I think there are ways the developer can 20 modify it to either shift the heft of the building, the mass, away from the residential areas, or 21 reduce the number of units to make it more suitable for the area. Thank you. 22 23 Chair Garber: Thank you. Our last speaker is Sandy Sloan speaking for the applicant. 24 25 Ms. Sandy Sloan, Attorney for the applicant: Good evening. I am speaking on behalf of the 26 applicant. I just want to respond to a few of the comments from the neighbors. First as several 27 people mentioned it is important to remember that this is a residential community. People will 28 live there. I think there has been some criticism from the neighbors that this is moving in 29 something that is commercial. These are residences they just happen to need a little more 30 assistance than most of us in the room. 31 32 Second, as Rob Steinberg pointed out the proposal completely complies with setbacks. It 33 actually has greater setbacks than the zoning would allow. It complies with the daylight plane, 34 95 percent of the building complies with the heights that would be allowed, and it complies with 35 the site coverage that would be allowed. It does have a greater FAR. 36 37 I think it is important to remember two things. First of all, seniors need more indoor space than 38 outdoor space. You don’t find many seniors playing softball in the backyard. What they need, 39 and the reason that the FAR increases, is the community rooms and the activity rooms, and the 40 dinning rooms that are inside. Second the Palo Alto zoning code doesn’t really address senior 41 communities. It doesn’t address the density that should be allowed with a senior community. 42 That is why every single senior community in Palo Alto has a PC zone. This is true of the oldest 43 senior communities like Channing House, which is a PC zone, and the newest senior 44 communities like the Hyatt, which is a PC zone. By the way, contrary to what a couple of 45 Page 12 neighbors said, Channing House is a good example of a senior community that is surrounded on 1 all four sides by single-family homes and some apartment buildings. 2 3 I want to also mention that even though you have a traffic report we had our traffic engineer look 4 at what the current zoning would allow, what the traffic would be, and he concluded that it 5 would be double the AM peak hour trips if it was developed as residential RM-15 and CN. In 6 the peak hour the trips would go from 12, which is what he estimated, to 33 peak hour trips. 7 8 I wanted to mention the emergency calls. I think Mr. Betts mentioned there was something like 9 three emergency calls a day. We got the records from the police department and in the last six 10 months there have been 48 emergency calls. So in other words about six a month rather than 11 three a day. We have that information that Julie can pass out to you. 12 13 Finally, I do believe the parking is quite adequate but if you have questions about that we can ask 14 Rob Steinberg. I think this is a worthy applicant and a worthy project. I urge you to move it 15 onto the ARB. Thank you very much. 16 17 Chair Garber: Thank you. We will keep the public hearing open should Commissioners wish to 18 call on anyone from the public. We will now move to the Commission. Commissioners, I will 19 remind you we do not have lights so you will need to signal me. Commissioner Lippert. 20 21 Commissioner Lippert: I have a question for Staff. In preparing the Staff Report did you look at 22 how the project compares to housing bonus density law? 23 24 Ms. Cutler: I believe we did discuss it some. There are also some bonuses that possible when 25 doing a 100 percent senior housing facility. I don’t know that we have any detailed analysis. 26 27 Ms. Sloan: The density bonus law allows an increase in density for affordable projects and 28 senior projects. It didn’t really work to apply it here because half the new site is commercial. So 29 it doesn’t compute. The basic density bonus is 20 percent of the residential units that would 30 ordinarily be allowed. That is what is required but that is why we didn’t proceed under the 31 density bonus law we are proceeding with a PC zone. 32 33 Commissioner Lippert: What I am actually looking for here is you have requested on increase in 34 FAR and that would be one of the exceptions. 35 36 Ms. Sloan: Yes, the density bonus law requires that the City give three concessions or incentives 37 for affordable housing projects but it does not require those same things for senior projects. That 38 specific law only addresses density bonus but it doesn’t address concessions for seniors. 39 40 41 Chair Garber: Commissioner Lippert, Commissioner Fineberg has a follow up to that. 42 43 Commissioner Fineberg: Maybe Staff can correct me but it is my recollection from other 44 projects that when there is a PC there are no zoning regulations. So how would one give bonuses 45 Page 13 when there is no baseline? So it is my understanding that that whole regulation is moot when it 1 is PC. 2 3 Ms. Cutler: That is correct. Any discussion of bonuses would just be for comparison as an 4 alternate way to possibly do this type of development in comparison to the PC. The PC would 5 be one track. Regular zoning with bonuses might be another. 6 7 Chair Garber: Commissioner Lippert. 8 9 Commissioner Lippert: We have done blended zones before. Most recently I think we looked at 10 a site that was the Palo Alto Bowl site where that was also zoned commercial. It was CS and 11 then in the back it was also zoned for residential. So how would this compare to the Palo Alto 12 Bowl site if we were to consider the CN and then RM-15? Could we do something like that as 13 opposed to a complete rezone to a PC? 14 15 Ms. Caporgno: Given that they didn’t propose that we have not evaluated that. I guess that is 16 something that we could look at. I think there was some concern on the part of some of the 17 Council Members and actually some of the Commissioners when we went forward with the Palo 18 Alto Bowl site that we would create another interpretation of the ordinance. So if that is 19 something that the Commission would like us to look at we could do that, but that is not what is 20 currently being proposed by the applicant. 21 22 Commissioner Lippert: I guess what I am trying to see is with the Palo Alto Bowl site it was a 23 hotel project with housing in the back and this is a senior project. So whether the interpretations 24 that were made for the Palo Alto Bowl site could be made for a site like this and still be able to 25 meet the development regulations. That is what I am interested in. 26 27 Chair Garber: Commissioner Keller, a follow up. 28 29 Commissioner Keller: Yes. With respect to this question, it is my understanding and please 30 correct me if I am wrong, that CN does not allow 100 percent residential. It requires mixed use. 31 So with a CN zone you could have half residential and half commercial and you could not 32 exceed half residential. Does that make sense? Is that true? Therefore, they would not be able 33 to get 1.0 FAR with housing because CN requires commercial and there is no commercial in this 34 project. So could this project without commercial be built on CN without rezoning of some sort? 35 36 Ms. Caporgno: I don’t believe so because as you mentioned the CN zone does require mixed use 37 for housing. You can have housing as a component with commercial. 38 39 Commissioner Keller: In other words, in order to build this project we would have to rezone it to 40 residential like RM-15 or RM-30, or create a PC. Thank you. 41 42 Commissioner Lippert: Okay, then lastly, here we are looking at the RM-30 development 43 regulations in the tablet here, but part of the parcels are RM-15. Why aren’t we looking at RM-44 15 also? 45 46 Page 14 Ms. Cutler: We wanted to provide some context for what was being looked at in this location. 1 On the site we do currently have RM-15, and then you have the commercial. So we felt that 2 RM-30 gave a good context for this kind of buffer type of site where you are between the 3 commercial and the residential. If additional comparisons are desired we can put that together 4 before we come back to you for further review. 5 6 Commissioner Lippert: Okay, thank you. 7 8 Chair Garber: We will go to Fineberg but let me just remind the Commissioners that our task 9 this evening and Staff can correct me here, is not to answer whether the project is acceptable or 10 not but simply whether we are initiating it to proceed down the track. So relative to the focus of 11 your questions please consider that. Commissioner Fineberg. 12 13 Commissioner Fineberg: That was a great segue because my first questions focus on why the PC 14 is required. In the Staff Report it talks about the first step of the PC process is for us to review 15 the concept plans, the development program statement, and the draft development schedule. As 16 a small, minor point I found the applicant’s description of the draft development schedule to 17 possibly meet the minimum required content to say anything. They said as soon as the PC is 18 approved by the City we will begin construction and it takes 18 months. That doesn’t tell me 19 whether the project is shovel-ready or it is going to take a year or two to get financing, and 20 whether they really want to begin construction in two years or three years. So if this does 21 proceed I believe there needs to be more substantive information about when they want the 22 project to start. If the City of Palo Alto could possibly do this in three months, are they ready in 23 six months? I don’t know and we probably won’t do it in three months. 24 25 The second thing is our Municipal Code, Chapter 18.38, Section A talks about the statement by 26 the applicant demonstrating the necessity of the application for the PC District including 27 information demonstrating, I am sorry my notes get scribbled here, compliance with the 28 Comprehensive Plan. I found that section to not really give me as much information as I wanted. 29 I have some questions about whether this project, akin to Commissioner Lippert’s questions, 30 could the goals of this project be fulfilled if this was RM-30? How different would it look? I am 31 not sure from what we have now that I know the answers. So I don’t know if that is something 32 Staff could tackle. Can the goals of what the applicant wants be fulfilled if it was rezoned RM-33 30 rather than PC? 34 35 Ms. Caporgno: I think we would probably prefer if the applicant responded to that because they 36 would know what they were trying to achieve. 37 38 Chair Garber: Sandy Sloan. 39 40 Ms. Sloan: The site is about .83 acres. RM-30 is 30 units per acre. So without having a 41 calculator I would say that is probably about 26 or 27 units. We are asking for 45 units and that 42 is 54 units per acre. There is a section in Jennifer Cutler’s Staff Report that lists the 43 Comprehensive Plan policies, and she does talk about the Comprehensive Plan policy that 44 mentions that the zoning code has 30 units per acre and 40 units per acre and that is the highest. 45 That is what I meant by saying that all the senior communities are PC zones because the Zoning 46 Page 15 Ordinance doesn’t really address that. However, the Comprehensive Plan also says you can have 1 up to 90 persons per acre. We anticipate only 55 people in these 45 units based on the people 2 that are on the waiting list. Most of them are single or have a spouse that is in more serious 3 condition. Even if it were more, even if every bed was occupied that would be 72 persons, 4 which is well under the 90. So that is why I think it complies with the Comprehensive Plan but 5 we do need a PC zone. We think we need 45 units economically to make it work. 6 7 Commissioner Fineberg: Okay. Then the last thing I want to bring up, and I will reserve some 8 more for a second round, is the adequacy of the public benefit. Could Staff clarify, I read the 9 stuff in the Staff Report and read some comments tonight, could Staff clarify whether this should 10 be considered a new PC, or is it an amendment of an existing PC? Is there a requirement that 11 there be public benefits or are the public benefits of the existing project sufficient to rezone new 12 land to a PC? 13 14 Ms. Caporgno: My understanding and historically we have not required additional public 15 benefits for projects such as this when there is an addition to a project. However, I think this not 16 considered an amendment to the PC this is a new PC. So I think there is flexibility on the part of 17 the City as to whether or not the existing public benefits are sufficient or additional public 18 benefits would be required. 19 20 Ms. Cara Silver, Senior Assistant City Attorney: If I could just add to that. I think that this case 21 is a little bit distinguishable from prior PCs in that when we did PCs in the past it has been on a 22 site that is an additional site. They filed for a separate PC application. So that is why this is a 23 new PC. 24 25 Then also as the applicant has suggested the original project is considered the intrinsic value of 26 senior housing they are proposing to the community as a public benefit. So the Commission and 27 Council could find that that would be a sufficient public benefit for this project as well. 28 29 Commissioner Fineberg: So if I understood you because it is a new parcel and it is new land that 30 is being rezoned possibly to a PC then there is a requirement that there be public benefit. Then 31 question posed tonight would then be is the public benefit offered intrinsic in the project and the 32 pedestrian and bus stop amenities is that adequate then in the balancing. 33 34 Ms. Silver: Correct. 35 36 Commissioner Fineberg: Okay, thank you. 37 38 Chair Garber: Anything else? 39 40 Commissioner Fineberg: That’s it for now. 41 42 Chair Garber: Commissioner Tuma and then Keller. 43 44 Vice-Chair Tuma: A couple of questions for the applicant to start with and maybe we could turn 45 the projector back on because one of them relates to one of the slides. While we are doing that 46 Page 16 the first question is somewhere in the papers someone had raised the question or the issue about 1 whether there is a buy-in or some sort of up front dollar amount in order to come into the 2 community. Everything I have heard tonight and what I have seen in the papers submitted by the 3 applicant that is not the case. Could someone clarify exactly is this strictly just a rental you pay 4 or is there a buy-in? 5 6 Mr. Reller: It is strictly a rental. There is no buy-in. There is no entrance fee. We considered a 7 CCRC, which is the buy-in originally, but we determined it really needed the mass to be able to 8 make that business model work. So we changed it to a pure rental. 9 10 Vice-Chair Tuma: Okay. A question for the architect. If you could go to the slide I think for 11 illustration sake there is a roofline slide that shows where there is a two story and where there is 12 a three story. That is the one right there. Could you describe for us along the side where there is 13 a three story that is adjacent I believe the Jacobs Court property could you describe what that 14 interface would look like between the three story and Jacobs Court? You come down part way 15 as a two story and then you step it up to a three story. What impact is that third story going to 16 have on the adjoining neighbors? 17 18 Mr. Steinberg: Well, the buildings in Jacobs Court are a combination of two and three story. I 19 think that the transition between the two is consistent with the zoning. I think it is consistent 20 with the heights and the daylight planes. We have not pressed it to the bare minimum. We set it 21 back beyond that. There is a 15-foot setback at the two-story condition. Then it steps back to 22 over 25 feet when it steps up to three-story. It gives us a lot of room for landscaping and 23 transition and buffer. So it is larger than is required. I think that that transition is very realistic 24 on a site like this. 25 26 Vice-Chair Tuma: So would that be higher than the building across the way on Jacobs Court? 27 28 Mr. Steinberg: I don’t have the drawings of Jacobs Court. So I can’t tell you specifically. When 29 I walked the site and I look at it without measuring it this is taller than a normal one story. That 30 is the second floor, and if it is not a full third story it is quite close. The heights that we are 31 trying to work within are consistent with the RM-15 and the RM-30 zone. 32 33 Vice-Chair Tuma: Okay. When and if this comes back I would suggest maybe we have some 34 photography or something that shows us what that interface might look like. It would be very 35 helpful. 36 37 Mr. Steinberg: Sure. 38 39 Vice-Chair Tuma: I would like to hear from the public. 40 41 Mr. Betts: If you could go back to the slide that showed the three-story and the two-story. I 42 guess the one other point I would like to make is these are two story buildings. I am sure you 43 can look in more detail as to the height of these buildings versus the height of these building. I 44 would also like to point out that what they neglect to show is the Wilkie Way buildings back here 45 are actually one-story houses. So they are actually having a two story and a three-story height 46 Page 17 building directly against the one story house as well. The existing buildings right now when they 1 are directly against residential housing actually slope down to one story. 2 3 Vice-Chair Tuma: Okay, thanks. 4 5 Chair Garber: Thanks very much. 6 7 Vice-Chair Tuma: A question for Staff about something that was raised in pre-Commission the 8 other day. With respect to other senior housing projects and perhaps maybe even someone from 9 Palo Alto Commons can tell us the people who are on the waiting list, but do we have any 10 statistics on where those people come from? There is a question asked other day, in other words 11 are they Palo Altoans who then go to this housing or are they seniors who are coming from other 12 areas that are moving into this housing? That is a question both for Staff as well as the applicant 13 with respect to those who are on the waiting list. 14 15 Ms. Cutler: We did ask the applicant to have the woman who manages the current Palo Alto 16 Commons answer some of those questions. 17 18 Chair Garber: As you approach could you identify yourself? 19 20 Ms. Sue Jordan, Executive Director, Palo Alto Commons: Fifty-three percent of the people that 21 are on the waiting list and that have moved into Palo Alto Commons are from Palo Alto. 22 23 Vice-Chair Tuma: Great, very helpful. Thank you. One other question that either Staff or the 24 applicant can answer, perhaps it is in here but I couldn’t find it. What the size of the current site, 25 the one that is currently developed with the Palo Alto Commons on it? What is the square 26 footage of the lot as well as the floor area in that building? 27 28 Ms. Cutler: I am not sure if we called out that. I know that we showed the proposed and the 29 combined in the comparison chart. So I will have to do a little subtraction if we didn’t actually 30 call out the existing. 31 32 Vice-Chair Tuma: Perhaps the applicant would know. 33 34 Mr. Steinberg: I don’t know exactly but it is about 70,000 square feet and the building is about 35 80,000. It is about a 1.1 FAR. 36 37 Vice-Chair Tuma: Okay. So the current building is in the area of about 80,000 square feet and 38 you are talking about adding 50,000 square feet. The current property is about 70,000 square 39 feet and you are talking about adding a site that is another 36,000 square feet, just ballpark. 40 Okay, I just wanted to get some relative numbers there. 41 42 Chair Garber: Commissioner Tanaka. 43 44 Commissioner Tanaka: You are talking about the existing for this project site or existing for the 45 Commons? 46 Page 18 1 Vice-Chair Tuma: The existing Palo Alto Commons itself. In other words, I am trying to figure 2 out what percentage are they adding both of the property as well as of the buildings. 3 4 Commissioner Tanaka: Do also know the square footage of the existing site? 5 6 Vice-Chair Tuma: Yes, they said the existing site that the current Palo Alto Commons is on is 7 about 70,000 or 75,000 square feet. 8 9 Commissioner Tanaka: The buildings? 10 11 Vice-Chair Tuma: About 80,000 square feet. 12 13 Ms. Cutler: The new site is 36,000. 14 15 Commissioner Tanaka: The existing sites buildings? 16 17 Ms. Cutler: About 80,000. 18 19 Vice-Chair Tuma: Okay. Does Staff have any comment about the environmental issues and the 20 Mitigated Negative Declaration issues that Mr. Moss raised? 21 22 Ms. Cutler: I think we can look into those questions and definitely make sure that the 23 environmental is sufficient before it comes back to you. 24 25 Ms. Caporgno: This the environmental review right now in the draft stage. So what we expect is 26 comments and then we will address those. 27 28 Vice-Chair Tuma: Okay, great. Then one last question. You said that there was a parking 29 consultant with the applicant. The question has to do with the current situation. Is there some 30 sort of division between parking spaces for residents, because we have heard a lot tonight about 31 how the residents don’t drive, versus the visitors and what the usage of those two types of 32 parking spaces are today, and what you would anticipate with the new project. 33 34 Mr. Steinberg: There is a security gate that separates public access parking, visitor parking, and 35 guest parking from resident parking. There are I believe 55 spaces in that garage. I believe there 36 are ten of them on the outboard side. 37 38 Mr. Reller: There are 55 total with seven above grade, and eight outside the gate. 39 40 Mr. Steinberg: So 55 minus the seven, we have 48 in the garage, and about seven of them are 41 outside where the security gate is currently. Eight outside, sorry. So right now in the garage we 42 have a substantial surplus of parking. There are about seven residents that have cars total in that 43 space. So we certainly have the flexibility to adjust and monitor where that gate is and how 44 much public parking, how much secured parking we have. We have a lot of flexibility. 45 46 Page 19 Vice-Chair Tuma: Okay. So I will just leave it with a comment that when we come back you 1 should talk about a plan – it is clear that there is not a lot of parking requirement for the 2 residents, we just want to make sure that there is adequate parking for the visitors. 3 4 Mr. Steinberg: For visitors, yes we are looking at that. 5 6 Vice-Chair Tuma: And employees. 7 8 Mr. Steinberg: Absolutely, and we are in that process currently. 9 10 Vice-Chair Tuma: Thank you. 11 12 Chair Garber: Commissioner Keller and then Tanaka. 13 14 Commissioner Keller: Thank you. First I did the math and the existing Palo Alto Commons site 15 is 74,927 if you subtract the proposed from the proposed combined with existing. The existing 16 floor area, built area, is 81,200 combined with 50,417 gives us 137,617. So the existing FAR is 17 1.083. The new FAR combined is 1.4. So one of the things about the blending of this is that it 18 does considerably lessen the FAR of the new part because of the blending with the existing of 19 1.08. 20 21 So I am wondering a few things. The first thing I am wondering is were there particular public 22 benefits of the Sunrise property? Did that have public benefits associated with it? I guess that is 23 a for sale, is that right? 24 25 Ms. Caporgno: Actually, it is not a for sale. It is rental plus services. So there is a component, it 26 is not a flat rental per bedroom, it is what level you are of need, and then they have another care 27 area. So I think it is a little bit different than this facility. The public benefit for Sunrise was that 28 we had to negotiate the below market rate component because again it wasn’t just units it was the 29 service component, and it was beds versus rooms. So we got I think a couple of extra beds as 30 part of that public benefit process. 31 32 Commissioner Keller: So was there a requirement for BMR under Sunrise? 33 34 Ms. Caporgno: Yes there was. 35 36 Commissioner Keller: So why would there have been a requirement for BMR in Sunrise and not 37 a requirement for BMR on this? 38 39 Ms. Caporgno: At this point, given recent case law we are not sure what the City can and cannot 40 do as far as a rental project in requiring a below market rate component. I think the City 41 Attorney will confirm that. So there is a possibility that we may be able to require the below 42 market rate units but at this point we are not sure. So at this point there haven’t been any 43 identified. When it comes back to you that will be determined. 44 45 Page 20 Commissioner Keller: So whether or not the BMR housing ordinance of some sort requires 1 below market rate housing as a public benefit, because this is proposed as a PC we, actually the 2 Council, could if we wanted to require BMR units as part of the public benefit and indicate that 3 the additional public benefit was needed. Could you describe what kinds of public benefits we 4 have had lately? Have the standards for public benefits as they have been administered by the 5 City changed in the interim since this project was first built? Are the public benefits the same or 6 are they different? 7 8 Ms. Caporgno: My understanding is that years ago we would require or our public benefits were 9 considered less substantial than they currently are. They would vary project-to-project 10 depending upon a need. There has been additional parking required for projects depending upon 11 if there were below market rate units or some component depending upon where it was located 12 or type of project. I think the City has, from the time that this project was probably built, has 13 strengthened the public benefit requirement. 14 15 Commissioner Keller: So the idea that the existing public benefit is the project itself in some 16 sense that might not fly under the current structure or if it were a brand new proposed project. 17 18 Ms. Caporgno: That is possible. 19 20 Commissioner Keller: Okay. Can we have the applicant? 21 22 Commissioner Lippert: I have a follow up on that. 23 24 Commissioner Keller: Sure. 25 26 Commissioner Lippert: This is for the City Attorney. We don’t propose public benefits. It is the 27 applicant that has to propose the public benefits. Is that correct? 28 29 Ms. Silver: Yes. Typically the applicant proposes the public benefits and then when the 30 ordinance is finally adopted the Council with your recommendation makes the finding that the 31 public benefits are sufficient. 32 33 Commissioner Keller: Is there anything in the ordinance that prevents the Planning Commission 34 or the City Council from suggesting at an initiation of a PC we would be more inclined to do this 35 if the public benefit were X or Y? 36 37 Ms. Silver: I think that is fine. 38 39 Commissioner Keller: Thank you. Could we go back to the diagram on the screen that shows 40 the profiles of the buildings adjacent….. 41 42 Chair Garber: Commissioner, would you like to hear from this member of the public? 43 44 Commissioner Keller: Why don’t you identify yourself and you may speak. 45 46 Page 21 Ms. Mildred Kohn, Palo Alto: I am a resident of Palo Alto Commons. Our manager said that 53 1 percent of us are from the local area, as I am. I want to tell you that almost without exception the 2 other 47 percent came here from other parts of the country to be with their children who live in 3 this area, and that is a public benefit. 4 5 Chair Garber: Thank you. 6 7 Commissioner Keller: Thank you. So can we go back to your slides? You had a profile view of 8 this building versus the Jacobs Court. That’s it. Okay, so what we have there is the Jacobs Court 9 building and it looks like they are what were referred to as a three-story, it looks like a clearstory 10 up there. I don’t know if I can sort of point this out here. What I am seeing here is that this is 11 sort of the clearstory of Jacobs Court and this is the roofline of the third story. I can’t exactly tell 12 how those line up. Perhaps the architect should tell me from this diagram how those might line 13 up. 14 15 Mr. Steinberg: I would say looking at this diagram, and I don’t have the exact dimensions in 16 front of me, that it looks like Jacobs Court is more the conventional two-story building. If you 17 look at the proposal for the Commons it is a little hard to compare because we have a taller first 18 story, because that has common facilities. It has services and food so it doesn’t have exactly the 19 same floor-to-floor height. But there I would say that they are comparable. They are not 20 identical but they are comparable. 21 22 Commissioner Keller: Thank you. So it looks like the third story, because you have the setback 23 third story, I can see the roofline of the third story it does look like that is somewhat higher than 24 the Jacobs Court. Is my visualization of that correct or am I off on that? 25 26 Mr. Steinberg: I want to say one thing and then I will answer that. It is a little confusing what 27 we are doing here because this scheme is a scheme that moved the tree, and is not our proposal. 28 So if you looking simply at the height relationships there that is one relationship. You also need 29 to look at the setbacks. Our setback is much larger than theirs. So I think when you look at this, 30 as one of the other Commissioners suggested, we could develop this and show you in more detail 31 but right now we are comparing a scheme that has the right height but different setbacks. 32 33 Commissioner Keller: The only reason I referred to this diagram, I realize the setback diagram 34 that you had, is because this one does show the Jacobs Court height and it does show the height 35 of three stories. My understanding is that half of the length of Jacobs Court roughly will have 36 three stories against it. So in some sense what would basically is that this would come out to 37 some distance with the setback. I can’t exactly tell how far across this goes but that is what it 38 looks like to me. So that is what I was wondering about, comparing the third story no matter 39 how set back it is, but that is what is adjacent to Jacobs Court. So if you could address that I 40 would appreciate that. 41 42 Mr. Steinberg: Well, I guess what I would say is that under the zoning of CN this could be 35 43 feet all along there with less of a setback than we are proposing. 44 45 Page 22 Commissioner Keller: Thank you. One final point if I may? When we are comparing with RM-1 30 even if the entire site were zoned for RM-30 or even possibly RM-40, for RM-30 the max 2 floor area ratio is .6:1 so that would be a much greater increase. Basically it would be a doubling 3 or more of the FAR for RM-30. 4 5 Mr. Steinberg: I was going to come back to this discussion and just tell you where we are is at 6 an early stage of the development. If you ask my opinion we are in the right strike zone. Have 7 we worked out exactly the perfect setback, the exact height, the angle? No. But when we look at 8 the zoning, we look at the daylight plane, we look at the setback, we look at the heights, and we 9 are in the right envelope. I feel that this is very much in the right zone and that is why we are 10 here tonight, to ask in order to move forward to really to start to refine some of the fine-tuning 11 the questions that we are hearing tonight. 12 13 Commissioner Keller: I appreciate that. Thank you for your comments. I think that in some 14 sense the people of Jacobs Courts looking at the project, some of them see two stories followed 15 by a recessed third story and some of them would see three stories not be recessed. I just want 16 you to think about that nature and whether something can be done about that. 17 18 Chair Garber: Commissioner Tanaka and then myself. Then I know a couple of Commissioners 19 have one or two more questions but we are at an hour and a half and I would like to try to get to 20 an action. 21 22 Commissioner Tanaka: First let me thank everyone for coming out and Staff’s time and of 23 course the applicant. I have a question and I just want make sure it is clear. Jennifer, the site is 24 36,000 square feet, correct? 25 26 Ms. Cutler: Correct. 27 28 Commissioner Tanaka: Okay. Can you tell me the existing three or four buildings on here are 29 80,000 square feet? 30 31 Ms. Cutler: No, that is the proposed. 32 33 Commissioner Tanaka: Okay, so how big are the existing buildings? 34 35 Ms. Cutler: The existing commercial combined is 3,475. I don’t know the exact size of the 36 single family home. 37 38 Commissioner Tanaka: Okay, but it is maybe 10,000-something. 39 40 Ms. Cutler: No, it is maybe 2,000. 41 42 Commissioner Tanaka: So it is going from maybe 5,000 square feet to 50,000 square feet. I just 43 wanted to make sure that was clear because I heard the 80,000 square foot number. 44 45 Ms. Cutler: Eighty thousand is the existing building. 46 Page 23 1 Commissioner Keller: The existing Palo Alto Commons building. 2 3 Ms. Cutler: Correct. 4 5 Commissioner Tanaka: Okay, but the existing buildings on the site are about 5,000 going to 6 50,000. I just wanted to make sure. 7 8 The other thing we talked about earlier and it is kind of tangential to the current discussion is that 9 you said there was about 3,400 square feet of commercial today kind of El Camino Way. You 10 mentioned a bunch of different business and some of them are in business and others are not. I 11 think right now cities are not just – this is probably one for the city with retail potential. I went 12 by there last night. It was kind of up closer to El Camino than Jacobs Court and some of the 13 other properties. So in terms of, and this may be a hard question to answer, you mentioned 14 earlier that this was not suited for commercial but it looked like it had commercial there for 15 awhile. There is commercial on El Camino Way down the street. Maybe you could clarify your 16 opinion about why that is not suitable for commercial. 17 18 Ms. Cutler: What we were trying to convey is that this is a balancing act. It is something to 19 consider in general there is a desire to not replace commercial with residential, but in this case it 20 seems that while some commercial does survive there, and has been there for some time it is not 21 an ideal spot for commercial. It is a difficult spot. Weighing the benefits of that small amount of 22 commercial or what commercial could do well in that location against the benefits of this 23 proposal is something that the Commission should consider too. 24 25 Commissioner Tanaka: Okay. I actually have eaten at restaurants and shopped at places there 26 and dropped off something at Goodwill there. There is a lot of commercial on El Camino Way 27 and there is a lot of commercial on El Camino as well. To replace this commercial with 28 residential I just don’t quite see your opinion. I want you to just understand that it doesn’t seem 29 to make sense. 30 31 Ms. Cutler: It is an opinion. It is something for the Commissioners to consider to see if there is 32 the possibility that this is a positive change that they want to initiate. If there are additional 33 studies you would like for information we can do that too. 34 35 Ms. Caporgno: I don’t think Staff is indicating that it is inappropriate for commercial uses it is 36 just that give the configuration, and the location, we thought it would be supportable. The 37 Council has said that they would like us to retain commercial uses and not covert those to 38 residential. 39 40 Chair Garber: Commissioner Tanaka, Commissioner Tuma had a follow up. 41 42 Vice-Chair Tuma: Do we have any idea of the commercial activity that takes place in these 43 buildings right now how much if any revenue that generates for the City? 44 45 Ms. Caporgno: We didn’t determine that but we have done it. 46 Page 24 1 Vice-Chair Tuma: Do you have any sense at all? 2 3 Ms. Caporgno: No. 4 5 Vice-Chair Tuma: I drive by there every day and my sense is very little. The other question that 6 I would have – I will hold off on that. 7 8 Chair Garber: Commissioner Tanaka. 9 10 Commissioner Tanaka: No more questions right now. Thank you. 11 12 Chair Garber: Remind me, the CN property that is at the end of the block that has a building 13 height of 35 feet, that is probably zoned a CN here, Goodwill Industries. What is the height limit 14 on that? 15 16 Ms. Cutler: The height limit in CN is 35 feet. 17 18 Chair Garber: Do we know what the height limit is on the current PC of Palo Alto Commons? 19 20 Ms. Cutler: I believe it was just designed for the building that is there. 21 22 Chair Garber: How tall is that? 23 24 Ms. Cutler: Slightly less than what is proposed. 25 26 Mr. Steinberg: I believe it is 32 feet, six inches. 27 28 Ms. Cutler: Yes, 32 feet, six inches. 29 30 Chair Garber: And then for RM-15, the height there? I think it is the same as RM-30. 31 32 Ms. Cutler: I believe so. 33 34 Chair Garber: Going into the CS zone, which I believe is 35 feet. 35 36 Ms. Caporgno: CS is 35. 37 38 Ms. Cutler: Within 150 feet of residential, 50 feet elsewhere. 39 40 Chair Garber: RM-15 has a height limit of 30 feet and the CS zone is 50 feet unless it is within 41 150 feet of residential and the limit is 35 feet. Thank you. Commissioner Fineberg, you had 42 some questions? 43 44 Commissioner Fineberg: Yes. Part of where my brain is with the decision whether to initiate is 45 hinging is still on the adequacy of public benefit. There was a brief mention that there is a lot of 46 Page 25 demographics about the graying of our population, the need for this kind of housing, and I am 1 wondering if we have even just a baseline of how many senior units are within the City of Palo 2 Alto. Off the top of my head I wrote up a list of Channing House, Stevenson, Lytton Gardens, 3 Mudow, Fabian Way, Classic, and Sunrise. Do we have a rough idea, maybe there is one or two 4 that I have missed, do we have a rough idea of how many units that is? 5 6 Ms. Caporgno: I couldn’t tell you right now. 7 8 Commissioner Fineberg: Are we talking 1,000, 2,000 units, 1,000 or 2,000 residents out of a 9 population of 60,000? 10 11 Ms. Cutler: We did not put together what those numbers are. There are some reference 12 materials that were provided by the applicant but I am not seeing those numbers here. 13 14 Commissioner Fineberg: For me weighing, are we talking about a five percent or a ten percent 15 change in the City’s inventory of that kind of housing or are we talking about a .05 percent 16 change? Then weighing the substance of that versus what is the impact on the adjacent single 17 family home, on the adjacent Jacobs Court homes, and that is kind of to me where the balance 18 sits. I don’t know the answers to that. I know we are not going to know that tonight but maybe 19 if we come back we can know that. 20 21 El Camino Design Guidelines. Are they in any way applicable to this property? It is not 22 technically on El Camino, but it is visually adjacent to and it sort of functions as being near it. 23 So I have some questions about whether it is applicable or because it simply is off El Camino it 24 is not applicable. 25 26 Ms. Caporgno: I think the fact that they are guidelines and I think the Architectural Review 27 Board in reviewing the design of the project will use them if they feel they are applicable in this 28 particular instance. There is nothing that precludes them from looking at them and looking at 29 this project in that context. 30 31 Commissioner Fineberg: Okay. I think it would be beneficial then if it comes back that we have 32 a sense of how it does or does not fit with that. 33 34 Then regarding the FAR was my last follow up question. I don’t know that we have enough 35 information to understand what is going on adjacent to Jacob Court. I see pictures that we are 36 now being told are not relevant because it is a previous edition. I guess I am just wondering if I 37 might on our drawings the architect is showing these BH-Bocook. We have Mr. Steinberg here 38 tonight. How long have you been on this project or why is there a different name on the plans? 39 40 Mr. Steinberg: We are not the original architect. We have been working on the project the last 41 couple of months. A lot of the work previously done was done by another architect. When we 42 got involved we looked at all of the drawings in the process. I confused you a little bit tonight 43 because I showed you some of those earlier schemes and Arthur pulled it back out and a little out 44 of context, and that may have added some confusion. 45 46 Page 26 What we observed is that the project started out perhaps a little aggressively. If you look at the 1 commercial zoning on the front it could give one impression of the direction you might take as 2 an architect. As you move to the back of the site there is a very different set of conditions. The 3 applicant met with the neighbors with their original concept. They were told it was too 4 aggressive. They backed it off. We backed it off again when we got involved. 5 6 Where we are tonight in my opinion is within the zoning envelope that is appropriate for the two 7 zoning classifications for the site. So we are currently the architect for this proceeding of the 8 project. As I said earlier, there are things that need to be worked out. When we first come to the 9 Planning Commission it is to get some feedback if we are going in the right direction. There is a 10 lot of work to do. What our hope was that we would get some encouragement from you tonight 11 to now drill down into those details more with the ARB. We don’t have the answers to all of the 12 very good questions that you are raising tonight, but it will be our hope to do that successfully 13 with the ARB and then bring that back to you. 14 15 Chair Garber: Commissioner Fineberg, Commissioner Martinez has a follow up question. 16 17 Commissioner Martinez: Does that mean that there have been significant changes to the site 18 plan? It is not longer this long building from the street to the back or is that basically the same? 19 20 Mr. Steinberg: There have been significant changes to the site plan. There have been many 21 variations. The general configuration is a C-shaped building that works around the major 22 existing oak tree that the City Arborist said must remain. So that really begins to dictate a 23 certain amount how that footprint is going to be developed. 24 25 Commissioner Martinez: Following up on Commissioner Tanaka’s point, he is weighing 26 whether commercial is sort of part of this. To me this is a significant building from El Camino 27 whether it rests on El Camino or not. Is that being reviewed in terms of its relationship to El 28 Camino? Or is it still that kind of suburban state? 29 30 Mr. Steinberg: Well, certainly the first picture I showed you of the site was from El Camino. So 31 I don’t think we want to ignore that or pretend that we are not part of El Camino. On the other 32 hand, we are rubbing shoulders with the Commons building, with the Jacobs Court, with other 33 residential a little more intimately. So I think it is very important that that be really thoughtfully 34 considered. If we were to develop a commercial building on the front of that I dare say the Jacob 35 Court neighbors would be in here screaming bloody murder because it would have much less 36 setback, and it would be much more aggressive. It would be a commercial building not a 37 residential neighbor. 38 39 Commissioner Martinez: I am not suggesting that. I am just asking about the architectural 40 character. It was stated that the amount of open space was 50 percent of the total site area. 41 When you look at the old site plan it really doesn’t appear that way. Are you counting driveways 42 and hardscape and like that as part of what you are calling 50 percent open space? Has it 43 changed significantly so it really is 50 percent open space? 44 45 Page 27 Mr. Steinberg: I don’t know if I can answer that. I am not exactly sure. It is certainly not 1 buildable area. The amount of paving we have is really a drop-off. We really don’t have roads 2 running down there. I have a feeling it is but I am not absolutely confident of that number. I 3 would need to go back and check. 4 5 Commissioner Martinez: Okay, fair enough. 6 7 Chair Garber: I skipped Commissioner Lippert. 8 9 Commissioner Lippert: I just want to clarify something but I don’t want to create confusion. 10 Vice-Chair Tuma asked about the businesses in a commercial zone there. It is my understanding 11 it is a barbershop, there was a contractor there at one point, and there is an architect also on that 12 site, Bill Bocook and Bill Bocook actually drew up these plans. I don’t know if he has equity or 13 ownership in the property or not but my assumption is that he probably has something to do with 14 it. He is reaching retirement age himself. So it could very well be that this is how he is 15 removing himself from the property. I can’t speak on his behalf but that might give you some 16 insight as where these plans came from. 17 18 The second point I would like to make is I read through the housing bonus density law here. I 19 have a question for the City Attorney. If housing bonus density law only requires that ten 20 percent of the units are for the low income in order to be able to make use of the section on the 21 housing bonus density law. What we have removed from our requirement for the time being is 22 15 percent requirement for BMR housing. If the applicant were to reinstate at least ten percent 23 housing would they be able to make use of the housing bonus density law for the additional 24 FAR? 25 26 Ms. Silver: I believe they would. This is outside of the context of a PC zone, I assume your 27 question is implying. 28 29 Commissioner Lippert: Well, if I read through this correctly, and I am not an attorney. I am 30 only a far-sighted architect. Here it cites that it is either or it categorizes it as rental housing and 31 then it goes on and defines it as condominium, which this is not, or it says planned development. 32 My understanding is that phrase ‘planned development’ refers to PC. 33 34 Ms. Silver: I would like to look at the particular statute. I think your understanding of that is 35 correct but we have to double-check. 36 37 MOTION 38 39 Commissioner Lippert: Okay, because that is important. With that I think I am going to try to 40 move this along here. I am going to make a motion that the Planning and Transportation 41 Commission recommend that we initiate the rezoning on this. This is not approving it. It is just 42 recommending that we move forward in terms of the rezoning with regard to the PC. I will leave 43 it at that. 44 45 SECOND 46 Page 28 1 Vice-Chair Tuma: Second. 2 3 Commissioner Fineberg: Second. 4 5 Chair Garber: I heard first from Commissioner Tuma but in case we need it I also heard 6 Commissioner Fineberg. Would the maker like to speak to their motion? 7 8 Commissioner Lippert: Certainly. We have a very serious problem. Not only is the state 9 growing exponentially but the reason why it is growing exponentially is people are living a lot 10 longer. I think our grandparents generation maybe lived to 67 years as the average age. We are 11 now looking at the average age as being about 77, and by the time we reach retirement age it 12 could very well be that we are in our 80s as the average expected lifespan. That is really where 13 this growth is coming from. So without providing adequate senior housing in Palo Alto what we 14 are asking is that the residents here in Palo Alto actually become captive in their suburban 15 homes. 16 17 One thing that this project does and it does it so beautifully is that it places housing along El 18 Camino Real. Why is El Camino Real so important? El Camino Real is a major arterial through 19 the city where there is public transportation, there are amenities like shops and stores, and 20 restaurants, and it is not far from the major shopping centers in terms of where seniors can get to 21 do their shopping. It is on the fringe of single-family residential neighborhoods. I can’t think of 22 a better buffer between single-family residences and El Camino Real than a stepped up 23 multifamily residence. So I think that this project by itself has a lot to offer in the PC 24 configuration that has been presented here. 25 26 Of course there are details that need to be flushed out. Of course there are things that need to be 27 worked out in terms of how this is going to work, the mechanics of how this is going to work. 28 For initiating a zone I think that this is ideal, something that we should definitely be looking at. I 29 think Sandy Sloan mentioned it beautifully, which is that if you look at any senior project in this 30 city the only configuration it has been able to fit into is the PC zone where it is tailored to a site. 31 32 Chair Garber: Would the seconder like to speak to their second? 33 34 Vice-Chair Tuma: Sure. Typically in today’s environment I would be very reticent to replace 35 commercial with residential, however the commercial site here I think is just a terrible site for 36 commercial. I think that is somewhat shown up by what is there, how it has been used. I am not 37 even sure if it is legal to make a left hand turn if you come out of the current commercial. I 38 know it is not as you come out of Jacobs Court. It is on a curve. It is just a bad place for 39 commercial and it would be a small amount there. So in today’s environment even though I 40 typically would not want to replace commercial with residential I think in this particular case it 41 makes a lot of sense. 42 43 With respect to some comments that have been made about FAR, I am not so concerned about 44 FAR, and this is a comment to the architect and the applicant as they go forward. I am not so 45 concerned about the FAR per se because I do think that you can have a lot greater FAR in the 46 Page 29 context of this type of project versus others. It is more of how the project relates to its neighbors 1 and I think some more work needs to be done there. Some more thought needs to be given to 2 that. I think when you have a meeting and the neighbors don’t show up that is a problem. So 3 think about ways to reach out and work on that interface, because I think that can really turn this 4 into a fantastic project. 5 6 The parking, as I said before, there potentially is an issue there. There was some discussion in 7 the Staff Report about asking for 50 percent or less of the requirements. It doesn’t quite work 8 out that way. That is for the new section, but the old section on its face is under-parked. My 9 suspicion is that if you jigger those spaces around where more could be used for visitors and for 10 your employees you won’t have that problem. 11 12 So I am very supportive of this project. I think that there is some tweaking around the edges that 13 needs to happen, and as we move forward I will continue to be supportive. 14 15 I do however want to make a comment that applies generally to senior housing. We have often 16 heard that senior housing doesn’t impact the schools and we are not taking into account the 17 impacts of the schools. I do want to point out that in looking at this project in particular and 18 talking about 53 percent of the seniors who are going to move in there being from Palo Alto. 19 Those people are moving out of homes that recent history has shown us often times are then 20 occupied by families who move into those homes. So it is not going to impact our decision. We 21 cannot take it into account with respect to this particular project but I do want to heighten the 22 awareness of the public that senior housing by itself sometimes does have an impact on the 23 schools. So we need to be aware of that. We need to talk about that in other context. 24 25 So I think I would agree with the architect. I think you are on the right path. I think some 26 interface issues. It is in a way unfortunate that that tree has to stay where it is because if it were 27 on the other side you could possibly have a better interface over there, but we do value those 28 things in this context. So it presents a challenge that I think you are up to and will figure out a 29 way to make that interface with the next-door neighbors better. 30 31 Chair Garber: Commissioners, other comments? This would be the time to speak so that the 32 applicant can hear our comments and use those comments to implement how they return to the 33 City. Commissioner Keller and then Fineberg. 34 35 Commissioner Keller: I was going to ask some questions of the applicant. May I still do that? 36 37 Chair Garber: Yes you may. 38 39 Commissioner Keller: Thank you. The first question is there was a comment made that some 40 changes have been made to the drawing. So let me ask Mr. Steinberg does this drawing, this 41 document that we have been handed of the project drawings, does this represent the latest version 42 of the drawings or are there changes since the March date here? 43 44 Mr. Steinberg: That is the third generation and the current status of the project at this moment. I 45 think it would be a fair statement to say that the design has more evolution to go. 46 Page 30 1 Commissioner Keller: Thank you. Those regular sheets with streetscape elevation SK-6, does 2 that represent the latest version of the drawings? 3 4 Mr. Steinberg: Yes. 5 6 Commissioner Keller: On that one you could probably more easily see the distances between 7 Jacobs Court and the proposed project and the various heights. It does appear from this that 8 there is some degree of what appears to be some sort of towering of the proposed project. If I 9 look at the drawings over here behind me, which allow me to see what is going on, it appears 10 that these two bedroom units are sort of the ones that tower over this part of the project, and that 11 these ones don’t really have that much problem. The curve of the street means that on the 12 property side adjacent to Jacobs Court there are what looks like four units that are on the third 13 floor. Two of them are facing a unit on Jacobs Court and two of them are mostly in front of that 14 unit that is on Jacobs Court. Because Jacobs Court is recessed because of the curve on El 15 Camino Way that provides that, and the rest of Jacobs Court does not appear to have the same 16 kind of impingement because of the entrance to that. So that is something that can be considered 17 there. 18 19 Perhaps Mr. Reller could answer a few questions if I may. There is a comment that the existing 20 commercial structures do not provide very much revenue to the City. I wasn’t even aware that 21 those buildings were used. I drive by and they look pretty decrepit to me. I am not sure how 22 much sales tax is generated by a service business like a barbershop. Perhaps you can talk about 23 the increase in property taxes that would accrue from this, because this is a for profit entity that 24 you are running, is that right? 25 26 Mr. Reller: Yes it is a for profit entity. I can’t comment on the – in your report you have what 27 the property tax increase change benefit would be. I don’t remember those numbers. There are 28 four businesses in there an architect, a barbershop, the African Cradle, the service for adopting 29 babies, and Love Bugs, lice removal. So they are in fact businesses that pay rent. They don’t 30 pay much rent. 31 32 Ms. Sloan: If you look on Attachment E, page 7 we have projected the impact fees and the 33 increase in property taxes. It is near the back of your packet. 34 35 Commissioner Keller: Thank you. So that is the impact fees and property taxes. Also, is there 36 sales tax that is relevant? Do you pay sales tax? 37 38 Ms. Sloan: Attachment E. 39 40 Commissioner Keller: I am looking at it, right. So the issue is not only – it is mentioned here 41 about sales tax from the people who are living there spending in Palo Alto. But I am wondering 42 in terms of the operations of Palo Alto Commons do you pay sales and/or use tax? 43 44 Mr. Reller: No. 45 46 Page 31 Commissioner Keller: Okay. And you don’t pay use tax for bringing things from out of state or 1 whatever? 2 3 Mr. Reller: No. 4 5 Commissioner Keller: Alright, one more thing if I may? There was a comment about Palo Alto 6 Commons basically having some sort of fee for rental versus a separate fee for service. 7 8 Mr. Reller: There is a base rental fee for moving in when someone is totally independent or very 9 independent. Then as services are needed that ramps up. 10 11 Commissioner Keller: So there are increased fees as people get to other levels of assisted living? 12 13 Mr. Reller: Yes. 14 15 Commissioner Keller: Great. May I make some comments? Thank you. So it seems to me that 16 first of all in terms of revenue to the City this is likely to provide more revenue than is currently 17 provided by these properties. I think that certainly has some significance. 18 19 I am concerned about a couple of things. Firstly, I am concerned about the adjacency 20 particularly of those two two-bedroom units looking on the unit towards the front of the Jacobs 21 Court property. I think that is of concern. 22 23 I think that considering that El Camino Way is a street that has a broad curve to it the idea of the 24 build-to kind of concept of the El Camino Real Design Guidelines doesn’t seem to make any 25 sense. Also, when you think about the adjacent properties being somewhat recessed it would not 26 from my point of view make sense to have this property have a build-to line on the sidewalk or 27 anything along those lines. 28 29 I do think it does make sense to think about the need for increasing senior housing. I appreciate 30 the people from the community talking about the nature of this facility and how it is a useful 31 addition to the community. I would just venture a guess that there will probably be between 32 1,000 and 2,000 senior units in Palo Alto. That is my guess. I don’t know for sure but that is 33 basically my guess considering Channing House and Lytton Gardens, and then almost 200 units 34 just built at the Campus for Jewish Life, and also the units that are already here. So an estimate 35 of basically the difference between 1,000 and 2,000, somewhere between those numbers seem to 36 be a reasonable guesstimate. So that would mean that this would basically be adding to the 37 senior housing stock somewhere between two and five percent additional senior housing stock. 38 So I think that sort of puts it in context. That is actually pretty significant considering there are 39 between 25,000 and 30,000 housing units in Palo Alto, and a graying of Palo Alto. I think we 40 are going to have to think seriously about how to add additional senior housing through 41 appropriate zoning. 42 43 I do point out that there really isn’t a residential zone that fits this for this kind of project. The 44 RM-30 basically has a limit to the number of units. It also has a limit to floor area ratio. So if 45 you had one concession you would actually need at least two one for number of units and one for 46 Page 32 the floor area ratio. I guess the parking has its own rule. It is not a concession. I think that 1 under RM-40 you also have that problem. So it seems to me that unless the amount of BMR 2 housing is at least 20 percent you wouldn’t be able to use the housing bonus density law unless 3 you could get two concessions. 4 5 I do think it makes sense to think a little bit about whether the project in and of itself and the 6 relatively inexpensive improvements across the way on the bus stop are in face adequate public 7 benefit considering that there has been a considerable escalation in terms of what is considered a 8 public benefit since the first part of the project was created. 9 10 I also note that the project does appear slightly overlap. It is not entirely on the new parcel. It 11 slightly overlaps on the existing Palo Alto Commons parcel. I don’t think there is anything 12 wrong with that but that is one of the reasons why this has to be a combined PC as opposed a 13 new PC for the new parcel, precisely because it straddles the property line there. 14 15 So perhaps some consideration of whether some number of BMR units for seniors might make 16 sense. I don’t know if that is worthwhile considering. I don’t know how the economics fit but it 17 would certainly strengthen the case from my perspective of the PC benefit. Thank you. 18 19 Chair Garber: Thank you. Commissioner Tanaka, Martinez and then myself. 20 21 Commissioner Tanaka: Thank you. First I have some questions and I am not entirely sure of the 22 process. So if we initiate the PC does it mean that we have a chance later to condition it or do 23 we condition it today? 24 25 Chair Garber: We do not condition it today. 26 27 Commissioner Tanaka: Okay, so it doesn’t necessarily have to exist as Palo Alto Commons to 28 modify. 29 30 Chair Garber: Exactly. 31 32 Commissioner Tanaka: Okay, great. I guess I will make a few comments for the applicants. 33 34 Chair Garber: Just to be clear, as Commissioner Tuma is whispering in my ear. The other 35 alternative is to deny. 36 37 Commissioner Tanaka: Okay, so we can initiate or deny. You don’t initiate with conditions. 38 39 Chair Garber: That is correct. Commissioner Tuma. 40 41 Vice-Chair Tuma: Even if we initiate that doesn’t mean down the road we couldn’t deny the 42 project. What we are doing tonight is just saying we want to a closer look, we want to hear more 43 about it, but that doesn’t in any way preclude or tie our hands from recommending denial down 44 the road if there are things that are not addressed. It is basically a nod that yes, this is worth 45 looking at further, you may be in the ballpark sort of thing, but it doesn’t tie your hands. 46 Page 33 1 Commissioner Keller: One question is, we can apply formal conditions but we could agree with 2 other people’s conditions and we might even do straw polls indicating the sense of the 3 Commission if that clarifies things for you. Is that reasonable? 4 5 Chair Garber: We could but I am not sure we will need to. Let’s let Commissioner Tanaka 6 make his comments. 7 8 Commissioner Tanaka: I looked at this project and whether it is this exact project or another 9 project it does look like a PC makes sense in some way, shape or form. I do understand the need 10 for senior housing. In fact I heard a stat similar, which is something like over half the people 65 11 and older today are living still. So that kind of tells you the need for senior housing. 12 13 I understand this project has to be economically viable and has to be a certain number of units in 14 order for this project to succeed financially. Projects have to be successful economically as well, 15 and I understand that. There is a concern that you heard from the community and I think 16 everyone appreciates that as well as my fellow Commissioners. I balanced that benefit, not 17 necessarily a public benefit, but that benefit with other impacts. One impact I see and I think my 18 fellow Commissioners have also is the intensity. The project is going from 5,000 square feet to 19 50,000 square feet. So I can understand the neighbor’s angst about this project. So I do think 20 that needs to be considered, and be sure that it contextually fits the neighborhood. Perhaps 21 considering a two story step-down into a one-story step-down would make sense. 22 23 The second part, and I know this is kind of a weak argument, I realize that the commercial is 24 small in this area and not very significant to the City. I worry about kind of the domino effect of 25 putting residential on El Camino. Maybe it makes total sense on El Camino but if we keep 26 putting residential on El Camino and pretty soon it doesn’t make sense for commercial 27 anywhere. This is extreme project, but I look at Hyatt Rickey’s and say that is a shame it is 28 residential now. So I am actually a bigger fan of mixed use, and maybe this project could use 29 some sort of mixed use aspect. It may make part of it more interesting, more beneficial to 30 everyone, to the neighbors, to the people that live there if they can go downstairs and buy 31 something perhaps, another source of independence. So I think this could be a better project 32 actually if there was a commercial aspect, a mixed use aspect. I think the City is actually 33 pushing for that. Not just the fact that the City’s finances are important, and that multifamily 34 generally costs the City money, while retail actually earns the City money. I think a mixed use 35 would be beneficial all around in some way, shape, or form. If you look at the existing parcel 36 some of it is CN and some of it is residential. So you put them together it kind of screams mixed 37 use in my opinion. It is not exactly on El Camino. It is not exactly on the right curve of the 38 street, but it is very close to El Camino, about as close as you can get without actually being on 39 there. There is a lot of commercial on El Camino Way so I can appreciate my fellow 40 Commissioners comments that at least there has to be some sort of compatibility so that it 41 doesn’t scream single family. So I guess those are some comments that I would like the 42 applicant to consider. I understand that this part has to become viable and I do think the City 43 needs more senior housing so I applaud your application. Thank you for bringing this forward. 44 Thank you for your work that you have done before on the original project. I think it also has to 45 be compatible to the neighbors and I hope you take that into account. 46 Page 34 1 Chair Garber: Commissioner Fineberg, then Martinez, and then Garber. 2 3 Commissioner Fineberg: So let me start by saying I am going to support the initiation tonight, 4 because I think there are some things about this project that are very, very good. So I want to 5 make it clear that I support the initiation, but I am also going to be very critical of some pieces of 6 what I have seen tonight. Hopefully as it comes back there can areas where there is change or 7 improvement. 8 9 The first thing I want to look at is in the required determinations for recommending approval for 10 a PC the code, Chapter 18.38.060, Section A says the site is so situated and the uses that are 11 proposed for each site are such characteristics that the application of general districts or 12 combining districts will not provide sufficient flexibility to allow the proposed development. We 13 have our 40, I think we have our 50, and the only thing I see that cannot be achieved by 14 traditional standard zoning is the number of units. There might be some differences in setback 15 that are more or less desirable. So the question hinges on do we zone PC simply to develop the 16 requested number of units? Then there are a whole host of negative impacts on the adjacent 17 properties, the residences especially because we are building those extra units, they are higher, 18 and they are closer. So that is the real dance that is going to have to get worked out as it moves 19 forward. 20 21 The reason right now I am supporting initiation is because of the single fact that our 22 Comprehensive Plan supports development of senior units, and there is something very special 23 with this project because the parcel is adjacent to Palo Alto Commons. It is the only place, I 24 shouldn’t say the only, but maybe the Goodwill or maybe if all of Jacobs Court sold, which isn’t 25 going to happen. It is a place where there can be significant increase in the capacity in a shared 26 common facility without increasing overhead, without increasing administrative costs, without 27 duplicating a lot of the services that are available in the main facility. That fact alone to me 28 outweighs that benefit, outweighs the loss of potential commercial property, the loss of sales tax 29 dollars. If this was something down the street where we could have a big box retail generating 30 big sales tax I wouldn’t feel as generous about that loss to the City. So it really tips the scales 31 that adjacency, just totally tips the scales. 32 33 Preliminary plans, our Municipal Code defines the application process and what is supposed to 34 be in it. It talks about specifically development plans in Section 18.38.090. It talks about aerial 35 photographs of the site and the adjacent land within 250 feet. It talks about maps showing public 36 and private streets for the proposed building sites, areas that are dedicated and reserved for parks, 37 pathways, playgrounds, schools, a map showing the existing and proposed topo and contours. It 38 talks about landscape development plans, circulation plans, parking and loading plans, 39 preliminary design plans with schematic blueprints, schematic exterior elevations. I don’t think 40 we have gotten that tonight. I understand they are only supposed to be preliminary for tonight, 41 but given that I don’t even have any sense of where the big building blocks are going to be I 42 think it might have been better to come to initiation with some simple drawings showing where 43 the building blocks would really lay in your current thinking. 44 45 Page 35 There is a danger because we talked about how we have initiation. I think I have seen four PCs 1 so far and initiation of a PC is like a snowball on an avalanche hill. What happens is there is 2 Planning Commission initiation, then there are a bunch of ARB meetings, then are bunch of 3 public meetings, there are a bunch of meetings with neighbors, and then the applicant comes and 4 says we have invested X-hundred thousand, we have had X public meetings, how can you say no 5 now? You have to say yes because we have invested all this. I am not pleased when I see that 6 happen because that is not in the best interest of the City or its residents or the neighbors, or 7 Council. So getting it right as you go through the process adds tremendous value. So please go 8 to another hearing, go in with the plans that you are thinking about that are current. 9 10 I would like to echo Commissioner Tanaka’s comments that the loss of retail is not good, but 11 again as I commented before that I think in this case the public benefit outweighs that. I would 12 also like to echo Commissioner Tuma’s comments that when you discussed it at previous PTC 13 meetings that senior housing does have a kind of a boomerang effect. As the residents move in 14 they move out of a three or four bedroom home and a young family with kids moves in. How 15 that would be addressed as a PC is obviously up to the negotiation between the applicant and the 16 City. Understanding there can’t be a required impact fee but to say there is no impact on the 17 schools is on its face not accurate. 18 19 Ultimately, as I look forward I have concerns now that I will have to see how the project 20 develops, but my concerns will be on the impacts on the neighbors both in terms of height, in 21 terms of noise, and in terms of adequacy of parking. I have yet to hear a single applicant within 22 the City of Palo Alto come forward and say we have a parking shortage. So the fact that there is 23 the applicant’s data doesn’t settle me in terms of parking. If I was there three times a week and I 24 saw the parking lot was three-quarters empty I would have a better sense of that is more than 25 adequate, but I am not there. I think City Staff needs to confirm that independently from the 26 applicant data. That’s it. 27 28 Chair Garber: Commissioner Martinez. 29 30 Commissioner Martinez: I have to be quick it is getting late. I visited Jacobs Court for the first 31 time on Saturday. I was just amazingly impressed with how beautiful it is. I did a slide show for 32 my office on Jacobs Court. For this project you are going to be working with an architect that I 33 respect very much, and I think has a very talented firm. I think they are quite capable of 34 addressing some of that or all of that interface problem. I would like to see them begin to break 35 down that long elevation that faces onto Jacobs Court and begin to reflect some of the character 36 we see in the international style influence of Jacobs Court. 37 38 The second thing, and related to that, is my experience is that these long double-loaded corridors 39 don’t work for people with dementia or cognitive problems. That may also be something that 40 you can work towards in resolving the sort of exterior problem that you are faced with. 41 42 Finally, I say this every time we get a project on El Camino, in this case near El Camino. Every 43 time we get a project that builds on a property line we lose a little bit more of the historic 44 character of El Camino Real. If you drive down South El Camino Real what distinguishes it 45 from Mountain View or Menlo Park or the other side of University is the sense of open space. 46 Page 36 Every project historically has not filled the site property line to property line. Soon or later, 1 hopefully sooner, we as the Planning Department and Commission need to address what is 2 happening to our historic properties. Thank you. 3 4 MOTION PASSED (7-0-0-0) 5 6 Chair Garber: I am in general support of my colleagues here. I did have a bunch of comments 7 but I think most of them have been iterated so let’s vote. I will close the public hearing. All 8 those in favor of the motion as stated say aye. (ayes) All those opposed? The motion passes 9 unanimously with Commissioners Tanaka, Martinez, Fineberg, Garber, Tuma, Keller, and 10 Lippert voting yea. 11 12 Thank you very much everyone for staying for so long. We will take a break. 13 Page 1 Planning and Transportation Commission Verbatim Minutes January 26, 2011 4041 El Camino Way*: Request by Stephen Reller to amend the existing Palo Alto Commons Planned Community zone by expanding it to add a 44-unit, three-story, senior assisted housing facility on a 0.83 ± acre site. Environmental Assessment: An Initial Study has been completed and a Draft Mitigated Negative Declaration has been prepared in accordance with California Environmental Quality Act (CEQA) requirements. Commissioner Garber: I would like to disclose that I met with the project’s attorney and the project’s architect on Thursday, January 13 for about 40 minutes or so. the things that were discussed at the meeting, and I will note that at that time the Staff Report had not been issued, so I did not know what was on or off the Staff Report at that particular time. I started out by informing them of the rules of the meetings that this cannot be a serial meeting, they cannot share with me anything else that they have discussed with any other Commissioner if they had had those meetings. I could not decide to make a decision until the public meeting on their project. That they should not interpret my questions as leading to any conclusions, and I went through the list of the requirements that we created in our rule list. The content that we talked about included a number of things that are actually found in the Staff Report, but let me just read from my notes here. They mentioned that elderly housing project in Palo Alto is a PC to accommodate the density of these types of projects. They have used the underlying CS zone and RM-15 zoning area of the parcel as a rough guide to the portions of their project that have three stories, and the two story areas. Three that they review the issues that were raised by the PTC at the last hearing that focused on issues of density, adjacency, etc. This issue included increasing the project setback from the neighboring building to the north and the R-1 houses to the east. They apparently made some modifications to the project to accommodate those comments, also, lessening the impact of their project’s wall that faces their neighbor to the north, Jacobs Court, by breaking into planes that are setback from each other, and three, increasing the landscaping screening between the two buildings. They emphasized that they met with several of the neighboring building occupants to understand their views from their units, and work with them to define the best location for the larger oak trees that are being relocated from other parts of the site. They mentioned that the project is/will be a licensed elderly care business and as such has to follow the state requirements, which include that no children are allowed and that occupants cannot be less than 60 to 62 years of age. They then reviewed the parking briefly. They had eliminated the second ramp down to the new parking and they learned that several of the existing parking stalls in the existing establishment had been used for storage and they would be returned to functional parking spaces as part of this project. They had also learned that several of their employees had been parking in the street and that practice will be stopped as a part of this project. I had asked, but they had not done, a calculation Page 2 to learn how much parking would have been required if the project was designed simply with the underlying zoning. That was the extent of our conversation. I am happy to answer any other questions that any other Commissioners might have. Chair Tuma: Commissioner Tanaka. Commissioner Tanaka: I also met with the developer from Palo Alto Commons on January 18. I met with Rob and Steve. Commissioner Martinez also accompanied me at that meeting. Also at the meeting was the President of the Jacobs Court HOA as well the Secretary. I don’t want to repeat all the things that my fellow Commissioner, Commissioner Garber, just mentioned. We talked about very similar items. I am going to try not to be repetitive here. They mentioned that PC is required in order to accommodate the number of units because they are smaller units. PCs require that Staff will be parking in the garage going forward. Some of the Jacobs Court opinion was that they kind of like it the way it is because they have more light than they will in the new configuration. It seemed like they thought the parking problem would be solved if the employees did park in the new garage. We talked a little bit about the economic impact, which it looks like our Economic Manager has done some analysis, so that is great. I think everything else has been discussed already. So any I missed Commissioner Martinez could probably fill in. If there are any questions for me from the other Commissioners I could also answer. Thank you. Chair Tuma: Thank you. Commissioner Keller. Commissioner Keller: I received a phone call from the applicant. I was in the middle of something and asked to receive email with any information that they wanted to send. The only thing that I received by email was contact information, no substance of the project at all was in the email. I am still wondering why the information that my two Commissioners to the left wasn’t in the Staff Report in some way or form when it could have been available to the public or anybody. In particular, the Staff Report does not list what changes were made, explicitly what changes were made from the last time as a Staff item. It does not list the recommendations made by the Commission last time and whether those things were held or changed. Those things should be in the Staff Report also. In other words, what the responses were to the Commission’s recommendations. With those we would have had less issues that would have come up separately. Thank you. Chair Tuma: Just as a note, Commissioner Keller, I shared your concerns with respect to what was discussed last time, the issues. I believe that Staff is prepared to and will go through that this evening. They also acknowledged and agreed that that information would be helpful to have in the Staff Report, and they will endeavor to do that in the future. Commissioner Keller: Thank you. Page 3 Chair Tuma: Vice-Chair Lippert. Vice-Chair Lippert: I was contacted by the applicant’s attorney as well as the applicant’s architect by telephone. I declined to enter into a conversation with them regarding this project. However, in the interest of full disclosure I did run into the applicant’s architect at the movies. We saw Barney’s Version. We did sit next to them. The film length was two hours and 12 minutes. It was at the Guild Theater. I think we were both in agreement that it was an enjoyable film. It was rated R. After the film finished we did not discuss the film or the project at all. We left the theater separately, and our wives did sit between us, so we didn’t hold hands. Chair Tuma: Commissioner Martinez. Commissioner Martinez: Yes, actually I met with the applicant’s architect on two occasions. The second one I will talk about first. I was asked by Commissioner Tanaka to join him for a meeting at Palo Alto Commons on the evening of the 18th with the architect, the applicant, and two members of the homeowners association. That meeting last I think about an hour and a half. I think it was nine o’clock before we left. Much better than the meeting I had prior to that in my office on January 4 where I meet with the architect alone. I am in agreement with Commissioner Tanaka with what was discussed. In addition I had three concerns, which I asked the architect to address. These I will talk about more as we have our comments later, but they had to do with the setback to the neighbors, the kind of frontage to El Camino, and parking. I learned a lot from that meeting. I think I don’t know, convinced, but certainly the nature of that meeting, I want to thank Commissioner Tanaka for inviting me, was very helpful to all of us, to the neighbors, to the applicants, to ourselves in understanding any differences, what attempts there were to resolve them, and really our attempt that we had in that forum, which was different than now to really have an exchange and really ask is this or has there really been an attempt to really address this, and is there any more that could be done. I will talk a bit more about that. A very positive meeting and again I want to thank everyone for asking to me to be there. Chair Tuma: Commissioner Fineberg. Commissioner Fineberg: I received a voicemail from the applicant, which I did listen to, and I did not respond to. So don’t know whether a one-way contact counts as contact. I would like to also echo Commissioner Keller’s concern that if these meetings were early enough the information that was garnered in what seems from self-reporting to be over two hours worth of meetings could have been shared with members of the public so that if there were any substantive learnings that took about 15 minutes to disclose the members of the public and other interested parties could have had a chance to learn those things and be prepared tonight to deal with those matters. Page 4 Chair Tuma: Okay. Just as a reminder, the rules that we set forth indicated that we would make these disclosures at the meetings at the time of the items coming before us. I also had a meeting with Mr. Steven Reller on January 24 for approximately 30 minutes in his office. We discussed the fact that they had had subsequent meetings with the residents to talk about the various issues that had already been raised. He in particular indicated that the meeting that they had had with Commissioner Tanaka and Commissioner Martinez and the homeowners association was productive in terms of sharing of ideas and resolution of some of the issues. I specifically raised issues regarding the setback for the neighboring buildings. He then walked me through the plans, which I am sure we will see again tonight indicating what the setbacks where and the height of the various different portions of their building that faces the neighbors. We talked about the parking and parking spaces, and also how the underground parking could be better utilized. He indicated that there would be some additional presentation on that tonight as part of their presentation. So I think that will interesting to hear. Also, he explained to me one of the new public benefits that is being offered as part of this project which is the installation of a crosswalk with lights go across El Camino Way, and an enhanced bus shelter. I think we will see those in the plans tonight as well. I raised with Mr. Reller an issue that had not been raised before, and that has to do with the traffic situation on El Camino Way at El Camino particularly with respect to the back up of traffic coming out of the Keys Schools during the time when the school is letting out. I expressed some concerns regarding how the new crosswalk as well as additional residents and traffic generated by this project could potentially exacerbate the problem that exists there now. It is also an issue that I raised with Staff during our pre- Commission so I will be interested to hear what comes as a result of that. That was the substance of my 30 minutes with the applicant. I believe Commissioner Garber has something additional he wants to add. Commissioner Garber: I was simply going to ask Commissioners Tanaka and Martinez if they could characterize the meeting, but Commissioner Martinez already did that so never mind. Chair Tuma: Okay, great. Thank you, Commissioners. With we will go to Staff for their presentation. Thank you. Ms. Jennifer Armer, Planner: Good evening. Tonight’s meeting is the formal review of a proposed revision to the existing Planned Community zone that will now be attached to the address of 4041 El Camino Way. Two commercial properties and one residential property are proposed to be rezoned to PC and combined with the existing PC zone for the existing Palo Alto Commons Senior Assisted Living Community. Page 5 The preliminary review of this project was held at the Commission’s meeting of June 16, 2010, and the project was initiated at that time. The Commission requested additional information on a number of issues at that hearing. These issues can fall into six categories including environmental review, the feasibility within a PC zone, the need for a PC zone for this project, project design, parking, and economic impacts. The environmental review subject, the Mitigated Negative Declaration that you saw in June has been updated and corrected in accordance with City and State policy including a few typos, consideration of public comments, and most significantly a new Greenhouse Gas Emissions Standards section addressing the new standards that have become available since the initial preparation. In terms of the feasibility without a PC zone the existing and standard zoning available would not allow the proposed unit density as it does not take into consideration the small unit size for senior housing and the greater need for indoor space rather than outdoor space for these residents. There is a density bonus law that includes bonuses for senior housing, which was considered by the applicant when reviewing the existing zoning, but it does not provide for any concessions as the affordable housing portion of that lot does. It is difficult to apply this law when the property has multiple zoning designations once. As far as the need for a PC zone in this case Staff sees the public benefit for this project as being the fact that it is a rental senior housing facility with facilities for aging in place. So Staff is recommending a Planned Community zone for this type of project because the public benefit is truly integral to the project not just added on. And, because small senior housing units and their unique character were not taken into consideration with the currently available zones in the Zoning Ordinance. The proposed unit per acre is above what is allowed in the zoning, but with the 86 persons per acre proposed it is within the eight to 90 persons per acre allowed within the sites multifamily residential designation of the Comprehensive Plan. Therefore is part of the goal of the City. The need for a PC zone for this type of project can clearly be seen in that there have not been any other senior housing facilities successfully approved in Palo Alto without the use of a PC zone. As to design concerns expressed by the Commission mostly I believe those were in relation to the height and the building’s relationship to the adjacent residential as well as to El Camino Real. These issues were addressed in the revised designs and through three meetings with the Architectural Review Board, but I will let the architect go into more detail as to those changes. For parking, parking is also an issue that the applicant can address more fully, but you were provided a Transportation Report that goes into more detail. You will see that in the plans the size of the underground parking garage has significantly increased. The applicant is considering changes to their current parking policies in terms of who uses the private parking that they have. The final item discussed at the last meeting was concerns about the change of use and the economic impacts in terms of loss of commercial and tax impacts. Staff has prepared a Page 6 memo describing the maximum possible retail on the existing retail sites, and the potential tax from that which is pretty insignificant in comparison to the City as a whole. It does give you some of those numbers as well as looking at some of the tax information provided by the applicant. A more complete analysis will actually be put together before going to Council. In addition, Commissioner Tuma’s question and concerns about the traffic from the Keys School, Staff has had conversations with the Keys School in response to those concerns, and is in discussion about their pick up and drop off times. In particular, the afternoon pick up time and whether there are things that can be done to expand the period of time for children to be picked up. It does appear that there currently is a shorter period of time for pick-ups than was described in the traffic report when that project did go to Architectural Review and was approved. So there is a possibility for working with them to try and bring that closer to what was reviewed and approved previously and hopefully reduce that impact in the area. So Staff feels that the applicant has addressed these issues adequately through their work with the Architectural Review Board to improve the building designs, and through additional submitted information in regards to parking and transportation impacts. The applicant has clarified the proposed public benefit for the project, which is first and foremost the intrinsic benefit of the senior housing but it is also augmented by public facility improvements and a donation as described in the project description and tonight’s Staff Report. Based on the discussions in the Staff Report and the items just mentioned Staff believes that the package presented by the applicant meets the findings for the Planned Community zone so that we can recommend approval of the PC zone change and associated environmental review. We do have the property owner and architect here available to expand on this information and to answer any questions you may have. Chair Tuma: Great, thank you very much for that. Next we will go to the applicant. I have a card that indicates that the presentation will be given by Mr. Reller and Mr. Steinberg. You will have 15 minutes. Welcome. Mr. Steven Reller, Applicant: Good evening Chairman Tuma and members of the Planning Commission. My name is Steven Reller and I am one of the project applicants. I would like to start by thanking Jennifer Armer and the Planning Staff for all their hard work on this project. The project before you tonight is the addition of 44 units to Palo Alto Commons, down from 45, which was proposed back in July. The Commons is senior rental housing that includes several care levels including dementia care and assisted living. At the Commons we balance personal privacy with the personal assistance some seniors need with daily tasks. Senior housing, in particular senior rental housing, is in great demand. As we live longer we find that an increasing number of seniors need a helping hand with daily tasks and/or memory support. Page 7 Senior housing is a good neighbor. This housing brings no children to impact schools, very little noise, and relatively little traffic especially at peak times. Over the past two and a half years we have considered many different design options and orientations for the new building. In this time we fine-tuned the design, looked at how and where to move two large oak trees, conducted parking and traffic surveys for the new and existing facilities, and met with neighbors six or seven times. Since July the project received unanimous approval from you all to continue as well as unanimous approval from the ARB. We are hopeful that after you see the plan tonight you will see it fit to approve, perhaps unanimously again. The proposed building while larger than what would otherwise be allowed is the best option for this parcel and for the City. An alternative development that would not require a zone change while smaller in overall size could easily have greater impacts on the neighbors. This is a great opportunity to add senior housing where it would otherwise be impossible. This type of community at this small size only works because of its adjacency to the exiting Commons and the subsequent sharing of operations. Now our architect, Rob Steinberg will explain the design in more detail, as well as the changes that have been made since July. Also here with me this evening to help answer any of your questions are Sue Jordan, the Executive Director of Palo Alto Commons, Robert Eckles, our traffic consultant, Paul Lettieri our landscape architect, and Sandy Sloan our attorney. Thank you. Mr. Rob Steinberg, Steinberg Architects: Good evening Mr. Chairman and Commissioners. We are glad to be with you this evening. I will give you a quick overview of our project. Our site is located on El Camino Way just off El Camino. It is about 36,000 square feet. Our site is in red. Adjacent to us on the left is multifamily Jacobs Court. We have two single-family lots just north of us. This is the existing Palo Alto Commons and Goodwill on the corner. In the middle you can see a composite photo of the streetscape. It is a little hard to read but down below there is a drawing that shows the heights, the massing in context even though there are a lot of ins and outs here. You can generally begin to see the massing and the scale of the site in the context. I want to just remind you that we are merging the old or existing Palo Alto Commons with the new one into a combined PC zone. Now the last time we met we showed you a site plan that was sort of a C or a U shape around a major existing oak tree. On the left adjacent to Jacobs Court was a new garage ramp that led you underneath the garage so there was some activity on this side. On the right side you can see the profile of Jacobs Court, the property line, and the exiting building that we showed you last time we met. Now when we met last time we heard several things from you. We heard that you were giving us unanimous approval to proceed with this process, that you felt it was a good use and the right location, but you did have three concerns that you asked us to take a look at. One was the relationship with Jacobs Court. The second was the curb location and the Page 8 garage entries. Third was the parking. We have tried very hard to listen to what you asked us to look at, to work with our neighbors, and to work with the Staff in order to come back with something tonight that we hope addresses that. So for example, our basic plan configuration is still sort of a U or a C shape around this very major oak tree, but in addition to a single wall we actually have one, two, and three steps that vary the relief and the variety and they get larger as you go deeper into the site. In our section we have taken three steps to try to mitigate the sensitivity to our neighbors. First of all, we have increased the setback from 27 to almost 34 feet. The second thing we have done is we have increased the variety of ins and outs along that edge so instead of having a solid wall there is a variety of articulation of shadow that again will breakdown the scale. We have also had meetings with our neighbors actually out on the site so we could relocate two pretty good size oak trees between us that would give privacy that would balance light, and certainly avoid any future maintenance issues. This is a view from our neighbor’s property and I feel that there is a lot of variety both horizontally as well as vertically. We have taken pieces of the building and brought it down. Other pieces are different material masonry and are two-story, a lot of ins and outs and variety. You will see that with the balconies we have not pushed them out in aggressive fashion to our neighbors but we have actually recessed them in to be sensitive to both the existing neighbors and the new residents. The second issue that you asked us to look at was the driveway and the entrance to the garage. The last time we saw you there was an existing entrance into the existing Palo Alto Commons here, and we were proposing a new garage entrance along Jacobs Court into our proposed building. Currently we have eliminated that. What we were able to do is take the existing curb cut that goes into the existing building and add another leg off of that that took you into our building eliminating the conflict, the noise, the interface, and potential problem with our neighbors. The third thing that you asked us to do was to examine the parking. So the first thing we did was retained a parking consultant and asked them to evaluate the existing as well as the new, the combination, the individual requirements for residents, for guest, for staff, and to make recommendations to us. in order to meet their recommendations we have increased the parking in the garage from 29 parking places, you can see here were it only partially under the building, to 38 spaces where we have gone all the way under the building in order to meet the recommendations of our consultant. The second thing that came up relative to the parking was visitor parking. How is this going to impact the neighbors? Well, the parking consultant said you have to have 15 parking spaces for visitors. So we have three in our new, one, two, and three. We also have an additional two that are short-term drop offs so there are really five. We have an additional seven under the existing building we have guest parking in front of the security screen, and we have seven spots on the existing lot. So where we were required to have 15 we have provided 17. As I mentioned to you, we are not on El Camino per se, but we wanted to be respectful to the spirit of the El Camino Real Guidelines. So we have designed a building that we feel Page 9 tries to mediate between commercial and residential users and context. In addition to providing much needed rental housing for the senior population here in Palo Alto we propose a design that really combines the best of California indoor/outdoor living. This is a view, if you pulled up in your car and you were a visitor we have made a glass wall on both sides of the lobby where you look right though to that oak tree. We are trying to make the inside and the outside one. Not only do we feel that the design compliments the adjacent neighbors but I firmly believe that this is going to be a dignified environment that not only encourages socialization and connection between residents but provides a sense of home. As Staff pointed out, generally the addition of providing much needed senior rental housing would meet the public benefit. In addition to that we are providing improvements to the existing transit stop, the bus stop, landscaping, and connections through the neighborhood not just for our site but for the whole district, as well as a contribution for a social worker for low income seniors that choose to stay in their home that would be administrated by Avenidas. So we would look forward to your support tonight in order to move this community resource and this project forward. Thank you. Chair Tuma: Thank you. Mr. Steinberg, before you leave the podium, I just want to on behalf of the Commission, myself and others, express our condolences on the passing of your father. I know this has to be a difficult time for you and we just wanted to let you know we were thinking about you. Mr. Steinberg: That is very kind of you, thank you. I appreciate those thoughts. Chair Tuma: Thank you. We will now go to the public. We have an increased stack of cards, which are now 12 speakers. You will each have three minutes. If you wish, it is not required, it may perhaps be helpful to identify where you live when you are speaking. Again, it is not required, but sometimes with projects like this it is interesting for the Commissioners to know where speakers live with respect to the property. Again, not required, but it is something you may want to consider. Our first speaker will be Marlene Prendergast followed by Ramona Cole. Welcome. Ms. Marlene Prendergast, Palo Alto: At the risk of being redundant I am just going to say quickly what I said last time, which is I have had some 25 years of experience in housing planning, development, and management, and initiating and managing BMR programs and so forth. What I think about this project is it fits in a place where it is needed. That is, rental housing for seniors of moderate incomes. We have I would say almost plenty for the high-end incomes in Palo Alto and the surrounding area of assisted living and the sort. We have never enough, but we have quite a number of low-income senior housing with services and some assisted living. This fits a niche that I think is needed and I am sure as other speakers will say, there are plenty of us who hope to stay in the community when we need that kind of housing. Thank you. Page 10 Chair Tuma: Thank you. Ramona Cole followed by David Mitchell. Ms. Ramona Cole, Menlo Park: Good evening. I currently live in Menlo Park. I was a Palo Alto resident however for 20 years, from 1966 to 1986. My husband and I raised our three children in the Palo Alto school system and owned five different homes here. One of which we purchased for my elderly mother-in-law close to where we lived. When she became unable to live on her own how I wish Palo Alto Commons had been available and thus an option. In support of the current project proposed as an addition to the current Palo Alto Commons I see it as a win/win for not only the City of Palo Alto, but for the aging population and their families in our area. Contrary to a housing development per se occupied by families the already overcrowded schools will not be impacted by this project as the residents would all be adults. We are all aware that projections show we are all going to be living longer and consequently ultimately may need this kind of facility offering assisted living. Palo Alto Commons has been meeting this need for the past 20 years. The demand for more units has become apparent. Thanks to the continuing efforts of the Reller’s this addition to the Palo Alto Commons is now a possibility if approved. The current location is ideal as it offers public transportation as well as in-house transportation when needed. Thus the traffic impact is and would be minimal. Please consider this win/win addition to an already proven facility meeting the needs of a portion of our aging population who are able to live with dignity while being lovingly helped to continue their lives in a meaningful way. Chair Tuma: Thank you. David Mitchell followed by Anne Loftis. Mr. David Mitchell, Palo Alto: Good evening. We live in the Crescent Park of Palo Alto. We have resided in Palo Alto with our family for 46 years. Now that we are seniors I am delighted to see the amount of senior housing that we have in Palo Alto now, and thrilled to see that we are going to be getting additional rental housing, we hope. There doesn’t seem to be enough. Most people who live here want to be able to stay here. I certainly hope that we are able to do that. I will not repeat the things that were said by the last two speakers in response to your request, but will join in their remarks and second them, or third them or whatever it is. I very much admire the commitment of the Reller’s to this community and their 20 years of perseverance with their present outstanding project. I know that the addition will make the project even better. Thank you. Chair Tuma: Thank you. Anne Loftis followed by Millie Kohn. Anne Loftis? Ms. Anne Loftis, Palo Alto: My husband and I have lived in this area for 59 years. Some of that time we have been on the edge of Palo Alto, but we have always been within the Palo Alto School District. Our three daughters graduated from Cubberley and Gunn. Page 11 My husband developed the symptoms of Alzheimer’s disease a few years ago and about two and a half years ago he was attending a daycare program but was told that he could no longer come. That he would be dropped. This is a tremendous shock to me and I was wondering how in the world I would manage even with the help of a helper who came to take care of him for 24 hours a day. So we moved into the Palo Alto Commons and it has been a most amazing experience. He has I think if anything improved, and he is very happy. I have found a piece of mind and freedom and friendship in a facility, which is in a neighborhood that is very familiar to me from having lived here so long. I was told about the new facility. One of the advantages I believe is that it will be available to the relatives of patients in the old facility who wish to live in a fairly independent way, and yet will have the access of going back and forth to see their husbands, or brothers, or sisters, or whoever is living in the present day Palo Alto Commons. So I think this would be a – I could recommend this as a wonderful opportunity for people in the community. Thank you. Chair Tuma: Thank you. Millie Kohn followed by Colleen Coleman. Ms. Millie Kohn, Palo Alto: My husband and I have lived in this area for over 30 years. He did precede me to Palo Alto Commons. I lost my sight sufficiently to be unable to drive seven years ago. I was left in my condominium trying to plan for food and thinking about hiring a helper. I thought that was not a very pleasant prospect, so I moved into the Palo Alto Commons and I am relieved of the all the daily chores. I get very good food and lots of companionship. I have a beautiful apartment where I have complete privacy. One advantage of Palo Alto Commons is that it is privately owned. So the residents have a lot of power of getting their way if they have any complaints or wishes or good suggestions. I would recommend it highly. Chair Tuma: Thank you. Colleen Coleman followed by Bill Hahn. Ms. Colleen Coleman, Palo Alto: I am Colleen Coleman Hahn because Mr. Hahn and I were married a year ago. I just wanted to make the name clear. I am very happy and content at the Palo Alto Commons. I just want to commend the management and the staff who do an outstanding job of creating family atmosphere, and warmth, and it really does become your home. I have been there for six and a half years. When I moved in with my former husband six and a half years ago we thought we would be needing more assistance. As things turned out I am very healthy and I was able to take care of my husband until he died in 2006. Hearing that this is going to be open maybe to more 70-ish people, because I felt very young in my 70’s when I moved in there six and a half years ago, I think it is a wonderful option to have for those people who are needing some assistance or maybe none but are looking ahead to the time when they will need that. So I am just very supportive and hope to see this project go through, because I think it will be such an addition not only to my own personal self but to those who come along later on. I think it is for people who are heading into this part of life that Page 12 we are in the midst of it would be a very good option to have these new units open for people who are a little bit younger than we are. It would be nice for my age to have these younger people around and it will be wonderful for them. So, thank you Commons. Chair Tuma: Thank you. Bill Hahn followed by Bob Harrington. Mr. Bill Hahn, Palo Alto: For 50 years my first wife and I lived in our home in Los Altos Hills as your neighbor. We moved into the Commons in August 2007. My wife moved into the Meadow Wing which is part of the existing facility and I lived without needing any assistance in the other part of the facility. My wife had arterial fibrillation in her heart and hydrocephalus in her head, and also had dementia that is why she was in the Meadow Wing. I have eaten dinner with my second wife, Mrs. Hahn that talked to you last, since we moved into the Commons. We have learned to know each other since we have been together. We were married in 2010 and have lived together for one year, and have lived together without any assistance. The Commons has taken care of us in a very good way during our time together. This would look like I could have moved into the new part if I had been in here when it had been existing, and then after I married I still could live in that new section. We wouldn’t have to have the Meadow Wing where my wife was. Thank you very much. Chair Tuma: Thank you. Bob Harrington followed by Tracy Herrick. Mr. Bob Harrington, Palo Alto: I have been a Palo Alto resident for 41 years, the last 32 years on Fulton Street, Christmas Tree Lane. About 25 years ago I appeared before the City Council to advocate for a much-needed senior living facility offering month-to- month rentals, Palo Alto Commons. Needless to say the test of time has proven the Commons model, management, and location to be remarkably successful. About a decade ago I became a member of the public who benefited. My mother moved into the Commons. All of our family members in the immediate area, and there are dozens, were able to visit mom for the two-plus years that she was at the Commons. It was a terrifically positive experience for all of us. Palo Alto Commons is a tremendous asset to our community and this addition just seems to be perfect common sense. Thanks. Chair Tuma: Thank you. Tracy Herrick followed by Bob Moss. Mr. Tracy Herrick, Palo Alto: My wife who is with me here and I live at 1150 University Avenue. We have lived there for 41 years. In my work, which has taken a lifetime, it has focused on evaluation of management. It has taken me all over the world to all kinds of concerns and businesses. My comment today is that the management of Palo Alto Commons in its 21 years of existence, which I have observed, is truly outstanding. I am not talking about the kind of reports that are state reports for examination, which look at who well the floors are waxed or the dishes are washed. I am talking about what is important in this type of organization. The management has shown that it does offer Page 13 care. It has shown that it does offer peace to those who are there. It does show that it has offered them hope, which is something that is very essential in a community of this type. Such an organization deserves rewards for its achievements. I believe that is the proper approach. The reward to the community is that it should have more of this type of facility available to it. The reward for the people who own it and operate it they should be allowed to expand their activities as well. I think that those that make decisions about the activities of this Palo Alto Commons North and whole organization deserve the rewards as well. I support this recommendation. Chair Tuma: Thank you. Bob Moss followed by John Sink. Mr. Robert Moss, Palo Alto: Chairman Tuma. I live in Barron Park about half a mile from the site and I have driven past it twice a day for the last 28 years-plus. So I am quite familiar with the area. The Staff Report has some odd statement in it that I want to correct. On page 4, BMR housing requirements, it says that there are none for rental housing. Since when? The Montage Apartments at 4020 El Camino directly across El Camino have required BMR units. Then 195 Page Mill that a few of you may have heard of was offered with 15 percent BMR units in a rental project. As far as I know rentals (BMRs) are required in all housing, ten to 15 percent. The second strange comment is in Policy Implications where it says that the project is consistent with the Comprehensive Plan designation and policies. A little over a year ago the City Council passed a Policy Resolution stating that they did not want any commercial or residential sites rezoned and redeveloped for housing. That is a Council approved policy. Now it is true that the Comprehensive Plan doesn’t include that but the Comprehensive Plan is in the process of being updated. Now, that having been said, the particular commercial properties that are being converted are not exactly prime. There is a barbershop and the rest is primarily offices and has been for decades. So I don’t think it is at all inappropriate to rezone this for a good use like senior housing. I think it is appropriate in this particular case because of the location, especially because it is directly adjacent to the existing Palo Alto Commons, which has been quite successful. I think the changes Mr. Steinberg made to the design have improved it from what was originally proposed. So I think that is all to the good. I do have a couple of suggestions that might improve it somewhat. I think the FAR, particularly compared to the existing Palo Alto Commons, is a little high. The reason is that 20 of these units are two bedrooms. When your original project was built there were no two-bedroom units but some of the units were designed so that they could be combined. I remember talking to Bill Reller and I said you are going to find that those are going to be very popular. He said, no, no seniors don’t want two-bedroom units. I believe the first four or five units that were rented they insisted on combining them to two bedrooms. So there is a desire for it. But if perhaps ten percent of them, say two to four Page 14 of those units, were reduced to one bedroom it would make the building smaller and reduce the FAR. Second, this is a PC. PCs have been giving me heartburn for 30 years in this town. The problem is the public benefit. One of the public benefits is giving $100,000 to Avenidas. The problem is that that benefit is going to be consumed. I would suggest that we try to get some BMR units in this project, which would be an ongoing public benefit and more properly justify the PC. Thank you. Chair Tuma: Thank you. John Sink followed by Steve Player. Mr. John Sink, Avenidas: I am Vice President for Programs at Avenidas. I am here to speak in support of the City’s older adults and the need for additional rental housing. Avenidas provides two part-time information and assistance specialists to help folks find information about and solutions to their issues. Over 1,200 families each year contact us for this kind of help. The most common topic of all questions asked is about housing. The second most common type or questions are about in-home help. We tell folks about housing options for older adults. These include market rate rental housing options, below market rate rental housing, retirement residences where you purchase, Alzheimer’s and dementia care residences, continuing care retirement communities, and the differences between various options. Our information and assistance specialists tell me that demand exceeds supply for rental housing. This is a project that should be supported in order to increase that supply. What is more, we think Palo Alto Commons is doing it right. Avenidas supports the development of neighborhoods that are senior friendly and close to public transit. Here we see another strategy whereby families are allowed to remain together in the community even when a member needs assistance. We think this is a good model and recommend it for your positive consideration. Chair Tuma: Mr. Sink, if I may one of the Commissioners has a question for you. Mr. Keller. Commissioner Keller: Thank you. I understand the $100,000 is for that kind of service. Is that right? The services that you are talking about? Mr. Sink: The services for? Commissioner Keller: The $100,000 donation that is being proposed with the project, would that go to Avenidas for the information service that you are talking about? Mr. Sink: I believe the conversations that we have had have to do with our social worker that is devoted to serving low-income folks. It is a separate position then the two information and assistance specialists. It is a Master’s level social worker that does case management. Page 15 Commissioner Keller: Okay, that is very helpful. How will you handle the fact that the funding is I assume a one-time payment? Will that increase for a year and then decrease after the payment is gone? How will you deal with that? Mr. Sink: I don’t understand the question. It is an existing position that we raise money for now. Commissioner Keller: So this will be $100,000 towards that existing position. You will not increase it, and afterwards you will go back to whatever you are also doing for fundraising. Is that correct? Mr. Sink: I believe that is correct. Commissioner Keller: Okay, thank you. Chair Tuma: Thank you, sir. Steve Player followed by Tom Reese. Mr. Steve Player, Palo Alto: I live at 1874 Guinda Street. I am just here to talk in support of this expansion of Palo Alto Commons. I can talk from first hand that this is a very special place. My mother was a resident of Palo Alto Commons for approximately two years prior to her death. It was a lifesaver to her. I can tell you how important this type of housing is. I was on the Board of Trustees of Channing House for 18 years. I saw many families who after eligibility for Channing House had passed were without a place to have their seniors, or their parents, or themselves live. This fills that niche for individuals who are in their own homes. They are not wanting to go to Channing House or the Sequoias or somewhere else. By the time they decide they need the support that the Palo Alto Commons has it is too late for them to go into those houses, but they are able to come into Palo Alto Commons. I have known the Reller’s for over 40 years and I know that they are caring people and their responsiveness to this community. I think the way this project has been redesigned to accommodate the interests of the neighbors reflects their concern as good neighbors. Tracy Herrick said it very well in terms of the management of this and the caring of the people that work at Palo Alto Commons and what it means to the seniors that live there. So I wholeheartedly support the importance of this project, the need that we have here in Palo Alto for this type of senior housing, and I do hope that it goes forward tonight. Thank you very, very much. Chair Tuma: Thank you. Tom Reese followed by our last speaker, Mircha Pandurum. Mr. Tom Reese, Palo Alto: I live at 80 Kirby Place. I am here on behalf of Avenidas Village, which is a section of Avenidas. John Sink you heard from Avenidas point of view. Avenidas Village, I am immediate past Chair, now has 292 members. We provide services for these seniors living in their home. At some point many of them are going to decide that they want to go into an assisted living facility like the Commons or Channing House. Unfortunately, not all of them can afford the entrance fee into Channing House Page 16 or Vi, so a place like the Commons is the alternative, and perhaps the only assisted living sort of community they can go in. I very much support it. Chair Tuma: Thank you. Mircha Pandurum followed by John Erving. Mr. Mircha Pandurum, Palo Alto: I am the homeowners association President in Jacobs Court. I speak for the Jacobs Court residents who cannot be here. As you can see the speakers before were all related or they are all members of the Palo Alto Commons. We are the neighbors. People are busy working that is why nobody could come here except three other people with me. To show you the point of view from our standpoint is that it is still, I feel really bad to speak against this, I don’t speak against such a facility. I am totally for it, but I would urge the Planning Commission to look at it also from our standpoint. We are looking now to a facility with 3,000 square feet. Now we are going to see in one year a facility with 30,000 plus square feet. This will change totally let’s say our daylight, out yard, our privacy, our access to our buildings. Since this project started two years ago I was in all the meetings. It is true, there are some improvements. The initial project had five levels now there are three levels, but it is still high and big, and requires this zone changing to change it from what it is now to facilitate this high density, which will be there. It impacts the transportation also. The parking, I don’t believe this two here, two there, two in the previous building. Someone who wants to park there needs to turn probably three times around until he finds the seven places in the existing facility. So this is our point of view, it is still not mature, still not ready for our acceptance. Thank you. Chair Tuma: Thank you. John Erving followed by Timothy Gray. Mr. John Erving, Palo Alto: Good evening. My wife Christine and I have been residents of Palo Alto since 1972. Our personal experience is that Christine’s father, after her mother passed away, lived with us for three or four years in our home. We were at some point unable to provide the kind of care that her father needed. The Palo Alto Commons was the answer. It was affordable. It was caring. It provided a niche of service that was not otherwise available. We have ourselves moved from living in Crescent Park for over 30 years to Downtown. It was an adjustment to live in that kind of density. It is an evolving community and I think that it is important for all of us to realize that change is difficult but it is manageable. I think the Reller project has gone through considerable evaluation and made adjustments to the community, and there is a tipping point where a project just doesn’t make financial sense. It is a difficult thing to put a project together in these times. I have some background in real estate development and I understand that there is a point where I project just is not feasible. I think based my observations of the work process that has gone on with the applicant that they have done everything they can to make this feasible. I think that the Commission should approve this project. I think it is a tremendous asset to the community. Page 17 Chair Tuma: Thank you. The last speaker card I have at this point is Timothy Gray. Mr. Timothy Gray, Palo Alto: I live in the Charleston Meadows area a few blocks from the project. I want to say that I am an enthusiastic supporter of the project. All the nice things that have been said about the operations are true. The one thing that is an additional supplement to this is that I believe this would increase our housing stock, which we are all so desperately trying to meet the ABAG requirements. It does it without impacting our schools, really impacting traffic, and it meets a true community need. It does it without taking away a grocery store, it doesn’t take away a bowling alley, and it doesn’t take away any of the other tax bases that are often associated with forced increase in housing stock that we have had to meet. So this seems to be a real win/win on a number of areas even outside of just the no brainer community need that the project serves. Chair Tuma: Thank you. We do have one additional card from Florence Garlock. Ms. Florence Garlock, Palo Alto: Hello. I am here to speak not only as an employee of Palo Alto Commons but also as a daughter-in-law of a woman who went to Palo Alto Commons, my mother-in-law obviously. When I was looking for a facility for her I did a detailed search and I ended up back at Palo Alto Commons for her. She has passed away since then, but it was beyond our expectation for husband and I. Because we were so happy with it another member of our family went there as well. As far as being an employee I understand there could be a conflict. I have been working for Bill Reller for the last 15 years. It has been truly a wonderful experience. He has been a mentor to me. My own father, I am from France originally, passed away from Alzheimer’s so I really wished that we would have had that type of facility at home in France for my father. Thank you. Chair Tuma: Thank you. At this point I believe Commissioner Keller of one of the previous speakers. If Mr. Pandurum would be so kind as to come back up to the podium for a brief question from Mr. Keller. Then we will go back to the applicant for up to five minutes of any closing comments they have. Commissioner Keller: Thank you, sire. Since I guess you are the only one here from the homeowners association, and you had some comments. Mr. Pandurum: There are two more. I am the President of the homeowners association. Commissioner Keller: I don’t think any of the other ones have spoken. Mr. Pandurum: Yes, they didn’t speak but they are here. Commissioner Keller: What I would like to hear is if you have any specific suggestions on changes that you would like to make, incremental changes or whatever, I think it would be good to hear them. Otherwise the comments that you made were not in a way Page 18 that I could interpret how to make specific changes. So if you could suggest any specific changes then we can consider them. Mr. Pandurum: One change, which was always suggested in all the meetings we had with the developers, was to not be higher than two levels. So this was one request everybody made from the first meeting, which were one year and a half ago until now. To maintain the same height like in Jacobs Court, to be neighborly, to be maybe covered by trees. The trees should be taller maybe. I don’t know. This was always requested for two reasons. One is to integrate better with the environment there. Second for privacy reasons because the way Jacobs Court is built it has let’s say the private areas towards the back, exactly towards this facility. We have let’s say all the windows from the bedrooms, the backyards. So the life of a family happens there. So all the time people complain they will not feel the same private feeling that they have now having this facility there and overlooking from two levels or above our yards and our windows. So this was one. Second, we wanted to see in one place all those parking spaces available because right now there are six or seven parking spots in front, which will disappear – probably three of them. Commissioner Keller: Are you referring to the visitor parking? Mr. Pandurum: Yes, the visitor parking, and the parking that is going to be lost in front. Right now probably there are six or seven parking, there will be lost three, and will offered three. But the way I see it parking everyday there a visitor won’t have anywhere to park coming after five or six in the afternoon. There won’t be any parking available. Probably eight or nine in the evening. We were told that probably they would increase the existing parking so the personnel won’t park anymore on the street like it was before we highlighted that even the parking in front of our building is taken by personnel from Palo Alto Commons. So this was also one issue, which was always brought up, the parking, number of parking. This explanation that was presented here with two there, two there, three in the other place is not good enough. I don’t think it satisfies the requirement. Another issue was height, parking, and traffic. I don’t know how it will be solved because the Keys School was recently built. So it is not the issue of Palo Alto Commons but let’s say at eight in the morning you cannot get out of Jacobs Court because of people dropping off kids there. So it probably won’t be everybody on the street but I expect an increase in parking too. One thing, which was solved and was positive, was the kitchen and utility access was taken from there on the other side. So I would commend the developers for that. Commissioner Keller: Okay, thank you. Mr. Pandurum: You are welcome. Page 19 Chair Tuma: Does the applicant wish to make up to five minutes of closing comments? Ms. Sandy Sloan, Applicant: Good evening Chairman and Members of the Commission. I am Sandy Sloan speaking on behalf of the applicant. I just want to address a few things that came up as the speakers spoke. The first is with regard to Keys School. Obviously Palo Alto Commons can’t solve the Keys School problem, but I did want to let you know that my understanding is the Keys School traffic jams are between three and three-thirty primarily. Most of the employees leave the Palo Alto Commons about two o’clock. The morning and the dining shift for lunch leave at two o’clock. The afternoon shift comes in at two o’clock. So there isn’t much traffic from the Commons from three to three-thirty. Second, with regard to the BMR units, and Melissa can speak to this more thoroughly, but last year the California court decision of Palmer struck down all the BMR requirements for rental housing only. This was because it was determined to be a violation of what is called the Costa Hawkins Rent Control Act. Frankly, this is one reason this project is able to go forward. Third, there are 19 two-bedroom units. We did shrink the number of two bedrooms even though many seniors desire two bedrooms even when they don’t need two bedrooms to sleep in many people like to have that extra bedroom. With shrinking the two bedroom units and shrinking the number of units to 44 we are at that tipping point. As most of you know, you can’t just knock off a couple of bedrooms and have the whole project work. It is a very integrated whole and you have to combine the bedrooms with the common space and have it all work together. One more thing, regarding the $100,000 to Avenidas, John Sink I think was at a little bit of a disadvantage because we have discussed that contribution with the Director, the CEO of Avenidas, Lisa Hendrickson who could not be here tonight. We have not formulated whether she would prefer to receive it in a lump sum or over a five-year or ten-year period, but they are grateful to have it. Then finally with regard to the parking, as we pointed out before the Commons did not know that the neighbors were complaining about any parking earlier. Now that they know and especially with this new project all employees will be instructed to park in the garage. So the fact that people were just parking around will not happen in the future. So just in summary, we think this as you heard tonight is a worthy applicant, a wonderful design, and a worthy project, and we urge you to move it onto the City Council. Thank you. Chair Tuma: Thank you. With that we will close the public hearing and bring it back to the Commission. Commissioners, this is the opportunity for questions, comments, and ultimately a motion. Does the City Attorney have something to say? No? Okay, great. We will start with Commissioner Fineberg. Page 20 Commissioner Fineberg: Thank you. Could we actually get the City Attorney to comment on the statement the applicant made about the potential for requiring BMRs in rental units? Ms. Melissa Tronquet, Senior Deputy City Attorney: Yes, the statement that the applicant’s attorney made is correct. State law no longer allows us to require BMR units for rental properties. So I think as Mr. Moss mentioned there are projects that occurred prior to that court case where it was a requirement but we are no longer allowed to do it under state law. So she is absolutely correct. Commissioner Fineberg: Thank you. Question for Staff, this is the first project before us where an applicant has completed a LEED-ND checklist. Do we have any information from that checklist as to whether this project meets the target goals we set? I understand it is not a requirement. Would Staff characterize this site as one that meets the neighborhood and Smart Location criteria as objectively defined by the LEED-ND checklist? Ms. Armer: Unfortunately, even though this is the first project of this kind in the new year with the new requirements, because we are still within the first month of the year there was not enough time to prepare all of those specific requirements for the applicant to then put together a complete response for us to provide to you tonight. From the preliminary that I have seen so far it does look positive in terms of their ability to do a reasonably good job on this. Though, again, as it is a project that really had most of its design completed before this requirement was approved by Council last month there are probably other things that new projects would be able to do that are no longer feasible that really has gone through so much design. We do plan to have feedback from the applicant and analysis and our own critique of that and analysis in the Staff Report that goes to City Council. Commissioner Fineberg: Great, thank you. I appreciate the rough characterization too, thank you. On page 3 of our Staff Report when it talks about the process for review, at the bottom of the first paragraph, the last sentence there says that it is going to proceed in “the same manner as any commercial or mixed use project.” I am confused by that sentence because this is a purely residential project, and there is criteria for how we handle PCs. So I don’t understand what difference it makes whether we review this as the same process as commercial or mixed use project there is a PC process. Ms. Amy French, Current Planning Manager: I didn’t write this, but what I am reading here it sounds like it was just an explanation, and Jennifer you can chime in here. A mixed use project on El Camino would typically go to the Planning Commission and then the Architectural Review. As you said, with a PC obviously it is initiated, then it goes to ARB, then it comes back to PTC. That is the order of things with a PC. Page 21 Commissioner Fineberg: So does the fact that there is a process for commercial or mixed use have anything to do with this project, or could that have just said per PC process? Ms. Armer: I believe what that was meant to characterize was the process that the ARB goes through in terms of what they consider when looking at a project. It should have also listed multifamily projects as well as the commercial and mixed use projects, because all of those projects go the Architectural Review Board for their review, consideration of their guidelines as this project did. Commissioner Fineberg: Okay, thank you. I didn’t know if there was something in that that I wasn’t coming away with them. Appreciate that clarification. I am concerned about the parking. I don’t know with the public hearing closed if the applicant can answer this or if maybe Staff can. Can I ask Mr. Steinberg a question at this point? Chair Tuma: Yes. Commissioner Fineberg: Mr. Steinberg, could you put the slide back on where you showed that I believe it was 17 spaces with the requirement of 15? If you can’t get the slide back on that is okay. You were talking about there being 15 required and 17. You said that there were seven of the existing parking spaces, were those existing at the current facility that are used by guests of the existing facility? So that is going to lose seven spaces? I don’t understand what you were describing. Mr. Steinberg: What I was describing was, and we certainly have our traffic engineer that could address perhaps in more detail, but I will try to clarify what I was saying. The traffic report says that it would be recommended that we have 15 parking spaces for visitors. We have provided 17. We have distributed those in proportion to where the units are. There are seven on grade in front of the existing Palo Alto Commons. We have three permanent parking plus two short-term drop-off spaces in front of the new facility. Then we have identified seven additional visitor parking spaces that would be underground in front of the security gate that would be accessible to either building. Commissioner Fineberg: So that first seven that you mentioned that you said are seven existing in front of the existing facility, aren’t those already sort of counted as the required spaces for the existing facility? Mr. Steinberg: No. The analysis that we did for the parking is for a merged project. So it takes into account residents for both, visitors for both, and staff for both. Commissioner Fineberg: Okay, that was the piece I missed. Thank you. If I could just a super quick one. I am concerned about the trees and want to make sure that we have the correct actions, maybe conditions going forward to make sure that we protect the trees that are going to be welled in. I will come back on the next round. Page 22 Chair Tuma: Vice-Chair Lippert. Vice-Chair Lippert: Rob, while you are up there. This is being developed under the Housing Bonus Density law. There are up to three concessions that are permitted with regard to relief from local development regulations. Can you outline what those are? Mr. Steinberg: No, but Sandy can. Ms. Sloan: I saw the panicked look on his face. I know you love this subject, Commissioner Lippert. The Density Bonus law in general speaks to both affordable projects and senior projects. For affordable projects there are density bonuses depending on how much affordability you offer, and up to three concessions or incentives. Then there is another part of the Density Bonus law that says that you can have a density bonus for seniors but no concessions or incentives are in the law for just a senior project. So that is one reason we did not proceed under the Density Bonus law. The other reason, as Jennifer pointed out, was it is hard to have a density bonus on top of something that doesn’t really allow residential. We are dealing with a CN zone on the front, and an RM zone on the back. So it wasn’t even worthwhile to figure out how many units we would have been allowed. Vice-Chair Lippert: That is pretty confusing. So when the project is completed and the two sites are merged will you be encroaching on any of the setbacks, or height limitations, or floor area that is permitted for the two sites combined? Ms. Sloan: I think that it is very detailed, the comparison, but the brief answer is we are completely meeting the setbacks, completely meeting the daylight plane. We are exceeding the height limit slightly. The CN zone allows 35 feet and we are going up to 37 feet for a small portion. We are exceeding the floor area ratio. Vice-Chair Lippert: Okay and that is the reason for applying for a PC. Ms. Sloan: For the PC zone in addition to the density, the number of units per acre. Vice-Chair Lippert: Okay. Mr. Reller, you had talked about this having an assisted living component. Is there also a skilled nursing facility within the building? Mr. Reller: No it is not skilled nursing. It is all under the same license as the existing Palo Alto Commons. So we offer many levels of care but not skilled nursing. Vice-Chair Lippert: Okay. So there are no medical facilities within the complex? Mr. Reller: Maybe Sue could speak to that. Sue is the Executive Director she can explain the various medical assistances. Page 23 Ms. Sue Jordan, Executive Director, Palo Alto Commons: Hello, we are licensed by the Department of Social Services not the Department of Health Services. So we are all assisted living. We do have 24-hour nurses in the existing Palo Alto Commons. Vice-Chair Lippert: Thank you. I had a question with regard to the BMR component that now as a rental they are no longer required to provide BMR. Were there any BMR units that were part of the original project that would have to be retained in the new development? In other words, now that the two sites are being combined the original Palo Alto Commons was there a BMR component when that was developed, and does the current court ruling trump those, and now that they are being combined basically negate any of those BMR units that were developed under this? Ms. Sloan: We probably know that more than Staff does. At the time the original Palo Alto Commons was built we paid BMR in lieu fees. So those were paid. So that money is gone and nothing is negated. Vice-Chair Lippert: Thank you very much. My time is just about up. Chair Tuma: Commissioner Martinez. Commissioner Martinez: I have questions for the architect. The President of the HOA had concerns about the impact of the new development on Jacobs Court. Can you review again for us the measures that you have taken in the new design to try to address those concerns? Mr. Steinberg: We have done several things. We have increased the physical setback about eight feet from what it previously was. Instead of a solid wall we have articulated that façade to breakdown the scale of it. Instead of projecting balconies outboard of the building mass that would give a sense of looming or moving forward, we have pulled them inside the building envelope. We have broken up the façade of the building so that as you move from El Camino deeper into the site the setbacks increase, the massing of the building steps down, becomes masonry, becomes a two-story expression with substantial setbacks to the third floor. We have met onsite and worked with the neighbors about relocating existing trees to find a good balance between privacy, daylight, and maintenance. We have moved a lot of the traffic, all of the entrants to the garage completely to the other side of the site, and we have upgraded the materials. Those would be a few of the things that we have done. Commissioner Martinez: Without leading the witness, what about exterior lighting on that side? Mr. Steinberg: One of the things that we have talked about is the potential impact to these neighbors relative to the zoning. The front zoning would allow commercial uses on the front. As a senior housing development modest traffic, and generally residents that retire earlier in the evening. We purposely have not put walking tracks around the perimeter of the site, but the buffer between our existing units and the residents is all Page 24 landscaped. There is no night lighting. There are no walkways that stay on all night. That is left in its natural state. A good part of that are the very mature existing trees between the two sites. Commissioner Martinez: Thank you. I have one question for Steve. At our meeting last Thursday you mentioned that the surplus parking was going to be made available to staff. I asked well, how many staff is that? You said at the peak hour, which is around noon, it is about 50. Is that correct? Mr. Reller: It is 49. Sandy just corrected me. Commissioner Martinez: Okay, there you go. Obviously not everybody drives, but a good proportion will. So you have offered to make the surplus parking available for staff reducing offsite parking, parking adjacent to Jacobs Court, and so forth. Are you willing to make that a condition of approval so that neighbors would be assured that this is something that would be done in perpetuity or what is your view on that? Mr. Reller: I think that is just fine and that is what we intend to do anyway, so yes. Commissioner Martinez: Okay, thank you. Chair Tuma: Commissioner Tanaka followed by Garber. Commissioner Tanaka: Thank you. I have a few questions for Staff. On Attachment D, the Zoning Comparison Table, I notice there are two parcels that are being merged together to the existing PC. If there was no PC change, what would be the total FAR allowed if the zoning stayed exactly the way it was? I know the ratios are there but I was wondering if you guys had done the math already so you could quickly tell me. Ms. French: I am pretty certain math was done, but I was not the mathematician in this case. She has stepped out of the room for a moment. If you could ask your next question and then we could hear back from her. Commissioner Tanaka: Okay, I will move on then. I know that the ARB will review this again probably, but I wanted to ask a question that may venture into that area. Is it possible to, as a condition for approval, to mandate frosted windows on the third and second levels that face Jacobs Court so that the Jacobs Court side would not have privacy issues? Ms. French: You are the Planning Commission. Commissioner Martinez: Can I help on that? I think there is a building code problem with that for natural light. Commissioner Tanaka: To have frosted glass? Page 25 Commissioner Martinez: Yes. Commissioner Tanaka: Okay, I didn’t know that. Ms. French: I was going to say you could ask the applicant if that was explored. They may have explored it and found out there were code restrictions. Commissioner Tanaka: Okay, let me ask the applicant then. Is there a way to provide some shielding, frosted glass, trellis, plants, or something that would provide some privacy for people who are in their backyards with a three-story building looking over their backyards and bedrooms? Is there some sort of privacy that can be done? Has anything been contemplated? Mr. Steinberg: The design currently incorporates trellises, recessed windows under overhangs, has close to 35 feet of setback on our side. If you add that to the ten, 12, 15 of theirs there is almost a lot width between us. To ask residents – I don’t know about the code issue. I have never been asked this in my life but can you imagine living in a house where you can’t see out the window? That would be very unusual. I have never been asked that before. I think that would be really a hardship though. I am not familiar with any houses where you can’t look out the window. I think we have made very effort possible to not go the minimum but to go way beyond the minimum of what would be required. If there were no zone change you are allowed 35 feet. You are allowed three stories. You are allowed three stories much closer to the property line than we are proposing. Commissioner Tanaka: Okay. So actually I think our Planner is back so maybe I will ask her that question, because that is the question I was going to ask her. With existing zoning, without a PC, have you done the math as to exactly how much FAR would be allowed if the lots stayed exactly the way they are, how much FAR? It is not going to be 3,000, which is what it is today. What would it be? Ms. Armer: We did not actually do that precise calculation. We provided comparison if the entire lot was RM-30 versus CN in comparison to what it is proposed, just this new building, and the new lot areas, as well as the combined project all together in Attachment D, the Zoning Comparison Table, but we have not done a calculation for precisely what that would be with the existing partial zoning since you wouldn’t be allowed to do something that was just residential with the CN zone. So some change would need to be made. Commissioner Tanaka: I see, but would it be possible to simply take the existing CN lot times it by .9, add it to .6, times the RM-30 lot in back? Ms. Armer: I would have to check the zoning map but I do believe that a portion of the residential lot, the front part, was also zoned CN. I would have to check that so it might Page 26 not be as straightforward a calculation. That would get you a pretty close approximation though. Commissioner Tanaka: Okay. I don’t know if you guys could do that until the next round so I can follow up on my questions then. Commissioner Keller: While we are looking into that is the rear portion of the lot zoned RM-15 or RM-30? Ms. Armer: It is RM-15. Staff provided the RM-30 comparison as we felt that that was a more useful comparison in terms of the evaluating the proposed project. Commissioner Keller: So one thing that might be worthwhile is to compare it if the entire project were RM-15 and look at those numbers. The CN looks like it is related to RM-15 so that might be worthwhile. Not that we are suggesting zoning it as that but that is part of the comparison. Thank you. Chair Tuma: Commissioner Garber followed by Keller. Commissioner Garber: I think what I would like to do is I am going to go directly to a motion as a way of directing our conversations. I recognize – the way I am going to do this is to make the motion essentially what the Staff has proposed with the idea that we can bring amendments into it. I am hearing that we will probably have amendments around some parking, potentially TDM sorts of consideration, and possibly some of the other public benefits, but as a way of sort of directing our conversation. MOTION So with that I would like to move that the Planning and Transportation Commission recommend that the City Council approve the Initial Study, the Mitigated Negative Declaration, and Amendment to the existing Palo Alto Commons Planned Community (PC) Zone, and add the .83 acre site to the existing 1.7 acre site, and construct a senior assisted housing facility to replace the existing buildings at 4041 El Camino Way. SECOND Commissioner Martinez: Second. Chair Tuma: Okay, motion by Commissioner Garber, seconded by Commissioner Martinez. Commissioner Garber, would you like to speak to your motion? Commissioner Garber: Yes, just briefly a couple of points. I think first of all I think it is very important for the neighbors that live in Jacobs Court to recognize two things. If this project were being presented to us within the existing zoning the opportunity to have a lot of the dialogue that you have had with the applicant as well as with the City and the Planning Staff would go away. You would end up with a less dense project, but it would Page 27 be within three and a half feet, the same height, and significantly closer. Those attributes of the project would be given by right to the applicant and they would not have to go through this process, and with the exception of the ARB you would have very little opportunity to have impact on how the project is actually designed. The second point is that because this is a PC, and precisely because it is a PC, you have had a great opportunity to have an impact on the project. The changes that have been made between this past summer and now, I have counted eight although there may be more, and they include the reduction of units from 45 to 40, the change in plan which changed the overall layout of the property, the two ramps down to one ramp, the straight tall wall that was adjacent to your property has now been pulled back, the back portion is now 17 foot, six inches, and the front portion is 35 feet give or take. So that wall was changed from a straight to a staggered and it is staggered and has been scaled in such a way to help reduce the scale and the overall impact. The setbacks, as I have mentioned, have been increased dramatically beyond what is required. The trees and landscaping have been organized in a way to improve the privacy and visual connections, reduce I should say the visual connections between the units on side and the other. Number seven was the car spaces have been increased and importantly the applicant hired a parking consultant, which I think was very helpful and helped them learn a great deal. Also, during this process they also learned about how their parking was actually used. That came directly from some of the criticisms that were a result of the interaction between Jacobs Court and the applicant. Then finally, the visitor parking spaces those were increased and added as well. So I think it is very important for the Jacobs Court people not to believe that they have had no impact on the project. In fact, it has been a dramatic impact and I think you should be commended for engaging, engaging positively, and recognizing the things, which are important to them, and recognize the applicant’s willingness to have that same conversation with you. That said I do believe that the criteria for the PC zone and the creation of the PC zone has been met. I just will read through these. The site is situated and the uses proposed for the site are of such characteristics that the application of the general districts and the combining districts that might otherwise be provided do not provide sufficient flexibility to allow for the proposed development. We simply would not be able to get the density, which is the underlying public benefit of this project, and as many of the speakers and a number of the Commissioners both in the summer as well as this evening have mentioned that is the real benefit here to address not only our responsibilities back to the state with our allocation of housing in the city but as well as to provide the valued services within the community itself. The development of the site under the provisions of the PC district will result in public benefits not otherwise attainable by application of the regulations of the general districts or combining districts. I have spoken to that. Page 28 The uses permitted and site development regulations applicable within the district are consistent with the Palo Alto Comprehensive Plan, and shall be compatible with the existing and potential uses on the adjoining sites, or within the general vicinity. With that I will let the seconder speak if he would like. Chair Tuma: Commissioner Martinez. Commissioner Martinez: Thank you. I could speak as a Commissioner about either the urban design qualities of the project, or from the point of view of the community benefit of the design of the project. I am going to choose the latter because we don’t often get to talk about design. As a studio director of a community mental health facility’s design group for a number of years I got to see how important space and space matters for people who are senior, people with dementia, people who have a hard time moving around, people that don’t get to socialize in their older years. In looking at not just the fact that it is assisted living but the fact that the design of the facility goes more than a step further in providing for a social environment for seniors. That really will improve the quality of their lives. The interaction on the first floor, the hair cutting salon on the third floor, the minimization of the double loaded corridors and views, and the ability to sit and look out your balcony and see activity. So much contributes to the quality of life that this project will bring forth as a community benefit. Not just as housing because we need housing, or senior housing because we need senior housing, but because it creates a social environment for generations of Palo Altoans to enjoy and thrive in. Thank you. Chair Tuma: Commissioner Keller. Commissioner Keller: Thank you. So let me ask a first question of our City Attorney. I believe you stated that for rental housing under the Palmer Decision we could not require below market rate units. Ms. Tronquet: For rental. Commissioner Keller: I understand, for rental housing. What I am wondering is could we have required, I am not suggesting we do, but just to get the issue aired and put to bed for a PC are we allowed to require BMR units in a Planned Community even if it is rental as part of the condition for approving a Planned Community zone. Ms. Tronquet: You cannot require BMR for rental at all. It doesn’t matter that it is a PC. We cannot require BMR units for rental. Commissioner Keller: So we could not require that as one of the public benefits? Ms. Tronquet: No. Commissioner Keller: Okay, thank you. It is helpful to get that out. It will help us in the future. Page 29 So firs a couple of other questions. Does this project meet the RM-15 daylight planes on Jacobs Court? Is it correct that the zoning on Wilkie Way is R-1, is that right? Ms. Armer: Yes. Commissioner Keller: Okay. So three things about the Staff Report first of all. As I mentioned earlier the Staff Report doesn’t list the changes that were made from the previous time we saw it. That should happen. That should be part of the Staff’s part of the Staff Report. Secondly, it doesn’t have a list of the record of the requests made by the Planning Commission for a PC when we initiated it, and track that through, and show whether those changes were made. The third thing that is missing is a parcel map showing the zoning of the parcels as well as the zoning of the surrounding communities. That would also be helpful, and that was also omitted. I would suggest that Attachment B does not show the zones on it. I don’t see where the zones are anywhere else in this, but maybe you can tell me where it is. But that should be part of the City’s Staff Report. I believe that Jacobs Court is R-1, is that correct? Ms. French: No it is not. It is multifamily. Commissioner Keller: Sorry, I mean Wilkie Way is R-1. Ms. French: That is correct. Commissioner Keller: And Jacobs Court is at RM-15 or what is that? Ms. French: I know we had that in initiation but the map provided was one that did not include zoning. We will look that up. Commissioner Keller: Okay. Well, one of the questions I would like to know is one of the things we have talked about for PCs is that it mirror the adjacent daylight plane. So my real question is does the revised project satisfy the daylight planes for RM-15 on the side and R-1 on the rear, or does it not meet those daylight planes? Ms. Armer: Well, first of all, the daylight plane for RM-15/RM-30 is the same so we can answer that in terms of Jacobs Court in both of those, and I do believe that it does. I will double check and confirm for you. Chair Tuma: I believe the applicant has an answer. Ms. Armer: The applicant is ready to jump right on that. Chair Tuma: Mr. Steinberg. Mr. Steinberg: If it would be helpful, yes they do. Page 30 Commissioner Keller: And it meets the R-1 in the back as well? Mr. Steinberg: Yes, yes. Commissioner Keller: Thank you, that is helpful. Okay, good. Do we have any idea whether the bathrooms on Jacobs Court have clear glazing or whether they have frosted glazing in Jacobs Court bathrooms? Commissioner Keller: A member of the public said that they are all clear. Are those visible from the adjacent property being developed? So what I am wondering is whether the applicant would be willing for homeowners on Jacobs Court that request it to replace the glazing on their windows with frosted glass to provide privacy for Jacobs Court if they wish that. For the Jacobs Court bathrooms so that they have privacy in their bathrooms. Mr. Steinberg: Yes, we would be willing. We could either replace the glazing or put a film over the glazing to cloud it, but we would be willing to do either. Commissioner Keller: Okay, thank you. I think that is probably the most serious part of where privacy is an issue. So let me run through the other things quickly. One is that I would suggest that we have the applicant consider rearranging the parking as needed so that there is ongoing monitoring, and rearrange where the parking is and the percentages. I assume that that is part of what goes on in terms of – so rearranging as needed. I am wondering if there is a possibility or whether it makes sense to coordinate the crosswalk light with El Camino Real and El Camino Way light, that light. I am not sure if it is coordinatable or not but in some sense the issue is you don’t want people crossing when traffic is going to run them over from El Camino, or people trying to get to El Camino. So I am not sure if that is possible. Ms. Armer: My understanding is that with type of crosswalk it is something that is triggered when a pedestrian comes and requests it. Then the blinking lights go on so that they alert oncoming drivers. Commissioner Keller: So they go on immediately? Thank you. The other issue, which I just want to put out there, is that I realize that it is not the fault of Palo Alto Commons that Keys School exists in that location, but is in fact the fault of our zoning code. In that we should require a CUP for private schools in order to be able to impose traffic conditions on future instances of Keys School. That is not Palo Alto Commons’ fault. I am just putting that out there so that when we do have an opportunity to revisit the zoning code that we require CUPs for private schools anywhere to allow us to put those conditions. Thank you. Page 31 Chair Tuma: Okay. So I had several questions that have all been answered. So I am going to stick to strictly comments at this point. First is that I would like to commend the applicant and the neighbors for working together. I know through these processes generally no one gets exactly what they want, but hopefully what you do get is something that both can live with. I would echo Commissioner Garber’s comments with respect to the homeowners association and how I value the input and the time and effort that you all took, and the impact I think you did have on this project has made it a better project both for the neighbors as well as the community. I also specifically want to commend one of my fellow Commissioners, Commissioner Tanaka for taking the effort to arrange a meeting that included both the homeowners as well as the applicant. I obviously was not there, but by all accounts it was a productive meeting, an opportunity to hear both sides together, and an opportunity to engage in a discussion that is difficult to do in this forum. So I believe that that type of meeting is productive and I thought the bringing together of those parties was creative and well executed. The rental housing is extremely difficult to build in Palo Alto at all. You don’t see much of that happening. Land is too expensive. Rental housing for seniors is a treasure. So I am just thrilled that this project is being brought forward and I am glad that it has gone through the process of making it better. With respect to the public benefits we are required to specifically call out and identify the public benefits. So in this situation there are three that I see the intrinsic value of this type of housing, senior housing, to the community. The $100,000 donation to Avenidas in whatever fashion that is administered. I, myself have been involved in raising funds for nonprofits, and any way they can get additional funds to provide those services is great. Finally the crosswalk, the crosswalk to me is, if it is executed well, is a good public benefit. Again, I would echo Commissioner Keller’s comment that it is not Palo Alto Commons’ making, however it is a situation that your residents and the neighborhood have to live with, and that is the backup off of El Camino. I would assume that you are putting this benefit in there because people will use it, if not it is of no benefit, and encouraging people to use it, and having it attractive and all those sorts of thing. But I will tell you I go through there on a regular basis picking my children up from school and coming back across. At that time of day it is dangerous. It is dangerous for the kids on the bikes. It is dangerous for pedestrians, and it is dangerous for people driving. So the City needs to address it. I think any way operationally, and I don’t know exactly how you might do this, but operationally if you have your residents, seniors, leaving to go to the bus stop across the way you have a situation I think it is in your interest as an operator of that property to work with the City and try to get this resolved. I think the last thing in the world you guys want is some sort of accident occurring there with one of your residents or exacerbated by the situation. So I know it is in some ways not of your making but it is a situation you will have to live with, and your residents will have to live Page 32 with. So please put some pressure on the City and on the school to do something about that because it is a dangerous situation as it exists today. With that said, I am extremely supportive of the project and thankful that it is coming forward, and going to be a part of community. I have lights from Commissioners Fineberg and Tanaka. Commissioner Fineberg: I have a quick question for my fellow Commissioners who did meet with the applicant. Did any of you receive anything in writing or were any of you shown anything in writing? Chair Tuma: I will go first on that. The only thing I was shown in writing was the documents that are before us tonight. I did receive an email from Mr. Reller after our conversation indicating something that was brought up here tonight, which is the time at which their shift change occurs with respect to the interaction with the traffic that is backed up there. So it was something that had already been mentioned tonight. Others? Commissioner Garber. Commissioner Garber: The only thing that was on the table the packet of drawings that had the same date as the ones that we are looking at this evening. The other thing I will mention is that I think the only thing ended up that I have in my notes that was discussed that was not in the Staff Report was the comment that it is a state licensed facility, and the limitations that the state has as to the age of the people that can actually occupy it. Chair Tuma: Commissioner Tanaka. Commissioner Tanaka: Basically they just went through this. I also sent notes to Staff actually after the meeting seeing if it should be distributed. Because they were just notes to myself versus minutes and stuff like that Staff advised that I just kind of summarize the meeting so that notes would be understood better. Pretty much everything that we discussed was already in our packet. Thank you. We did exchange emails and that was merely to setup the meeting itself but nothing about the project. Commissioner Fineberg: Okay, thank you I appreciate that. I have another question for the City Attorney. For the projects under the new law where we cannot require BMR units where it is rental units, are we allowed or is it advisable to have some kind of stipulation or maybe this can’t be done, but can those units be converted to condominiums at a later date and thereby skirt the payment of the in lieu fee or the building of the BMRs? Would it be legal for us to have a condition of approval that should there be a conversion to condo that an in lieu fee would then need to be paid at that date? Ms. Tronquet: I think one of the conditions in the PC, and I could be wrong, but I think the PC ordinance itself says they will be rental. So they would have to change the ordinance if they wanted to change it from rental. Page 33 Ms. Armer: In addition to that a Tentative Map would be required if you are turning into condos. So through that process the requirement could be brought in for BMR. Commissioner Fineberg: Would we be able in a Tentative Map change and a PC Amendment be able to impose BMR fees on an already built structure? Ms. French: I believe the answer is yes. Ms. Tronquet: We have a condo conversion ordinance, which would govern it. I am sure, but I don’t think that that would be allowed. We can double check that before it goes to Council but it is questionable. Commissioner Fineberg: Okay, so it sounds like we can’t do a condition of approval with that now, but maybe we ought to understand it as we deal with this new set of laws we need to understand it better moving forward. Ms. Tronquet: If it changes it would come back to you in some form. So we could look into addressing it at that point, but right now you are recommending adoption of a PC ordinance, which covers it as a rental. Commissioner Fineberg: I understand that if it comes back later, and I am not saying there is any intention obviously now, but 40 years from now the world can be a different place. So if it were to come back to us, is this the time when we need to say if it converts to condo we maintain the right to impose in lieu fees? Then if it never converts we never have to deal with that. Ms. Tronquet: I think our condo conversion ordinance and condo conversion laws would govern it. So we already have laws that cover what you can and cannot do for that. Commissioner Fineberg: Okay. A couple of quick comments then. A few members of the public and I believe one Commissioner earlier mentioned that this has to pencil out financially in order to work. I understand that. We have said this on many other projects. We do not have pro forma financials so we as a body have absolutely no view into the accuracy of those statements. We must take the applicant’s word and I wish we had pro forma financials, because then there could be more certainty of that. I want to echo comments of Commissioner Garber and Commissioner Martinez. I think this project will accomplish many goods for the community. I think that the fact that it is adjacent to the existing site yields tremendous efficiencies and economies, and the public benefits are present and met in more ways than many of the projects we build. I am not particularly concerned ….. Chair Tuma: Commissioner Fineberg, if I could, I really need to ask you to wrap it up. Page 34 Commissioner Fineberg: Okay. I think the accommodations the applicant has done on the side setback with Jacobs Court have moved it in a very, very good direction, and I will be supporting the motion. We still have to deal with some of the conditions of approval. Chair Tuma: Commissioner Tanaka followed by Lippert. Commissioner Tanaka: I was wondering if Staff had calculated the FAR. Ms. French: Yes. Basically as noted it can’t all be an RM-15 development standards project because we would not allow a residential only project on the front parcel that is zoned CN. But if it was rezoned to RM-15 there would be .5 FAR allowed. Did you want the square footage? Commissioner Tanaka: So basically the amount of FAR they are going to be adding is about 3X over what they could have done without a PC. Ms. French: Correct. Commissioner Tanaka: Okay. So for 3X the zoning FAR they are providing the public benefit of senior rentals, essentially. Ms. French: Among the other benefits, yes. Commissioner Tanaka: Okay, great. I just want to make sure that was clear so that we understood what the trade was. So 3X FAR, which is a lot in general. So I actually appreciate the Chair’s comments, so thank you, as well as Commissioner Keller’s. I like your solution about having maybe the privacy put on the Jacobs Court side is actually a very elegant solution. Perhaps that could be extended to, and this is a question for Staff, perhaps can higher trellises be made or allowed? I know there is a fence code and there are some limitations there or perhaps if they wanted to more frosting or film on the Jacobs Court side to provide privacy if that is a possibility as another condition for approval? Ms. French: The applicant expressed willingness to put film or frosted glass on the bathroom windows as requested. Commissioner Tanaka: What about taller fences or higher trellises if the Jacobs Court side wanted that? Ms. French: A PC creates its own development standards. So right now we have a fence ordinance that says seven feet. Is the proposal for a seven-foot fence? The applicant would know what they are proposing. If the neighbors would enjoy a taller fence…? Page 35 Commissioner Tanaka: Let me ask the applicant. Would that be something that the applicant would be willing to entertain if the individual owner of that Jacobs Court side facing your project desired more frosting or film on the glass, and/or higher fences? Would that be something that you would consider? Ms. Sloan: I think the applicant has said that they would be willing to frost the windows of any Jacobs Court people that want frosted windows. I don’t think we are willing to do more with the fence. We have had several meetings including the one that you went to and no one has ever suggested raising the fence. I might remind you that Jacobs Court residents did ask that the fence be extended and then built onto their property. So we are adding about 15 feet for the benefit of Jacobs Court. But no one has asked about raising the fence and I don’t think we want to build trellises for people. Commissioner Tanaka: Okay. Then my other comment here is I looked at the economic memo from the Development Manager. I think Bob Moss said earlier, and I think he is right, that the Council mandated there is no conversion of commercial property to residential. To stay with the Council’s direction it looks like this project would impact potentially, if the stars aligned, $4,000 a year in sales tax revenue. So I wanted to ask to kind of offset that could we also have a condition of approval where Palo Alto Commons would basically credit the City $4,000 a year inflation adjusted to make up for this potential loss of sales tax? Ms. Tronquet: No. Your conditions need to be related to the development of the project. Commissioner Tanaka: So the fact of loss of sales tax cannot be offset? You cannot ask the developer to offset it? Ms. Tronquet: Right. Chair Tuma: Commissioner Tanaka, if I may, if I am interpreting this memo right there is an ongoing property tax for the proposed project, which would be increased by $17,672 as a result. So if I am interpreting this memo correctly we actually come out ahead. Commissioner Tanaka: I understand, but I think if any development happened there the property tax would increase. So I guess what I was trying to do was address the Council’s direction of no loss of sales tax and if there is a way to offset that. Ms. French: I also want to add this memo is developed as if the site were entirely developed with retail. Currently that is not the case, and it is not a good spot for retail. We have discussed that with our Economic folks. It is just not likely that that would go that direction. This $4,000 is definitely not a scientific number. Commissioner Tanaka: Okay. Can I make an amendment? Chair Tuma: Yes, I think what I want to do here is I would like to get to the point where we wrap up comments. We have been at it two hours and 20 minutes. I think there are Page 36 several amendments that are sort of floating around out here. So I would go one more round if people have amendments, but stick strictly to amendments. Let’s not get into – if those amendments require some discussion that is fine, but we do need to wrap up general comments and then we can get to the amendments. Commissioner Tanaka: I have my general comments done. Chair Tuma: Great. Commissioner Lippert. Vice-Chair Lippert: First of all, I want to thank the applicant, members of the public, as well as the neighbors at Jacobs Court for coming out this evening. I am going to be supporting the project. I think the applicant has done a great job of hearing the concerns of the residents of Jacobs Court and incorporating that into the plan, as well as incorporating our comments from the initial hearing. A couple of corrections I would like to make for you. In your presentation, when you bring this to the City Council, it said ‘approval by the Planning and Transportation Commission,’ and we did not previously approve the project with unanimous approval. It was unanimously initiated or recommended the zoning change. So when you bring it forward to Council the terminology should probably be correct. With regard to Commissioner Tanaka’s comment with regard to the sales tax, currently on the property there are some offices there. Really, actually I think there are a couple of retail uses there, there is an architect’s office there, and there is a barber that is currently there. Both of those are services and they do not generate any sales tax currently. So there is no net loss of sales tax from the existing building that are currently there. So I just wanted to clarify that. I do have a friendly amendment that I will offer up with regard to the concerns of the residents of Jacobs Court and the traffic on El Camino Way sort of backing up there. My friendly amendment is I guess with the review and approval of transportation engineering looking at perhaps when they put in the pedestrian crossing zone, or they review the crosswalk there, also look at the possibility of having painted ‘keep clear’ right in front of the driveway in front of the Jacobs Court driveway. So that the residents there are able to actually get out and be able to blend in with the traffic along El Camino Way. Commissioner Garber: So your friendly amendment is to ask Staff to evaluate the addition of pavement signage to keep the driveways clear if that is an appropriate add. Vice-Chair Lippert: That is correct, and so that it will be – we also have to ask the applicant as well. This would be done at the same time as the pedestrian crosswalk painting or striping is done. Commissioner Garber: Is there some discussion Commissioners? Page 37 Chair Tuma: Yes. I think looking at it is fine. The problem that I see with it is that if we sort of take a section of that already precious real estate that is there and we say people can’t go into that it is actually I think going to exacerbate the problem in terms of the backup there, because you are pushing it even further down the road, and you create these gaps. I think it is fine as a friendly amendment to look at it, but I would just say to Staff if you are going to evaluate that be thinking about whether that improves, because this backup that occurs is only a limited number of minutes per day. It is a very dangerous number of minutes per day, because of all of the convergence of the things going on there. I think about places in front of the railroad track where people are not supposed to pull up create these extra gaps. It may make it worse. I don’t have any problem with the amendment but just a comment to Staff to think about that if you do that analysis. Vice-Chair Lippert: I think what is going to wind up happening is that during the hours that there isn’t traffic backed up obviously there is no reason to keep that area clear. They will just pull up as the traffic flows. During the hours that there is a concern it will delay the traffic there. The biggest issue that I have is that there is a curve there and the curve adds additional sightline complications. So that is why I think the Transportation Engineers need to take a look at that before it is incorporated into the actual proposal here. Commissioner Garber: Okay. So let me try stating it. The Staff shall evaluate the addition of pavement signage to keep or help keep the Jacobs Court drive clear during peak hours. I would accept. Chair Tuma: The seconder also has to accept. Commissioner Martinez: Yes, I think it is a good idea to look at that. If it helps that would be great. Chair Tuma: Okay, thank you. Commissioner Keller you indicated you had a brief comment. Commissioner Keller: Yes. Firstly, I realize the applicant may or may not have made specific statements about the affordability of the project based on changes to it, but it seems to me that making such statements should require pro forma financials. Making such statements in the absence of that is not quite fair to the Commission. That is an issue that some people on the Commission have had issues in general about that. I would make a comment about sales tax. This property as being expanded buys a lot of stuff. Sales tax is paid on the stuff that is bought. I would be willing to believe that for the expanded facility you are probably buying somewhere on the order of $400,000 worth of supplies and food and stuff like that on which sales tax would be paid. Therefore you get the $4,000 that way in any event. I want to make sure, and I am not sure if this would be a friendly amendment or not, but to make sure that the point of sale location for the Page 38 things purchased by the facilities be that location in Palo Alto so that we get sales tax credit for it as opposed to somewhere else. I am not sure how to do that. Ms. Sloan: I would just say that we are not willing to do that. There are long relationships with suppliers that are not necessarily in Palo Alto. It is not anything that we would like to have imposed. That is a huge discussion, point of sale. Commissioner Keller: Well, there are other ways of dealing with it and that has to do with exactly how – whether you consider wholesale or retail, and whether you file sales tax or whatever. But to the extent it is feasible to identify that as a location for which sales tax is paid I think that would be useful for the City to the extent that it does not increase the difficulty, is really not inconvenient for you. So to the extent that it is possible to do that when you are renegotiating contracts that would be desirable. I think that with respect to the issue of the fencing it seems to me that while it makes sense for the applicant to pay for the direct impact on the bathrooms of providing glazing acceptable to the Jacobs Court homeowners that want it, it does not make sense to me to provide anything else in terms of trellises or whatever. What does make sense to me is for the applicant to be required for if a Jacobs Court homeowner requests trellises or additional higher fences or landscaping or whatever that the applicant does not object and in fact supports such an applicant that is paid for by the Jacobs Court homeowner or correspondingly a Wilkie Way adjacent homeowner. So they can do it and the PC applicant simply says we are not going to object to the Jacobs Court homeowner, assuming it is approved by the homeowners association, or the Wilkie Way homeowner making these changes. Is that a reasonable thing, first of Staff, to require? Ms. Tronquet: Well, if the applicant does the project owner is agreeable to doing that, I think that is one thing. I don’t know that they can make promises as to what their future residents will do or not do, or support or not support. Commissioner Keller: I am not making a suggestion on the residents. I am basically saying that they would allow the Jacobs Court people or the Wilkie Way people to build whatever they want to without objecting to it. Ms. Tronquet: If you want to impose that as a condition you can ask the applicant. Ms. French: Maybe I am hearing this wrong, but it sounds as if part of the solution that you are looking for is things being done on the Jacobs Court property, which is not a PC and therefore anything above what is allowed in the fence code it has a discretionary process associated with that. Commissioner Keller: Right so if a Jacobs Court or Wilkie Way homeowner were to apply to increase the fence or put a trellis or whatever that would go through a discretionary process. I am simply suggesting making a condition of approval that the applicant not object to such a discretionary application on the part of a Jacobs Court Page 39 homeowner, or homeowners association, or Wilkie Way homeowner. Does that make sense? Ms. Tronquet: I think it does. I think a bit vague since we have no idea of knowing what a homeowner in Jacobs Court might propose in terms of trellis or fencing or anything else. Chair Tuma: I am going to interject a comment here. As currently framed I could in no way support this because it is so vague. I think we have requirements that the City has about what people can do so it would go through that process. To just say simply to the applicant you can’t object no matter what people want to do about things related – it is too vague. If we want to say if they want to increase the height of the fence, or a couple of specific things, maybe, but I think we are getting into imposing thoughts or solutions or ideas that even the neighbors have not come to the Commission asking for. I think we are really meandering into an area that is not really our purview where we are designing what this thing should look like without these things even having been requested. Commissioner Keller: I am not suggesting redesigning. I am just saying that we give the Jacobs Court homeowners tools to be able to implement it and not require that the applicant pay for it, but enabling the homeowners association or Wilkie Way people. I am not sure how to do that. Maybe one of the other Commissioners can figure out a better way to word it. Let me just in closing say that I think this is a good project. I think the project has done as much as possible or as feasible to satisfy the needs of the adjacent homeowners. I think in particular staying within the daylight plane is an important step in that direction. This certainly satisfies the particular need in Palo Alto, and I will support the project. Thank you. Chair Tuma: Okay, great. Are we ready for any other amendments? Commissioner Tanaka. Commissioner Tanaka: Yes. This was talked about earlier but I want to make sure we have it, which is that I think the applicant indicated that they will mandate staff, going forward, will park onsite and I think that will help alleviate the parking. So I would like to make two friendly amendments. One part is that and the other is the screening that Commissioner Keller was talking about in terms of…. Chair Tuma: Let’s do them one at a time. Commissioner Tanaka: Okay. I will do the first one. Let’s do the easy one. So the staff will basically park onsite in non-visitor parking spots. Commissioner Garber: Unless Staff has suggestions on the wording I am happy to accept that. Page 40 Chair Tuma: Commissioner Martinez. Ms. French: I am thinking there might be a time of day thing that goes along with that, but I would not be able on the fly to come up with it. We could look at it. Commissioner Garber: With the Commissioner’s indulgence here, perhaps Staff can come up with the wording that gets to the concept of keeping staff within the property and not imposing impacts on its neighbors or the public right-of-way. Chair Tuma: Commissioner Martinez is that acceptable to you? Commissioner Martinez: Actually, at our – it was stated quite simply that there is enough below grade onsite parking that will be available for staff to park there. I think the amendment should be as simple as that. That this surplus parking below grade be made available so staff will not park on the street. Commissioner Garber: That is acceptable to the maker. Commissioner Martinez: I second it. Chair Tuma: Okay. Vice-Chair Lippert. Vice-Chair Lippert: I just want to make some comments here. I think there is danger in the details. What I mean by that are a couple of things. Number one, as they increase and they may need additional staff they will need to find additional parking. Well, we have just conditioned that that parking needs to be onsite. The City has in place vehicles for doing offsite parking agreements so I want to make sure that this doesn’t prevent the applicant from then having an offsite parking agreement and locating that elsewhere. The public right-of-way is the public right-of-way. People are entitled to park there whether they are working in that facility or not. I want to make sure that we are singling out people. If they are working there that they shouldn’t have the ability to park in the public right-of-way if it is legally permitted. Number three, the biggest danger I see is we have conditioned the staff but we have not conditions the residents. What could possibly happen is that if there is an overflow condition where more staff people need parking spaces, well the residents will just move their cars out and leave them on the street or in the public right-of-way. So it doesn’t really solve any problem there. What I want to be careful of is are we imposing something on this project that we wouldn’t normally be imposing on any other development project. Chair Tuma: Commissioner Martinez. Commissioner Martinez: Commissioner, I think you are over-thinking the problem. From what we have learned at our meetings with the applicant there are very, very few Page 41 residents that have cars. In their current facility they told it was something like seven or eight, and they have converted the remaining parking to storage. The applicant has said what their staffing levels are going to be there is no reason to assume that there is going to be some need to dramatically increase that parking. If this were any other kind of project such as retail or office we would require parking onsite for staff. So in that regard it is no different than anything else. Commissioner Garber: Could I make a possible modification of the friendly amendment that I accepted and was seconded? In lieu of a specific condition regarding parking that we simply ask Staff, after six months of the project opening, to review the parking and impacts with the applicant to determine if there are issues that need to be mitigated? Commissioner Martinez: Sure, that is fine. Vice-Chair Lippert: I would like to just make one other clarification. I have an aging parent that does not drive but she owns a vehicle. Commissioner Garber: Has to apply for a unit the same way anybody else does. Vice-Chair Lippert: She also has a caregiver or an aide that comes in to assist her on a daily basis, and that person has a vehicle. What basically happens is that the aide comes in, parks their vehicle, and then when my mother needs to go somewhere the aide takes my mother’s vehicle and drives that vehicle. So basically there are two vehicles onsite that are associated with my mother’s unit, but nonetheless there is only one vehicle that is actually used at any one time. So I was trying to get to that level of detail not necessarily saying or putting it out there that somebody is doing something nefarious, it is just that there has to be a way to manage it. Commissioner Garber: Are you satisfied with the amendment as I have rephrased it? Vice-Chair Lippert: I will be supporting the motion, yes. Chair Tuma: Okay, Commissioner Tanaka, did you have another friendly amendment? Commissioner Tanaka: Yes. This is my last friendly amendment, which is the screening. I think the applicant already indicated that they are willing to fund the glazing of the Jacobs Court windows should the Jacobs Court person, resident, homeowner desire it. So I would like to have that also as a condition for approval. I understand what Commissioner Keller was saying about making the fence higher, but I also understand the complication with that. So maybe you can make a friendly amendment after this one to figure out that problem. I would like to at least get the screening for the Jacobs Court. Commissioner Garber: State it and if necessary I will make a suggestion. Page 42 Commissioner Tanaka: So basically if the Jacobs Court homeowner facing the project desires frosted glazing that the Palo Alto Commons development will fund it. Chair Tuma: For their bathroom window, correct? Commissioner Tanaka: Well, I think they said for any window. I don’t know if they would actually want other windows. I would imagine it is just going to be bathroom windows I am guessing, but I will leave that up to the Jacobs Court person. Commissioner Garber: May I ask the applicant if they are in favor or willing to do this? Mr. Steinberg: Yes for the bathrooms. I think leaving it open to every window …. Commissioner Garber: In fact my exact questions to you are that. It is constrained once by it being a bathroom. Then it is constrained twice by the windows that face your property line. I don’t know how many that is. Also we are not telling you how to accomplish that. So I don’t have any sense as to what the overall impact to you is, but you are okay with that then I guess I am okay with that. Mr. Steinberg: We are okay with that. Commissioner Garber: Okay, so I will support the friendly amendment. Commissioner Martinez: I am sorry, can you state what that is again? Commissioner Garber: Commissioner? Commissioner Tanaka: Basically, a Jacobs Court homeowner facing, actually I guess it shouldn’t just be Jacobs Court homeowners it should be Jacobs Court plus Wilkie Way homeowners bathroom window facing the project the developer will for the frosted glazing if requested by the homeowner. Commissioner Martinez: Bathrooms only? It is limited to bathrooms. Is that correct? Commissioner Garber: Windows that face the project from Wilkie Way, and I am assuming that we are only talking about lots that actually have a common property line with the project. Commissioner Tanaka: Correct. Commissioner Garber: So Jacobs Court or Wilkie way, bathrooms only. Commissioner Martinez: Bathrooms only, I support that. Commissioner Tanaka: I would like to make one last comment on the subject. I know from the developer’s point of view I might seem really hard on you on this project. I Page 43 actually do support this project quite a bit, and I see the value that it adds to Palo Alto. So I appreciate you guys coming out, spending the two years to develop this, and make it happen, meeting with the residents, meeting with the Commissioners. I think that is appreciated. I think you also have to appreciate from the Jacobs Court point of view, which is you are getting 3X the currently permitted use, FAR which is a lot. So I think while it has been arduous I think it has been really admirable that you guys have been willing to work with the residents to make this project happen. Thank you. Chair Tuma: Commissioner Fineberg. Ms. French: Can we get a clarification? With the Wilkie Way addition of bathroom windows we want to just specify that it is the new building and not the existing Palo Alto Commons. Commissioner Garber: That is fine. Ms. Armer: Just those two properties. Commissioner Garber: That is correct. Chair Tuma: Commissioner Fineberg. Commissioner Garber: Just for clarification, it is the properties that share a common property line. Commissioner Fineberg: A quick clarifying question for Staff that will affect my possible friendly amendments. For the items that the applicant has already proposed for public benefits like the contribution to Avenidas or the crosswalk are those built into the plan as part of the PC ordinance or to ensure them do we also need to call them out as conditions of approval? Ms. Armer: If you look at the details in the draft ordinance that was provided to you it does include those specifically listed as public benefits and therefore required. Commissioner Fineberg: Okay, thank you. Then for the first friendly amendment that we have on the table I am not sure if I can support it as it is. I would consider and suggest possibly some alternative language that included there be a TDM, Transportation Demand Management, program including, and then the item that is on the table be number one. Numbers whatever, two, three, and four could be subject to discussion tonight and/or development by Staff. But there are standard tools that we have in TDM programs and some of it is already built in with the Architectural Review like the bike lockers, but maybe a program to encourage carpooling, or possibly – I am just sort of suggesting things. I am not sure what would be appropriate and we can’t design it tonight, now, but leaving the flexibility for Staff to add appropriate TDM measures. Page 44 Commissioner Garber: Through the Chair, is that something that we could add to the language? First of all, I appreciate your going more global than specific here. I am just wondering if it is something that we couldn’t make part of the sort of six month review to determine if there are impacts and if they are significant enough that a TDM program be put in place and include various elements that include things like pavement signage, shuttles, carpooling, time of day exists and entrances, etc., etc. Commissioner Fineberg: I think it would be quite comfortable if we had the requirement that there be a review and the ability to implement a TDM program at the six months. Commissioner Garber: Sure. Commissioner Fineberg: I think if Staff can concur, do we need to lock in the right to impose that somehow? Does that condition need to be included now? Ms. Tronquet: I would think it would be helpful for City Staff as well as the applicant if you have things in mind that you want to be triggering conditions when we do the six- month review. What do you see is going wrong at that point? What would happen at that point that you would want TDM? Commissioner Garber: Right, what conditions should we flag here? Ms. Tronquet: Yes. Commissioner Garber: We are talking slightly over different things here. What I would propose that we do is we eliminate the first friendly amendment, which was having Staff evaluate if there should be pavement signage that Commissioner Lippert had suggested. Add that as one of the things to flag at the six-month review. Then we could also add other issues as well. Is there street parking that has for some reason that we don’t know impacted the neighboring properties in some way? I don’t know what else we might include as other flags to be considered at that time. Commissioners, discussion on both of those topics? Chair Tuma: Vice-Chair Lippert. Vice-Chair Lippert: I am confused about something. When you talk about a Transportation Demand Management program are you talking about the staff that they would be subject to the Transportation Demand Management program or are you talking about the residents that are living there? None of them go to work. Commissioner Fineberg: Depending on… Vice-Chair Lippert: You shook your head. Which was that? Commissioner Fineberg: It could be both. For instance, it could be that the staff be requested to park onsite if it was found at the six months that there was inadequate Page 45 parking. Or it could be that there be commitment that shuttles would be provided and used. So that could be something that would apply to the residents. Obviously if the residents don’t have cars it is not helpful to require them to park in a basement. It could be things like, and again, we can’t implement things at this hour without study, which is why I erred on the cautious side of saying Staff would have to work the details. It could be things like encouraging carpooling or providing bicycle lockers or bicycle showers for staff. So I don’t know what the right features are. There are things we do in many other projects. It hasn’t been analyzed, we don’t have it in specific concrete suggestions, I didn’t see it, and so I don’t want to invent things that won’t work at this hour. I think the way to approach it then is for Staff to work through what would be appropriate. Vice-Chair Lippert: I have a question for the applicant. Chair Tuma: Vice-Chair Lippert, would you like to speak? Vice-Chair Lippert: Yes. Currently doesn’t Palo Alto Commons have an onsite bus? Mr. Steinberg: Yes, there is a bus and a van. The same transportation would be available with that bus and van for the new facility. Vice-Chair Lippert: As part of your route, or where you go, I am sure it is by request. Mr. Steinberg: It is by request, and there are outings that are planned and those kinds of things. Vice-Chair Lippert: You do have shuttle service like for instance from Palo Alto Train Station for staff people that want to take the train and come to work? Mr. Steinberg: No we don’t. It is for residents. Vice-Chair Lippert: It is for residents. Could it work both ways? Mr. Steinberg: No, it is used frequently. Vice-Chair Lippert: Okay. Commissioner Garber: So let me ask where we are. Chair Tuma: Commissioner Keller has a comment about this. Commissioner Keller: Here is my suggestion. We don’t want to reinvent the wheel here. The wheel is already invented. It is called a TDM program. It sounds like the Palo Alto Commons already implements a lot of issues of the TDM program. So I am going to simply suggest that we simply require a TDM program, period, with a six-month review, and the condition merely be that the entire project, both halves of the PC, be fully parked onsite. That is the condition. Whatever TDM measures are required in order to Page 46 implement that they implement. It is just simple. The TDM program has a whole bunch of things that already exist. We don’t need to add to it, we don’t need to invent new things. The TDM program already provides the appropriate discretion to Staff. We should impose that now, the condition for consideration for it because the TDM program also has multiple reviews. We simply have a TDM with the standard process with an extra review at the six-month period, and the condition is that it fully be parked onsite. Now that may involve shuttle buses, it may involve hiring a company to provide shuttle for employees from the Caltrain to that if that is what is needed. We don’t want to have to decide these things. We don’t have to think about maybe it involves taking a couple of spaces and putting zip cars on there. I don’t want to have worry about it. TDM measures already take this into account. I think that is an easy way to handle it. Commissioner Garber: I am supportive of that and I would accept that as a friendly amendment, that we require a TDM program, and that the requirements of the project be fully parked onsite and that there be a six-month review and that would replace our first two friendly amendments. Then the second friendly amendment would be the offer to create translucent coverings for the bathroom windows, etc. Commissioner Keller: Do we have the Jacobs Court thing about the ‘keep clear.’ Commissioner Garber: I was going to include that with the TDM. Vice-Chair Lippert: It is different. Commissioner Garber: Okay, so then we would keep that and we would still have three friendly amendments then. Chair Tuma: Are you clear on that Commissioner Martinez? Commissioner Martinez: I am and I agree. Chair Tuma: Okay. Anything else? Commissioner Keller. Commissioner Keller: I have a question for Staff about the maintenance of the lighted crosswalk. Has that become a City responsibility, and is the City comfortable with that? Ms. French: Prior to Council we would check with Public Works and determine what their protocol is, and if there are any such crosswalks in the city and how that works. Commissioner Keller: Thank you. It would be helpful to actually think about that in general because I am sure more of them will appear. So a policy on that might make sense. Thank you. That’s it. Page 47 I will just say one thing, which I am not suggesting as a friendly amendment. In the spirit of what we talked about I am hoping that the Palo Alto Commons will in the future positively consider and encourage if a Jacobs Court or a Wilkie Way adjacent homeowner wishes to provide additional screening that is reasonable that you will be supportive of that to the extent that it pass the City’s muster, but I am not going to make that a condition of approval. Thank you. MOTION PASSED (7-0-0-0) Chair Tuma: Okay, with that I believe we are ready to vote. Is there any Commissioner who needs any clarification as what the motion and friendly amendments are? Okay. All those in favor of the motion with the friendly amendments say aye. (ayes) All those opposed? That passes unanimously. Thank you very much to the public and the applicants and Staff. We will take a break for seven minutes and come back at nine o’clock. 1415 Hard Copies (provided to Council Members Only) Page 1 City of Palo Alto (ID # 1313) City Council Staff Report Report Type: Action Items Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 3 (ID # 1313) Title: Gas Utility Long-term Plan Subject: Finance Committee Recommendation to Adopt a Resolution Approving the Proposed Gas Utility Long-term Plan (GULP) Objectives, Strategies, and Implementation Plan From:City Manager Lead Department: Utilities RECOMMENDATION Staff, the Utilities Advisory Commission, and the Finance Committee recommend that the Council adopt a resolution approving the proposed Gas Utility Long-term Plan (GULP) Objectives, Strategies, and Implementation Plan. SUMMARY GULP was originally approved by Council in July 2003 and was revised in 2004 and 2008. The proposed new GULP Objectives and Strategies focus on balancing environmental concerns with economic sustainability. At its meetings on September 1, 2010 and October 6, 2010, the UAC recommended that Council approve the proposed GULP Objectives, Strategies and the associated Implementation Plan (Attachment A). On December 7, 2010, the Finance Committee voted to recommend that Council approve the GULP Objectives, Strategies, and Implementation Plan. In parallel with the GULP revision, staff is developing a new Utilities Strategic Plan. Ultimately, GULP will be aligned with the Utilities Strategic Plan to ensure that the GULP Objectives are consistent with the vision, goals, and strategic objectives of the Utilities Department. Further revisions to GULP may be required after the Utilities Strategic Plan is completed. COUNCIL COMMENTS AT JANUARY 10, 2011 MEETING This report was presented originally to the Council for consideration on January 10, 2011 as an element of the consent calendar (CMR: 106:11). However, Council removed the item from the consent calendar and asked that it be rescheduled for discussion since GULP is a substantive program and worthy of discussion by the full Council regardless of the recommendation by the Council Finance Committee. This item was continued until the February 7, 2011 meeting to allow for thorough consideration by the full Council. Council Member Burt raised several issues, which are summarized below: 1.The natural gas commodity purchasing strategy includes “laddered” purchases in March 07, 2011 Page 2 of 3 (ID # 1313) which portions of the monthly gas needs are purchased over a three-year period before delivery of the gas. Since the price of gas has been highly volatile in the past, this strategy resulted in a smoothing of the total cost of the gas allowing for relative stability in the City’s gas retail rates. PG&E’s gas purchasing strategy is very different from the City’s and relies on purchasing gas at near the time of delivery of the gas. Therefore, when the market prices for natural gas rise, PG&E’s gas retail rates rise and when gas prices fall, PG&E’s prices fall. Since gas prices have fallen precipitously since mid-2008, the City’s natural gas retail rates are much higher than PG&E’s. As Council Member Burt stated, industry experts expect the price of natural gas to remain low for the next several years at least as new sources continue to be discovered. This trend calls the laddering strategy into question. In its discussions of this issue on November 16, 2010, the Finance Committee requested that UAC revisit the laddering strategy. Staff added an implementation item, (Implementation Item No. 2), to return to the UAC to review the laddering strategy in compliance with this request. 2.GULP does not include any objectives or strategies related to safety of the gas distribution system. GULP is limited to issues related to the gas resource portfolio – both gas supplies and demand-side (energy efficiency) resources. Other issues of importance to the Gas Fund, including safety, reliability and customer service are not addressed in GULP, but are part of the Utilities Strategic Plan. An update of the Utilities Strategic Plan is underway and will be ready for Council consideration in the next couple of months. 3.Although the report from the Finance Committee (CMR: 432: 10) did contain tables comparing the existing GULP Objectives, Guidelines, and Implementation Plan items to the proposed new GULP Objectives, Strategies and Implementation Plan items, there was no attachment with all the changes together. This omission has been remedied with the addition to this report of an attachment containing the combined comparison, as requested (Attachment E). COMMITTEE REVIEW AND RECOMMENDATIONS Staff presented the proposed GULP Objectives, Strategies, and Implementation Plan to the Finance Committee on November 16, 2010. After discussion and requests for additional information, the Finance Committee voted to request that staff return with a revised report providing more detail and clarity on several points. In addition, the Finance Committee requested that the UAC review the gas purchasing strategy known as the laddering strategy to undertake further study on the laddering strategy, with staff returning to the Finance Committee with the results of the review, including any suggestions to change the laddering strategy. Staff returned to the Finance Committee on December 7, 2010 with a revised report responding to the questions and comments provided by the UAC at its November 16, 2010 meeting. Staff provided a brief explanation of the changes in the report compared to the November 16, 2010 March 07, 2011 Page 3 of 3 (ID # 1313) version. In addition, staff noted that it added a new task (Task #2) in the GULP Implementation Plan for the UAC to review the gas laddering strategy and to potentially make changes to the strategy. The Finance Committee voted unanimously to recommend that the City Council approve the revised, proposed GULP Objectives, Strategies, and Implementation Plan. Draft notes from the Finance Committee’s December 7, 2010 are provided as Attachment C. RESOURCE IMPACT There is no direct resource impact as a result of the proposed changes to the GULP Objectives, Strategies and Implementation Plan. Implementation of various programs that meet the Objective and Strategies will be brought to Council for approval and may have a resource impact at that time. POLICY IMPLICATIONS The proposed GULP Objectives, Strategies and Implementation Plan support the Council- approved Utilities Strategic Plan, Energy Risk Management Policies, and Comprehensive Plan Goal N-9: to provide a clean, efficient, competitively-priced energy supply that makes use of cost-effective renewable resources. ENVIRONMENTAL REVIEW Adoption of the resolution approving the GULP Objectives, Strategies and Implementation Plan does not constitute a project for the purposes of the California Environmental Quality Act. Attachments: ·Attachment A: Resolution (DOC) ·Attachment B: CMR: 432:10 -Utilities Advisory Commission Recommendation to Approve the Proposed Gas Utility Long-term Plan (GULP) Objectives, Strategies, and Implementation Plan (PDF) ·Attachment C: Excerpted Draft Minutes of the Finance Committee meeting of November 16, 2010 (DOC) ·Attachment D: Excerpted Draft Minutes of the Finance Committee meeting of December 7, 2010 (DOC) ·Attachment E: Existing and Proposed GULP Objectives Comparison (DOC) Prepared By:Karla Dailey, Sr. Resource Planner Department Head:Valerie Fong, Director City Manager Approval: James Keene, City Manager ATTACHMENT A Not Yet Approved 1 110228 syn 6051499 Resolution No. ______ Resolution of the Council of the City of Palo Alto Approving the Gas Utility Long-term Plan (GULP) Objectives, Strategies, And Implementation Plan WHEREAS, the Gas Utility Long-term Plan is a strategic planning document focused on how the City of Palo Alto’s Utilities Department (CPAU) can successfully balance environmental and economic sustainability as it provides natural gas service to CPAU customers;and WHEREAS, staff presented the Gas Utility Long-term Plan to the UAC at its September 1, 2010 meeting, and the UAC voted 7 to 0 to recommend that the City Council approve the Gas Utility Long-term Plan (GULP) Objectives, Strategies, and Implementation Plan; and WHEREAS, staff presented the Gas Utility Long-term Plan to the Finance Committee at its December 7, 2010 meeting, and the Finance Committee voted 4 to 0 (with Councilmember Larry Klein absent) to recommend that the City Council approve the Gas Utility Long-term Plan (GULP) Objectives, Strategies, and Implementation Plan. NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1.The Council hereby adopts the resolution approving the Gas Utility Long-term Plan (GULP) Objectives, Strategies, and Implementation Plan. SECTION 2.The Council finds that any revenue derived from the authorized adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. / / / / / / / / / / ATTACHMENT A Not Yet Approved 2 110228 syn 6051499 / / / / ATTACHMENT A Not Yet Approved 3 110228 syn 6051499 SECTION 3.The Council finds that the adoption of this resolution does not constitute a project under Section 21065 of the California Environmental Quality Act (CEQA)and the CEQA Guidelines, and therefore, no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ______________________________________________________ City Clerk Mayor APPROVED AS TO FORM:APPROVED: ______________________________________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: UTILITIES ATTENTION: FINANCE COMMITTEE DATE: DECEMBER 7, 2010 CMR: 432:10 SUBJECT: Utilities Advisory Commission Recommendation to Approve the Proposed Gas Utility Long-term Plan (GULP) Objectives, Strategies and Implementation Plan EXECUTIVE SUMMARY The Gas Utility Long-term Plan (GULP) covers a wide range of gas supply activities of City of Palo Alto Utilities including supply procurement given varying market prices, supply cost reduction, energy efficiency, climate protection and regulatory involvement. The proposed GULP Objectives, Strategies and Implementation Plan have a focus on balancing environmental and economic sustainability. REQUEST The Utilities Advisory Commission (UAC) and staff recommend that the Finance Committee recommend that the City Council approve the proposed Gas Utility Long-term Plan (GULP) Objectives, Strategies and Implementation Plan. BACKGROUND In July 2003, Council approved the first GULP Objectives and Guidelines (CMR: 345:03), and in September 2004, Council approved the accompanying GULP Implementation Plan (CMR: 368:04). In April 2005, and again in April 2006, Council received informational reports about GULP (CMR: 186:05 and CMR: 255:06). Staff reported that minor modifications had been made to the Implementation Plan and informed Council that no other GULP reports were planned. In 2007 and 2008, three factors drove the need to update GULP: 1) changes in the natural gas market prompted a review of the economics of gas storage; 2) new opportunities and favorable economics and contract terms prompted the need to re-examine financial alternatives for long- term discounted gas purchases; and 3) the arrival of renewable gas resources from livestock manure (biogas) afforded new opportunities for the City to pursue non-fossil fuel gas resources. The potential availability of biogas was significant because the City’s Climate Protection Plan (CPP), approved in December 2007 (CMR: 435:07), included greenhouse gas (GHG) emissions reduction goals related to renewable energy supply to be purchased voluntarily by gas utility customers. Council approved new GULP Guidelines and an Implementation Plan in February CMR: 432:10 Page 1 of 14 2008 (CMR: 134:08). The existing GULP Objectives, Guidelines and Implementation Plan are provided as Attachment B. Since 2008, staff has effectively worked towards meeting the Objectives within the set Guidelines. Significant accomplishments include:  Maintained robust gas supply contracts with private sector suppliers to purchase market price-based gas supplies;  Managed market price variability within portfolio and risk management limits through implementation of the laddered purchasing strategy;  Positively influenced new regulations and legislation to increase reliability and to maintain parity with Pacific Gas and Electric’s (PG&E’s) residential and commercial customers;  Conducted an exhaustive search for reasonably priced non-fossil fuel gas resources; and  Achieved gas efficiency savings of 0.11% and 0.49% of the annual gas usage in FY 2008 and FY 2009, respectively. The single biggest change since GULP was last updated is the global recession that began in 2007 and continues to affect federal, local and state governments, consumers, and businesses. Diminished global demand for energy resulted in lower prices for natural gas. Because Palo Alto purchases a portion of its gas needs at fixed prices over a period of years, Palo Alto’s gas cost is currently higher than prevailing market prices. (The opposite has been true during past periods of rising gas prices.) In addition, the cost of renewable energy has increased as more California electric utilities pursue Renewable Portfolio Standard (RPS) goals while future GHG emissions regulation is uncertain. Solutions with a reasonable cost are becoming difficult to find. The proposed set of GULP Objectives and Strategies have a focus on balancing environmental and economic sustainability. At its October 6, 2010 meeting, the UAC recommended Council approval of revised GULP Objectives and Strategies and an Implementation Plan (Attachment A). In parallel with the GULP revision, staff is developing a new Utilities Strategic Plan. Ultimately, GULP will need to align with the Utilities Strategic Plan to ensure that the GULP Objectives are consistent with the vision, goals, and strategic objectives of the Utilities Department and, thus, further revisions to GULP may be required after the Utilities Strategic Plan is completed. DISCUSSION Proposed Changes to GULP Objectives The GULP Objectives are intended to address several functions related to long-term gas resource acquisition and management including implementation of related Council policies. The Objectives are intended to direct the management of gas supply cost and uncertainty inherent in the business of serving Palo Alto’s gas customers. Modifications to the GULP Objectives are proposed with a focus on procuring supply resources and gas efficiency and managing existing gas supply assets to meet customer needs over the next ten years. The proposed changes to GULP Objectives are shown below. CMR: 432:10 Page 2 of 14 Existing and Proposed GULP Objectives Existing GULP Objectives Proposed GULP Objectives Objective 1 Management of market price uncertainty Ensure low and stable gas supply rates for pool customers. Balance supply cost stability with market exposure. Objective 2 Supply Cost Management Provide superior financial performance to customers and the City by managing the supply portfolio cost in a competitive manner compared to market cost and a retail supply rate advantage compared to PG&E. Lower delivered gas cost over the long term. Objective 3 Energy Efficiency Balance environmental, rate, and cost impacts when considering energy efficiency investments. Ensure the deployment of all feasible, reliable, cost-effective energy efficiency measures. Objective 4 Climate Protection Reduce the carbon intensity of the gas portfolio in accordance with the Climate Protection Plan Objective 5 Parity with PG&E At a reasonable cost, protect the City’s interests and maintain access to transportation on par with PG&E’s core customers. Proposed Changes to GULP Guidelines The proposed modifications to the 2008 GULP Guidelines and Implementation Plan are described in detail in this section. In an attempt to be consistent with the Strategic Plan, the term “guidelines” will be replaced with “strategies”. For each proposed GULP Objective, a Strategy is proposed providing definition for the Objective. The changes are intended to better reflect the proposed GULP Objectives, account for initiatives that have been completed and new ones that are underway, include concepts currently addressed in the implementation plan, and bring them more in line with Council priorities. Proposed Objective #1: Management of market price uncertainty Unlike the electric utility, the gas utility does not hold any long-term commodity assets and is ultimately dependent upon the spot market for all gas commodity purchases. After experiencing skyrocketing gas prices during the 2001 energy crisis, staff developed a plan to manage gas price volatility for periods longer than one fiscal year (CMR:196:01). Figure 1 shows Palo Alto’s historical and projected cost of gas compared to the monthly spot market price since July 2005. CMR: 432:10 Page 3 of 14 Figure 1 Palo Alto's Cost of Gas versus the Monthly Spot Market $0 $2 $4 $6 $8 $10 $12 $14Jul-05Oct-05Jan-06Apr-06Jul-06Oct-06Jan-07Apr-07Jul-07Oct-07Jan-08Apr-08Jul-08Oct-08Jan-09Apr-09Jul-09Oct-09Jan-10Apr-10Jul-10Oct-10Jan-11Apr-11Jul-11Oct-11Jan-12Apr-12Jul-12Oct-12Jan-13Apr-13$/ M M B t u CPAU's Cost of Gas PG&E Citygate Monthly Spot Price Palo Alto has implemented a “laddering strategy” for its residential and small commercial gas customers (i.e. the “pool” customers). The rates for the largest gas customers change on a monthly basis similar to gas rates for all of Pacific Gas and Electric’s (PG&E’s) customers. These large customers do, however, have the option to select a variety of rate structures to manage their energy cost. The gas laddering strategy spreads out the purchase of gas over a longer time period in an effort to stabilize costs and, thus, rates. The laddering strategy is implemented by purchasing gas at fixed-prices or prices with a negotiated cap on the price. The parameters of the laddering strategy are established by the Director of Utilities by her approval of a procurement plan. Procurement plans are developed in accordance with the City of Palo Alto’s Energy Risk Management Procedures. The procurement plan includes an analysis of the risks to net revenue (projected revenue minus cost) and takes into account Palo Alto’s expected gas costs compared to the spot market, Palo Alto’s current and projected gas commodity rate, the system average rate compared to market prices and the Gas Supply Rate Stabilization Reserve (G-SRSR) balance. Figure 2 below shows the cumulative cost savings that have accrued to the average residential customer from gas bills paid to the City of Palo Alto Utilities (CPAU) compared to what would have been paid to PG&E since January 1998. The figure shows that there were savings (CPAU’s bill was lower than PG&E’s) from about January 1998 through May 2001, then PG&E’s bill was lower than CPAU’s from June 2001 until November 2002. CPAU’s bill was lower from December 2002 through September 2006, but since October 2006, PG&E’s gas bill has been CMR: 432:10 Page 4 of 14 lower than CPAU’s. Over the entire span of time for which we have data – from January 1998 to October 2010 – Palo Altans paid about the same as PG&E customers for gas usage. Figure 2 Cumulative Residential Gas Bill Savings January 1998 through October 2010 $0 $100 $200 $300 $400 $500 $600 $700 $800Jan-98Jan-99Jan-00Jan-01Jan-02Jan-03Jan-04Jan-05Jan-06Jan-07Jan-08Jan-09Jan-10Bi l l S a v i n g s ( P G & E B i l l - C P A U B i l l ) Note that Figure 2 shows the entire gas bill savings. However, in July 2006, Palo Alto “unbundled” its gas rates by separating the charges into those related to distribution and those related to supply. Since GULP is about the supply business only and the laddering strategy relates to supply only, it may be useful to compare the supply rates and bills for Palo Alto and PG&E. Figure 3 below provides the cumulative gas supply bill savings since July 2006 for Palo Alto versus PG&E. As shown, Palo Alto residential customers saved money on gas supply compared to PG&E customers until September 2008, when the gas supply market prices started to plummet (See Figure 1). Since October 2008, Palo Alto residential customers have paid more for gas supply than PG&E. Overall, over the July 2006 to October 2010 period, the average Palo Alto residential customer paid about $140 more than a PG&E residential customer for gas supply. CMR: 432:10 Page 5 of 14 Figure 3 Cumulative Residential Gas Supply Bill Savings July 2006 through October 2010 -200 -150 -100 -50 0 50 100 150 200 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Cu m u l a t i v e S a v i n g s f o r G a s S u p p l y O n l y The current procurement plan’s targets are to purchase 80% of expected usage for the next 18- month period, 50% of expected usage for the following 9-month period and 20% of expected usage for the last 9-month period in the 36-month laddering horizon. The laddered commodity procurement strategy means that in times of rising gas prices, Palo Alto’s gas cost will be lower than the market and in times of falling gas prices Palo Alto’s gas cost will be higher than the market. On the other hand, purchasing gas on the short-term spot market results in unpredictable and volatile costs. In either case, communication with customers when rates are impacted is important and will be addressed in the context of overall customer communication improvements in the Utilities Strategic Plan While the current GULP Objectives have competing goals (stable and competitive rates), rate stability has been an overriding objective in recent years. Staff has used an internal objective of limiting rate changes to 10% in a given year; however, the cost of gas is only one factor contributing to the potential need for a rate change. Capital, regulatory and operational costs for the distribution system also impact total cost. Reserves are also used to achieve rate stability by building reserve levels during low-cost periods and drawing down reserves during high-cost periods. The table below shows the existing GULP Guideline #1 compared to the proposed GULP Strategy #1 and related Implementation Plan tasks. The proposed Strategy is essentially the same as the existing Guideline. All of the strategy elements are designed to strike a balance between cost stabilization and to not stray too far from the market cost over the longer term. CMR: 432:10 Page 6 of 14 This strategy also includes a limit of 10 years for fixed-price contracts due to the credit risk associated with such long-term transactions and the reality of an inactive market that far into the future. Fixed-price purchases for delivery more than three years from present require Council approval. The Utilities Strategic Plan may establish a quantifiable, measurable objective for gas rates at which time this strategy will be reviewed and may require modification. Staff will bring the results of that analysis to the UAC and then to the Finance Committee for review by June 2011 or as soon as practical after the completion of the Utilities Strategic Plan. In the interim, staff recommends continuing with a diversified portfolio, thus dampening the effects of the volatile gas market, helping to stabilize costs and rates while reducing the need for large reserves. The proposed Implementation Plan task makes this recommendation explicit. Existing Guideline Proposed Strategy Guideline #1: Market Risk Management – Manage market risk by adopting a portfolio strategy for gas supply procurement by: a. Diversifying energy purchases for the pool across commitment date, delivery date, duration, suppliers, pricing terms, and delivery points; b. Maintaining a prudent exposure to changing market prices by leaving some fraction of the forecasted gas pool needs exposed to near-term market prices; and c. Avoiding long-term (>10 years) fixed-price commodity contracts. Strategy #1: Balance supply cost stability with market exposure by: a. Diversifying energy purchases for the pool across commitment date, delivery date, duration, suppliers, pricing terms & delivery points; b. Leaving some fraction of the forecasted gas pool needs exposed to near-term market prices; and c. Avoiding long-term (>10 years) fixed-price commodity contracts. Existing Implementation Plan Proposed Implementation Plan No initiatives were specified. 1. Continue to implement a laddered commodity purchasing strategy for the pool. 2. Review the laddering strategy and rate stability with the Utilities Advisory Commission and recommend changes, if appropriate. Proposed Objective #2: Supply Cost Management Because Palo Alto does not own gas supplies (reserves in the ground, or gas production wells), all gas must be purchased on the open market. This objective is to lower Palo Alto’s cost whenever possible through asset management and the acquisition of cost-effective storage services or pipeline capacity. This objective does not refer to trying to “beat the market” or PG&E’s commodity cost, but to lower these other aspects of supply-related costs. Procuring gas pipeline capacity, gas storage services or resources are potential opportunities to lower gas supply costs. Gas prepay transactions, described below, provide an opportunity for Palo Alto to systematically acquire gas commodity at a discount to market prices. Storage The use of gas storage may result in a lower delivered gas cost if that storage service is cost- effective. Typically gas is injected into storage during the low-usage summer months and then CMR: 432:10 Page 7 of 14 withdrawn during the winter when usage is high. If the difference between the price of gas for summer delivery and the price of gas for winter delivery is greater than the cost of storage, then storage is cost-effective. Palo Alto has access to several independent storage service providers and Pacific Gas and Electric Company (PG&E). Palo Alto already has the ability to purchase storage services from PG&E through an existing transportation contract but would need contracts to purchase gas storage services from any of the other storage service providers. The proposed Implementation Plan is intended to prepare Palo Alto to purchase gas storage services, if those services prove to be cost-effective. Asset Optimization Occasionally, below-market assets or services become available to Palo Alto. For example, through a regulatory process, Palo Alto acquired access on a PG&E pipeline at a discounted rate. Another way to lower costs is through the optimization of assets. For instance, in some months excess pipeline capacity on a pipeline may be sold for more than its cost. However, this revenue is very small compared to the overall cost of the gas portfolio. As a result of a pending settlement agreement, Palo Alto has an opportunity to elect pipeline capacity on two PG&E-owned intrastate pipelines at a rate comparable to that for PG&E’s residential and commercial customers. Accepted capacity will be contracted at set rates for a four-year period beginning in 2011, the same term as the settlement agreement. Forecasting the value of the pipeline capacity and then capturing that value is included in the proposed Implementation Plan. Gas Prepay A potentially significant opportunity for lowering delivered gas commodity cost is through a “gas prepay” transaction. In a gas prepay transaction, a municipality purchases discounted gas by prepayment using tax-exempt bonds. IRS regulations allow for tax-exempt prepay natural gas transactions by municipalities, and the tax-exempt status of those transactions was codified in the Federal Energy Policy Act of 2005. Many other municipal utilities have completed prepay transactions for their gas-fired electric generation plants, including the City of Long Beach, the City of Roseville, the City of Redding, Silicon Valley Power, and the Sacramento Municipal Utility District. Gas prepay transactions are one way for municipal utilities to have a cost advantage over investor-owned utilities such as PG&E. Typically transactions are structured such that the gas supplier is liable in the event of bond payment default. While the prepayment amount is calculated using a fixed gas price, gas is purchased monthly by the municipality at an index price, less a fixed discount as the gas is delivered. The amount of the discount is dependent on several factors, including the difference between municipal bond interest rates and taxable interest rates. Recent recession-related credit market problems stalled prepay activity as achievable discounts have shrunk considerably. Because the potential benefit of participation in a gas prepay transaction in the future could be substantial, Palo Alto should position itself to be able to act in the event an attractive opportunity arises. Prepay transactions are quite complicated and involve a number of parties and agreements resulting in a significant up-front cost. Palo Alto may want to partner with other municipal utilities. Additionally, Palo Alto may want to consider a series of one to three prepay arrangements over a number of years to diversify price risk. The proposed Implementation Plan CMR: 432:10 Page 8 of 14 includes the necessity of engaging a consultant to help guide CPAU through the process of evaluating these complex, but potentially cost-effective, transactions. The table below shows the existing GULP Guideline #2 compared to the proposed GULP Strategy #2. The proposed strategy is very similar to the existing guideline, but removes some of the operational specificity and contains language that is more policy-based. In addition, the existing and proposed Implementation Plan tasks supporting this strategy are shown. Existing Guideline Proposed Strategy Guideline #2: Asset Acquisition and Management – Explore supply, pipeline, and storage acquisition options available to the City which may be assembled to yield reliable supply at a fair and reasonable cost, taking into consideration: a. Long-term supply cost for gas deliveries at PG&E Citygate; b. Operational needs including the need for daily balancing during Operational and Emergency Flow Orders; c. Existing and potential regulatory mandates; d. Potential operational streamlining opportunities with other agencies; and e. City’s low cost of capital for asset acquisition. Strategy #2: Lower delivered gas cost over the long term by: a. Acquiring pipeline and/or storage assets that yield supply costs below market and meet operational needs; b. Taking advantage of the City’s low cost of capital to acquire gas supply and assets; and c. Optimizing existing assets. Existing Implementation Plan Proposed Implementation Plan Implementation Plan Items: 1. Pursue cost-effective opportunities for natural gas storage capacity; 2. Do not acquire additional natural gas pipeline capacity at this time; 3. Take steps to analyze Palo Alto’s tax-exempt status to realize a discount to the City’s gas cost by: a. Identifying risks and costs associated with prepay transactions including required modifications to City policies and operating procedures; and b. Exploring alternative prepay structures 4. Pursue any low-cost, high-value prospects to acquire supply- related resources that may arise from time to time. 3. Pursue cost-effective gas storage services by: a. Signing enabling agreements with available gas storage service providers; b. Monitoring gas prices for seasonal differences; and c. Purchasing gas storage services when cost-effective. 4. Pursue below-market assets available through the Gas Transportation and Storage Settlement by: a. Evaluating the pipeline capacity reservation options available; and b. Contracting with PG&E for any pipeline capacity with an estimated cost below the forecasted market value. 5. Pursue opportunities for natural gas prepay transactions by: a. Hiring a consultant to help staff with; i. Identifying any internal policy changes needed including the policy on the use of financial instruments; ii. Identifying system and internal processes required; iii. Identifying opportunities; and iv. Evaluating opportunities and quantifying the benefits and costs; and b. Seeking UAC recommendation and Council approval regarding whether to proceed with a gas prepay transaction. Proposed Objective #3: Energy Efficiency Palo Alto has long been a leader in energy efficiency programs, and views efficiency as a critical long-term resource that plays a key role in long-term planning and in achieving the GHG CMR: 432:10 Page 9 of 14 CMR: 432:10 Page 10 of 14 emissions reduction goals in the CPP. Council approved the first Ten-Year Energy Efficiency (EE) Plan in April 2007 which set energy savings goals for both electric and gas efficiency. Over a ten-year period, the cumulative electric and gas savings were targeted at 3.5% of both gas and electric usage. Council approved the updated Ten-Year Electric EE Plan in May 2010, which doubled the cumulative electric efficiency savings to 7.2% by 2020. In determining the amount of cost- effective electric efficiency, staff used a value for renewable energy adopted by the California Public Utilities Commission (CPUC) so that the carbon emission reduction benefits of EE are properly valued. Staff is currently updating the Ten-Year Gas EE Plan, which will include updated gas efficiency targets. Staff is using the carbon adder (carbon price premium)1 identified in the CPP for the purposes of calculating the cost-effectiveness of gas efficiency measures. The proposed update of the Ten-Year Gas EE Plan will be presented to the UAC in Fall 2010 and to Council in early 2011. The table below shows the existing Guideline #4 compared to the proposed Strategy #3. The proposed strategy states that the Ten-Year Gas EE Plan must be prepared every three years and must include a “reasonable” carbon adder when evaluating cost-effectiveness for gas efficiency. The carbon adder identified in the CPP is used for the purpose of calculating the cost- effectiveness of gas efficiency measures. A $20/tonne carbon adder translates to around 12¢ per therm. Therefore, given a long-term natural gas price of about $0.60 per therm, a gas efficiency measure that costs less than $0.72 per therm ($0.60/therm + $0.12/therm) would be found to be cost-effective. Including a value for carbon in the EE Plan is justified because natural gas is anticipated to be regulated under cap-and-trade, which is expected to result in a market cost associated with carbon emissions. Using a carbon adder ensures that the long-term liability of the costs of buying allowances for carbon emissions is incorporated into the investment decision for gas efficiency measures. The proposed update of the 10-year gas efficiency goals will be presented to the Utilities Advisory Commission in January 2011. The existing Implementation Plan item that relates to Guideline #4 is listed. The proposed Implementation Plan tasks related to this strategy address the evaluation of substitutions (gas for electric appliances and vice versa), reporting of gas efficiency program results and ongoing evaluation of gas efficiency technologies. 1 The City’s 2007 CPP recommended using a carbon adder for investment decisions of $20 per tonne escalated by 5% each year starting in 2008. A $20 per tonne CO2 carbon adder translates to around 12¢ per therm. Existing Guideline Proposed Strategy Guideline #4: Gas Efficiency and Solar Heating - Fund innovative programs that promote and facilitate deployment of all cost- effective, reliable and feasible energy efficiency and solar heating opportunities as high priority resources consistent with the Ten-year Efficiency Plan. Strategy #3: Ensure the deployment of all feasible, reliable, cost-effective energy efficiency measures by: a. Developing and implementing a ten-year gas efficiency plan every three years that includes a reasonable carbon price premium for traditional gas supplies; and b. Considering the impacts (cost, benefits, and GHG emissions) of substituting electricity-using appliances for gas-using appliances and vice versa in the ten-year gas efficiency plan. Existing Implementation Plan Proposed Implementation Plan Implementation Plan Item: Develop comprehensive demand-side management goals and implementation plan by fall 2004 in time for incorporation into FY 2006 and future ratemaking and budget decisions. In the interim, continue implementation of current and planned FY 2005 demand-side management programs. 6. Develop an implementation plan by summer 2011 to meet the gas efficiency targets including the: a. Evaluation of the cost-effectiveness of substituting gas-using appliance for electric-using appliances and vice versa and the greenhouse gas impacts of such substitutions; and b. Incorporation of any cost-effective substitution measures in the implementation plan to meet the gas efficiency targets. 7. Track and report progress against adopted gas efficiency goals by: a. Providing quarterly updates on the gas efficiency program achievements to the UAC; and b. Providing annual updates on gas efficiency program achievements to the UAC and the City Council. 8. Continue evaluating new gas efficiency technologies and undertake pilot studies where appropriate. Proposed Objective #4: Climate Protection Climate change continues to be a key global environmental challenge that impacts not only utilities, but all City operations. Both a voluntary green gas program similar to PaloAltoGreen and a mandatory green portfolio similar to the Renewable Portfolio Standard (RPS) concept for the electric portfolio were considered in staff’s analysis. Besides the expected CO2 emissions reductions from gas efficiency (under Strategy #3 above), the City’s CPP includes a CO2 reduction goal associated with a voluntary green gas program. This strategy reflects staff’s intention to pursue resources for that purpose. Staff investigated the potential acquisition of non-fossil gas supplies through the issuance of a Request for Proposals in July 2009, but found the resource to be too costly for a successful voluntary program. Currently staff is pursuing several non-fossil fuel gas opportunities through Palo Alto’s Northern California Power Agency (NCPA) membership and participation in the NCPA Green Power Project (NGPP). NCPA has hired a consultant to perform due diligence on the projects. CPAU is a participant thus far in the project evaluation process with an interest in the gas for the voluntary green gas program. The proposed implementation plan includes continued CMR: 432:10 Page 11 of 14 involvement in NGPP to pursue green gas at a reasonable price that could be used in a voluntary green gas program. Non-fossil fuel gas acquisition was also considered for the portfolio. Any additional cost for non- fossil gas supplies would have the benefit of meeting local GHG reduction goals, but would adversely impact gas rates. Given the lack of regulatory pressure and the current economic climate, no rate impact for non-fossil gas supplies is deemed prudent at this time for the overall gas portfolio, and this is reflected in the proposed strategy. The table below shows the existing Guideline #5 compared to the proposed Strategy #4. The proposed strategy recommends pursuing a voluntary program for green gas. Non-fossil fuel supplies for the portfolio are recommended only when there is no rate impact, which in essence means that a renewable gas portfolio standard for the overall gas portfolio will not be implemented at this time. The proposed Implementation Plan tasks include pursuing reasonably priced renewable gas resources through NGPP. Existing Guideline Proposed Strategy Guideline #5: Renewable Resources - Develop alternatives to reduce the carbon intensity of the natural gas portfolio consistent with the Climate Protection Plan. Strategy 4: Reduce the carbon intensity of the gas portfolio by: a. Designing and implementing a voluntary retail program using reasonably priced non- fossil fuel gas resources; and b. Purchasing non-fossil fuel gas for the portfolio as long as it can be done with no rate impact. Existing Implementation Plan Proposed Implementation Plan Reduce the carbon intensity of the natural gas portfolio by a. Designing and implementing a voluntary retail program using low- carbon gas resources; b. Evaluating the participation of City facilities in the voluntary program; and c. Evaluating portfolio targets for low- carbon gas resources. 9. Pursue reasonably priced non-fossil gas for a voluntary program through NGPP by: a. Reviewing the due diligence report to be provided to NGPP participants by the end of October 2010; and b. Based on the results, recommending whether to continue participating in the projects. Proposed Objective #5: Parity with PG&E Palo Alto participates in regulatory proceedings and in the legislative arena when the expected cost to intervene is less costly than an adverse outcome and when the city has a reasonable chance of influencing that outcome. Whenever possible, staff seeks to partner with other entities with similar positions and interests. The table below shows the existing Guideline #3 compared to the proposed Strategy #5. The proposed strategy is similar to the existing guideline, but adds more detail on parity with PG&E and specifies that participation in regulatory and legislative advocacy be cost-effective. CMR: 432:10 Page 12 of 14 Existing Guideline Proposed Strategy Guideline #3: Management of Regulatory and Legislative Matters – Serve as an effective voice to protect and enhance the City’s positions in regulatory and legislative arenas by: a. Intervening in the regulatory and legislative arenas that the City’s gas utility interests are protected and enhanced; and b. Exploring potential joint action with other public agencies. Strategy 5: Protect the City’s interests and maintain parity with PG&E’s core customers by: a. Participating in the regulatory and legislative arenas when the potential impact on the City is aligned with the cost to intervene and the probability of success; b. Negotiating with PG&E for fair access to transportation and storage; and c. Exploring potential joint action with other public agencies. Existing Implementation Plan Proposed Implementation Plan No initiatives specified No Implementation Plan initiatives are recommended for this strategy as the strategy itself provides staff the direction needed. COMMISSION REVIEW AND RECOMMENDATIONS The UAC began discussing the GULP update at its June 2010 meeting. At that meeting, staff reviewed the existing policies and GULP Objectives and Guidelines and began the discussions with the UAC on the range of alternatives to the current policies. Discussion continued on draft GULP Objectives and Strategies at the UAC’s July 2010 meetings. Using the UAC’s input from those discussions, staff presented proposed GULP Objectives and Strategies to the UAC at its September 2010 meeting. At its September 2010 meeting, the UAC voted (6-1) to recommend that the Council approve the proposed GULP Objectives and Strategies as staff recommended. Chair Waldfogel opposed the motion clarifying that he felt that Strategy #1 did not provide sufficient policy direction. The notes from the UAC’s September 1, 2010 meeting are provided as Attachment C. Staff presented the proposed GULP Implementation Plan to the UAC at its October 2010 meeting. At that meeting, the UAC unanimously recommended that the City Council approve the proposed Gas Utility Long-term Plan (GULP) Implementation Plan (7-0). The notes from the UAC’s October 6, 2010 meeting are provided as Attachment D. The Finance Committee reviewed the draft GULP Objectives, Strategies and Implementation Plan on November 16, 2010. The committee asked for clarifications on several issues and requested that the report contain additional information providing that clarification. For example, there was a question about whether Objective #2 – Lower delivered gas cost over the long term – referred to lowering gas costs compared to PG&E. Staff explained that this did not refer to being lower cost than PG&E, but to finding ways to reduce Palo Alto’s cost by investing in cost-effective storage or pipeline capacity and pursuing a gas prepayment transaction. The committee also discussed the gas procurement laddering strategy and questioned the value of rate stability that results from the laddering strategy versus a strategy of tracking market prices. The committee requested that staff review the laddering strategy and rate stability CMR: 432:10 Page 13 of 14 objectives with the UAC. Another issue raised around gas rates was communication to customers. Staff advised that customer communication would be addressed in the strategic plan that is currently under development. The committee voted unanimously to continue the requested action until the report was revised to include the clarifications requested. This report contains additional explanation on the issues raised by the Finance Committee and includes a new implementation plan item to review the laddering strategy with the UAC. RESOURCE IMPACT There is no direct resource impact as a result of the proposed changes to the GULP Objectives and Guidelines. Implementation of various programs that meet the Objective and Strategies will be brought to Council for approval and may have a resource impact at that time. POLICY IMPLICATIONS The proposed GULP' Objectives, Strategies and Implementation Plan support the Council- approved Utilities Strategic Plan, Energy Risk Management Policies, and Comprehensive Plan Goal N-9 (a clean, efficient, competitively-priced energy supply that makes use of cost-effective renewable resources). ENVIRONMENTAL REVIEW Adoption of the GULP Objectives, Strategies and Implementation Plan does not constitute a project for the purposes of the California Environmental Quality Act. ATTACHMENTS A. Proposed GULP Objectives, Strategies and Implementation Plan B. Existing GULP Objectives, Guidelines and Implementation Plan C. Excerpted Minutes of the UAC Meeting of September 1,2010 D. Excerpted Minutes of the UAC Meeting of October 6, 2010 E. Excerpted Draft Minutes of the Finance Committee Meeting of1\ovember 6, 2010 PREPARED BY; REVIEWED BY: DEPARTMENT HEAD: CHRISTINE TAM, Resource Planner KARLA DAILEY, Senior Resource Planner '~NE RATCHYE VALERI O. NG ~ ""i~RoW"= M_,""" sz-':::: CITY MANAGER APPROVAL: fC .j ~ JAMES KEENE ......-City Manager CMR:432:10 Page 14 ofl4 Proposed 2010 Gas Utility Long-term Plan (GULP) Objectives, Strategies and Implementation Plan GULP Objectives: 1. Management of market price uncertainty – Balance supply cost stability with market exposure. 2. Supply Cost Management – Lower delivered gas cost over the long term. 3. Energy Efficiency – Ensure the deployment of all feasible, reliable, cost-effective energy efficiency measures. 4. Climate Protection – Reduce the carbon intensity of the gas portfolio in accordance with the Climate Protection Plan. 5. Parity with PG&E – At a reasonable cost, protect the City’s interests and maintain access to transportation on par with PG&E’s core customers. GULP Strategies: 1. Balance supply cost stability with market exposure by: a. Diversifying energy purchases for the pool across commitment date, delivery date, duration, suppliers, pricing terms & delivery points; b. Leaving some fraction of the forecasted gas pool needs exposed to near-term market prices; and c. Avoiding long-term (>10 years) fixed-price commodity contracts. 2. Lower delivered gas cost over the long term by: a. Acquiring pipeline and/or storage assets that yield supply costs below market and meet operational needs; b. Taking advantage of the City’s low cost of capital to acquire gas supply and assets; and c. Optimizing existing assets. 3. Ensure the deployment of all feasible, reliable, cost-effective energy efficiency measures by: a. Developing and implementing a ten-year gas efficiency plan every three years that includes a reasonable carbon price premium for traditional gas supplies; and b. Considering the impacts (cost, benefits, and GHG emissions) of substituting electricity-using appliances for gas-using appliances and vice versa in the ten-year gas efficiency plan. 4. Reduce the carbon intensity of the gas portfolio in accordance with the Climate Protection Plan by: a. Designing and implementing a voluntary retail program using reasonably priced non- fossil fuel gas resources; and b. Purchasing non-fossil fuel gas for the portfolio as long as it can be done with no rate impact. 5. At a reasonable cost, protect the City’s interests and maintain access to transportation on par with PG&E’s core customers by: a. Participating in the regulatory and legislative arenas when the potential impact on the City is aligned with the cost to intervene and the probability of success; a. Negotiating with PG&E for fair access to transportation and storage; and b. Exploring potential joint action with other public agencies. GULP Implementation Plan: 1. Continue to implement a laddered commodity purchasing strategy for the pool. 2. Review the laddering strategy and rate stability with the Utilities Advisory Commission and recommend changes, if appropriate. 3. Pursue cost-effective gas storage services by: a. Signing enabling agreements with available gas storage service providers; b. Monitoring gas prices for seasonal differences; and c. Purchasing gas storage services when cost-effective. 4. Pursue below-market assets available through the Gas Transportation and Storage Settlement by: a. Evaluating the pipeline capacity reservation options available; and b. Contracting with PG&E for any pipeline capacity with an estimated cost below the forecasted market value. 5. Pursue opportunities for natural gas prepay transactions by: a. Hiring a consultant to help staff with: i. Identifying any internal policy changes needed including the policy on the use of financial instruments; ii. Identifying system and internal processes required; iii. Identifying opportunities; and iv. Evaluating opportunities and quantifying the benefits and costs; and b. Seeking UAC recommendation and Council approval regarding whether to proceed with a gas prepay transaction. 6. Develop an implementation plan by summer 2011 to meet the gas efficiency targets including the: a. Evaluation of the cost-effectiveness of substituting gas-using appliance for electric- using appliances and vice versa and the greenhouse gas impacts of such substitutions; and b. Incorporation of any cost-effective substitution measures in the implementation plan to meet the gas efficiency targets. 7. Track and report progress against adopted gas efficiency goals by: a. Providing quarterly updates on the gas efficiency program achievements to the UAC; and b. Providing annual updates on gas efficiency program achievements to the UAC and the City Council. 8. Continue evaluating new gas efficiency technologies and undertake pilot studies where appropriate. 9. Pursue reasonably priced non-fossil gas for a voluntary program through NGPP by: a. Reviewing the due diligence report to be provided to NGPP participants by the end of October 2010; and b. Based on the results, recommending whether to continue participating in the projects. EXISTING GAS UTILITY LONG-TERM PLAN (GULP) GUIDELINES, OBJECTIVES, AND IMPLEMENTATION RECOMMENDATIONS GULP Objectives (CMR:345:03) Objective 1: Ensure low and stable gas supply rates for pool customers. Objective 2: Provide superior financial performance to customers and to the City by managing the supply portfolio cost in a competitive manner compared to market cost and a retail supply rate advantage compared to PG&E. Objective 3: Balance environmental, rate, and cost impacts when considering energy efficiency investments. GULP Guidelines (CMR:134:08) Guideline 1: Market Risk Management – Manage market risk by adopting a portfolio strategy for gas supply procurement by: A. Diversifying energy purchases for the pool across commitment date, delivery date, duration, suppliers, pricing terms and delivery points; B. Maintaining a prudent exposure to changing market prices by leaving some fraction of the forecasted gas pool needs exposed to near-term market prices; C. Avoiding long-term (>10 years) fixed-price commodity contracts. Guideline 2: Asset Acquisition and Management – Explore supply, pipeline, and storage acquisition options available to the City which may be assembled to yield reliable supply at fair and reasonable cost, taking into consideration: A. Long-term supply cost for gas deliveries at PG&E Citygate; B. Operational needs including the need for daily balancing during Operational and Emergency Flow Orders; C. Existing and potential regulatory mandates; D. Potential operational streamlining opportunities with other agencies; and E. City’s low cost of capital for asset acquisition. Guideline 3: Management of Regulatory and Legislative Matters – Serve as an effective voice to protect and enhance the City’s position in regulatory and legislative arenas by: A. Intervening in the regulatory and legislative arenas to ensure that the City’s gas utility interests are protected and enhanced; and B. Exploring potential joint action with other public agencies. Guideline 4: Gas Efficiency and Solar Heating - Fund innovative programs that promote and facilitate deployment of all cost-effective, reliable and feasible energy efficiency and solar heating opportunities as high priority resources consistent with the Ten-year Efficiency Plan. Guideline 5: Renewable Resources - Develop alternatives to reduce the carbon intensity of the natural gas portfolio consistent with the Climate Protection Plan. GULP Implementation Recommendations (CMR:134:08) 1. Pursue cost-effective opportunities for natural gas storage capacity; 2. Do not acquire additional natural gas pipeline capacity at this time; 3. Take steps to analyze Palo Alto’s tax-exempt status to realize a discount to the City’s gas cost by: a. Identifying risks and costs associated with prepay transactions including required modifications to City policies and operating procedures; and b. Exploring alternative prepay structures. 4. Pursue any low-cost, high-value prospects to acquire supply-related resources that may arise from time to time; 5. Develop comprehensive demand-side management goals and implementation plan by fall 2004 in time for incorporation into FY05-06 and future ratemaking and budget decisions. In the interim, continue implementation of current and planned FY 04-05 demand-side management programs; and 6. Reduce the carbon intensity of the natural gas portfolio by a. Designing and implementing a voluntary retail program using low-carbon gas resources; b. Evaluating the participation of City facilities in the voluntary program; and c. Evaluating portfolio targets for low-carbon gas resources. EXCERPTED FINAL MINUTES OF UTILITIES ADVISORY COMMISSION Meeting of September 1, 2010 ITEM 3: ACTION: Proposed Gas Utility Long-Term Plan (GULP) Objectives and Strategies Senior Resource Planner Karla Dailey focused the discussion on the proposed GULP objectives and strategies, as given in Attachment A of the Memo on Proposed Gas Utility Long-term Plan Objectives and Strategies in the UAC package. Chair Waldfogel stated that proposed Objective #1 (Balance supply cost stability with market exposure) is too vague and doesn’t offer enough guidance as to where the “balance” gets resolved. Dailey offered that the strategic plan will provide a rates objective such as that rates do not change by more than 10% every 12 months, for example. The gas supply portfolio would then be managed to meet the rates objective. Assistant Director Ratchye added that during the annual long-term financial forecast and budget process, the level of the reserves and the forecast costs would be evaluated along with the rates stability objective so that the Council could determine the proper balance. There is a danger of adding too much specificity into the objective and strategy that could box staff in to a corner in managing the supply portfolio. Commissioner Eglash stated that there was no opposition from the UAC to contracts longer than one year and wondered what problem proposed Strategy #1 was addressing. Chair Waldfogel replied that the strategy provides no policy direction. Council Member Yeh asked if we could have a policy to change how the portfolio is managed if our costs exceed PG&E’s for a period of time – say, three years, for example. Commissioner Eglash stated that in the long term, energy prices have risen and, given our laddering strategy, we should overall (in the long term) be lower priced than PG&E. Commissioner Keller stated that the City should strive to have rate stability and weather the storm when our costs are higher than PG&E’s. Council Member Scharff asked where our rates have been with respect to PG&E’s over the past 10 years. He advised that the topic of rates and rate stability was very relevant as it is being discussed by the Council Finance Committee with respect to the Refuse Fund. Dailey stated that CPAU started the laddering strategy during the energy crisis. In contrast, PG&E historically buys nearly 100% spot purchases, which is expected given the CPUC gas procurement incentive mechanism for the IOUs, Council Member Scharff stated that he had read that natural gas reserves were huge and that some experts expect prices to remain low for the foreseeable future. Dailey responded that staff monitors gas prices on a daily basis and understands the volatility of gas prices; however staff doesn’t have a “market view” and can’t predict where prices might go in the future. At the current price levels however, there is more room for gas prices to go higher rather than lower. There aren’t many analysts predicting sudden price spikes in the short term. Commissioner Cook asked if CPAU’s objective was to have less variability in gas prices than PG&E. Commissioner Eglash responded that rate stability is an objective, but noted that stable rates shield customers from price signals. Stability however is better than volatility. Commissioner Eglash then asked if the UAC should accept the proposed GULP strategy and wait until the other issues are resolved and the strategic plan is complete and return to the question in the future. Commissioner Berry agreed with this approach to act now and return to these issues later. Yeh asked if the UAC had an opinion on Strategy 4.b. (Reduce the carbon intensity of the gas portfolio by purchasing non-fossil fuel gas for the portfolio as long as it can be done with no rate impact.). He noted that LEAP did contain a rate impact limit for RPS and wondered if a rate impact limit should be allowed under this GULP strategy. Commissioner Eglash commented that there is no competitive alternative to fossil-based gas supply. Commissioner Melton offered that the reality is that the premium for green gas is very high and that staff’s proposal was acceptable and responsive to this fact. Commissioner Eglash asked how proposed Strategy #2 (Lower delivered gas cost over the long term by: a) acquiring pipeline and/or storage assets that yield supply costs below market and meet operational needs; b) taking advantage of the City’s low cost of capital to acquire gas supply and assets; and c) optimizing existing assets) would work. Dailey replied that, for subsection a, the City’s pipeline capacity rights that were granted in settlements with PG&E have some value that the City receives and that, for subsection c, there is a small amount of money that can be realized by optimizing that asset. However, the largest potential value could come from subsection b, which is a gas “pre-pay” arrangement whereby the City would prepay for gas for the long term and realize a discount off of the spot market index for the gas. The GULP implementation plan would contain all the steps that would be required to implement such an arrangement, which is a complex set of agreements that would minimize the City’s risk and provide a long-term benefit. ACTION: Commissioner Melton made a motion that the UAC recommend that the Council approve proposed GULP Objective and Strategy #1 – Balancing Stability and Competitiveness as proposed. Commissioner Eglash seconded the motion. Commissioner Eglash offered a substitute motion that the UAC recommend that the Council approve the proposed GULP Objectives and Strategies as proposed. Commissioner Cook seconded the motion. The motion passed (6-1) with Chair Waldfogel opposing. Chair Waldfogel stated his opposition was due to his opinion that Strategy #1 did not provide sufficient policy direction. EXCERPTED FINAL MINUTES OF UTILITIES ADVISORY COMMISSION Meeting of October 6, 2010 ITEM 3: ACTION: Gas Utility Long-term Plan (GULP) Implementation Plan Senior Resource Planner Karla Dailey presented the proposed GULP implementation plan, which consists of eight initiatives to be taken by staff in order to achieve the proposed GULP objectives and strategies that the UAC recommended Council approve at its September 2011 meeting. Commissioner Keller asked if GULP addresses long-term maintenance and new pipeline development. Dailey clarified that GULP only addresses gas supply and not infrastructure. Commissioner Cook noted his support for Implementation Plan Initiatives #2 (Pursue cost- effective gas storage services) and #3 (Pursue below-market assets available through the Gas Transportation and Storage Settlement) as they are proactive attempts to save costs. Regarding Initiative #4 (Pursue opportunities for natural gas prepay transactions), Council Member Yeh asked for clarification on the use of financial instruments. Dailey emphasized that the use of financial instruments needs to be part of the prepay discussion up front because implementing a hedging strategy with physical gas priced at a discount to a market varying index price requires the use of financial instruments. Council Member Yeh expressed his concern about structuring the deal to protect the City. Commissioner Eglash noted that using a consultant can be expensive, and the City may not end up pursuing prepay. Dailey explained that the potential benefits of several million dollars out of an annual supply budget of $20 million outweigh the costs of using a consultant, and a prepay arrangement is the only way to achieve gas supply cost below PG&E’s. Commissioner Eglash asked about the cost range for a consultant. Dailey responded that if Palo Alto decides to pursue prepay alone, that could result in higher transaction costs. A consultant would help Palo Alto identify how best to pursue prepay. Commissioner Eglash asked if the Energy Risk Manager is aware of the prepay initiative. Karl Van Orsdol, Energy Risk Manager, responded that he himself, along with Lalo Perez, Director of Administrative Services, and City Manager Jim Keene are aware of this, and that a consultant was hired around two years ago to provide training to staff on this issue. Commissioner Melton asked if any of the cities that participated in a prepay transaction was financially was harmed during the financial crisis. Dailey responded that the worst case did occur when Lehman Brothers collapsed and a prepay deal involving Lehman fell apart. However, the unwinding of the transaction happened exactly as contractually planned under such conditions and the bond holders lost their investment. The municipal utility involved lost only the discount to index for future deliveries, but was otherwise unharmed. Director Fong reassured that given the complexity of a prepay transaction, staff will present more details on the structuring of a prepay transaction to the UAC. Chair Waldfogel supports a reasonable cost for the consultant study for prepay. No comments were made on Initiatives 5, 6 and 7. On Initiative #8, Commissioner Eglash asked about the Return on Investment of reviewing the cost of non-fossil gas. Dailey responded that Palo Alto’s share of the NCPA due diligence study is $5,000, which is a relatively low investment. Chair Waldfogel asked if we have ruled out offsets. Dailey explained that customers can currently purchase offsets from many sources for personal travel and energy usage. Palo Alto does not provide unique value by offering offsets to customers and that offsets would be difficult to market. ACTION: Commissioner Eglash moved, and Commissioner Foster seconded, that the UAC recommend that the City Council approve the proposed Gas Utility Long-term Plan (GULP) Implementation Plan. The motion passed unanimously (7-0). ATTACHMENT E FINANCE COMMITTEE – MEETING EXCERPTED DRAFT MINUTES OF NOVEMBER 16, 2010 ITEM 3: ACTION: Utilities Advisory Commission recommendation to Approve the Proposed Gas utility Long-term Plan (GULP) Objectives, Strategies and implementation Plan (Continued from the November 2, 2010) Senior Resource Planner Karla Dailey provided a brief presentation on GULP noting that the UAC unanimously approved the objectives, Strategies, and Implementation Plan at its October 2010 meeting. She highlighted the differences between the current and proposed GULP Objectives and the Strategies and Implementation Plan to meet those objectives. Council Member Klein asked what the benchmark is for “lower cost” referred to in proposed GULP Objective 2. Staff explained that “lower” is better than a do-nothing strategy and that gas prepay transactions are the only means to lower cost relative to the market/PG&E. Council Member Klein noted that the report contained no explanation for avoiding long-term fixed price contracts in proposed Strategy 1. Council Member Klein said he did not have a preference between stable rates and competitive (market-based) costs. Council Member Scharff requested that staff do more analysis on laddering strategy alternatives and discuss with the UAC. Council Member Scharff also asked what the purpose of the carbon adder is when evaluating energy efficiency as stated in proposed Strategy 3. Staff explained that it expects that the City will have to pay for greenhouse gas emissions in the future. Therefore reducing these emissions has value and, since energy efficiency is a long-term investment, those avoided costs are included in the value of energy efficiency. Vice Mayor Espinosa noted that it is important to communicate with the public on why the City’s gas purchasing strategy sometimes leads to the City’s gas rates being higher than PG&E’s. Staff indicated that this would be part of the job of the new position Council approved in the FY 2010 budget, the Utilities Communications Manager. Council Member Schmid expressed concern about the City’s gas cost relative to the market and commented on the need for more information regarding prepay transactions. ACTION: Council Member Klein moved, seconded by Vice Mayor Espinosa to request that Staff bring revisions to the Staff Report back to the Finance Committee that clarify the justifications for the proposals Staff is making. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER for Staff to refer the laddering strategy to the Utilities Advisory Commission for further study and return to the Finance Committee at a later date. Motion Passed: 4-0 ATTACHMENT C FINANCE COMMITTEE –MEETING EXCERPTED DRAFT MINUTES OF NOVEMBER 16, 2010 ITEM 3. Utilities Advisory Commission Recommendation to Approve the Proposed Gas Utility Long-term Plan (GULP) Objectives, Strategies and Implementation Plan (continued form November 2, 2010) Senior Resource Planner Karla Dailey provided a brief presentation on GULP noting that the UAC unanimously approved the objectives, Strategies, and Implementation Plan at its October 2010 meeting. She highlighted the differences between the current and proposed GULP Objectives and the Strategies and Implementation Plan to meet those objectives. Council Member Klein asked what the benchmark is for “lower cost” referred to in proposed GULP Objective 2. Staff explained that “lower” is better than a do-nothing strategy and that gas prepay transactions are the only means to lower cost relative to the market/PG&E. Council Member Klein noted that the report contained no explanation for avoiding long-term fixed price contracts in proposed Strategy 1. Council Member Klein said he did not have a preference between stable rates and competitive (market-based) costs. Council Member Scharff requested that staff do more analysis on laddering strategy alternatives and discuss with the UAC. Council Member Scharff also asked what the purpose of the carbon adder is when evaluating energy efficiency as stated in proposed Strategy 3. Staff explained that it expects that the City will have to pay for greenhouse gas emissions in the future. Therefore reducing these emissions has value and, since energy efficiency is a long-term investment, those avoided costs are included in the value of energy efficiency. Vice Mayor Espinosa noted that it is important to communicate with the public on why the City’s gas purchasing strategy sometimes leads to the City’s gas rates being higher than PG&E’s. Staff indicated that this would be part of the job of the new position Council approved in the FY 2010 budget, the Utilities Communications Manager. Council Member Schmid expressed concern about the City’s gas cost relative to the market and commented on the need for more information regarding prepay transactions. MOTION: Council Member Klein moved, seconded by Vice Mayor Espinosa to request that Staff bring revisions to the Staff Report back to the Finance Committee that clarify the justifications for the proposals Staff are making. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER for Staff to refer the laddering strategy to the Utilities Advisory Commission for further study and return to the Finance Committee with at a later date. Motion Passed:4-0 ATTACHMENT D FINANCE COMMITTEE –MEETING EXCERPTED DRAFT MINUTES OF DECEMBER 7, 2010 ITEM 3: ACTION: Utilities Advisory Commission recommendation to Approve the Proposed Gas Utility Long-term Plan (GULP) Objectives, Strategies and Implementation Plan Assistant Director of Utilities for Resource Management,Jane Ratchye,provided a brief explanation of the changes in the report compared to the November 16, 2010 version to be responsive to the direction provided by the Finance Committee. She highlighted the following: 1.An implementation step to review the laddering strategy with the Utilities Advisory Commission (UAC) by June 2011 was added to the Implementation Plan. 2.Text and 2 graphs were added showing the cumulative residential gas bill savings compared to PG&E for the bundled bill and the commodity portion only of the bill. Ratchye pointed out that for the total gas bill, Palo Alto customers have paid the same amount as PG&E customers for the time period for the last 13 years. For the period July 2006 through present, Palo Alto customers have paid approximately $140 more than PG&E customers for gas commodity only. 3.A paragraph detailing the fixed-price purchase targets for the next 36 months was added. 4.The reasons for not engaging in transactions for fixed-price contracts beyond 10 years were listed. 5.Clarification was made that lowering cost does not refer to “beating the market”. 6.More explanation regarding the carbon adder for comparing energy efficiency to natural gas resources was provided. Council Member Scharff asked if natural gas could be purchased at the current spot market price of $4 per MMBtu for the next several years. Ratchye explained the difference between the spot market and the market for deliveries of gas in the future and presented a forward curve for gas showing that the price for gas for delivery two years from now is $5.90 per MMBtu despite gas costs for delivery in the next month being closer to $4.00 per MMBtu. Ratchye also pointed out that interested people can view similar graphs in the quarterly update reports to the UAC available on the City’s website. Council Member Schmid expressed an opinion about the forward curve lagging compared to the spot market and commented on the need for more information regarding prepay transactions. Utilities Director Valerie Fong acknowledged the need for staff to provide more information on gas prepay transactions. MOTION: Council Member Espinosa moved, seconded by Schmid, that the Finance Committee recommends to the City Council approval of the proposed Gas Utility Long-term Plan (GULP) objectives, strategies, and implementation plan. MOTION PASSED 3-0, Klein absent Attachment E 1 Existing and Proposed GULP Objectives Existing and Proposed GULP Strategies and Implementation Plan Items Existing Guideline Proposed Strategy #1 Guideline #1: Market Risk Management – Manage market risk by adopting a portfolio strategy for gas supply procurement by: a.Diversifying energy purchases for the pool across commitment date, delivery date, duration, suppliers, pricing terms, and delivery points; b.Maintaining a prudent exposure to changing market prices by leaving some fraction of the forecasted gas pool needs exposed to near-term market prices; and c.Avoiding long-term (>10 years) fixed- price commodity contracts. Strategy #1: Balance supply cost stability with market exposure by: a.Diversifying energy purchases for the pool across commitment date, delivery date, duration, suppliers, pricing terms & delivery points; b.Leaving some fraction of the forecasted gas pool needs exposed to near-term market prices; and c.Avoiding long-term (>10 years) fixed-price commodity contracts. Existing Implementation Plan Proposed Implementation Plan No initiatives were specified.1.Continue to implement a laddered commodity purchasing strategy for the pool. 2.Review the laddering strategy and rate stability with the Utilities Advisory Commission and recommend changes, if appropriate. Existing GULP Objectives Proposed GULP Objectives Objective 1 Management of market price uncertainty Ensure low and stable gas supply rates for pool customers. Balance supply cost stability with market exposure. Objective 2 Supply Cost Management Provide superior financial performance to customers and the City by managing the supply portfolio cost in a competitive manner compared to market cost and a retail supply rate advantage compared to PG&E. Lower delivered gas cost over the long term. Objective 3 Energy Efficiency Balance environmental, rate, and cost impacts when considering energy efficiency investments. Ensure the deployment of all feasible, reliable, cost-effective energy efficiency measures. Objective 4 Climate Protection Reduce the carbon intensity of the gas portfolio in accordance with the Climate Protection Plan Objective 5 Parity with PG&E At a reasonable cost, protect the City’s interests and maintain access to transportation on par with PG&E’s core customers. Attachment E 2 Existing Guideline Proposed Strategy #2 Guideline #2: Asset Acquisition and Management – Explore supply, pipeline, and storage acquisition options available to the City which may be assembled to yield reliable supply at a fair and reasonable cost, taking into consideration: a.Long-term supply cost for gas deliveries at PG&E Citygate; b.Operational needs including the need for daily balancing during Operational and Emergency Flow Orders; c.Existing and potential regulatory mandates; d.Potential operational streamlining opportunities with other agencies; and e.City’s low cost of capital for asset acquisition. Strategy #2:Lower delivered gas cost over the long term by: a.Acquiring pipeline and/or storage assets that yield supply costs below market and meet operational needs; b.Taking advantage of the City’s low cost of capital to acquire gas supply and assets; and c.Optimizing existing assets. Existing Implementation Plan Proposed Implementation Plan Implementation Plan Items: 1.Pursue cost-effective opportunities for natural gas storage capacity; 2.Do not acquire additional natural gas pipeline capacity at this time; 3.Take steps to analyze Palo Alto’s tax-exempt status to realize a discount to the City’s gas cost by: a.Identifying risks and costs associated with prepay transactions including required modifications to City policies and operating procedures; and b.Exploring alternative prepay structures 4. Pursue any low-cost, high- value prospects to acquire supply-related resources that may arise from time to time. 3. Pursue cost-effective gas storage services by: a.Signing enabling agreements with available gas storage service providers; b.Monitoring gas prices for seasonal differences; and c.Purchasing gas storage services when cost-effective. 4.Pursue below-market assets available through the Gas Transportation and Storage Settlement by: a.Evaluating the pipeline capacity reservation options available; and b.Contracting with PG&E for any pipeline capacity with an estimated cost below the forecasted market value. 5.Pursue opportunities for natural gas prepay transactions by: a.Hiring a consultant to help staff with; i.Identifying any internal policy changes needed including the policy on the use of financial instruments; ii.Identifying system and internal processes required; iii.Identifying opportunities; and iv.Evaluating opportunities and quantifying the benefits and costs; and b.Seeking UAC recommendation and Council approval regarding whether to proceed with a gas prepay transaction. Attachment E 3 Existing Guideline Proposed Strategy #3 Guideline #4: Gas Efficiency and Solar Heating -Fund innovative programs that promote and facilitate deployment of all cost- effective, reliable and feasible energy efficiency and solar heating opportunities as high priority resources consistent with the Ten- year Efficiency Plan. Strategy #3: Ensure the deployment of all feasible, reliable, cost-effective energy efficiency measures by: a.Developing and implementing a ten-year gas efficiency plan every three years that includes a reasonable carbon price premium for traditional gas supplies;and b.Considering the impacts (cost, benefits, and GHG emissions) of substituting electricity-using appliances for gas-using appliances and vice versa in the ten-year gas efficiency plan. Existing Implementation Plan Proposed Implementation Plan Implementation Plan Item: Develop comprehensive demand- side management goals and implementation plan by fall 2004 in time for incorporation into FY 2006 and future ratemaking and budget decisions. In the interim, continue implementation of current and planned FY 2005 demand-side management programs. 6. Develop an implementation plan by summer 2011 to meet the gas efficiency targets including the: a.Evaluation of the cost-effectiveness of substituting gas-using appliance for electric-using appliances and vice versa and the greenhouse gas impacts of such substitutions; and b.Incorporation of any cost-effective substitution measures in the implementation plan to meet the gas efficiency targets. 7. Track and report progress against adopted gas efficiency goals by: a.Providing quarterly updates on the gas efficiency program achievements to the UAC; and b.Providing annual updates on gas efficiency program achievements to the UAC and the City Council. 8. Continue evaluating new gas efficiency technologies and undertake pilot studies where appropriate. Attachment E 4 Existing Guideline Proposed Strategy #4 Guideline #5: Renewable Resources – Develop alternatives to reduce the carbon intensity of the natural gas portfolio consistent with the Climate Protection Plan. Strategy 4: Reduce the carbon intensity of the gas portfolio by: a.Designing and implementing a voluntary retail program using reasonably priced non-fossil fuel gas resources; and b.Purchasing non-fossil fuel gas for the portfolio as long as it can be done with no rate impact. Existing Implementation Plan Proposed Implementation Plan Reduce the carbon intensity of the natural gas portfolio by a.Designing and implementing a voluntary retail program using low- carbon gas resources; b.Evaluating the participation of City facilities in the voluntary program; and c.Evaluating portfolio targets for low- carbon gas resources. 9.Pursue reasonably priced non-fossil gas for a voluntary program through NGPP by: a.Reviewing the due diligence report to be provided to NGPP participants by the end of October 2010; and b.Based on the results, recommending whether to continue participating in the projects. Existing Guideline Proposed Strategy #5 Guideline #3: Management of Regulatory and Legislative Matters – Serve as an effective voice to protect and enhance the City’s positions in regulatory and legislative arenas by: a.Intervening in the regulatory and legislative arenas that the City’s gas utility interests are protected and enhanced; and b.Exploring potential joint action with other public agencies. Strategy 5: Protect the City’s interests and maintain parity with PG&E’s core customers by: a.Participating in the regulatory and legislative arenas when the potential impact on the City is aligned with the cost to intervene and the probability of success; b.Negotiating with PG&E for fair access to transportation and storage; and c.Exploring potential joint action with other public agencies. Existing Implementation Plan Proposed Implementation Plan No initiatives specified No Implementation Plan initiatives are recommended for this strategy as the strategy itself provides staff the direction needed. City of Palo Alto (ID # 1317) City Council Staff Report Report Type: Action Items Meeting Date: 3/7/2011 March 07, 2011 Page 1 of 3 (ID # 1317) Title: Approval of Long-term Electric Acquisition Plan Subject: Finance Committee Recommendation to Adopt a Resolution Approving the Proposed Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies, and Implementation Plan From:City Manager Lead Department: Utilities RECOMMENDATION Staff, the Utilities Advisory Commission, and the Finance Committee recommend that the City Council adopt a resolution approving the proposed Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies, and Implementation Plan. SUMMARY The proposed LEAP Objectives and Strategies have a focus on balancing environmental and economic sustainability. The main issues at the heart of the proposed updated LEAP include pursuit of the maximum amount of cost-effective energy efficiency, re-establishment of a goal for renewable energy supplies, and examination of opportunities for local generation (including evaluation of a feed-in tariff to incent local renewable supplies). LEAP represents a comprehensive strategy for all aspects of the electric resource portfolio –both energy efficiency and electricity supplies. The UAC discussed revisions to LEAP at meetings in June, July and August 2010 in the context of the directives in the Council Colleagues’ Memo of May 3, 2010 (Request to the City Council to Direct the Utilities Advisory Commission to Make Recommendations to the City Council on a Comprehensive Energy Efficiency and Renewables Procurement Strategy). At its meeting on September 1, 2010, the UAC recommended Council approval of the proposed LEAP Objectives and Strategies. At its meeting of November 3, 2010, the UAC voted to recommend Council approval of the associated LEAP Implementation Plan. On December 7, 2010, the Finance Committee voted to recommend Council approve the LEAP Objectives, Strategies, and Implementation Plan. In parallel with the LEAP revision, staff is developing a new Utilities Strategic Plan. Ultimately, LEAP will be aligned with the Utilities Strategic Plan to ensure that the LEAP Objectives are consistent with the vision and strategic objectives of the Utilities Department and, thus, further revisions to LEAP may be required after the Utilities Strategic Plan is completed. March 07, 2011 Page 2 of 3 (ID # 1317) COMMITTEE REVIEW AND RECOMMENDATIONS At its December 7, 2010 meeting, the Finance Committee discussed the proposed LEAP Objectives, Strategies, and Implementation Plan. Staff provided a brief presentation of the purpose and value of LEAP with a focus on how staff intends to balance its pursuit of competing resource objectives including energy efficiency, renewable energy, and local generation. An in- depth discussion of the proposed Objectives, Strategies and Implementation Plan followed. After discussion, the Finance Committee voted unanimously to accept the UAC’s and staff’s recommendation for Council to approve the LEAP Objectives, Strategies, and Implementation Plan with the following modifications: 1.Change first part of Strategy #1 (Resource Acquisition) to read: “a. Evaluating each potential resource on an equal basis by evaluating rate impacts and establishing costs and values for location, time of day and year, carbon, value of renewable supplies and any secondary benefits attributed to the resource”; 2.Change Strategy #5 (Climate Protection) from “Support the City’s climate protection goals by…” to “Reduce the electric portfolio’s carbon intensity by…”; and 3.Modify LEAP Implementation Plan item #27 to read: “Evaluate the PaloAltoGreen program design and recommend modifications, as appropriate, including constructing PaloAltoGreen to assist in meeting Renewable Portfolio Standard goals.” Staff agrees with the changes recommended by the Finance Committee and the changes were incorporated in the Proposed LEAP Objectives, Strategies and Implementation Plan provided in Attachment C. The minutes of the Finance Committee are provided as Attachment G. RESOURCE IMPACT There is no direct resource impact as a result of the proposed changes to the LEAP Objectives and Strategies for fiscal years 2011. The initiatives, plans and/or tasks identified in the proposed LEAP Implementation Plan to meet the Objective and Strategies will require further review and approvals and the resource impacts will be identified at that time. POLICY IMPLICATIONS The proposed LEAP Objectives, Strategies and Implementation Plan support the Council- approved Utilities Strategic Plan, Energy Risk Management Policies, and Comprehensive Plan Goal N-9 (a clean, efficient, competitively-priced energy supply that makes use of cost-effective renewable resources). ENVIRONMENTAL REVIEW Approval of the LEAP Objectives, Strategies and Implementation Plan does not meet the definition of a project pursuant to Public Resources Code Section 21065, thus no California Environmental Quality Act review is required. March 07, 2011 Page 3 of 3 (ID # 1317) Attachments: ·Attachment A: Resolution Approving LEAP 2011 (DOC) ·Attachment B: CMR 426_10 LEAP to Finance Committee (DOC) ·Attachment C: Proposed LEAP Objectives Strategies and Imp Plan (DOC) ·Attachment D: Existing LEAP (DOC) ·Attachment E: UAC Minutes September 1, 2010 (DOC) ·Attachment F: UAC Minutes November 3, 2010(DOC) ·Attachment G: Finance Committee Mtg Minutes of December 7, 2010 (DOC) Prepared By:Monica Padilla, Sr. Resource Planner Department Head:Valerie Fong, Director City Manager Approval: James Keene, City Manager ATTACHMENT A Not Yet Approved 1 110228 dm 6051523 Resolution No. ______ Resolution of the Council of the City of Palo Alto Approving the Proposed Long-term Electric Plan (LEAP) Objectives, Strategies, And Implementation Plan WHEREAS, the Long-term Electric Acquisition Plan is a strategic planning document focused on how the City of Palo Alto’s Utilities Department (CPAU) can successfully balance environmental and economic sustainability as it provides natural gas service to CPAU customers;and WHEREAS, staff presented the Long-term Electric Acquisition Plan to the UAC at its November 3, 2010 meeting, and the UAC voted 7 to 0 to recommend that the City Council approve the Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies, and Implementation Plan; and WHEREAS, staff presented the Long-term Electric Acquisition Plan to the Finance Committee at its December 7, 2010 meeting, and the Finance Committee voted 4 to 0 (with Councilmember Larry Klein absent) to recommend that the City Council approve the Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies, and Implementation Plan. NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1.The Council hereby adopts the resolution approving the Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies, and Implementation Plan. SECTION 2.The Council finds that any revenue derived from the authorized adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of the City of Palo Alto. / / / / / / / / / / / / ATTACHMENT A Not Yet Approved 2 110228 dm 6051523 SECTION 3.The Council finds that the adoption of this resolution does not constitute a project under Section 21065 of the Public Resources Code,therefore, no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ______________________________________________________ City Clerk Mayor APPROVED AS TO FORM:APPROVED: ______________________________________________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services CMR: 426:10 Page 1 of 23 ATTACHMENT B TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: UTILITIES ATTENTION:FINANCE COMMITTEE DATE:DECEMBER 7, 2010 CMR: 426:10 SUBJECT:Utilities Advisory Commission Recommendation to Approve the Proposed Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies and Implementation Plan EXECUTIVE SUMMARY The Long-term Electric Acquisition Plan (LEAP) addresses the functions related to the pursuit and management of electric resources. The Plan includes implementation of related Council policies and plans for energy efficiency, renewable energy, greenhouse gas (GHG)emissions reduction, and the management of uncertain and variable costs. LEAP provides direction for the management of these costs and the uncertainties inherent in the business of providing electric service to the City’s electric customers over the next five to ten years. The proposed LEAP Objectives and Strategies have a focus on balancing environmental and economic sustainability.The proposal includes the maximization of cost-effective energy efficiency, examination of alternative ways to pursue renewable energy, and exploration of the feasibility of setting GHG emission reduction targets for the electric supply portfolio. The LEAP Implementation Plan provides a road map for how staff will assess resource needs including energy efficiency and local renewable and clean resources,integrate such resources in acquisition plans and evaluate the economic and environmental merits of competing resources. REQUEST The UAC and staff recommend that the Finance Committee recommend that the City Council approve the proposed Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies and Implementation Plan. BACKGROUND History of LEAP Objectives and Guidelines The Long-term Electric Acquisition Plan (LEAP) is intended to address several functions related to long-term electric resource acquisition and management including implementation of related Council policies and plans for energy efficiency, renewable energy, greenhouse gas (GHG) emissions reduction, management of hydroelectric and market price uncertainty, and resource adequacy. LEAP provides direction for the management of these costs and the uncertainties inherent in the business of providing electric service to the City of Palo Alto Utilities’(CPAU) customers over the next five to ten years or longer. CMR: 426:10 Page 2 of 23 Council provided policy direction to guide staff in the acquisition and management of electric supply resources through adoption of the first LEAP in November 2001 (CMR: 425:01). LEAP was later updated in October 2002 (CMR: 398:02) and in March 2007 (CMR: 158:07) to reflect regulatory and legislative changes in the industry and to align with community values for environmental solutions related to energy efficiency, renewable supplies and climate protection. Within the LEAP Objectives and Guidelines framework, Council also adopted the first LEAP Implementation Plan in August 2003 (CMR: 354:03) and an updated plan in April 2006. The current LEAP was approved by Council in March 2007. A key element of the 2007 LEAP was that the Renewable Portfolio Standard (RPS) goal was accelerated from 20% by 2015 to 33% by 2015. This goal is to be achieved within a half-cent per kilowatt hour (kWh) rate impact limit. The existing LEAP Objectives, Guidelines and Implementation Plan are provided as Attachment B. The global recession, which continues to affect federal, local and state governments, consumers, and businesses, has been the single biggest change since LEAP was last approved. As a result of lower global demand for energy resources, the cost of natural gas and electricity has fallen; however, the cost of renewable resources continues to climb as more California utilities pursue renewable portfolio goals,thus increasing the gap in the price between conventional and renewable resources.Further, the fate of a federal cap-and-trade program to reduce GHG emissions is uncertain and this uncertainty extends to California’s plans for GHG emissions regulations and a cap-and-trade market. In August 2009 and in May 2010, when it considered recommendations to execute long-term renewable contracts, the City Council expressed concern about the high cost of renewable resources and wished to ensure that CPAU was maximizing the pursuit of cost-effective energy efficiency, which would both reduce GHG emissions and reduce the amount of renewable energy that would be required to meet the City’s renewable portfolio standard (RPS)goals. Council has also expressed concerns about the City’s strategy of locking in long-term renewable energy supplies through power purchase agreements (PPA) to meet the City’s RPS as opposed to alternative contracting mechanisms including the use of a feed-in-tariff (FIT) to promote locally distributed renewable resources. Consequently, Council directed staff to evaluate policies and efforts related to the acquisition of energy efficiency, renewable energy, and local generation and to explore the feasibility of setting GHG emission reduction targets for the electric supply portfolio. In addition to meeting environmental goals and climate challenges, the electric industry is experiencing many technological advances in how electricity is produced, stored, utilized, managed, and regulated. Electric utility customers are also demanding more transparency and information related to their energy use in an effort to better manage their utility bills. To address these and other issues, CPAU has embarked on a process to update its Strategic Plan to establish the appropriate vision and road map for CPAU in the next five years.Ultimately, LEAP will need to align with the Strategic Plan to ensure that the objectives carried out are consistent with the vision and objectives of the Utilities Department and the community; thus, further revisions to LEAP may be necessary in the near future. The UAC discussed the development of the updated LEAP at meetings in June, July, and August, 2010. The UAC recommended Council approval of the proposed LEAP Objectives and CMR: 426:10 Page 3 of 23 Strategies at its September 1, 2010 meeting and recommended Council approval of the proposed LEAP Implementation Plan at its November 3, 2010 meeting. Long-term Demand and Resource Forecasts CPAU forecasts citywide electric usage to remain almost flat at 1,000 gigawatt-hours (GWh) per year between 2010 and 2020. The projections incorporate the goals for energy efficiency set in the 2010 Ten-Ye ar Electric Energy Efficiency (EE) Plan of a cumulative load reduction of 7.2% or approximately 70 GWh by 2020. The load forecast includes the impacts of Roche leaving Palo Alto; the Stanford Medical Center expansion; and the global economic recession. The load projections do not include demand and energy impacts associated with electric vehicles.1 Figure 1: 20-Year Load and Resource Balance Projections 0 200 400 600 800 1,000 1,200 FY 2 0 1 0 FY 2 0 1 1 FY 2 0 1 2 FY 2 0 1 3 FY 2 0 1 4 FY 2 0 1 5 FY 2 0 1 6 FY 2 0 1 7 FY 2 0 1 8 FY 2 0 1 9 FY 2 0 2 0 FY 2 0 2 1 FY 2 0 2 2 FY 2 0 2 3 FY 2 0 2 4 FY 2 0 2 5 FY 2 0 2 6 FY 2 0 2 7 FY 2 0 2 8 FY 2 0 2 9 FY 2 0 3 0 GWh per year Expected Load Load without EE Western Calaveras Renewables On average over the next ten years, hydroelectric supplies are expected to account for about 50% of load needs (13% from the Calaveras hydroelectric project and 37% from the Western contract). Commitments for long-term renewable resources are expected to meet 19% of the load in 2010 and grow to 26.5%by 2013. Beginning in 2021, some of the existing long-term renewable energy contracts will begin to expire, leaving a growing gap between load and committed supply resources. Figure 1 illustrates long-term demand and resource projections. 1 Staff estimates that the introduction of new electric vehicles may increase total load by 2-4% by 2020, but is not expected to increase peak demand.EPRI study suggests peak impacts could occur depending on charging location and behavior. CMR: 426:10 Page 4 of 23 The renewable energy quantity shown is the amount that is currently committed to and includes three projects that are under construction and not currently operational. DISCUSSION The external and local changes discussed previously along with increasing commodity costs and cost uncertainty related to the wholesale energy prices, renewable energy, transmission of electricity and resource adequacy, necessitate a thorough review of existing Council adopted policies and guidelines related to the City’s RPS goals, energy efficiency, GHG reduction initiatives and local generation. The following discussion proposes new LEAP Objectives and Strategies and identifies key initiatives, plans and reports needed to effectively implement LEAP. Proposed Changes to LEAP Objectives LEAP Objectives are intended to provide high-level direction in resource acquisition and management some of which endure for over 20 years. Because of the long-term nature of electric resource program planning and implementation, LEAP Objectives should generally neither change dramatically nor often. However, it is appropriate to review and update them when external factors and/or Council priorities change. Modifications to the current LEAP Objectives are proposed with a focus on how to evaluate and procure supply and demand-side electric resources and manage existing electric supply assets to meet customer needs over the next ten years. The proposed changes to LEAP Objectives are shown below. Proposed Change to LEAP Guidelines and Implementation Plan The proposed modifications to the current LEAP Guidelines are described in detail in this section. The changes are intended to better reflect the revised Objectives, account for initiatives that have been completed and new ones that are underway, eliminate portions of some Guidelines that are no longer applicable or are better situated in the Strategic Plan, and bring the Guidelines more into line with City Council priorities. Further, in an attempt to be consistent Objectives Existing LEAP Objective Proposed LEAP Objective 1. Demand and Supply Resource Acquisition Provide competitive and predictable supply cost while balancing environmental, local reliability, rate and cost impacts. Meet customer electricity needs through the acquisition of least total cost energy and demand resources including an assessment of the environmental costs and benefits. 2. Supply Cost Management Maintain a supply portfolio cost advantage compared to wholesale electricity market cost Manage supply portfolio cost uncertainty to meet rate and reserve objectives. 3. Local Distributed Generation & Transmission Enhance supply reliability to meet City and customer needs by pursuing opportunities including transmission system upgrades and local generation. No Change 4. Local Control Act to maintain the City Council’s ability to exercise local control of decision making related to all aspects of serving customer energy needs Move to Strategic Plan CMR: 426:10 Page 5 of 23 with the Strategic Plan, the term “guidelines” was replaced with “strategies”. LEAP Strategies are proposed for the following eight electric resource management activities: 1.Resource Acquisition 2.Electric Energy Efficiency and Demand Reductions 3.Renewable Portfolio Standard (RPS) 4.Local Generation 5.Climate Protection 6.Hydro Resource Management 7.Market Price Exposure Management 8.Transmission and Reliability Current efforts undertaken by staff to meet electric load requirements (e.g. implementing energy efficiency programs, and managing supply resources), while important to meeting LEAP Objectives, are considered operational and not a part of the Implementation Plan. The focus of the LEAP Implementation Plan is to identify new policies, initiatives, rates, plans, and reports needed to carryout the proposed LEAP Objectives and Strategies. Resource Acquisition Setting a hierarchy of preference for types of resources, or “loading order,”is required by state legislation. Loading order was first codified with legislation in SB 1037 (2005), then modified slightly in AB 2021 (2006)2. Proposed Strategy #1 is intended to clarify how the evaluation of competing resources will be carried out by explicitly stating that staff will pursue resources with the least total cost to the City. Cost-effectiveness for each resource is defined under the respective strategy. To the extent that energy efficiency and demand reduction resources are cost-effective, they will be deployed first. Staff utilizes a mix of energy load forecasting, supply portfolio and energy efficiency models to assess and forecast energy demand, resource availability, portfolio costs and uncertainties. Resource acquisition decisions, whether demand-side reduction through energy efficiency programs or the purchase of renewable and/or conventional power supplies, should be made using the same set of planning assumptions. Better integration of the planning models is needed to properly implement Strategy 1 including ensuring proper accounting for environmental costs and benefits of each potential resource. 2 From AB 2021: 9615. (a) Each local publicly owned electric utility, in procuring energy to serve the load of its retail end-use customers, shall first acquire all available energy efficiency and demand reduction resources that are cost effective, reliable, and feasible. CMR: 426:10 Page 6 of 23 Existing Guideline #1 Proposed Strategy #1 Resource Loading Order Manage a supply portfolio comprising locally selected and joint action cooperative purchases, with the following preference hierarchy for resource acquisition: A.Efficiency B.Renewable Supply C.Local Ultra-Clean Distributed Generation D.Conventional Supply Resource Acquisition Pursue the least total cost resources including an assessment of environmental costs and benefits to meet the City’s needs in the long term by: A.Evaluating each potential resource on an equal basis by establishing costs and values for location, time of day and year, carbon, value of renewable supplies and any secondary benefits attributed to the resource; and B.Including all resources –conventional energy, local and remote renewable energy supplies, energy efficiency, cogeneration, and demand reduction –in the evaluation. Proposed Implementation Plan When 1.Adjust planning and portfolio models to include an integrated and least cost planning perspective which evaluates demand and supply side resources in an integrated manner and includes time of delivery, locational and environmental costs and benefits. Dec. 2010 2.Evaluate the impacts of energy efficiency, demand reductions and electric vehicle penetration in Palo Alto in the annual development of the electric load forecast. Dec. 2010 Electric Energy Efficiency and Demand Reduction Palo Alto has long been a leader in energy efficiency programs, and views efficiency as a critical long-term resource that plays a key role in long-term planning and as such recognizes energy efficiency and demand reduction resources as the highest priority resource as demonstrated by declining load forecasts which show a cumulative decrease in load of 2.29% since Fiscal Year (FY)2006.The City also recognizes that energy efficiency is critical in achieving GHG emission reduction goals and reduces the need to acquire renewable and/or conventional energy supplies. In developing the 2010 Ten-Year Electric Energy Efficiency (EE) Plan, the long-term cost of renewable energy was used as the avoided cost of energy to determine the cost effectiveness of energy efficiency. This methodology of adopting the Market Price Referent3 (MPR) as the avoided cost was based on discussions with the UAC in November 2009. As a result of utilizing a higher avoided energy cost and updated energy efficiency measures in the efficiency assessment model, the 2010 Ten-Year Electric EE Plan’s goal is a reduction in energy use of 7.2%by 2020, which is more than double the 3.5% 10-year goal set in the 2007 Electric EE Plan. The proposed strategy incorporates this methodology of evaluating the cost-effectiveness of EE using the cost of renewable energy as the value of the saved energy. The proposed implementation plan also includes development of a pilot demand reduction program. This program could include development of time-of-use pricing to incent peak demand reductions or shifting load from peak to off-peak periods. 3 The Market Price Referent (MPR)is established annually by the California Public Utilities Commission (CPUC), which sets the pre-authorized price for renewable power for Investor-Owned Utilities (IOUs).The MPR is calculated as the cost of owning and operating a combined cycle gas-fired power plant in California plus the cost of CO2 offsets for its emissions. CMR: 426:10 Page 7 of 23 Existing Guideline #7 Proposed Strategy #2 Electric Energy Efficiency and Demand Reduction A. Fund innovative programs that promote and facilitate deployment of all cost-effective, reliable and feasible energy efficiency and demand reduction opportunities as high priority resources. B. Use a community-wide perspective in program evaluation criteria. C. Use a bill reduction (utility cost) perspective in program funding criteria. D. Promote equity by designing and making programs available to all customers. Electric Energy Efficiency and Demand Reduction Fund programs that maximize the deployment of cost- effective, reliable and feasible energy efficiency and demand reduction opportunities as the highest priority resources by: A.Every three years, preparing a ten-year energy efficiency plan that identifies all cost-effective energy efficiency opportunities; B.Using the cost of long-term renewable energy resources adjusted for time of day factors and location as the avoided cost when evaluating cost effectiveness of energy efficiency measures; C.Designing and making energy efficiency programs available to all customers; and D.Considering the impacts (costs, benefits and GHG emissions) of substituting electricity-using appliances for natural gas-using appliances and vice versa in the ten-year energy efficiency plan. Proposed Implementation Plan When 3.Provide quarterly updates on electric efficiency program achievements including tracking against 10-Year Energy Efficiency goals to the UAC and annual updates to the City Council. quarterly 4.Develop Energy Efficiency Implementation Plan for the 2010 10-Year Electric EE Plan addressing certain items identified in the May 2010 Council Colleagues Memo and identification of resources and funding needed to achieve EE goals. Apr. 2011 5.Evaluate fuel switching energy efficiency measures and include them, if cost- effective, in the Electric and Gas EE Implementation Plans. Feb. 2011 6.Develop a pilot Demand Response Program for large commercial industrial customers for implementation in summer 2011. Apr. 2011 7.Assess the feasibility and cost-effectiveness of using current and potential thermal energy storage (TES) systems to shift load from on-peak periods to off- peak periods, for use in a demand response program, or for meeting any energy storage needs. Sep. 2011 Renewable Portfolio Standard (RPS) Current and Proposed Renewable Energy Mandates Aggressive renewable portfolio standards statewide have been evolving through legislation and state energy policy. The original goals for investor-owned utilities, established by SB 1078 (2002), were to achieve 20% of electric supply from eligible renewable resources by 2017. Eligible renewable resources are defined by the state and do not include large hydroelectric projects such as the Calaveras hydroelectric project and the resources delivered under the City’s contract with Western. Under SB 1078, publicly-owned utilities are “responsible for implementing and enforcing a renewables portfolio standard that recognizes the intent of the Legislature to encourage renewable resources, while taking into consideration the effect of the standard on rates, reliability, and financial resources and the goal of environmental improvement,” and to report certain information relative to renewable energy resources to their customers. Palo Alto’s existing RPS and reporting complies with SB 1078. CMR: 426:10 Page 8 of 23 Although the California legislature failed to pass RPS legislation which would have established an RPS goal of 33% by 2020 in the 2010 legislative session, legislation is expected to be re- introduced in 2011 to establish a state mandated RPS for all load serving entities, including publicly-owned utilities such as CPAU. California’s Global Warming Solutions Act of 2006, AB 32, directs the California Air Resources Board (CARB) to develop a renewable electricity standard (RES) to achieve GHG emissions reduction goals.In an effort to meet the goals set by AB 32, on September 15, 2009, California Governor Arnold Schwarzenegger issued an executive order (S-21-09) mandating an RES of 33% by 2020 for publicly-and investor-owned utilities. In September 2010, CARB adopted three-year compliance periods leading up to a 33% by 2020 RES including 20% for the 2012 to 2014 period; 24%for 2015 to 2017; and 28% for 2018 to 2019. CPAU’s Renewable Energy and Energy Efficiency Commitments CPAU’s quest to meet the current RPS goal has been through the use of the City’s competitive procurement process; participation in the Northern California Power Agency (NCPA) Green Power Pool; and through collaboration with NCPA’s power generation division to explore investments in ownership opportunities. Since 2004, the City has executed eight long-term Power Purchase Agreements (PPA) for renewable energy.These renewable energy resources are expected to account for about 26.5% of the City’s load by 2013. Figure 2 shows the City’s RPS resources compared to the RPS goal in the existing LEAP Guideline. The RPS goals shown in Figure 2 are based on the planned achievement of the additional energy efficiency goal (7.2% of the Citywide load by 2020)as outlined in the 2010 Ten-Year Electric EE Plan. To fully meet the existing RPS gap with even more energy efficiency would mean increasing the EE goal to 18% by 2020. Staff’s preliminary estimates suggest a 10-year efficiency goal of 18% could increase expenditures six-fold and have a retail rate impact of up to 30% without a commensurate bill reduction during the ten years. Even if sufficient resources were devoted to achieve this higher goal, staff is uncertain if such goals are achievable through voluntary programs.As noted in Strategy #2 above, a new Ten-Year Electric EE Plan will be prepared every three years when measures to achieve energy efficiency savings are reassessed. CMR: 426:10 Page 9 of 23 Figure 2: Renewable Energy Resources, 2003-2033 0 50 100 150 200 250 300 350 200 3 200 5 200 7 200 9 201 1 201 3 201 5 201 7 201 9 202 1 202 3 202 5 202 7 202 9 203 1 203 3 Calendar Year GWh/yr Crazy HorseLFG San Joaquin LFG Short-term Renewables JohnsonCanyon LFG Keller Canyon LFG Half Moon Bay LFG Santa Cruz LFG Shiloh Wind High Winds RPS Goal: 33% (2015) RPS Goal: 20% (2008) RPS Goal: 30% (2012) RPS Alternatives Alternatives to the current RPS targets were evaluated including 1) eliminating interim targets; 2) aligning with the state resource eligibility and vintage requirements; 3) aligning with the anticipated state standard by delaying the City’s RPS to 33% by 2020 (instead of 2015 in the City’s existing RPS target); 4) including carve-outs for specific technologies and/or contracting mechanisms; and 5) not including a rate impact limitation for the acquisition of RPS resources. Staff did not consider abandoning an RPS all together as staff felt that this option was not consistent with Council directives and may expose the City to potential regulatory risks and/or penalties. 1.Eliminating Interim RPS Targets The City’s current RPS includes interim targets of 20% by 2008 and 30% by 2012. The existing renewable portfolio fell short of the 2008 interim target and is expected to fall short of meeting the 2012 target by approximately 10%. Given the lack of long-term renewable projects that could be on-line by 2012, acquisition of renewables to meet the shortfall would need to be through the use of short-term bundled energy with renewable energy certificates (REC), resulting in an annual cost of approximately $6.2 million for 2012, $2.0 million for 2013, and $1.9 million for 2014 –for a three-year cumulative cost of $10.1 million. Staff is exploring the use of RECs for short-term compliance requirements and will include those findings in future assessments to meet RPS; however, staff recommends eliminating the interim RPS targets and focusing efforts towards acquiring longer-term renewable resources. CMR: 426:10 Page 10 of 23 2.Aligning RPS Eligibility Standards with State Standards The City’s current standards for resources to qualify towards its RPS targets include that the project be “new” and that it meets the state’s eligibility criteria as laid out in the Public Resource Code4. Although the state Public Resource Code eligibility standards include no newness requirement for in-state resources, Palo Alto’s current standard is that resources must have begun commercial operations no earlier than the date of adoption of the first LEAP guidelines, in October 2002. The idea behind the newness requirement in the current LEAP guideline is that Palo Alto wanted to influence the development of new renewable energy projects and not rely on existing renewable energy projects, such as older geothermal projects, to meet the RPS goals. If the City were to eliminate its newness requirement and adopt the same standard that applies to the state’s investor-owned utilities, a small portion of the generation from its two hydroelectric resources would be able to be counted towards RPS targets.5 The amount of this generation varies slightly from year to year based on hydrologic conditions, but on average equates to about 1% of the City’s annual load. This addition to the City’s RPS supply would reduce the existing gap between committed resources and RPS targets, yielding an annual savings of about $500,000 per year. It is also conceivable that when the City seeks additional RPS resources in the future, there may be existing “old”eligible renewable resources available at lower prices than resources that meet the City’s current newness requirement. Staff recommends adopting the standard for the investor-owned utilities and eliminating the newness requirement. 3.Delaying 33% RPS Goal until 2020 Palo Alto’s RPS achievement is expected to be 26.5% in 2013 if the three projects that are under construction are completed as scheduled. If the City were to align its RPS goals with the current state mandated RES, then it would not have to meet a 33% RPS goal until 2020, instead of 2015. By delaying the purchase of the additional renewable resources required to meet a 33% goal until 2020 from 2015, the City could save about $16.5 million related to the premium for purchasing renewable energy. However, assuming a cap-and-trade market materializes in 2012, delaying the RPS goal by 5 years increases the City’s cumulative exposure to the cost of GHG emissions allowances by $4.2 million (from $16.0 million to $20.2 million), yielding a net savings of $12.3 million over the five-year period from 2015 to 2020. The net savings to retail rates achieved by the delay are 0.3 to 0.35 cents per kWh for the five-year period.If the non “new” eligible small hydro resources of about 1% were added (as recommended in the proposed LEAP Strategy), the City would have about 27.5% eligible renewable resources by 2013 and the net cost of delaying the 33% RPS from 2015 to 2020 would be proportionately less. Disadvantages associated with delaying the 33% RPS goal include: ·The City may lose its stature as a green leader and as an exemplary case for how local control can achieve the best results. ·The delay would increase the community’s carbon footprint and increase GHG emissions by about 20,000 tons per year or 100,000 tons over the 5-year period of delay (an increase of the City’s annual GHG emissions by about 30% during the 5 years). 4 Qualifying resources are those deemed eligible by the state Public Resources Code definition of eligible renewable energy supplies, which excludes large hydroelectric facilities. Further, the City’s current RPS requires the renewable resource to be “new,” which refers to facilities built or repowered after adoption of Palo Alto’s first LEAP guidelines in October 2002.5 According to Section 25741 of the state Public Resource Code, “small” hydroelectric resources –i.e., those less than 30 MW nameplate capacity –are deemed RPS eligible. The City’s two major hydroelectric resources, Western and Calaveras, each comprise a system of generation powerhouses; a small number of these powerhouses fall into the “small hydro” category. CMR: 426:10 Page 11 of 23 ·Due to a lack of viable renewable resources and the lead time necessary to develop new renewables, maintaining the City’s current RPS of 33% by 2015 may provide a safeguard or cushion in implementing the state’s likely mandate of 33% by 2020. 4.Carve-outs for Technologies and/or Contracting Mechanisms The City’s current RPS guideline does not include any carve-outs for technologies or contracting mechanisms. This provides staff the most flexibility and makes the decision between competing technologies based primarily on the best value to the electric portfolio and load requirements. Alternatives to the current RPS guideline include adding requirements that favor one technology over another (e.g. at least X% of the RPS resources must be from solar energy resources, or no more than X% can be from landfill gas to energy projects), or a location (e.g. at least Y% must be located in California, or Palo Alto), or a contracting mechanism (e.g. at least Z% must be procured through a Feed-in-Tariff (FIT).Staff and the UAC do not recommend including such carve-outs in the proposed LEAP strategy. The current mix of RPS resources in the City’s portfolio is the result of several requests for proposals (RFPs) conducted by the City. The RFP process allows staff to evaluate several alternative technologies and proposals in a competitive manner by applying pre-identified evaluation and selection criteria. In an effort to meet the City’s RPS targets and to be responsive to concerns raised by Council in the Council Colleagues Memo dated May 3, 2010, staff intends to expand the scope of the next renewable RFP to include an assessment of the feasibility of meeting the remaining RPS needs through a FIT or other alternative contract structures to power purchase agreements (PPAs). After Council acts on the proposed updated LEAP Strategies, staff intends to bring a range of proposals for different technologies, products and contract structures to the UAC and Council for consideration. In addition, staff does not plan to solicit for new renewable energy supplies until key tasks in the LEAP Implementation Plan are complete. These tasks include evaluation of a FIT, development of the Energy Efficiency Implementation Plan, evaluation of using renewable energy credits (RECs) to meet RPS goals, and analysis of the potential for local generation. 5.Use of a Rate Impact Limitation or Allowance for a Green Premium Part of the current LEAP Guideline related to RPS is that the additional cost of the renewable power over the cost of brown power cannot cause an upward rate impact of more than 0.5 cents per kWh. To date, there has been virtually no rate impact due to the renewable projects since the projects that are currently delivering renewable energy were priced near the price for brown power. When all the projects with which the City has executed PPAs are operational, the total upward rate impact is expected to be about 0.24 cents per kWh for a RPS of 26.5% in 2013. The projected cost of meeting the balance of the RPS goals has increased as the demand and price for renewable resources has increased while brown power prices have fallen significantly in the past two years. However, staff anticipates that it will be possible to meet the 33% RPS goal by 2015 within the 0.5 cents per kWh rate impact limit assuming adequate lead time for the development of any new facilities successfully responding to the RFP(s). If the state mandates an RPS/RES and the City’s RPS goal is in alignment with the state’s, then the need for a green premium constraint may be obsolete. If, however, the City’s RPS goal exceeds the State’s mandate then a green premium constraint may be necessary to ensure that the CMR: 426:10 Page 12 of 23 rate impacts associated with pursuing an RPS beyond the requirements of the law are within an acceptable limit. Summary of Proposed Changes to the LEAP Strategy Regarding RPS The proposed LEAP Strategy #3 continues the existing 33% by 2015 RPS target and the 0.5 ¢/kWh rate impact limit from the existing guideline, but removes the interim targets. The eligibility requirement for renewable resources is proposed to be aligned with the current State requirement so that the newness requirement in the current guideline is removed.The requirement to evaluate a FIT is added to the proposed strategy, but no technology or contract mechanism carve-outs are recommended. PaloAltoGreen Vo luntary Program Current RPS guidelines include language related to the PaloAltoGreen (PAG) program, which is a voluntary renewable program providing customers a 100% renewable option at a premium rate. At present, 21% of CPAU customers subscribe to PAG, representing over 6% of the City’s load and making it one of the most successful voluntary green energy programs in the country. Renewable energy credits for the PAG program are procured to meet 100% of PAG load and are typically sourced through wind located in the Pacific Northwest and through solar photovoltaic (PV) projects installed throughout California (including facilities owned by the City). These resources do not qualify for the City’s RPS and, therefore, are not counted towards meeting the RPS. As a result, customers participating in PAG pay extra to “green-up” their energy needs, but the underlying portfolio already contains some green energy from the RPS resources. This will become more of an issue as the RPS grows to 33%. PAG is proposed to be addressed as part of the Climate Protection strategy (LEAP Strategy #5) as the program’s focus is to reduce GHG emissions; the program does not meet RPS goals and, thus, has been removed from the proposed RPS strategy. Existing Guideline #6 Proposed Strategy #3 Renewable Energy Supply Reduce electric portfolio dependence on fossil fuels by meeting at least 80% of City’s long term energy needs from non-fossil and non- nuclear supply. A. Renewable Portfolio Standard: In addition to the voluntary program, the City shall invest in new renewable resources to meet the City’s sustainability goals while ensuring that the retail rate impact does not exceed 0.5 ¢/kWh on average. B. Pursue a target level of new renewable purchases of 20% of the expected portfolio load by 2008 and move to a 30% target by 2012 and 33% by 2015. The contracts for investment in renewable resources shall not exceed 30 years in term. C. Palo Alto Green: In addition to the renewable portfolio standard, the City shall continue to offer a renewable resource- Renewable Portfolio Standard (RPS) Reduce the carbon intensity of the electric portfolio by acquiring renewable energy supplies by: A.Pursuing a target level of renewable purchases of 33% by 2015 with the following attributes: §The contracts for investment in renewable resources shall not exceed 30 years in term. §Pursue only renewable resources deemed to be eligible by the California Energy Commission (CEC). §Evaluate use of Renewable Energy Certificates (RECs) to meet RPS. B.Ensuring that the retail rate impact for renewable purchases does not exceed 0.5 ¢/kWh on average; and C.Evaluating a Feed-In Tariff (FIT) CMR: 426:10 Page 13 of 23 based retail rate for all customers who want to voluntarily select an increased content of non-hydro renewable energy. contracting mechanism that considers the full value of locally sited renewable resources. Proposed Implementation Plan When 8.Fully integrate the effects on energy efficiency in the long-term electric load forecast. Nov. 2010 9.Evaluate the merits of implementing a feed-in-tariff (FIT) and the potential to meet RPS goals through local renewable resources. Jan. 2011 10.Seek UAC recommendation and Council approval of the policy elements of a FIT to encourage local renewable resource projects. May 2011 11.Continue working with NCPA to identify opportunities, including joint- ownership, for developing qualifying renewable resources. On- going 12.Evaluate the use of renewable energy credits (REC)to meet a portion of the City’s RPS goal and/or greenhouse gas emission reduction goals and monitor the regulations and requirements regarding the use of RECs to meet RPS goals. On- going 13.Evaluate a proposed geothermal project being considered by NCPA, including a pre-pay option and the benefit, costs, and risks of a pre-pay structure. June 2011 14.Conduct a Request for Proposal for eligible renewable resources including RECs and evaluate alternative renewable resource technologies and contracting mechanisms. RFP in June 2011 Local Generation Between 2003 and 2005 CPAU conducted local generation feasibility studies to identify potential sites for both large-and small-scale distributed cogeneration. A technical potential of 30 to 40 MW was identified for small-scale local cogeneration and several sites were identified for possible development of a 25 to 50 megawatt (MW)gas-fired generator. Additionally, staff estimates the potential for a local renewable distributed generation (e.g. solar PV) of about 10 MW. The existing local generation guideline reflects Council’s decision (CMR:169:06) to emphasize small-scale,local,ultra-clean distributed generation, including solar and other renewable energy resources as well as low-emission technologies such as cogeneration or fuel cells,instead of larger local natural gas-fired power plant alternatives. In 2006, CPAU staff recommended, as part of the LEAP update, to abandon efforts to pursue developing a 25 to 50 MW gas-fired generator within Palo Alto. This recommendation was approved by Council in March 2007 when it modified the LEAP Guidelines. At the time, the support for the recommendation was that there was a lack of viable sites within Palo Alto, developing such a plant in Palo Alto would be cost prohibitive, and development of such a plant was not consistent with potential long-term electric portfolio carbon neutrality goals. Currently, CPAU offers two programs to promote local generation including the Power from Local Ultra-clean Generation Incentive Program (“PLUG-In”)and Solar Photovoltaics (“PV Partners”). To date a total of 2.62 MW has been installed through the PV Partners program. No projects have been completed through the PLUG-In program to date. Local Renewable Generation Staff recognizes that CPAU has a central and unique role in promoting renewable or ultra clean local generation in Palo Alto which would otherwise not happen (e.g. buying Solar RECs from CMR: 426:10 Page 14 of 23 Roche’s 780 kW PV project enabled the project to proceed) and that making such projects happen will have a direct impact in reducing global GHG emissions. However, the cost of acquiring small local renewable generation is higher than the cost of conventional renewable supplies (even when the value is adjusted for the location) under expected market conditions. Under certain scenarios,such as high transmission and local resource adequacy costs, local generation may prove to be less expensive than conventional supply. Value of Local Generation The value of local generation depends on the value of the avoided energy, transmission, and local resource adequacy costs. In addition, avoided emissions costs could accrue if a cap-and- trade system was implemented. Table 1 below shows the value of local generation for the expected case and high and low value cases. The values in Table 1 are based on using the MPR for the avoided cost for a solar PV project with a lifetime of 20 years starting in 2012. The base and high value cases assume that a functioning cap-and-trade market for GHG emissions allowances will be in place in 2012. For the low value case, it is assumed that a functioning cap-and-trade market is not in existence for the next 20 years, or that the City gets no value from the sale of emissions allowances. Table 1: Value of Local Generation and Sensitivity to Value Components Case Avoided Energy Cost (¢/kWh) Transmission Access Charges (¢/kWh) Local Resource Adequacy ($/kW-yr) Emissions Credit Benefit ($/tonne) Total Value (¢/kWh) Base 10.5 1.8 75 37 14.7 High 18.0 2.2 120 74 24.6 Low 8.0 1.4 30 0 9.7 This analysis shows that the value for local solar PV generation is expected to be about $147 per MWh (about 15 ¢/kWh). This means that the City should be willing to pay up to this amount for local solar PV projects. Paying more than 15 ¢/kWh may result in a rate impact to cover the subsidization of PV. The analysis also shows that the value can vary greatly depending on the avoided costs for energy generated, transmission, local capacity, and GHG emissions. Additionally, staff recognizes that there are many benefits of local renewable generation that are difficult to quantify, including: ·Having a generation resource close to load has sustainability and environmental justice values ·Long term optionality value (land permit, emission permits, etc) ·Small local generation at a customer site improves the customer’s supply reliability (however, it does not improve not overall system reliability) ·May improve Bay Area system reliability through reduced reliance on the transmission grid and may lower costs through reduced need to expand the transmission grid ·Reduces exposure to higher than expected transmission and loss charges Small vs. Large Local Generation Small distributed PV systems within the City do not protect the city against blackouts and cannot provide emergency supplies to customer premises. PV systems, in conjunction with storage systems and load isolation circuitry (for lineperson safety), could provide this option, but such an CMR: 426:10 Page 15 of 23 integrated system will increase costs further. Though a larger (25 to 50 MW) generator could enhance local reliability, the possibility of siting such a local generation resource within Palo Alto is problematic due the lack of suitable sites and because such a fossil-fired resource does not comport with City’s long-term objective of reducing GHG emissions. Staff will continue to explore siting and/or contracting for a large-scale gas-fired generator in or near Palo Alto, to achieve load, resource adequacy and certain reliability needs. Proposed modifications to the local generation strategy are intended to recognize the value of local renewable generation, including those which are less tangible, and promote the use of feed- in-tariffs as a mechanism to incent the development of local renewable generation. Existing Guideline #5 Proposed Strategy #4 Local Generation A. Promote and facilitate deployment of renewable resource supplies by providing expertise, education, incentives and rates to support customer-owned solar power systems, and demonstrating renewable generation technologies. B. Promote ultra-clean distributed generation incentive program. Promote and facilitate the deployment of cost-effective local resources by: A.Using the renewable market price referent (MPR) adjusted for time of day factors and location as the avoided cost when evaluating cost effectiveness of local resources; B.Considering energy delivery cost uncertainty and strategic value options when evaluating opportunities; C.Evaluating a Feed-in-Tariff to promote locally sited renewable resources; D.Evaluating cost-effective energy storage resources; and E.Evaluating the feasibility of developing a 25 to 50 MW generating facility connect to the City’s distribution system. Proposed Implementation Plan When 15.Provide an update of past local generation feasibility studies and actions to UAC and Council Dec. 2010 16.Assess the potential for and feasibility of small local distributed and non- distributed, renewable and cogeneration projects, including using a FIT to encourage these projects. Jan. 2011 17.Assess the potential, benefits and costs of developing and/or joint ownership of a 25 to 50 MW gas-fired power plant located in or near Palo Alto to meet load, reliability and local capacity needs. Jun. 2011 18.Evaluate the City’s PLUG-In Program to encourage cogeneration including rules, regulations, and buy back rates and recommend modifications as needed. Dec. 2011 19.Following receiving Council direction from Implementation Plan Initiative #10, develop a FIT proposal including rate, rules, regulations, standard contract form and limits. To be determined 20.Assess the economics and potential of the anaerobic digester as a local generation resource for CPAU Sep. 2011 21.Assess the need for and value of energy storage to support local renewable distributed generation resources. Jun. 2012 Climate Protection Climate change continues to be a key global environmental challenge that impacts not only Utilities, but all City operations. In December 2007, the Council approved the City’s Climate CMR: 426:10 Page 16 of 23 Protection Plan (CPP), which set certain goals for the electric utility and allowed for the use of a GHG adder, or carbon price premium, to be used when evaluating electric resource acquisitions. The adder was set at $20/metric ton of carbon dioxide equivalent (CO2e)escalating at 5% annually. The carbon adder in the CPP is similar to the one used by the California Public Utilities Commission (CPUC) –about $20/metric ton for a 10-year investment and $37/metric ton for a 20-year investment. The CPP recommendation was principally designed to hedge against financial exposure that CPAU could face under GHG reduction regulations including AB32 and/or federal cap-and-trade regulation. The electric supply portfolio’s GHG emissions are projected to be 120,000 metric tons of CO2e in 2010 and are expected to decline to less than 50,000 tons/year by 2020 as the City achieves its energy efficiency and RPS goals. Under current plans for California, a GHG emissions cap-and- trade market is expected to be implemented by 2012; depending on the method of allowance allocation adopted, CPAU may be allocated between 50% to 100% of its allowance needs free of charge and will be able to buy, sell and/or bank allowances to minimize cost exposure and maximize value. The value of the electric portfolio’s GHG emissions allocations is highly uncertain and is expected to range between $1.5 and $3 million per year depending on the actual cost of GHG emissions allowances. Staff evaluated three key policy questions related to meeting the City’s CPP goals and LEAP climate protection objectives, including: 1.Should the City adopt a policy minimizing the purchase of greenhouse gas-emitting power supplies? 2.Should the City establish a GHG emissions goal instead of an RPS goal? 3.Should CPAU strive for carbon neutrality in the long-term for the electric supply portfolio? 1.Should the City adopt a policy minimizing the purchase of GHG-emitting supplies? Since about 50% of the City’s electric supplies are from hydroelectric resources in average hydrologic years, when the City meets a 33% RPS goal, approximately 83% of electric supplies will come from carbon-free resources. Therefore, CPAU’s future portfolio will have very low carbon content. The balance of the supplies is short-term market purchases from unspecified resources. These short-term market purchases are assigned the emission content of the “California Mix”6, which has varied from 724 to 879 lbs of CO2e per MWh in the past few years. Table 2 below assumes that the City has achieved a 33%RPS and has a demand of 1,000 GWh/year. It shows the approximate amount of market purchases that are required in an average, a wet, and a dry hydrologic year. Note that in a wet year, energy would be sold into the market as the hydroelectric supplies and the RPS resources are greater than the City’s needs. Procuring non-carbon emitting resources to cover short-term balance needs will prove to be cumbersome as the quantity needed will be dependent on highly variable hydroelectric supply resources. Additionally, the market for short-term non-carbon-emitting resources is illiquid and these products may carry high cost premiums. 6 As a result of the state’s emission performance standard of 1,100 lbs/MWh of CO2e set by SB 1368 (2006) for base load generation, one can assume this to be the upper emission limit for the “California Mix.” CMR: 426:10 Page 17 of 23 Table 2: Market Purchases/(Sales) in Average, Wet, and Dry Hydrologic Years Average Year Wet Year Dry Year RPS resources (GWh/year)330 330 330 Hydroelectric supplies (GWh/year)500 800 300 Unspecified market-based supplies (GWh/year)170 (130)370 Emissions (metric tones per year of CO2e) (based on carbon intensity of 879 lbs/MWh for unspecified market-based supplies) 68,000 0 147,000 Given the current uncertainty surrounding state and federal cap-and-trade regulations and the potential high cost and complexity of procuring short-term carbon neutral resources, staff does not recommend adopting a policy to minimize the purchase of GHG-emitting power supplies for short-term market based purchases. Further, the primary objective of the proposed LEAP Objectives and Strategies is to pursue all cost-effective energy efficiency measures that minimize the need to buy both brown and renewable energy supplies, thus minimizing GHG emissions. 2.Should the City establish a GHG emissions goal instead of an RPS goal? An alternative to a standard “bottom up” RPS goal (specified as a percentage of total load) could be a “top down” goal to reduce the purchase of GHG-emitting power supplies, with an upper limit on the number of tons of GHG emissions allowed in the supply portfolio. A GHG emissions goal, normalized for an average hydro year, could be structured as follows: ·Reduce the dependence of fossil fuel based generation to less than 17% by 2015 with an electric portfolio carbon content of less than 68,0007 metric tons of CO2e per year; or ·Reduce the dependence of fossil fuel based generation to less than 10% by 2020 with an electric portfolio carbon content of less than 40,000 metric tons of CO2e per year. Adopting a maximum GHG emission goal would need to be in addition to an RPS goal as staff believes that an RPS goal will soon become a state mandate. Given the uncertainty of cap-and- trade legislation and regulation and the potential complexity of simultaneously pursuing two separate portfolio goals, staff recommends not adopting a GHG emission reduction goal at this time.The proposed implementation plan includes a reassessment of this policy. 3.Should CPAU strive for carbon neutrality in the long-term for the electric supply portfolio? Carbon neutrality for the electric supply portfolio could be a long-term goal. However, staff recommends that a decision to set such a goal be deferred for two to three years for the following reasons: ·There is much uncertainty regarding the cost impacts of implementing AB32 and a potential future federal climate bill. Setting local mandates may result in the City receiving fewer emission allowances than otherwise may have been available; ·In the next two to three years as the City pursues energy efficiency and acquires additional renewable resources (including local PV), the City will be closer to carbon neutrality. The cost of achieving incremental carbon neutrality through the purchase of short-term carbon free resources and/or carbon off-sets may prove to be very high; and 7Meeting load with 17% of supplies (approximately 170,000 MWh/year) from GHG-emitting power supplies at 879 lbs/MWh would result in an annual emission of 67,769 metric tons of CO2. CMR: 426:10 Page 18 of 23 ·Given current economic conditions, businesses and residents may not be willing or able to absorb additional utility costs related to implementing a carbon neutral portfolio. The proposed LEAP strategy regarding climate protection is to support the City’s goals as outlined in the City’s CPP. The CPP’s goals for emission reductions related to the electric utility will be met through implementation of LEAP, specifically through the strategies related to the RPS goals, implementation of energy efficiency, and development of renewable local generation and cogeneration. Additionally, the PaloAltoGreen program supports CPP initiatives. Other efforts include assisting the City in developing an inventory of GHG emissions and tracking and reporting such emissions. Staff will continue to work to implement climate protection goals and to evaluate the development of a carbon neutral electric portfolio policy for future consideration. Existing Guideline #8 Proposed Strategy #5 Climate Action Plan As part of the City’s commitment to develop an implement an action plan to reduce greenhouse gas emissions, develop and implement a Climate Action Plan relating to utility activities. A.Consider all Mayor’s Green Ribbon Task Force utility-related recommendations. B.The plan shall be consistent with the California Municipal Utilities Association Greenhouse Gas Reduction Principles. C.Take actions to meet ICLEI Cities for Climate Protection Campaign milestones. D.Coordinate with and support Climate Action Plan efforts of other departments. Climate Protection Support the City’s climate protection goals by: A.Supporting the City municipal government’s climate protection goals; B.Promoting the use of technologies (e.g. incentives for cogeneration systems, promotion of EVs, in-home energy displays) and programs that will reduce the community’s carbon footprint at a cost of up to the City’s value of carbon;and C.Continuing to offer a renewable resource- based retail rate for all customers who want to voluntarily select an increased content of non-hydro renewable energy. Proposed Implementation Plan When 22.Promote the City’s Plug-in program to encourage development of cogeneration systems. On-going 23.Analyze electric vehicle (EV) charging patterns and evaluate rates to incent nighttime EV charging. Jun. 2011 24.Meet AB32 mandated annual reporting requirements to California Air Resources Board on annual volumes of electricity purchases by resource. Annually, next in Jun. 2011 25.Track and report annually on 6 major greenhouse gas emissions (CO2, CH4, N2O, SF6, HFCs, PFCs) for all of the City’s municipal operations and calculate electric portfolio’s overall emissions coefficients (lbs of CO2, CH4, and N2O per MWh of purchases). Annually, next in Sep. 2011 26.Evaluate the costs, benefits and impacts of the implementation of an electric portfolio carbon neutral policy and the setting of quantitative goals (e.g. carbon intensity, total GHG emissions). Jan. 2012 27.Evaluate PaloAltoGreen program design and recommend modifications, as appropriate. Jun. 2012 CMR: 426:10 Page 19 of 23 Hydro Resource Management The variability in hydroelectric generation is the largest recurring cost uncertainty to the electric supply portfolio, representing an estimated $17 million variation in cost annually. To manage this uncertainty, cash is held in reserve to cover two years of adverse hydrologic conditions. The reserve is drawn down in dry years and funded in wet years. This strategy has allowed for rate certainty within a fiscal year, however it shields ratepayers from a proper price signal that could encourage conservation during dry years. The proposed LEAP includes evaluation of alternative strategies including the use of a rate adjustment mechanism and continuing to seek opportunities to maximize value from existing hydroelectric resources. Existing Guideline #2 Proposed Strategy #6 Hydro Resource Management Manage hydroelectric supply resources by: A.Planning for an average hydro year on a long-term basis; B.Maintaining the flexibility to adopt hydro resource management products; C.Maximizing value of the Western and Calaveras resource; and D.Maintaining adequate supply rate stabilization reserves to manage hydro production volume uncertainty. Hydro Resource Management Actively monitor and manage cost uncertainty related to variations in hydroelectric supply and maximize value of hydro resources by: A.Planning for an average hydro year on a long-term basis; B.Utilizing cost-effective hydro resource management products; and C.Implementing opportunities to maximize benefits and reduce costs of the Western Base Resource and Calaveras hydroelectric resources. Proposed Implementation Plan When 28.Evaluate potential rate adjustment mechanisms that would adjust electric rates based on hydrologic year type and develop a recommendation for a rate. Apr. 2011 29.Assess the value related to Palo Alto’s participation in the CAISO’s Metered Subsystem Agreement and the use of the Calaveras hydroelectric project for load following. On-going 30.Identify long-term opportunities to maximize the value of the Calaveras hydroelectric project as an energy storage resource. On-going 31.Work with NCPA to seek opportunities to increase the efficiency of the Calaveras hydroelectric project and implement operational value maximizing strategies. On-going Market Price Exposure Management Wholesale power prices are volatile and electric supply costs can increase by $6 million annually if prices move to high levels. To partially manage this risk, staff implements a three-year “laddering”strategy whereby a portion of energy and capacity needs is purchased at a fixed price up to thirty-six months ahead of delivery. Additionally, to provide for rate certainty, funds are held in reserve to cover adverse market price movements within the fiscal year. The proposed LEAP strategy in this area is not changed significantly from the existing guideline. However, the proposed implementation plan includes the examination of purchasing a five-year block of energy to lock in the costs of a portion of the City’s energy needs as market prices are currently relatively low. Any purchase for delivery beyond three years out requires Council approval, and the UAC’s recommendation would also be sought for such a purchase. CMR: 426:10 Page 20 of 23 Existing Guideline #3 Proposed Strategy #7 Energy Risk Management Manage supply cost uncertainty and risk by: A. Implementing the City’s Energy Risk Management Policies and Guidelines; B. Maintaining an adequate pool of credit-worthy suppliers; C. Diversifying supply purchases across commitment date, start date, duration, suppliers, pricing terms and fuel sources; D. Maintaining a prudent exposure to changing market prices; and E. Maintaining adequate supply rate stabilization reserves to manage market, credit, and other uncertainties. Market Price Exposure Management Actively monitor and manage operational, counterparty and wholesale energy price risk in the short-term (up to three to five years) by: A.Maintaining an adequate pool of creditworthy suppliers; and B.Diversifying supply purchases across commitment date, start date, duration, suppliers and pricing terms in alignment with rate stability objectives and reserve guidelines. Proposed Implementation Plan When 32.Evaluate a block purchase of up to 25 MW to meet base load needs for Jan- Mar and Nov-Dec for a term of up to 5 years. Feb. 2011 33.Conduct an RFP for new electric master agreement counterparties.Dec. 2011 34.Explore opportunities with NCPA, other municipal utilities and/or third party suppliers to reduce scheduling and/or operating costs. On-going 35.Continue to implement a 3-year laddering strategy to manage market price uncertainty. On-going Transmission and Reliability Since LEAP was last approved in 2007, there have been several changes related to the functions of transmission and reliability. First, the California Independent System Operator (CAISO) implemented its much awaited market redesign in April 2009. Through collaborative efforts with NCPA, CPAU effectively transitioned to this new market structure with minimal cost impact to Palo Alto ratepayers. Further, staff has effectively implemented the City’s Resource Adequacy Program in an effort to minimize cost while meeting the CAISO’s requirements and has effectively managed congestion cost through the use of Council-approved congestion revenue right (CRR) products. Lastly, in January 2009, in an effort to reduce cost, the City effected a 15-year assignment of its full share of the California-Oregon Transmission Project (COTP), thus reducing staff’s efforts in monitoring and intervening in FERC regulations related to transmission. At present, Palo Alto does not have any goals or plans to expand its interest in the transmission business (i.e., as a transmission provider or investor). Current interest in transmission assets are driven primarily by the City’s goals to improve reliability and create redundant path(s) of interconnection to the electric transmission grid;for acquiring renewable energy; reducing the cost of delivery of the City’s share of Western Base Resource (WBR); and advocating for fair and reasonable transmissions rates within the CAISO. Besides the evaluation of local generation (under Strategy #4 above), Palo Alto’s reliability needs will focus on evaluating upgrades to a 230KV connection and/or second (or redundant) points of interconnection with PG&E through continued participation in the Bay Area Municipal CMR: 426:10 Page 21 of 23 Transmission Group (BAMx) to advocate on behalf of Palo Alto and promote cost effective grid planning activities for the Bay Area. Existing Guideline #4 Proposed Strategy #8 Market Design, Transmission and Resource Adequacy Ensure the reliability of supply at fair and reasonable transmission and capacity costs by: A. Actively participating, as an individual entity and also through collaborative efforts with other entities, in local, regional, statewide and federal regulatory and legislative forums. Supporting, through legislative, regulatory and technical advocacy and/or direct investment, the upgrading of Northern California transmission to improve reliability and to relieve both congestion and local capacity costs; B. Participating in transmission and reliability market design forums to ensure that adopted market designs result in adequate reliability, workably competitive markets and equitable cost allocation; C. Implementing the City of Palo Alto Electric Utility Resource Adequacy Program; D. Participating in Joint Action Agencies to optimize value of City-owned transmission assets and ensure compliance with FERC regulations; E. Supporting, through legislative, regulatory and technical advocacy, the development and availability of long-term transmission rights to serve load; and F.Evaluating interconnection options to the City to increase service reliability and lower delivery costs. Transmission and Reliability Pursue the reliability of supply at fair and reasonable transmission and delivery costs by: A.Actively participating through collaborative efforts with other entities, in local, regional, statewide and federal regulatory and legislative forums; B.Participating in transmission and reliability market design forums to ensure that adopted market designs result in adequate reliability, workably competitive markets and equitable cost allocation; C.Evaluating interconnection options to the City to increase service reliability and lower delivery costs; and D.Exploring transmission opportunities and strategies to meet long-term renewable portfolio objectives beyond 2020 Proposed Implementation Plan When 36.Investigate transmission connection voltage upgrade from 115 to 230 kV, and the potential for a transmission reliability connection to west side. On-going 37.Explore transmission opportunities and strategies to meet long-term renewable portfolio objectives beyond 2020. On-going 38.Evaluate joint efforts for power plant ownership opportunities or long-term agreements to meet the City’s Resource Adequacy Program requirements. On-going COMMISSION REVIEW AND RECOMMENDATIONS The UAC began discussing LEAP and the need for updates at its June 2010 meeting. A review of current LEAP Objectives and Guidelines, current practices and alternatives were presented to elicit feedback from the UAC on broad policy areas of resource acquisition, hydro and market price uncertainty management and furthering of climate protection goals. Staff returned to the UAC twice in July 2010 to continue discussion on updating LEAP. At the July 20 UAC meeting, a proposal to align the City’s RPS with the state’s mandate for investor owned utilities of 33% by 2020 was presented. The UAC indicated a preference for maintaining the expedited RPS goal of 33% by 2015 and for including information about the economic and CMR: 426:10 Page 22 of 23 environmental impacts of alternative policies. The minutes of the July 20, 2010 UAC meeting are provided as Attachment C. At the July 28, 2010 UAC meeting,staff presented an analysis of the impact on costs and GHG emissions associated with several alternative strategies including increased energy efficiency; promotion of local generation; and an aggressive RPS. The UAC provided general feedback that it desired to see more analysis about the impacts on rates and GHG emission reductions from alternatives going forward and in general was in support of the LEAP Objectives and Strategies as proposed by staff. The July 28, 2010 UAC meeting minutes are provided as Attachment D. At the UAC’s September 1, 2010 meeting, staff presented the final draft of the LEAP Objectives and Strategies. The UAC voted to modify LEAP Objective #1 by adding an assessment of the environmental costs and benefits when evaluating the total cost of resources. After the modification, the UAC voted unanimously (7-0)to support the three proposed LEAP Objectives. The UAC proposed a similar modification to Strategy #1 and minor modifications were proposed to Strategies #3 and #5. No changes were proposed by the UAC to Strategies #2, #6, #7, and #8. After the modifications, proposed LEAP Strategies #1, #2, #3, #5, #6, #7, and #8 were unanimously (7-0) approved by the UAC. An addition was proposed for Strategy #4 (Local Generation) to include an evaluation of the feasibility of developing a 25 to 50 MW generating facility in or near the City. This addition was approved by the UAC by a 4 to 3 vote. The minutes of the September 1, 2010 UAC meeting are provided as Attachment E. After receiving the UAC’s recommendation and modifying the LEAP Objectives and Strategies accordingly, staff presented the LEAP Implementation Plan at the UAC’s November 3, 2010 meeting. The UAC unanimously (7-0) voted to approve the proposed LEAP Implementation Plan. The draft minutes of the November 3, 2010 UAC meeting are provided as Attachment F. RESOURCE IMPACT There is no direct resource impact as a result of the proposed changes to the LEAP Objectives, Strategies for fiscal years 2011. The initiatives, plans and/or tasks identified in the proposed LEAP Implementation Plan to meet the Objective and Strategies will require further review and approvals and the resource impact will be identified at that time. POLICY IMPLICATIONS The proposed LEAP Objectives, Strategies and Implementation Plan support the Council- approved Utilities Strategic Plan, Energy Risk Management Policies, and Comprehensive Plan Goal N-9 (a clean, efficient, competitively-priced energy supply that makes use of cost-effective renewable resources). ENVIRONMENTAL REVIEW Adoption of the LEAP Objectives, Strategies and Implementation Plan does not constitute a project for the purposes of the California Environmental Quality Act. CMR: 426:10 Page 23 of 23 ATTACHMENTS A.Proposed LEAP Objectives, Strategies and Implementation Plan B.Existing LEAP Objectives, Guidelines and Implementation Plan C.Excerpted Minutes of the July 20, 2010 UAC Meeting D.Excerpted Minutes of the July 28, 2010 UAC Meeting E.Excerpted Minutes of the September 1, 2010 UAC Meeting F.Excerpted Draft Minutes of the November 3, 2010 UAC Meeting PREPARED BY:JAMES STACK, Resource Planner MONICA PADILLA, Senior Resource Planner REVIEWED BY:JANE RATCHYE Assistant Director, Resource Management DEPARTMENT HEAD:______________________________ VALERIE O. FONG Director of Utilities CITY MANAGER APPROVAL:______________________________ JAMES KEENE City Manager ATTACHMENT C Proposed Long-term Electric Acquisition Plan (LEAP) Objectives,Strategies and Implementation Plan LEAP Objectives: 1.Meet customer electricity needs through the acquisition of least total cost energy and demand resources including an assessment of the environmental costs and benefits 2.Manage supply portfolio cost uncertainty to meet rate and reserve objectives. 3.Enhance supply reliability to meet City and customer needs by pursuing opportunities including transmission system upgrades and local generation. LEAP Strategies and Implementation Plan Steps: 1.Resource Acquisition –Pursue the least total cost resources including an assessment of environmental costs and benefits to meet the City’s needs in the long term by: a.Evaluating each potential resource on an equal basis by evaluating rate impacts and establishing costs and values for location, time of day and year, carbon, value of renewable supplies and any secondary benefits attributed to the resource; and b.Including all resources –conventional energy, local and remote renewable energy supplies, energy efficiency, cogeneration, and demand reduction –in the evaluation. Implementation Plan Items for Strategy #1 –Resource Acquisition Estimated Completion 1.Adjust planning and portfolio models to include an integrated and least cost planning perspective which evaluates demand and supply side resources in an integrated manner and includes time of delivery, locational and environmental costs and benefits. Dec. 2010 2.Evaluate the impacts of energy efficiency, demand reductions and electric vehicle penetration in Palo Alto in the annual development of the electric load forecast. Dec. 2010 2.Electric Energy Efficiency and Demand Reduction –Fund programs that maximize the deployment of cost-effective, reliable and feasible energy efficiency and demand reduction opportunities as the highest priority resources by: a.Every three years, preparing a ten-year energy efficiency plan that identifies all cost- effective energy efficiency opportunities; b.Using the cost of long-term renewable energy resources adjusted for time of day factors and location as the avoided cost when evaluating cost effectiveness of energy efficiency measures; c.Designing and making energy efficiency programs available to all customers; and d.Considering the impacts (costs, benefits and GHG emissions) of substituting electricity-using appliances for natural gas-using appliances and vice versa in the ten- year energy efficiency plan. ATTACHMENT C Implementation Plan Items for Strategy #2 –Electric Energy Efficiency and Demand Reduction Estimated Completion 3.Provide quarterly updates on electric efficiency program achievements including tracking against 10-Year Energy Efficiency goals to the UAC and annual updates to the City Council. quarterly 4.Develop Energy Efficiency Implementation Plan for the 2010 10-Year Electric EE Plan addressing certain items identified in the May 2010 Council Colleagues Memo and identification of resources and funding needed to achieve EE goals. Apr. 2011 5.Evaluate fuel switching energy efficiency measures and include them, if cost- effective, in the Electric and Gas EE Implementation Plans. Feb. 2011 6.Develop a pilot Demand Response Program for large commercial industrial customers for implementation in summer 2011. Apr. 2011 7.Assess the feasibility and cost-effectiveness of using current and potential thermal energy storage (TES) systems to shift load from on-peak periods to off-peak periods, for use in a demand response program, or for meeting any energy storage needs. Sep. 2011 3.Renewable Portfolio Standard (RPS) –Reduce the carbon intensity of the electric portfolio by acquiring renewable energy supplies by: a.Pursuing a target level of renewable purchases of 33% by 2015 with the following attributes: i.The contracts for investment in renewable resources shall not exceed 30 years in term. ii.Pursue only renewable resources deemed to be eligible by the California Energy Commission (CEC). iii.Evaluate use of Renewable Energy Certificates (RECs) to meet RPS. b.Ensuring that the retail rate impact for renewable purchases does not exceed 0.5 ¢/kWh on average; and c.Evaluating a Feed-In Tariff (FIT) contracting mechanism that considers the full value of locally sited renewable resources. Proposed Implementation Plan Items for Strategy #3 –Renewable Portfolio Standard (RPS) Estimated Completion 8.Fully integrate the effects on energy efficiency in the long-term electric load forecast. Nov. 2010 9.Evaluate the merits of implementing a feed-in-tariff (FIT) and the potential to meet RPS goals through local renewable resources. Jan. 2011 10.Seek UAC recommendation and Council approval of the policy elements of a FIT to encourage local renewable resource projects. May 2011 11.Continue working with NCPA to identify opportunities, including joint- ownership, for developing qualifying renewable resources. On-going ATTACHMENT C Proposed Implementation Plan Items for Strategy #3 –Renewable Portfolio Standard (RPS) Estimated Completion 12.Evaluate the use of renewable energy credits (REC) to meet a portion of the City’s RPS goal and/or greenhouse gas emission reduction goals and monitor the regulations and requirements regarding the use of RECs to meet RPS goals. On-going 13.Evaluate a proposed geothermal project being considered by NCPA, including a pre-pay option and the benefit, costs, and risks of a pre-pay structure. June 2011 14.Conduct a Request for Proposal for eligible renewable resources including RECs and evaluate alternative renewable resource technologies and contracting mechanisms. RFP in June 2011 4.Local Generation –Promote and facilitate the deployment of cost-effective local resources by: a.Using the renewable market price referent (MPR) adjusted for time of day factors and location as the avoided cost when evaluating cost effectiveness of local resources; b.Considering energy delivery cost uncertainty and strategic value options when evaluating opportunities; c.Evaluating a Feed-in-Tariff to promote locally sited renewable resources; d.Evaluating cost-effective energy storage resources; and e.Evaluating the feasibility of developing a 25 to 50 MW generating facility connect to the City’s distribution system. Proposed Implementation Plan Items for Strategy #4 –Local Generation Estimated Completion 15.Provide an update of past local generation feasibility studies and actions to UAC and Council Dec. 2010 16.Assess the potential for and feasibility of small local distributed and non- distributed, renewable and cogeneration projects, including using a FIT to encourage these projects. Jan. 2011 17.Assess the potential, benefits and costs of developing and/or joint ownership of a 25 to 50 MW gas-fired power plant located in or near Palo Alto to meet load, reliability and local capacity needs. Jun. 2011 18.Evaluate the City’s PLUG-In Program to encourage cogeneration including rules, regulations, and buy back rates and recommend modifications as needed. Dec. 2011 19.Following receiving Council direction from Implementation Plan Initiative #10, develop a FIT proposal including rate, rules, regulations, standard contract form and limits. To be determined 20.Assess the economics and potential of the anaerobic digester as a local generation resource for CPAU Sep.2011 21.Assess the need for and value of energy storage to support local renewable distributed generation resources. Jun. 2012 ATTACHMENT C 5.Climate Protection –Reduce the electric portfolio’s carbon intensity by: a.Supporting the City municipal government’s climate protection goals; b.Promoting the use of technologies (e.g. incentives for cogeneration systems, promotion of EVs, in-home energy displays) and programs that will reduce the community’s carbon footprint at a cost of up to the City’s value of carbon; c.Continuing to offer a renewable resource-based retail rate for all customers who want to voluntarily select an increased content of non-hydro renewable energy; and. d.Evaluating quantitative goals for possible future implementation. Proposed Implementation Plan Items for Strategy #5 –Climate Protection Estimated Completion 22.Promote the City’s Plug-in program to encourage development of cogeneration systems. On-going 23.Analyze electric vehicle (EV) charging patterns and evaluate rates to incent nighttime EV charging. Jun. 2011 24.Meet AB32 mandated annual reporting requirements to California Air Resources Board on annual volumes of electricity purchases by resource. Annually, next in Jun. 2011 25.Track and report annually on 6 major greenhouse gas emissions (CO2, CH4, N2O, SF6, HFCs, PFCs) for all of the City’s municipal operations and calculate electric portfolio’s overall emissions coefficients (lbs of CO2, CH4, and N2O per MWh of purchases). Annually, next in Sep. 2011 26.Evaluate the costs, benefits and impacts of the implementation of an electric portfolio carbon neutral policy and the setting of quantitative goals (e.g. carbon intensity, total GHG emissions). Jan. 2012 27.Evaluate PaloAltoGreen program design and recommend modifications, as appropriate, including constructing PaloAltoGreen to assist in meeting Renewable Portfolio Standard goals. Jun. 2012 6.Hydro Resource Management –Actively monitor and manage cost uncertainty related to variations in hydroelectric supply and maximize value of hydro resources by: a.Planning for an average hydro year on a long-term basis; b.Utilizing cost effective hydro resource management products; and c.Implementing opportunities to maximize benefits and reduce costs of the Western Base Resource and Calaveras hydroelectric resources. Proposed Implementation Plan Items for Strategy #6 –Hydro Resource Management Estimated Completion 28.Evaluate potential rate adjustment mechanisms that would adjust electric rates based on hydrologic year type and develop a recommendation for a rate. Apr. 2011 29.Assess the value related to Palo Alto’s participation in the CAISO’s Metered Subsystem Agreement and the use of the Calaveras hydroelectric project for load following. On-going 30.Identify long-term opportunities to maximize the value of the Calaveras hydroelectric project as an energy storage resource. On-going ATTACHMENT C Proposed Implementation Plan Items for Strategy #6 –Hydro Resource Management Estimated Completion 31.Work with NCPA to seek opportunities to increase the efficiency of the Calaveras hydroelectric project and implement operational value maximizing strategies. On-going 7.Market Price Exposure Management –Actively monitor and manage operational, counterparty and wholesale energy price risk in the short-term (up to three to five years) by: a.Maintaining an adequate pool of creditworthy suppliers; and b.Diversifying supply purchases across commitment date, start date, duration, suppliers and pricing terms in alignment with rate stability objectives and reserve guideline. Proposed Implementation Plan Items for Strategy #7 –Market Price Exposure Management Estimated Completion 32.Evaluate a block purchase of up to 25 MW to meet base load needs for Jan- Mar and Nov-Dec for a term of up to 5 years. Feb. 2011 33.Conduct an RFP for new electric master agreement counterparties.Dec. 2011 34.Explore opportunities with NCPA, other municipal utilities and/or third party suppliers to reduce scheduling and/or operating costs. On-going 35.Continue to implement a 3-year laddering strategy to manage market price uncertainty. On-going 8.Transmission and Reliability –Pursue the reliability of supply at fair and reasonable transmission and delivery costs by: a.Actively participating through collaborative efforts with other entities, in local, regional, statewide and federal regulatory and legislative forums; b.Participating in transmission and reliability market design forums to ensure that adopted market designs result in adequate reliability, workably competitive markets and equitable cost allocation; c.Evaluating interconnection options to the City to increase service reliability and lower delivery costs; and d.Exploring transmission opportunities and strategies to meet long-term renewable portfolio objectives beyond 2020. Proposed Implementation Plan Items for Strategy #8 –Transmission and Reliability Estimated Completion 36.Investigate transmission connection voltage upgrade from 115 to 230 kV, and the potential for a transmission reliability connection to west side. On-going 37.Explore transmission opportunities and strategies to meet long-term renewable portfolio objectives beyond 2020. On-going 38.Evaluate joint efforts for power plant ownership opportunities or long-term agreements to meet the City’s Resource Adequacy Program requirements. On-going ATTACHMENT D Page 1 of 4 Existing Long-term Electric Acquisition Plan (LEAP) Objectives and Guidelines and Implementation Plan LEAP Primary Portfolio Planning Objectives Originally approved by Council on November 13, 2001 (CMR 425:01). Objectives modified by Council on March 5, 2007 (CMR 158:07). Objective 1:Provide competitive and predictable supply cost while balancing environmental, local reliability, rate and cost impacts. Objective 2: Maintain a supply portfolio cost advantage compared to wholesale electricity market cost. Objective 3: Enhance supply reliability to meet City and customer needs by pursuing opportunities including transmission system upgrades and local generation. Objective 4: Act to maintain the City Council’s ability to exercise local control of decision making related to all aspects of serving customer energy needs. LEAP Guidelines Originally approved by Council on October 21, 2002 (CMR 398:02). Guidelines modified by Council on March 5, 2007 (CMR 158:07). Guideline 1: Resource Loading Order Manage a supply portfolio comprising locally selected and joint action cooperative purchases, with the following preference hierarchy for resource acquisition: A.Efficiency B.Renewable Supply C.Local Ultra-Clean Distributed Generation D.Conventional Supply Guideline 2: Hydro Resource Management Manage hydroelectric supply resources by: A.Planning for an average hydro year on a long-term basis; B.Maintaining the flexibility to adopt hydro resource management products; C.Maximizing value of the Western and Calaveras resource; and D.Maintaining adequate supply rate stabilization reserve to manage hydro production volume uncertainty. Guideline 3: Energy Risk Management Manage supply cost uncertainty and risk by: A.Implementing the City’s Energy Risk Management Policies and Guidelines; B.Maintaining an adequate pool of credit-worthy suppliers; C.Diversifying supply purchases across commitment date, start date, duration, suppliers, pricing terms and fuel sources; D.Maintaining a prudent exposure to changing market prices; and E.Maintaining adequate supply rate stabilization reserves to manage market, credit, and other uncertainties. ATTACHMENT D Page 2 of 4 Guideline 4: Market Design, Transmission and Resource Adequacy Ensure the reliability of supply at fair and reasonable transmission and capacity costs by: A.Actively participating, as an individual entity and also through collaborative efforts with other entities, in local, regional, statewide and federal regulatory and legislative forums. Supporting, through legislative, regulatory and technical advocacy and/or direct investment, the upgrading of Northern California transmission to improve reliability and to relieve both congestion and local capacity costs; B.Participating in transmission and reliability market design forums to ensure that adopted market designs result in adequate reliability, workably competitive markets and equitable cost allocation; C.Implementing the City of Palo Alto Electric Utility Resource Adequacy Program; D.Participating in Joint Action Agencies to optimize value of City-owned transmission assets and ensure compliance with FERC regulations; E.Supporting, through legislative, regulatory and technical advocacy, the development and availability of long-term transmission rights to serve load; and F.Evaluating interconnection options to the City to increase service reliability and lower delivery costs. Guideline 5: Local Generation A.Promote and facilitate deployment of renewable resource supplies by providing expertise, education, incentives and rates to support customer-owned solar power systems, and demonstrating renewable generation technologies. B.Promote an ultra-clean distributed generation incentive program. Guideline 6: Renewable Energy Supply Reduce electric portfolio dependence on fossil fuels by meeting at least 80% of City’s long term energy needs from non-fossil and non-nuclear supply. A.Renewable Portfolio Standard: In addition to the voluntary program, the City shall invest in new renewable resources to meet the City’s sustainability goals while ensuring that the retail rate impact does not exceed 0.5 ¢/kWh on average. B.Pursue a target level of new renewable purchases of 20% of the expected portfolio load by 2008 and move to a 30% target by 2012 and 33% by 2015. The contracts for investment in renewable resources shall not exceed 30 years in term. C.Palo Alto Green: In addition to the renewable portfolio standard, the City shall continue to offer a renewable resource-based retail rate for all customers who want to voluntarily select an increased content of non-hydro renewable energy. Guideline 7: Electric Energy Efficiency and Demand Reduction A.Fund innovative programs that promote and facilitate deployment of all cost-effective, reliable and feasible energy efficiency and demand reduction opportunities as high priority resources. B.Use a community-wide perspective in program evaluation criteria. C.Use a bill reduction (utility cost) perspective in program funding criteria. D.Promote equity by designing and making programs available to all customers ATTACHMENT D Page 3 of 4 Guideline 8: Climate Action Plan As part of the City’s commitment to develop an implement an action plan to reduce greenhouse gas emissions, develop and implement a Climate Action Plan relating to utility activities. A.Consider all Mayor’s Green Ribbon Task Force utility-related recommendations. B.The plan shall be consistent with the California Municipal Utilities Association Greenhouse Gas Reduction Principles. C.Take actions to meet ICLEI Cities for Climate Protection Campaign milestones. D.Coordinate with and support Climate Action Plan efforts of other departments. LEAP Implementation Plan Originally approved by Council on August 4, 2003 (CMR:354:03). Changes approved by Council on April 17, 2006 (CMR 169:06). 1.Climate Action: Promote environmental stewardship by completing the California Climate Action Registry process for reporting and certifying greenhouse gas emissions, developing a Climate Action Plan for utilities, and supporting City efforts to address climate change and other environmental issues. 2.Public Benefits: Continue implementation of electric public benefits programs, which is funded by collecting a fee equal to 2.85% of the electric retail rate. These funds are partially used to demonstrate renewable resources or alternative technologies and to assist customers in pursuing efficiency improvements. Coordinate Public Benefits program enhancements with efficiency portfolio plan development (Task #3) 3.Efficiency Portfolio: Enhance the existing efficiency programs by developing a long-term integrated resource efficiency portfolio plan that recognizes cost-effective energy efficiency and load management as priority resources in the “loading order” for energy resources. Design efficiency programs to account for the combined benefits of electric, gas, and water efficiency savings (e.g. a horizontal clothes washer saves electricity, water and gas). Leverage joint efforts with other public power providers via NCPA’s efficiency initiatives and Public Benefits Committee. Enhance system efficiency through generation efficiency improvements and electric distribution system enhancements to lower system losses. As appropriate, additional funding for cost-effective efficiency programs will be recommended to complement and enhance the existing Public Benefits programs. Develop retail rate options that provide price signals to customers that encourage efficiency. 4.Renewable Portfolio: Acquire renewable energy resources to meet LEAP Guideline 6. Strive to meet 2015 goals by 2010. Work closely with suppliers to meet their contract obligations and to ensure that projects under construction are completed in a timely manner. Participate in NCPA “Green Pool” joint procurement initiative to meet remaining needs. 5.PaloAltoGreen: Continue implementation of the Palo Alto Green program, a green pricing product available on a volunteer basis to customers who wish to purchase a greater fraction of green resources. Where feasible, secure eligible renewable energy supplies to meet both the renewable portfolio investments and the needs of the Palo Alto Green program. Evaluate potential strategies to meet the solar portion of PaloAltoGreen with local solar resources. ATTACHMENT D Page 4 of 4 6.Clean Distributed Generation: Develop a long-term cogeneration implementation plan to capitalize on environmentally friendly and cost-effective high-efficiency combined heat, power and cooling (CHPC) opportunities at large customer sites that are compatible with the Comprehensive Plan. Assist motivated large customers in evaluating technical and economic feasibility of CHPC combined with energy efficiency, and in implementing cost- effective and environmentally sound prospects. Establish standardized distributed generation interconnection standards and procedures that leverage the groundwork of California Public Utilities Commission Rule 21, and update retail and wholesale electric and gas rates for small-scale clean distributed generation. Continue to monitor technology costs and opportunities for smaller renewable technologies, cogeneration and other low-impact generation that can be located within Palo Alto. 7.Natural Gas-Fired Generation: Redirect the local generation feasibility study CIP to focus on clean small-scale distributed generation (Task #6) and power plant opportunities outside of Palo Alto. Given regulatory uncertainty related to local capacity rules and uncertainty of control area constraints, evaluate joint efforts toward power plant ownership opportunities within and near the Greater Bay Area (consistent with levels listed in LEAP Guideline #3B (25-50 MW). 8.Greater Bay Area Contracts: In parallel with Task #7, pursue firm energy and capacity supply contracts within the Greater Bay Area on either medium or long-term basis. Conduct a Request for Proposals to solicit firm energy and capacity offers from all sources within the Greater Bay Area, including renewables, cogeneration and conventional generation. 9.Portfolio Management: Continue to diversify energy purchases to meet load. Continue to develop and maintain expertise and analytic tools, models and other efforts to evaluate scenarios, new resource opportunities, and impact of uncertainties on portfolio position and performance. 10.Risk Management: Develop improved transparent and streamlined Back Office process (contract administration and settlements). Clarify surplus power wholesale sales procedures to ensure transparency and the appropriateness of surplus energy commodity sales transactions that are necessary to meet varying loads with varying and dispatchable electric supplies.Maintain adequate reserves by recognizing the degree of uncertainty the City faces in the future and periodically review and recommend appropriate level of financial reserves. 11.Local Interconnection: Evaluate transmission system upgrades to reduce cost and enhance reliability. Investigate transmission connection voltage increase from 115 to 230 kV, and the potential for a redundant transmission connection to west side. 12.Legislation and Regulation: Monitor and participate in regulatory and legislative initiatives related to transmission market design and pursue alternatives to increase reliability at a reasonable cost. Continue to advocate transmission upgrades in to the Bay Area to increase reliability.Establish a policy to address mandatory resource adequacy requirements. ATTACHMENT E Utilities Advisory Commission Minutes Approved on: October 6, 2010 Page 1 of 7 UTILITIES ADVISORY COMMISSION -MEETING MINUTES OF SEPTEMBER 1, 2010 ITEM 2: ACTION: Proposed Long-Term Electric Acquisition Plan (LEAP) Objectives and Strategies Senior Resource Planner Monica Padilla provided a presentation to the UAC on the proposed Strategies to meet the three proposed LEAP Objectives: 1.Meet customer electricity needs through the acquisition of least total cost energy and demand resources. 2.Manage supply portfolio cost uncertainty to meet rate and reserve objectives. 3.Enhance supply reliability to meet City and customer needs by pursuing opportunities including transmission system upgrades and local generation. The eight proposed Strategies related to electric resource management presented include: 1.Resource Acquisition 2.Energy Efficiency and Demand Reduction 3.Renewable Portfolio Standard (RPS) 4.Local Generation 5.Climate Protection 6.Market Price Exposure Management 7.Hydro Resource Management 8.Transmission and Reliability Padilla focused the presentation on several issues raised by UAC members and the City Council with regard to: ·Amount of energy efficiency to pursue; ·Costs and benefits of advancing the RPS goal of 33%by 2020 (expected state mandate) to 33% by 2015 (City’s current RPS); ·Benefits and value of local distributed generation; and ·Setting of Climate Protection goals and policies. Energy Efficiency Padilla described the process used to develop the recently approved Ten-Year Energy Efficiency Plan and how cost effectiveness was determined by using the long-term cost of renewable energy, adjusted for time of delivery and location,as the avoided cost. Padilla also explained that while a potential 18% load reduction by 2020 due to energy efficiency was identified, the amount staff believes it could actually achieve given existing resources is closer to 7.2% as currently approved in the Ten-Year Energy Efficiency Plan. Padilla also noted that the cost of pursuing a higher energy efficiency target would be much higher than in the current plan and highly uncertain. Renewable Portfolio Standard Padilla summarized analysis performed on the advantages and disadvantages as a result of delaying achieving a 33% RPS by five years (from 2015 to 2020). The City could save approximately $11 million over five years by avoiding purchases of renewable energy supplies, however would face a potential exposure to green house gas emission taxes of approximately $3 million under a cap and trade regime. ATTACHMENT E Utilities Advisory Commission Minutes Approved on: October 6, 2010 Page 2 of 7 The net savings of $8 million over five years, which equates to about ¼ cent per kWh, could be used to fund other measures to reduce greenhouse gas emissions. Padilla noted that by delaying the 33% RPS goal, the City may lose its “cushion” for meeting the expected state standard and may not be in line with the community’s values related to sustainability. Local Generation An overview of the both tangible and intangible benefits of local distributed generation was presented by Padilla along with analysis of the value of local generation to meet the City’s RPS. Padilla noted that under an expected case scenario, local distributed generation is valued at 14.7 cents per kWh, however is highly dependent on several market conditions and that the actual value may range from 9.7 to 24.6 cents per kWh. Commissioner Melton noted that staff has chosen not to examine local generation of sufficient capacity to support local demands. He stated that it’s time to look at that option again even though the idea was not pursued when studied in the past. Padilla acknowledged that this was indeed the case and that staff did not intent to pursue large scale generation. Commissioner Melton stated that he disagreed with this stance. Climate Protection Padilla proceeded to address several issues related to Climate Protection including: ·Whether to use a greenhouse gas adder in making short-term resource acquisition decisions; ·Whether to minimize purchases of greenhouse gas emitting resources; ·Whether to adopt a carbon intensity goal; and ·Whether to pursue carbon neutrality for the electric supply portfolio. Padilla explained that assuming an RPS of 33%is achieved by 2015 the City’s electric portfolio will be 85% carbon neutral assuming average hydroelectric supplies and that 15% of the portfolio would consist of unspecified market purchases which are assumed to have a carbon intensity of 879 pounds per MWh. Padilla also noted that the cost of “greening-up” the carbon intense portion of the portfolio is highly dependent on the cost of renewable energy credits and hydroelectric supply conditions and can range from $5 to $11 million per year. Padilla concluded that given the cost and complexity of “greening-up” the electric portfolio and the uncertainty regarding cap and trade allowances, a strategy to pursue a carbon neutral portfolio at this time would not be prudent. PUBLIC COMMENT Craig Lewis, Executive Director of the FIT Coalition gave a presentation.He stated that the Fit Coalition is assisting other municipal utilities to implement Feed-in-Tariffs and would like to do the same with Palo Alto. They have done some research to look at requirements for a feed-in-tariff for Palo Alto to achieve and maintain its 33% RPS.They have come up with an estimate of avoided costs in Palo Alto of 14c/kWh. Lewis also showed an example of how much roof top space opportunity is in Los Angeles, which he believes is an indication of the opportunity in Palo Alto. Sahm White, also of the FIT Coalition, gave a presentation. FIT modeled roof-stop solar in Palo Alto and looked at different sizes and rates that would be required. White claimed that the best of the options at 14.85 cents in current dollars over the life of the contract is close to the current avoided cost for power produced locally. ATTACHMENT E Utilities Advisory Commission Minutes Approved on: October 6, 2010 Page 3 of 7 Council Member Scharff stated that the idea of a Feed-in-Tariff (FIT) needs more work and that it can’t be accepted without further analysis. Director Fong indicated that staff fully intends to study this and come back to the UAC prior to implementing such a rate. Commissioner Eglash noted that progress had been made in the LEAP, but that he has serious concerns. He noted that the objectives and strategies are inconsistent across sections and that it doesn’t go far enough to achieve green goals. Commissioner Eglash stated that he likes the proposed RPS goal, it is consistent with community values, and he is pleased that the economic impact is small. However,it seems inconsistent with proposed Strategy #1 (pursue the least total cost resources to meet the City’s needs in the long term) since that appears to not allow for more renewable resources. In addition, Commissioner Eglash stated that carbon strategy is not reflective of community values and appears weak and watered down. He acknowledged that a strong RPS does impact carbon footprint, but the strategy seems to send the wrong message and misses an opportunity to do the right thing. Regarding local generation, implementing FITs, and cost-effective storage resources, he would be more comfortable if we investigated them, rather than implemented them as proposed in the strategies. Commissioner Foster said that he agreed with Commissioner Eglash’s comments and that regarding FITs, we could change the language in the proposed strategy. He added that he is generally supportive of the plan and is 100% in favor of the RPS goal of 33% by 2015 with a cost limitation. Commissioner Cook said he feels similarly to Commissioner Eglash as well. Commissioner Cook asked why proposed LEAP Objective #1 was changed from the prior Objective #1. Padilla responded that when evaluating resources,all costs and benefits including environmental, would be monetized and that those with the least total cost would be pursued. Regarding proposed Strategy #2 (Electric Energy Efficiency and Demand Response), Commissioner Cook asked why staff would want to identify all the cost-effective energy efficiency opportunities, instead of just the measures with the highest value. Padilla responded that all need to be identified, but that not all may make sense to pursue. Commissioner Cook noted that the proposed Strategy #5 (Climate Protection)as written in the report was redundant. Padilla replied that proposed Strategy #5 was rewritten as provided in the presentation. Commissioner Keller agreed that the RPS goal should be aggressive as proposed. She asked if the rate impact measure should be changed to a percentage of the rate rather than a set amount of 0.5 cents per kWh. Ratchye replied that having the measure be a percentage of the rate is more difficult for staff to calculate the green premium since that would require long-term rate projections to be done, which is problematic. Commissioner Melton stated his support for all elements of the plan except for the absence of a strategy to re-evaluate large local generation. He said that it’s been a number of years since this was last examined and that Santa Clara has such a facility and that it’s important for emergency preparedness. He would like to add to Strategy #4 (Local Generation) to ensure that this is evaluated. Senior Resource Planner Shiva Swaminathan provided the reasons staff did not include this in the proposed Strategy. First, the size of a plant that could add local reliability would have to be at least 25 MW to 50 MW in size and even at that size, the City would have to institute rolling blackouts to have parts of the City served at any one time since the City’s peak load is nearly 200 MW. The last time this was evaluated, no acceptable site was found. Second, the siting of a gas-fired power plant is not aligned with the City’s GHG emissions reduction goals. Third, cogeneration would be considered and the City already has the PLUG-In program that encourages cogeneration, but has been unsuccessful in finding customer sites where cogeneration is feasible. Fong ATTACHMENT E Utilities Advisory Commission Minutes Approved on: October 6, 2010 Page 4 of 7 added that investigating this again takes time, money and staff resources and may require the hiring of a consultant. Council Member Yeh suggested that staff could distribute the studies that were done previously to the UAC. He stated that emergency preparedness is a Council priority and asked what elements of a study with emergency preparedness alternatives can be done. Commissioner Melton indicated that he wanted to know what the costs would be if we can find a site. Council Member Scharff stated that he was generally supportive of the RPS strategy, but stated that he wondered what the best way to reduce carbon footprint was if the additional cost is $11 million. There could be other approaches,such as energy efficiency. Staff should look at the best possible way to achieve environmental goals and encouraged the UAC to not rigidly consider only RPS. The discussion should be framed as the best way to move toward carbon neutrality. Council Member Scharff added that CPAU should tout the City’s current low carbon footprint as PG&E does. Commissioner Foster agreed that we should look more at efficiency, but should also have more renewable resources –we should do both. Chair Waldfogel stated that the proposed LEAP Objectives and Strategies was a great staff work and that he was very supportive of proposed Strategy #1 (Pursue the least total cost resources to meet the City’s needs in the long-term), which is a good operating principle. Regarding the RPS, he is not comfortable with 30-year terms and asked if that could be reduced. Chair Waldfogel also expressed concern about the lack of diversity in the renewable portfolio and said that we are at risk with so much in landfill-gas-to-energy projects.He suggested that a limit to a particular technology could be included in the RPS strategy. Commissioner Keller disagreed and stated that it would be best to keep options open and not be too restrictive. She added that the climate protection strategy could include other options such as planting trees. Commissioner Eglash agreed with Commissioner Keller that it is best not to restrict the staff’s ability to comply with the RPS goal by adding requirements by technology. Chair Waldfogel indicated that the Commission would consider the LEAP Objectives and Strategies individually, as needed,to take action rather than taking action as a whole. LEAP Objectives ACTION: Commissioner Eglash made a motion that the UAC recommend that the Council approve LEAP Objectives #2 and #3 as proposed and LEAP Objective #1 with the addition of the phrase “including an assessment of environmental costs and benefits”so that LEAP Objective #1 reads: “1.Meet customer electricity needs through the acquisition of least total cost energy and demand resources including an assessment of the environmental costs and benefits.” Commissioner Foster seconded the motion. The motion passed unanimously (7-0). LEAP Strategy #1 (Resource Acquisition) Regarding proposed Strategy #1, Commissioner Eglash proposed a change so the first clause in the strategy would read: “Pursue the least total cost resources including an assessment of environmental costs and benefits to meet the City’s needs in the long term by:”. Chair Waldfogel asked why environmental cost should be privileged as opposed to any other part of the total cost. Commissioner Eglash responded that the addition was not intended to privilege them, but to ATTACHMENT E Utilities Advisory Commission Minutes Approved on: October 6, 2010 Page 5 of 7 ensure that not only tangible costs are included in the analysis. Council Member Scharff asked how this was to be done. Commissioner Eglash responded that the point is to make sure that environmental impacts are included as they could easily be ignored since they are not always easy to quantify. Council Member Scharff asked what staff will do when power is purchased according to this strategy. Commissioner Eglash replied that he wouldn’t want staff to value GHG emissions at a very high level or at zero. He is trying to give some flexibility to incorporate intangibles into the analysis. Commissioner Keller stated that she agreed with this sentiment. ACTION: Commissioner Foster made a motion that the UAC recommend that the Council approve the change proposed by Commissioner Eglash to LEAP Strategy #1 so that the first phrase reads: “Pursue the least total cost resources including an assessment of environmental costs and benefits to meet the City’s needs in the long term by:”. Commissioner Keller seconded the motion. The motion passed unanimously (7-0). LEAP Strategy #3 (Renewable Portfolio Standard) Commissioner Eglash indicated that he would like to change the subsection c. “evaluating” instead of “developing” a Feed-in-Tariff. Chair Waldfogel asked if a new section under subsection a.i. (regarding contracts not exceeding 30-year terms) be added to read: “with reasonable cancellation terms”. He wanted to protect the City in case regulations or legislation was changed in the future that changed what is considered an eligible renewable resource. Director Fong stated that this insurance would likely be very expensive and that historically, existing long-term contracts are grandfathered in if regulations change.Regarding the 30-year term limitation and whether it should be reduced, Commissioner Eglash opined that the maximum term proposed should stay so that staff was not boxed in too tightly. Commissioner Foster agreed that the proposed maximum term should stay as proposed. He also suggested that these long-term contracts should be brought to the UAC for review and recommendation. Council Member Yeh asked whether proposed contracts have to have the 1.5% per year price escalators that the last several renewable contracts contained and whether there was a way to get flat pricing from project proposers.Ratchye indicated that generally proposers can price a project many different ways and usually can provide a flat price, but in the last couple of renewable resource Requests for Proposals (RFPs), staff had required proposers to provide at least one pricing option that included a start price and a 1.5% per year escalation since staff believes that this is a good pricing structure for the City for long-term contracts. ACTION: Commissioner Eglash moved to recommend that the Council approved the proposed LEAP Strategy #3 with a change to subsection c. so that it reads:“evaluating” instead of “developing” a Feed-in-Tariff. Commissioner Foster seconded the motion. The motion passed unanimously (7-0). LEAP Strategy #4 (Local Generation) Commissioner Melton said that he would like to change subsection c. from “implementing” to “evaluating” a Feed-in-Tariff. Commissioner Foster suggested changing subsection c. from “local solar photovoltaic (PV) systems” to “locally sited renewable resources” to be more generic. ATTACHMENT E Utilities Advisory Commission Minutes Approved on: October 6, 2010 Page 6 of 7 Commissioner Melton suggested adding a new subsection e. to read: “evaluating the feasibility of developing a 25 to 50 MW generating facility connect to the City’s distribution system.” Commissioner Eglash indicated that he would support Melton’s proposal and would also support removing the word “distributed” in the first phrase of proposed Strategy #4. Commissioner Eglash also proposed changing subsection d. from “promoting” to “evaluating” cost-effective energy storage resources. Commissioner Keller asked how much capacity from cogeneration systems in the City is possible. Swaminathan replied that the City would get from 20 to 40 MW of cogeneration and mentioned that the PLUG-In program exists to encourage the installation of these systems at customer sites. Commissioner Berry asked if the reliability of the City’s system would improve with resources outside of Palo Alto. Director Fong said that they could improve reliability if they were outside of the City, but in close proximity, and, especially, if there were a transmission line directly to the resource outside the City. ACTION: Commissioner Eglash moved, seconded by Commissioner Foster, to recommend that the Council approved the proposed LEAP Strategy #4 with the recommended changes so that it reads as follows: Local Generation –Promote and facilitate the deployment of cost-effective local resources by: a.Using the renewable market price referent (MPR) adjusted for time of day factors and location as the avoided cost when evaluating cost effectiveness of local resources; b.Considering energy delivery cost uncertainty and strategic value options when evaluating opportunities; c.Evaluating a Feed-in-Tariff to promote locally sited renewable resources; and d.Evaluating cost-effective energy storage resources. The motion passed unanimously (7-0). Commissioner Eglash moved to recommend that the Council approve adding subsection e. to LEAP Strategy #4 to read: “Evaluating the feasibility of developing a 25 to 50 MW generating facility connect to the City’s distribution system.” Commissioner Melton seconded the motion. The motion passed (4-3) with Commissioners Cook, Foster, and Keller opposed. LEAP Strategy #5 (Climate Protection) Commissioner Eglash stated that this strategy was weak, especially in comparison to the aggressive environmental goal in the RPS strategy. Council Member Scharff suggested that a target could be added for a carbon neutral content of the electric portfolio. Director Fong cautioned that, since the hydroelectric generation content of the electric portfolio changes with hydrologic year type, this could be a tricky goal to keep track of, or may need to be averaged over several years. Commissioner Eglash suggested adding a new subsection that would read: “Evaluating quantitative goals for possible future implementation.” Chair Waldfogel asked if the UAC has jurisdiction under the item in subsection a. –support the City municipal government’s climate protection goals. Ratchye advised that the City’s 2007 Climate Protection ATTACHMENT E Utilities Advisory Commission Minutes Approved on: October 6, 2010 Page 7 of 7 Plan contains GHG emissions reduction goals that rely on increased renewable resources in the electric portfolio as well as efficiency savings in the gas and electric portfolio so that Utilities is a major part of the plan to meet the City’s climate goals. ACTION: Commissioner Cook moved to recommend that the Council approved the proposed LEAP Strategy #5 with the addition of subsection d. to read “Evaluating quantitative goals for possible future implementation.” and with a correction to the first phrase to read: “Reduce the electric portfolio’s carbon intensity by:”. Commissioner Eglash seconded the motion. The motion passed unanimously (7-0). LEAP Strategies #2, 6, 7, 8 Commissioners indicated that they were comfortable with LEAP Strategy #2 (Electric Energy Efficiency and Demand Reduction),Strategy #6 (Hydro Resource Management), Strategy #7 (Market Price Exposure Management), and Strategy #8 (Transmission and Reliability) as proposed. ACTION: Commissioner Foster made a motion that the UAC recommend that the Council approve LEAP Strategies #2, #6, #7, and #8 as proposed. Commissioner Eglash seconded the motion. The motion passed unanimously (6-0) with Commissioner Berry absent. ATTACHMENT F Utilities Advisory Commission Minutes Approved on: Page 1 of 1 UTILITIES ADVISORY COMMISSION -MEETING EXCERPTED DRAFT MINUTES OF NOVEMBER 3, 2010 ITEM 4: ACTION: Proposed Long-term Electric Acquisition Plan (LEAP) Implementation Plan Senior Resource Planner Monica Padilla provided a brief presentation on the LEAP, noting that the UAC recommended approval of the LEAP Objectives and Strategies at its September 2010 meeting. She noted that the proposed Implementation Plan consists of 38 steps that were identified to implement the policy objectives in the LEAP Objectives and Strategies. Chair Waldfogel agreed that the UAC’s consideration of the LEAP Implementation Plan was perfunctory as they had already provided the policy direction in the development of the Objectives and Strategies. Commissioner Eglash indicated that he supported the plan, but expressed concern about the workload that the 38 implementation items represented. He added that he hoped that the resource requirements to complete the tasks in the plan would not increase costs or the need for additional personnel. Ratchye explained that the tasks differ in level of effort and that some required much less work than others. ACTION:Commissioner Cook made a motion to recommend Council approval of the LEAP Implementation Plan. Commissioner Eglash seconded the motion. The motion carried unanimously (7-0). 1 ATTACHMENT G EXCEPTED MINUTES OF THE FINANCE COMMITTEE MEETING FINANCE COMMITTEE Regular Meeting Tuesday, December 07, 2010 Chair Schmid called the meeting to order at 7:08 p.m. in the Council Conference Room, 250 Hamilton Avenue, Palo Alto, California. Present: Schmid (Chair), Espinosa, Scharff Absent: Klein 3. Utilities Advisory Commission Recommendation to Approve the Proposed Long-term Electric Acquisition Plan (LEAP) Objectives, Strategies, and Implementation Plan Senior Resource Planner Monica Padilla gave a presentation regarding the proposed long-term electric acquisition plan objectives. She said that LEAP was an effort to have a discussion regarding a plan to meet future load obligations while meeting various requirements. She said the 2020 forecast was for 1,012 gigawatt hours. She said Staff was recommending a 33% Renewable Portfolio Standard (RPS). Vice Mayor Espinosa asked about load increase changes. Ms. Padilla said they only forecast through 2020, this was a natural growth over time. Continuing with her presentation she reviewed the LEAP objectives; 1) acquiring resources based on a total cost, 2) managing the portfolios uncertainty, and 3) enhancing the portfolio. To accomplish these objectives Staff developed eight strategies. Ms. Fong said the new renewable was currently counted in the portfolio. 2 Ms. Padilla said Staff was not recommending carve outs and they were recommending the City evaluate renewable energy certificates (REC). Even without a proposed specific goal, they could purchase it from remote renewables. There were three types of portfolio mixes to meet the 33% RPS. She said that if the goals were met their resource goals in 2020 would look like page 8 of the presentation. Council Member Scharff asked if it were doubled from 7 to 14 what would happen to the price. Ms. Padilla said the price would increase. This is not a linear analysis. She said that different policies that could be adopted. LEAP would have a rate impact of about .21 cents per kWh. If they were going to attempt to reach the goals with only local renewables, it would be .66 per kWh. A carbon neutral portfolio could be achieved with a remote RPS at a rate impact of .66 kWh. She spoke regarding the desired benefits LEAP would have on the customers.She said the main focus would be on the on-going activities. Staff identified eight strategies which could all be categorized into either managing the existing portfolio or acquiring new resources. She said that LEAP set energy efficiency as the highest priority. She said Staff was still recommending maintaining the 33% by 2015 strategy for RPS while eliminating the interim targets and aligning City goals with California Energy Commission mandates. LEAP also focused on evaluating distributive generation and Staff was not recommending handouts for technology. Local generation did not have a numerical goal, but they would focus on local, clean, distributed generation. Exploring building a large natural gas-fired generator will also be a goal. The portfolio’s carbon content should drop dramatically if they meet all the goals. The renewables required will drop. Staff proposed a 7.2% energy efficiency goal. She reviewed the costs required to achieve the load goals at 7.7 cents per kilowatt hour up to 12.5 cents. Council Member Scharff asked for a scenario that involved doubling the energy efficiency. Ms. Padilla said the cost would go up, but otherwise the change wasn’t linear.Continuing with her presentation she said Staff estimated LEAP would impact customer’s rates by approximately $.02 per kilowatt hour or about $13.00 per year. If only local renewables were used it would impact rates by approximately $.06 per kilowatt hour. A more aggressive energy efficiency plan would be a higher rate at 2.4 cents, but it would have a lower bill impact. She discussed what would be needed to achieve a carbon neutral status which would increase rates and bills up to between.06 per kilowatt- hour to 1.9 cents per hour or $122.00 per year. At 26% it would be a 4.8 3 cent impact. She stressed that none of the estimates could be precise. She discussed the rate stability and diversification that LEAP would promote. Should LEAP be approved, Staff was working on an implementation plan. Staff’s immediate focus would be a fully integrated model for efficiency and a reporting schedule.The next focus would be on determining local generation potential. Then Staff would issue another proposal featuring a range of proposals to purchase renewables. Vice Mayor Espinosa asked what the consequences would be if they don’t meet 33% by 2020 goal. Ms. Fong said they missed the existing interim RPS goal in 2008. They were close so they purchased some short term renewable energy certificates which affected their decisions in 2009. They were now missing the goal in 2010. She said Staff attempt at addressing those goals will go before Council as the long-term contracts. Vice Mayor Espinosa asked if they should continue to set goals they keep missing. Ms. Fong said it’s good to set aggressive goals. She said the Legislature and the California Energy Commission has allowed Palo Alto to retain local control in part because of these goals. Ms. Padilla said Staff still felt the 2020 goal would be achieved. Ms. Fong spoke regarding a bill being put forward by Senator Simitian which had aggressive standards. Ms. Padilla said the goal gives them some cushion with the mandates. Chair Schmid asked if the Air Resources Board had the power to make changes. Ms. Padilla said it had enforcement abilities. Ms. Fong said they had not been fully defined yet but penalty structures had been discussed. Council Member Scharff asked for a comparison to other cities. Ms. Fong said Palo Alto was ahead of some cities and behind others onrenewable achievements. Ms. Padilla said Palo Alto was ahead of Pacific Gas & Electric. 4 Ms. Fong said that there was nothing that would permit them to meet the state law by now identifying large hydro in the portfolio because of the way the proposed law is currently crafted. Chair Schmid asked about projected loads and the project population count. Ipek Connolly Senior Resource Planner discussed the projection model. She said the population projection was not a variable. Staff used a model containing historical data and factored in future Gross Domestic Product projections. Chair Schmid said that in the last decade they had broken from historical population growth. Ms. Connolly said Staff had a good record of forecast accuracy with this model.She was confident in the electric forecast being presented by Staff. Chair Schmid spoke regarding the integrated resource plan and goals and the carbon content reduction. The LEAD objectives do not have carbon as a goal. Ms. Padilla said the City doesn’t have a carbon goal. They do discuss the outcomes but not the goals. Council Member Scharff asked how the rate limitation allowed the 0.5 cents. Ms. Padilla said it was the portfolio of the renewable contracts, and it was an accumulative number. Jane Ratchye Assistant Director Utilities said it was cumulative of all the resources. She spoke regarding the formula for determining the impact. Council Member Scharff asked if moving from the current to 33% will require a rate increase of 2.1%. Ms. Ratchye said that was a $2.1 million premium to pay. Council Member Scharff said the average bill would increase $13. He asked what the average customer uses. Ms. Fong said it was about 650 kilowatt hours per month. 5 Council Member Scharff confirmed that a customer that used 700 would see a $6 increase in their bill. He asked if this was the place to discuss customer service. Ms. Fong said that would be a discussion that should take place during Strategic Planning. Council Member Schmid asked Staff about dark City Streets. Ms. Fong said she was not the expert. But if dark streets were caused by light fixture spacing or some such thing, it would be a capitol expense and Public Works responsibility. Council Member Scharff said the savings from switching out the lights comes from that fund. Ms. Fong agreed. Council Member Scharff asked if that was paid for through usage. Ms. Fong said usage was but not capital improvements. Ms. Padilla spoke regarding Strategy #1 which focused on resource acquisition. Council Member Scharff asked about the equal basis. Ms. Padilla said it was trying to make the different options comparable and suggested they review slide nine. Ms. Ratchye said this was an improvement over the existing guidelines which did not provide much guidance. Ms. Padilla spoke about strategy number two which addressed electric energy efficiency and demand reduction. Chair Schmid asked about substituting electric appliances for gas. He said that was very specific and asked why it was recommended as a strategy. Ms. Fong said it was included because one of the UAC Commissioners asked how Staff knew they were not strategically thinking about the commodities and suggested they should evaluate the different fields. Chair Schmid said it made sense, but it did not seem a strategy. He asked about the Implementation Plan Colleagues Memo. 6 Ms. Fong said there was a Colleagues Memo that discussed including more externalities to put energy efficiencies on the same level as renewables. Chair Schmid asked about designing programs and making them available to all customers. Ms. Fong said Staff was trying to ensure all customers had access to energy efficiency programs. Chair Schmid said it seemed they were spending more Staff hours on designing a program everyone can use than finding the segments that would create the most gain. He said he thought that inside the residential market there was a wide variance of customers and a program shouldn’t equalize that. Ms. Fong said Staff tried to capture programs that were most effective. If lighting is a good program to offer they will offer it to all customers. Joyce Kinnear Manager Utilities Marketing Services said they first reviewed the cost effective programs, which would be primarily commercial lighting. Part of the decision was to have efficiency opportunities available for all customer classes. Chair Schmid said Staff’s resource investment should be in the areas where the gains would be the most significant. Ms. Kinnear said they do spend the majority of their time and effort on those programs. Chair Schmid said Staff should read through the strategy and make a clear statement about making a program available to everyone. Ms. Padilla spoke regarding the next strategy. She said that Staff proposed eliminating the interim targets for RPS. Vice Mayor Espinosa asked about the Palo Alto Green Program. Ms. Padilla said those resources were not eligible for this portfolio as the City defined them. Ms. Ratchye said that Palo Alto Green was addressed in an upcoming strategy. 7 Ms. Kinnear said that since customers pay for the renewable energy certificates the value belongs to the customer, not to the utility. Chair Schmid clarified that was the same as any energy the customer purchases. Ms. Fong said that they wouldn’t pay additionally for that energy. Ms. Kinnear clarified that Palo Alto Green customers pay extra. Chair Schmid asked if he should be paying a premium. Ms. Kinnear said the concept behind Palo Alto Green was to help not only the City but the entire green industry. Chair Schmid asked if he was bidding against himself by buying green and pushing up the green prices. Ms. Padilla said the stuff that gets sold doesn’t tend to be eligible as it is out of state older resources. Ms. Fong said Staff was planning on having that discussion first with the Utilities Advisory Commission. Vice Mayor Espinosa asked for an update on the success of the program. Ms. Kinnear said they hit a plateau and have tried a few different marketing approaches in response. Vice Mayor Espinosa asked of that plateau had caused their rates to level off compared to other communities. Ms. Fong said it was neutral. Chair Schmid said it sounded like the world had passed the green program by as the focus became more about making the entire city green. Council Member Scharff asked for clarification regarding the inability to count Palo Alto Green. Ms. Fong said it was a City policy, the Customer was able to claim it however they want. The RPS did not allow renewable energy certificates to be counted. 8 Ms. Kinnear spoke regarding a system that tracks produced green energy. The owner of that energy was monitored as well. She said it was a matter of ownership, the customers owned the certificates. Council Member Scharff asked if they received actual certificates. Ms. Kinnear confirmed that they do. Council Member Scharff asked how not doing this would affect the program. Ms. Fong said it would be a 6% difference. Ms. Padilla said it would not be the same stuff they buy now. They would have to buy an actual resource. Ms. Padilla said they could structure it in a variety of ways. Council Member Scharff said it should give Palo Alto credit toward that. He suggested it should be included. Ms. Fong said that they were precluded from doing that. Council Member Scharff confirmed that as long as it is a volunteer program Palo Alto could not claim it. Ms. Ratchye said it was also the product which was not eligible. Ms. Fong reiterated that as a voluntary program it does not qualify for RPS reporting purposes. She added that under a proposed law there would be some recognition over time. Council Member Scharff asked if Palo Alto Green customers could sell their credits. Ms. Kinnear said probably, but there would not be a market for it. Council Member Scharff said Palo Alto Green could be restructured to apply to Renewable Portfolio Standards. Ms. Fong said the Resources Board does have some recognition for the credits. Council Member Scharff said many residents might want to help Palo Alto reach the goal by signing up for Palo Alto Green. 9 Chair Schmid asked about the restrictions on what is renewable. Ms. Fong said Staff was proposing to follow the State Laws rather than setting higher standards. New technologies, if they qualify, would take the lowest bids. Chair Schmid asked if new technologies had an entry point with the new law. Ms. Fong said it depended on the lobby groups behind the technology. Solar, for example, had a strong lobby group and thus applicable laws. Chair Schmid said he had read articles that stated waste management produces three times the energy at one third the emissions. Ms. Fong said they would invite the technology into the RFP. MOTION: Council Member Scharff moved, seconded by Council Member Schmid to evaluate ways to include Palo Alto Green in the Renewable Portfolio Standards. Council Member Scharff said he wanted Staff to evaluate how the City can include Palo Alto Green Customers in renewables so we can claim credit for it.He added that if those were green customers the City should get credit for it.Otherwise that there is no way to get to 100% because the green customers would never be counted. Council Member Espinosa suggested the motion be withdrawn until after Staff presents Strategy Number Five, and that the Committee make a new motion approving Strategies one, two, and three. Council Member Scharff agreed and withdrew his motion. MOTION WITHDRAWN MOTION: Vice Mayor Espinosa moved, seconded by Council Member Schmid to approve Staff Recommendations to pursue the least total cost resources (Strategy Number One), to fund programs that maximize electric energy efficiency and demand reduction (Strategy Number Two), and to reduce the carbon intensity of the electric portfolio (Strategy Number Three.) Ms. Fong requested clarification that the motion was to approve both the strategies and the implementation plans. Council Member Scharff asked if December 2010 was still a good date to implement Strategy Number One. 10 Ms. Padilla said it was a current process already. Council Member Scharff suggested amending the Motion to state, regarding Strategy One, that Staff shall evaluate each potential resource on an equal basis by evaluating rate impacts and establishing costs. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER that Staff shall evaluate each potential resource on an equal basis by evaluating rate impacts and establishing costs. Ms. Fong said that Staff normally evaluates the cost first and then develops the rates. Ms. Padilla said they could assess the potential with no problem. Chair Schmid confirmed that eliminating the interim targets was included in the Motion. MOTION PASSED: 3-0, Klein absent Ms. Padilla discussed Strategy Number Four which was pursuing local generation with the primary focus being on small generators. MOTION: Council Member Scharff moved, seconded by XXX to approve all Staff Recommendations to promote and facilitate the deployment of cost- effective local resources (Strategy Number 4) except the recommendation to evaluate a feed-in-tariff option (Recommendation C.) MOTION FAILED DUE TO LACK OF A SECOND Chair Schmid asked Staff about a recent Council vote that sounded like a feed-in tariff. Ms. Fong said it was a State law on net surplus energy. Chair Schmid said Staff said they might spend $375,000. Ms. Fong disagreed. Chair Schmid asked about feed-in tariffs. Ms. Fong said the net surplus energy was designed for those nominal over- sized photo voltaic systems residents put on their homes. A feed-in tariff is 11 paying for the generation. Palo Alto does not have a program that does that at this time. Chair Schmid asked for an example. Ms. Padilla said a feed-in tariff would establish a rate and use a standard contract. Ms. Ratchye said residents a with solar photovoltaic system on their roof use the energy the system produces. With a feed-in tariff all the energy produced is purchased by the City and fed into the grid. The resident uses none of it. Ms. Fong said the purpose is to encourage local solar photovoltaic production. Chair Schmid asked if there was another type of energy that would be included. Ms. Ratchye said with new technology it is impossible to state. Ms. Fong said it is a tariff that has a set rate for the customer. They know in advance what their revenue stream will be. Ms. Ratchye spoke regarding a co-generation system as an example. Council Member Scharff said the Fit Coalition discussed a rate. He asked what the rate was, suggesting it was near 20 cents. Ms. Ratchye said they were not sure, and that is why they want to evaluate it. Chair Schmid said that would be very expensive. He asked why Staff wanted to evaluate it. Ms. Ratchye said Staff wanted policy direction to determine what level they should offer and what a fit rate should be based on. Council Member Scharff said it would be uneconomical compared to renewable portfolio options. He didn’t want Staff time wasted on it, knowing what the answers would be. Ms. Fong said that some Council Members and UAC Members have requested it. 12 Ms. Ratchye said it seemed that the Staff time to evaluate would not be endless, Staff would cut if off at Council’s direction. Chair Member Schmid said this would go to Council. Ms. Fong said it would go to Council on Consent. Chair Schmid said it should go to full Council for discussion rather than on Consent. Vice Mayor Espinosa said they should evaluate the potential, this is not to implement it. Ms. Padilla said it was it was just to determine what the implications would be. Ms. Fong clarified that these are Staff actions. MOTION: Council Member Scharff moved, seconded by Council Member Schmid to approve Staff Recommendations to promote and facilitate the deployment of cost-effective local resources (Strategy Number Four.) MOTION PASSED: 3-0, Klein absent Ms. Padilla reviewed the next strategy which was recommended to support the City’s Climate Protection Plan. Ms. Fong said it would include Palo Alto Green renewables. MOTION: Council Member Scharff moved, seconded by Vice Mayor Espinosa to approve Staff Recommendations to support the City’s climate protection goals (Strategy Number Five.) Chair Schmid said he liked the recommendations Staff made regarding climate protection. He commented on a rejected greenhouse gas rule that would soon be a State Mandate. Ms. Padilla said there was uncertainty about the pending legislation, and other factors, Staff determined that additional goals should not be implemented at this time. Chair Schmid said the City was driving toward an emissions goal, so this was an important conversation as if affects that. Ms. Fong said they still have to move forward with Chapter Three. 13 Chair Schmid asked about the Refuse Fund. Ms. Fong said she was not equipped to respond. Council Member Scharff asked how Staff would develop a neutral policy. Ms. Ratchye said that Staff expected to have a more thorough understanding of the requirements in a year and would better be able to define the policy at that time. Chair Schmid questioned the repetitive verbiage. Ms. Fong said Staff would make the appropriate correction. Ms. Ratchye explained the language was meant to address using the City’s existing facilities to reach the City’s overall goals. MOTION: Council Member Scharff moved, seconded by Council Member Schmid to evaluate ways to include Palo Alto Green program design and recommend modifications as appropriate including how to include Palo Alto Green to meet Renewable Portfolio Standards. MOTION PASSED: 3-0, Klein absent Ms. Padilla said that the next strategy was essentially about monitoring reserves. She said the implementation plan looked at using a hydro rate adjustment mechanism instead of holding cash reserves. The next one addressed managing the uncertainty of the portfolio portions exposed to volatile market prices. Council Member Scharff asked if it would help Staff to be able to purchase five year plans. He also asked about the laddering strategy. Ms. Ratchye said the authority provided by Council only allows three year. She added that energy and gas were very different as affected by the laddering strategy. Ms. Padilla said the next strategy related to transportation reliability and stated that the City will continue to work with other entities to strategize regarding transportation. MOTION: Vice Mayor Espinosa moved, seconded by Council Member Scharff to approve Staff Recommendations to manage cost uncertainty related to variations in hydroelectric supply (Strategy Number Six), to actively monitor 14 and manage operations, counterparty, and wholesale energy price risk in the short term (Strategy Number Seven), and to pursue the reliability of supply at reasonable costs (Strategy Number Eight.) MOTION PASSED: 3-0, Klein absent Chair Schmid stated that these were the overriding objectives, and the language around them was very strong. MOTION: Council Member Scharff moved, seconded by Vice Mayor Espinosa to approve Staff recommendations regarding the Long-term Electric Acquisition Plan Objectives. MOTION PASSED: 3-0, Klein absent