HomeMy WebLinkAbout1976-06-07 City Council Summary Minutes1
cITY
COUNCIL
MINUTES'
ITEM
Minutes of May 3, 1976
Minutes of May 4 and May 6, 1976
Oral Communications
Consent Calendar - Action Items
Contract for Professional Services - Alcohol
Ordinance of the Council of the City of Palo
Parking For Construction or Maintenance Work
Ordinance of the Council of the
Permitted in P -F Zone Districts
Ordinance of the Council of the
(Massage Establishments)
Ordinance of the Council of the
for Certain Card Room Employees
Axastra Litigation Settlement
Executive Session
Oral Communications
Executive Session
Adjournment
City of Palo
City of Palo
City of Palo
CITY
or
PALO
ALTO
Regular Meeting
June 7, 1976
Tests
Alto re Regulating
Alto re Uses
Alto re
Alto re Permits
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f$etle
June 7, 1976
The City Council of the City of Palo Alto met on this date at 7:30 p.m.
in a regular meeting with Mayor Norton presiding.
PRESENT: Beahrs, Berwald, Carey, Clay (arrived at 8:23 p.m.)
Comstock, Eyerly, Norton, Sher (arrived at 7:37 p.m,)
Witherspoon
ABSENT: None
II.h'QS OP IAY3
sammila
Mayor Norton said these are essentially an Executive Session.
Councilman Beahrs said Norton corrected page 1052, 24th line
of the first major paragraph, repeats "that" twice and the
second "that" should be "this." In the second paragraph from
the bottcn,line seven, it should be "where" instead of "whereas."
MOTION: Councilwoman Witherspoon moved, seconded by Norton, to
approve the minutes of May 3, 1976, as modified. The motion
carried unanimously on a vote of eight in favor (Councilman Clay
absent).
ALVi S ir MAY 4 fit), ..I
MOTION: Councilwoman Witherspoon moved, secouded by Berwald, to
approve the minutes of May 4 and May 6 as submitted. The notion
carried unanimously on a vote of eight in favor, (Councilman Clay
absent) .
Glis simaletEgrarniimaiTAM
1. Helen Smith, 3142 Greer, *peaking for the West Myshore
Residents Association, expreased their reluctant approval
of the budget amendment ordinance because of the Arasttra
litigation settlement, since this will mean the postpone-
ment of all Greer Park improvements which are of great
importance to them. They recognize the necessity for many
aegmeuts of the Palo Alto community to curtail the expecta-
tions and demands during this period of financial ad j us to ent .
[ever, they elsea request that the Council and City staff
reaffirms Greer Perk as a highest priority budget item as
*eon as the Araatra eettlement is completed.
2. Ralph Cahn, 500 North California Avenue, said he grew up
in Palo Alto and is raising two daughters in the City. He
encouraged the mil to des a strong measage parlor
ordinance. He said he is not versed in the lea, but the
citizens of Palo Alto will judge thae effectiveness of the
law by the way in which it functious. The message parlors
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in the California Avenue area are a disgrace. Everyone
knows it, and the citizens will judge Council'o actions
from the success of the ordinance. He urged Council to
make it a strong one.
3. Paul Zamarian, 3119 Clement Street, San Francisco, said
he had the opportunity to address the Committee on Policy
and Procedures in late April and to present them with a
concept that those in the massage profession had begun
to look at seriously. A letter from Donna Gerry to
Mr. Thacher of the City Attorney's office and copies to
most of the Councilmembers sets forth this concept. He
said he represents a number of groups as an attcrney, a
message practitioner and massage teacher, and his work is
in the health maintenance field. He is addressing the
Council tonight to continue a dialogue with the elected
repre3entatives of this City. With the law being considered
ton,ight, the City has classified massage with adult -oriented
businesses. That is true of much of what is called massage;
however, there is a substantial representation of people
in this town} -- and the Massage Center is a clear example
of this who have nothing to do with adult --oriented
activities. They are lc the health maintenance field,
and they are not another type of special interest group
because they represent a health concept chat is becoming
more and more important to people today. The purpose of
appearing here is to point up a need for a differentiation.
This new concept needs to be looked at seriously. At the same
time, it may be something that Council needs to look at to
help the ordinance be effective, for in classifying massage
operations in the adult --oriented business, he could see a
conflict in requiring these people to go to schools.
Training in massage has nothing to do with adult -oriented
business, and setting forth a standard like that creates
a conflict which opens up the ordinance to vulnerability.
If the City of Palo Alto can cue up with criteria to
differentiate between professional and nonprofessional
,message, it can disengage the adult -oriented massage places
from the schooling process or any education or training
requirements, and clearly set then off in that category.
Many of these places, however, have State -approved schools
connected with them. He had consulted with the State
Deputy Superintendent of Public instruction on this concept,
aad he has expressed agreement with it. Mr. lamerian
requested the Council to continue their dialogue while
material is cooing forth to put this on paper its specifies.
The biggest problet is tkat to differentiate the health -
maintenance oriented from those that ere adult -oriented
wage businesses; the biggest problem is how to devise
practical standards for a field that is very sophisticated.
The massage field in the health maintenance area, as
practiced it. the hay area, ranges from deep relaxation to
postural balancing and uncovers a number of massage tech-
niques and combinations end refinements and improvements,
The problem of the practical examination which practioners
in the health maintenance field feel is going to be necessary
is something that we are looking at and discussing and trying
to come up with a solution,
4. James J. Herrick, 868 Robb Road, said the people here tonight
are primarily here to see that the ordinance now in process
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gets passed as expeditiously as possible. He .asked those
in the audience here for that reason to stand up to let
the Council see their numbers. He said they are here to
express their concern and to say that Council should keep
going and not be delayed, The majority of those present
stood as requested.
The following items were voted on the Consent Calendar:
Staff recommends that Council authorize the Mayor to execute the
agreement with Milton W. Smith, Jr. for the 1976-77 fiscal year to
provide the same service, as required by the California Vehicle Code,
in an amount not to exceed $12,000. Sufficient funds are available
in the 1976-77 Police Department Budget.
AGREEMENT - CLINICS LABORATORY
TECHNOLOGIST SERVICES
0'. INANCE OF THE COUNCIL OF THE CITY
.1e i.*1.f , 114E110 irt4tiqt.'
281:6)
Staff recommends that Council: 1) adopt the ordinance, and 2) find
that this particular action is not considered a "project" for purposes
of Title 11 of the Palo Alto Municipal Code, and therefore no euviroa-
mental assessment is needed.
ORDINANCE NO. 2919 entitled "ORDINANCE OF THE
COUNCIL OF THE CITY OF PALO ALTO ADDING SECTION
10.40.045 TO THE PALO ALTO MUNICIPAL CODE
REGULATING PARKING FOR CONSTRDCTION OR
MAINTENANCE WORK" (1st reading 5/17/76)
OF THE COUNCIL OF TEE CITY
ORDINANCE NO. 2920 entitled "ORDINANCE OF THE
COUNCIL OF TSE CITY OF PALO ALTO AMENDING CHAPTER
18.32 OF THE PALO ALTO MUNICIPAL CODE SING TO
USES PERMITTED I11 g -F ZOIIE DISTRICTS" (1st reading
5/24/76)
ORDINANCE KO. 2921 entitled "ORDINANCE Of THE
COUNCIL OF THE CITY Or PALO ALTO AMENDING
CUTTER 4.54► OF THE PALO ALTO CESCIPAL CODE
(MSS ESTAELISNMENTS) TO PROVIIN FOR CLOSING
FMS AND CERTAIN MODIFICATIONS IN LICENSE AND
nun APPLICATION (bit rsadias 5/24/76)
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ORDINANCE NO. 2922 entitled "ORDINANCE OF THE
COUNCIL OF THE CITY OF PALO ALTO AMENDING
CHAPTER 4.52 OF THE PALO ALTO MUNICIPAL CODE
(BILLARD AND POOL ROOMS, CARD ROOMS AND SWUNG
ALLEYS) TO REQUIRE PERKS FOR CERTAIN CART?
ROOM EMPLOYEES (1st reading 5/24/76)
MOTION: Councilman Eerwald moved, seconded by Comstock, that Items
1 through 5 on the Consent Calendar be approved.
The motion was approved on unanimous vote, Vice Mayor Clay absent.
TTLE€EN T
CMR:299 : E)
George Sipel, City Manager said the report submitted to the Council
on June 3 relating to the financial implications of the Arastra
litigation settlement ebviausly assumes that there will be a
settlement and that the purchase price is $7,475,844. The plan
presented to Council will finance the Arastra settlement out of
funds that are currently on hand in the Citye This financial plan
has been accomplished by stopping work on a number of capital
projects. The staff report exhibit lists 64 projects, not
including the Arastra settlement project, 32 of which are already
complete. Essentially, what we are doing is clearing the books
a couple of weeks early. We normally do this on June 30, taking
the remaining funds and placing them in the Arastra settlement
project. Of the other 32 projects, we believe 12 ought to continue
because there are irrevocable commitments that have been made for
them. Roughly 20 projects would be stopped at some phase of develop-
ment. In some cases, the projects have not yet begun or are not
out of the concept stage, so none of those 20 projects will be
stopped in the middle of ceueeruction or in the middle of design;
we will be stopping projects at what are the normal checkpoints --
at the end of design, prier to construction, etc. The effects of
the action, should Council take the proposed action, would be,
first, that the Capital. Improvement Program will be drastically
curtailed. Staff will complete the 12 projects in process or get
thee{ to a stage where they can be stopped or where they run out
of funding. There will be no Capital Improvement Program to
speak of next year unless the Council were to find a way to raise
a substantial amount of money. The Capital Improvement reserve
sne the operating reserve, which are one and the same, will be
$600,000, should Council take the actions before it tonight. At
the end of the year, staff hopes that reserve would increase to
severe around $900,000 going into the next fiscal year. In
addition to those two effects, there will be required lay-offs
because the work required in the Capital lmprove*ent Program will
no longer be there. Secondly, there will be a substantial loss
of operating income next year by virtue of not having $7.5 million
to invest in Li:terest-bearing securities. The actions after this
evening to remedy or to some degree mitigate the effects of having
to crew up with $7.5 million on a relatively abort notice will be,
first, the need to find replacement revenue, and this can be done
in several ways. We are working with the Finance and Public Works
Committee to accomplieh that. The Est thing will be to look at
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various capital improvement projects and determine those that are
moat essential for continuation next year, and staff will be send-
ing Council a report either the end of this week, or the beginning
of next week that will help them accomplish that.
Councilman Sher said the report, page 5, talks about the impact of
the proposal for financing the settlement on the Capital Improve-
ment Program and suggests, in the second paragraph, that next
year new required capital projecte of $.4 million can be provided
together with a minimum operating or capital improvement reserve of
$2 million. What are those required capital projects of $.4 million
that staff sees as being essential and should be taken care of next
year.
Yir. Sipel said those. projects are ones that have been reviewed with
the Finance and Public Works Committee. Staff has not come to a
final listing at this points but they do have a general idea as to
what some of them might be. One is an automated circulation system
in the library, which is about a $200,000 project and will result
in an annual savings of about 3.5 persons, and can be justified on
an operaticnal savings basis. There are required improvements to
Rircorada Pool for safety reasons. There are sane- required improve-
ments to the Community Theatre for safety reasons. There are a couple
of others that staff are looking at and have not finally decided on,
but they would be included in a report next week along with some
criteria that we would suggest the Committee and Council use to
decide which projects ought to be included. Needless to say,
there will be no park improvement projects included in that list
from the staff.
ir. Sipel replied to Councilman Sher's question that this will be
dealt with before the Capital Improvement Program is adopted for
the cowing year; that it would be part of that process.
Councilman Sher said in that same paragraph staff suggests that if
everything works out in terms of restoring some monies to the
Capital improvement Fund at the eel of this fiscal year, there
will also be another $.4 million, assuming new revenue as well,
which would be available for additional capital projects. He
asked if it was staff's thought that the Finance and Public. Works
Committee vill address that and that will be part of the adopted
Capital iaprov t Program for the coaxing fiscal year, so that
there will really be $.8 million to be spent nest year, assuming
all these revenues and cuts in the operating budget are approved
as recommended.
:del.
Mr. Sipel said that is correct.
Councilman Sher said as far as those projects go, are there specific
ones in mind or is that something the Finance Committee will wrestle
with, looking at all of them and choosing those: which the Committee
will recommend to the Council, and then the Council will decide
should be the lucky projects.
4r. Sipel said yes, that will be. the- freie-play area.
Councilman Sher asked if there it anything in mind for those at this
point.
?be. Sipel said staff has aroma opinions on -which projects ere more
worthy anal will be happy to state those opinions, but they do not
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have a long waiting list, We thine there is
cut-off point with four or five projects.
Councilman Sher asked if it is possible that
projects in that $.4 million.
Mr. Sipel replied it was not in his mind and it was not going to be
one of staff's recommendations. Staff thinks that to tiI there is
a substantial balance built up in the Capital Improvement Fund again,
there should not be any more park projects, unless they have to do
with safety.
a fairly logical
there could be park
Councilman Sher asked how much would have to be built up in order
to do that. It seems this is important .and is affected by the
action we take tonight, and its important that people be aware
of the coact. One speaker under Oral Communications talked about
the effect on the Greer Park area, and it is important that the
public have some idea about when there -would be any possibility:
of going forward with those projects, to which, in a sense, Council
has already made a commitment before these recent events. He asked
for the City Manager's view about how much the fund would have to
be built up before it would be possible, in his opinion and on
his recommendation, to go forward with the Greer Park project.
Sipel said the most important thing with respect to the
Capital Lmpravement Fund is to note that it does operate, has operated
as the City's operating reserve. It is the only reserve the City
has available that is completely unencumbered .and could be used
if City got into trouble in the operating budget, either through
some kind of catastrophe that required a lot of additional operating
expense or a sirt .fall in reveuues, either in the sales tax or
in the utility profits. It is important that the City has a
minimum balance of $2 million. We have an operating budget of
alst $20 million, so that ie not as unreasonable punt of money.
Once that 1s established and there is a balance of, say, anywhere
from $500,000 to $1 million in the Capital Improvement Fund and
OP hand* then City can begin to look at some of the projects it
has previously considered funding and maybe even those approved
for funding. One of the things we must keep in wind is that while
on the books to trill have some money available as of July 1, that
money will not come in until toward - the and of the year, so that
While we say we have an, additional $400,000 or $500,000 available,
that is really not available until the end of the year. Staff
would urge that if there are to be projects above $400,001) or
$500,000, aril appropriate them with the understanding that they
will not take place until the money is actually availablea
Councilman Sher said Exhibit 8 attached to the staff report gives as
tabulation smith shows how the minimum $2 million balance can be
built up in the Capital Improvement Fund for the operating reserve,
and lit. Sipel suggests that the pee revenues he is recommending 'hat
can Occur by the end of fiscal year 196r6r-67, together with a 8400,000
amount that would ba available for additional capital_ projects. As
he understood Mr. Sipei°s answer to his lawn question, once the City
3wa,, that $2 million operating reserve, plus $500,000 to $1 million in_
addition, then City will be in a po.itiaa to go forward with tare other
capital projects, including park projects. so it might be possible
then during the year 1971-18 to proceed with park projects.
Mt. Sipel staid that was correct; that he thought 1977-78 is the
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year in which City could do those things, assuming the Council adopts
all of the current staff recommendations.
Mayor Morton said there are two questions that are not going to be
resolved tonight, and although the public is no'. precluded from
addressing Council, he would discourage the Council from spending
much time on them. These are first of all, the ultimate use of.
the land, assuring it is purchased by the City. He suggested not
getting into a dialogue about whether City is going to sell a portion
or keep a portion or retain all in open space. These are not natters
that can possibly be meaningfully decided tonight. The other
question he would hope Council would put off is the decision as
to methods of financing to restore the funds to the Capital Improve-
ment Program, as recommended by the wager. Questions .are fine,
but any serious dialogue about attempting to resolve them tonight
would be, in his opinion, inappropriate.
Councilman Beahrs requested a correction to the record. Reports to
hies indicete that many outraged citizens/taxpayers believe the
problems before us tonight originate with the Council sitting
here. in all fairness, it is important to correct this understandable,
but erroneous, irpressiorti. The record should clearly, firmly, and
e equivocably show that the majority of this current Council in no
respect whatsoever had any responsibility for the actions that led
to the unhappy situation before Council tonight. The Council sitting
here has carried the heavy burden of rescuing this City from the
foothills debacle at minimum cost and future risk.
Maher Norton said that he has been a part of both Councils and
is not sure he is willing to place b1a , because there is no
blame to be placed an anybody.
Councilman Comstock said the Mayor said it in a much more polite
and gentlemanly manner the* he would have, and he seconded chose
remarks.
Councilman Berwald said the past record is clear and anyone can
look it up. The Mayor has covered his subject. Councilman Sher's
questions were appropriate and all questions ere appropriate et
any time; but it should be pointed out that all of the materials
before Council ere proposals in the same light es the budget vas
a proposal before we began to make allowe ices for the Arastrae
compromise, so everything in the report, as be takes it, is
subject to Finance and Public Works Committee review, that is,
all of the financial aspects, and that staff does of doesn't agree.
Ns said, as fear as be is concerned, none of theme proposals are
set in granite and the major question is whether or not the financial
computations that have been made by the staff are within the limits
of the recommendations found; doses the City have the fund*, are the
funds available without limiting eseential services, are there
other bettor methods of financing the proposal eebich could be
discussed, aud has the City the legal right to nettle this setter
in this may. Those are the questions that are essential. As far
as questions oat the Oetaile of which projects will continue and
which will not art concerned, he looks to the finance and Public
Works Committee as being the r n g committee on those) and
their recommendations will coma beck to the mil.
Mayor Norton said we will try to get answers to some of your questions
through tbee process of going through the wads its.
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Councilman Eyerly said the June 3rd staff report indicates the
City is going to be very heavily iepscted in the cash eituatian
here. He asked staff to ease hie mind as to how the city wild
go about procuring funds for the emergency that Mr. Sipel had
mentioned -- not bonding or increased taxation a.. but if we had
a real emergency what steps can staff take to bail the City out,
if needed.
Mr. Sigel said it is hard to answer that not knowing hemw big the
emergency might be. City is required in the Charter to put money
aside in reserve for emergencies in the utilities system, so it
may be covered there pretty well. Another thing might be the
issuance of tax anticipation notes or revenue anticipation notes,
which would probably be the quickest way to get substantial amounts
of money, say in excess of $1 million. The City could put on hiring
freezes and not hire when vacancies arose. There might be some
other thinga,but the City is in some jeopardy if there were to be
a problem of the magnitude of $1 million or over.
Mayor Norton asked the City Attorney to broadly outline the terms
of the settlement. Council has press ab3y informed itself of
these matters, but the public is entitled to a sugary.
Robert R. Booth, Jr., City Attorney, said he would outline the
report distributed in the public Council packet. The City will pay
the a;aume of $7,475,844 to Arastra. In return for that amount in
settlement and in a compromise, the City will receive fee title to
Araztra`s property which consists of approximately 515 acres located
roughly ou Arastradero Road on the foothills side of. Highway 280,
That fee title acquisition is subject to an existing leaoe and
certain other exceptions as shoot in the title insurance policy.
The City will assume reepousibility for cancelling property taxes
back to September 15, 1972. Both suits brought by Arastra Limited
Partnership against the City and against a number of individuals
will be dlemiased. No judgment will be entered against the City.
It is anticipated an order will be obtained from the trial judge,
which will cancel, espauge and vacate his earlier decision in
September, 1975. First of all, the Council ought to take action
on the Environmental Impact Assessment. The title insurance item
is an a xpeuditnre of approximately $10,000, not to azcaed $11,000,
for purchasing of the title insurance with the full value of the
City's investment in thin' aettleaseent and compromise and it would
cover titles to the Arastra property.
Ht. Sipel rid to the Mayor's request to discuss the revenue
anticipation notes. This matter is a cashefloe matter and it
ass that Council will pass the ordinance appropriating the
fetes. Some of the City's funds are currently in longer term
**curiae* and, rather -than than pull then out now, staff hopes to be
able eo Liebe some revenue asnticipetioa notes. The words "hopes to"
ars empbaeleed because staff is not sure yet, nay have spent the
last couple of days eorhine with a battery of attoensys and as bank
in order to put this tugsthsr and it has not yet been finalised.
Staff oaks Council to apptove this resolution sad another one that
they will place before them, -with theunderstand/4 that it will go
forward if the other parties ate abls to agree to it legally. The
report generally covens the pertinent points, but Mt. Ham, City
Treasurer, is here and can answer quash .
Councilman Heshrs said he had reed Mt. )badak€ s report carefully and
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would ask why is it not indicated that these bonds are offered for
bid. The Council apparently awards them outright without any
reference whatever to whether or not they were bid and whether
or not the City is offered the least costly market.
James Hudak, City Treasurer, said in most transactions the City
would go out to bid. The City is allowed legally to negotiate
terms for such bonds. Staff did talk with several banks and
brokerage fires to get a general idea of the range that we might
gat to be able to sell the bonds. However, because of the tight
time constraints, the City's bond counsel advised that it would be
better to negotiate than to go out for bid.
Councilman beahrs asked if the City Treasurer's record clearly
indicates that there was a negotiation and that staff has done
the best possible under all circumstances for the City and its
taxpayers.
Ht. Hudak replied yea it does. The rates quoted from various sources
were from 3.75% to 4.0%. The rate staff negotiated was at the
bottom of that range - 3.75%. He confirmed Councilman Beaehrs'
understanding that this is clearly recorded.
Councilman Comstock "said his initial reaction upon receiving the
report was one of some concern, and he has discussed this with
the Mayor and Councilman Byerly, as to the idea that staff would
go out and borrow money on the basis of anticipating getting
money at a later date. But in reading the staff report, he came
to another point of view. This is an alternative way of obtain-
ing money. The City indeed does have an equivalent amount of
money on hand right now. The process of obtaining money in
this matter is wei.1 enshrined in the legislation of this state,
and has been put there for ae reason, that is that tax collections
do not come th.rougbsteadily and evenly all year long, bet they
come through in bunches* aa'd it has been necessary for cities
from time to tine to meet short -terse cash needs in this sea r.
Re understood that the City of Palo Alto is going to benefit from
this procedure because some of the money the City his on hand
that could be used this way is invested in a fairly profitable and
a aatis►factory manner and, rather than dimply art -term the City's
investmeut return in that area, ve can ;use this method as a way
of minimising the financial impact on the City that would occur
because of -this short -terse borroviog. Ke said he is now satisfied
that this is au adequate thing to-do. The City is reeponding in
a more responsible may to the need to raise this money and it will
be to -the City's edventsge to do it in this ter.
Mayor Horton sued that the point is that the Council, rather
than call in certain finite sort and intermediate investments and
mss the interest adventage on then, ten save abet $50,0001 or
#40,000.by tying the revenue anticipation type of approach. It
is just a scatter of sound fioangial management of the City's currant
investments as against the sborteteine botmeines proPoned hl this
reeoltstion.
Councilman n Sheer asked if the revenue anticipation motes are
issued, world the $3.3 million produced then be used, it part, to
finance this settlement aimed the other $3.3 million mold remain
is the fund mil January 1, 1977, when those securities would
be lignidated to repay these testes.
1
Ifs. Sipel said that would not happen. The $3.5 million raised through
the notes would go to the Arastra settlement program. -For the purposes
of the Capital Improvement Program, the other "$3.5 -million" would not
exist, That would just be on a cash `low basis. That would be on
our books as an outstanding investment and would secure the anticipa-
tion notes but would not appear in the Capital Improvement Fund.
Councilman Sher said there would then be a new security account for
the certificates of the revenue anticipation notes. correct.
Mt. Hudak said paragraph L4 (of the staff report) points out that
there would be a special fund established called the revenue anti-
cipation note fund and into this would go the maturing certificates
of deposit which could be reinvested at short-term until they mature,
but there would be a special fund created and the City would have
to keep the money in essence dedicated. for that.
Councilman Sher said these notes in no way would affect what we
consider the unappropriated capital improvement balance which, if
things voxk out as indicated in your tabulation, would be $.6 million
after the payment of the compromise and hopefully would rise to
$,9 million at the end of this fiscal year when we are able to
transfer some moneys into it. It would not be any greater than that
amount?
Mx. Sipel confirmed that is correct.
Councilman Carey said as he understood these totes, the net cost to
the City is 3.75% and these will be sold to some institutional
buyer, !presumably the bank.
Mr. Hudak said City does have a proposal from the Bank of pica
that says they will buy them at that rate subject, to some legal
opinions which staff must obtain tomorrow.
Councilmen Carey mid the resolution recites an S% rate. Is that a
"rot to exceed rate"?
Mk. Hudak said that is correct. That is set by State law as the
maximum.
Councilman Grey said the old reiterate Councilman C'o stock's
remarks that after all the struggling and meetings this sew to
be sn excellent way to provide the cash and still leave all Council's
options seen with respect to the coming fiscal year. It is his
interpretation that by issuing these notes, essentially Council
has several months, while determining the next fiscal year's budget,
to determine the method of repayment.
Mr. Sipel agreed that is a fair synopsis.
Mityor Marton said before finally handling this entire matter, the
Council will edjo rn to an Executive Session, but at this time,
it will be appropriate to hear from the pabl.ic.
Alan Henderson, 1935 Emerson Street, said, having been a party in
the Arastra litigation sad having been intimately involved in the
cane for era years, it was difficult for hie to coat about
the outcome of the mow, because he has not been privy to the
deliberations of the most rent ten months. Thera are morns
questions in his rams#, and total openness by the Council would be
1 2 2
617.17
welcome now that the case is about to be settled. He said when
he left the Council there was no question but what the Council
intended to pursue its position as far as necessary, that is,
through whatever appeal steps that might take. The City
Attorney was totally supportive of this position. We knew
about what to expect from Judge Schnacke and we were prepared
for that. We were very optimistic about succeeding and reversing
in a higher court any negative rulings made by Judge Schnaeke..
Maybe there have been sufficient changes iu circumstances to
change that position. After what Mr. Beahre said,, he suspects
there is a great deal that the public does not know He said
Councilman Beehvss was one of those moving toward massive develop-
ment in the foothills and has always opposed any attempt to preserve
open space. Mr. Henderson said he wanted to make it clear that he:
is in total disagreement with Judge Schnacke's decision that the
City intended to acquire the Arestra property and then deliberately
confiscated it through zoning. It is true that a previoue Council
favored development of the foothills, even to the extent of having
put in utilities. It is true also that the vast majority of Palo
Alto citizens did not went intensive development. The Council,
in 1972, was acting in response to the citisene. It_directed staff
to study alternative methods of preserving the natural character
of the foothills, yet allowing reasonable economic uses by the
property owners. The result was a recommendation to create an
open space zone for the entire foothills. This recommendation
was strongly supported by then City Attorney, Peter Stone, and
it allowed numerous uses of the land. The ordinance adopting
the open space zoning was adopted in total good faith by the
Council. There vas not thought of deliberate confiscation. He
had several questions to impose concerning the financial implica-
tions of the settlement.
First, is the matter of utility users tax. Now, instead of a 42
tax on all utilities, the proposal is for a 62 tax on electric
consumption and telephone use. The reason give 3 for limiting
the tax to electric use is that our electric rates are 402 below
ueighhoring jurisdictions, while gas and water rates are approximately
equal to our neighbors. This is the argument he has been using all
along. Leered of a tax, why not raise the electric utility rates.
There is a limit to such raises, but historically Palo Alto's
electric rateshave bees 252 to 302 below its neighbors. Mt. Henderson
said be bad not hard en adequate srplaz*ation on why the City cast
raise those rates. Certainly,, Palo Altane do not want a new tax.
His second set of questioae relates to the property tax. The
assessments have copse in well above the original estimates. How
each property tax revenue is now anticipated? How muck is tbie
above the original basis for the 1976--17 budget? Ras this
difference been taken into account in Council's new calculations?
The third set of questions relates to a business license tax. 'How
many cities in California have such s tax, wed how many do nest?
Whet old be the impact on business in Palo Alto from a busimees
license tax versus the impact an business from a utility users tax?
How do business interests in Palo Alto rote the choices of a
business tax or a utility users tax, or increased electric rates?
Me did not favor may now tames, but said let's at least bet a
reecties from the besimess community amoes tie three choices.
Finally, why is there a need to folly restore the Capital Issprovenent
?fund reserve in one year? Staff figures indicate a reserve et year -
1 2 1 3
4/1/76
end, this June 30, of nearly $1 million. That is not exactly a
state of bankruptcy. The staff recommendation calls for a build-
up of nearly $2 million in the reserve in 1976-77. Less the listed
required capital projects for that year, the unappropriated balance
in the capital improvement fund would be $2.4 million on June 30,
1977. Why not built'• the reserve back up over a two, three or four
year period?
Mr. Hendersou said he hoped Council would raise these questions
and weigh possible alternatives carefully. Most important, once
ownership of the land is obtained, Council auat honor the citizens'
desires to preserve its natural character. The Council has a
unique opportunity to prove the sincerity of the open space zoning
by applying its regulations to the foothills property now owned by
the City.
Councilman Heahrs said he would like to correct a misrepresentation
made by Mr. Henderson. He ( hrss) alone opposed the ordinance
that led to this unhappy day. The record shows this. He did
this because of a aenee of equity and inherent fairness and, beyond
that, he did not wish development permitted on some of the more
e enicly important areas of the foothills. In otherwords, he
was more conservative in his outlook than the other eight members
of the previous Council, and that should be understood.
Joan Johnston, President, League of Women Voters of Palo Alto,
offices at 1176 person Street ➢ said although the League in previous
testimony had urged appeal of Judge Scbnackey's decision, she
would confine her remarks tonight to the future use of the land
and the financial implications of the settlement. The City faces
painful short-range financial costs and constraints. But taking
a longer, and more far-sighted view, the aount of money spent
now will result in greater total savings. The City will not have
the huge costs of extending capital improvements and urban services
to a distant area of Palo Alto. Moreover, we can safeguard the
quality of the environment and the livability of the developed
section of Palo Alto and provide an irreplaceable legacy for future
generations. The Councils that bought the 1eylands, the municipal
utilities and Foothill Park did greater long -terra service than
even they probably realized at the time. The question of the
use, or the non-use, and safeguards, of the lard is eo critical
and basic to the future of Palo Alto that there should be a
maximum of citizen participation in the decision. 'Me LWVPA
unges you to provide for an open, careful, thorough, city foothills
lands planning process. We urge the Council to maintain the
maximum amount df opeu space in the foothills.
Boyd Smith, 301 Coleridge Avenue, said he has carefully reviewed
the Council minutes of four years ago, at which ei a the zoning
of drastrs took place. Several pertinent facts from thaws minutes
should be pointed up in light of this financial situation. First,
the Council elected. not to place on the ballot the issue of purchasing
the foothill lands belonging to A rastra. The possibility of a ballot
voce ime carefully screened out because of its likely defeat if the
majority of. Palo Alto citizens had a sesy, Red a vote boon taken and
therefroma dsciaion been melds to acquire the property, the cost
would have been at least one-third of the settlement price of
asst *15.000 an acre today. .It is ridiculous that the City nom
finds itself paying three tip the property market value. The
legal advice end *toff counsel which Council received has turned
out to be dead vIogg. What you mere told could sb.oiutely not
1 2 1 4
417,71
happen has fully happened. The warnings which were given and bulldozed
over here come home to roost. As to how to pay for this $7.5 million
surprise, Mr. Smith suggested the most direct route. An increese in
the property tax. By using this method, the full impact of what has
occurred will fall upon the taxpayers and voters of Palo Alto. Be
wee _ against sweeping it under the carpet by a lengthy and inconspi-
cuous tax on utilities which will undoubtedly never be removed,
and which will fall mainly upon the business community who have
the least to gain by the property's acquisition. We must atop
supporting luxuries by tax against business who represent the
easiest target, In the short run, this is certainly the most
expedient way to raise money, but in the long run, business, too,
hat a vote. To their dismay, many cities are now finding this out.
They have lost their strong tax base as businesses move to cities
which offer more equitable financial climates. Business cannot
be unreasonably weighted down by expenses for which they gain no
return and receive act benefit. Let the users pay for their luxuries
and you will quickly find out how badly they are wanted. If the
Council. of today fails to follow this policy and continues to look
to business to bail out the City and to pay for any mistakes or any
loose financial ncaatageeent, the day will cow when business will
vote, not in mass and not at once, but in a way which will be
unnoticed at first, but eventually will take its toll on Palo Alto's
finances. Mr. Smith asked Council to make sure the revenues and
expenses of each year watch and not to count on the future to
solve today's financial problem.
Wes Burgess, 1178 Hamilton Avenue, said he was very pleased to hear
Mayor Norton say that we should hang a for sale sign on this unwanted
property. Whet ie the City's total liability apt to be under the
other six law suits, which are still outstanding? That has a great
bearing on what we are going to do today. This cannot be any secret.
It is his money we are talking about and all these people's money.
It must be a known figure. There squat be some figures mentioned.
The Attorney or someone on the: staff must have added them up.
Mayor Norton replied it is clear that it is *possible to answer
Mss-. Burgess ; question. His point is well taken.
tfr.3urgess repeated his question saying that has a great deal to
do with wit we do with the Arastra property. Is it $50 million,
or more than that?
Mayor Norton said there are no answers to those questions. The
amount named in the £rastra case was something like $15 million.
,use a lawyer, be knew :that they often ask for quite a lot are
than they pct to get.
Mk. Burgess staid his question referred to the maximum.
Mayor Borten asked if Ma. Bootle Wanted to ax as to the maximum.
Mt. Booth said it is less than the total amount here tonight.
Couaellmen *her said Mk. Burgess made a statement about a resl>aark
that Mayor Morten had made that he had oot heard. ihk asked if
the Mayor would like to clear that up. Mk. lb srge a said that
Mayor Norte said earlier tonight ocaathime about Malin a fax
sssi* ei.gn on this property.
Mayor Note *aid be did not say that.
Councilman Sher agreed and said he did not think he heard Mr. Norton
say that.
Ken Margolies, 224 Fernando Avenue, said he is a field representative
for Local 715, the city workers, and would like to comment about the
trend of the effects of the cuts that are being made, some of them
in the name of general need in the budget, but many cf them related
to the suit. He said approximately 30 positions have been cut from
the budget of the people that he represents. Of those, between
four and eight, depending on certain other things that may happen,
may be people who will be laid off and without employment. Some
of those people have 20 dears of service to the City and some have
seven. Particularly hard hit by this is the Engineering Division
which is losing a total of four positions, out of eight. The
reason given to taxer is that the lade of capital improvement projects
will cause a lack of work for theses people. Mr. Margolies said they
have pointed out to hire and to management staff that there are
duties they have done before capital improvements projects, there are
duties they have been asked to put aside because of rushes in
capital improvement projects, that they feel are needed services
to the cities that they would want to do. The effect on the City
work force is being felt pretty hard in terms of morale. Because
of this lawsuit, the workers feel they are being asked to put In a
pretty high share of paying for it and that is causing a very
negative effect on people's attitudes toward their work He urged
looking for other alternatives to meeting the City's financial
problems without laying people off.
Councilmen Berwald said Mr. Margolies stated the numbers of people
to be laid off, and he wanted to advise his colleagues and the
public: that prior to the considerations of the Arastra suit,
even if it were not for this settlement, it is likely that the
Finance and Public Works Committee would have approved some manage-
ment recommendations for fewer people in various departments. The
Arastra suit, which deferred the Capital Improvement Program, simply
added to that, but each year the Finance and Pub1ie Works Committee
looks at the morning table and for oath of the last several years,
maybe not every one, but the majority of them, there has been some
reduction in staff, some move toward contract work in certain areas,
etc., so it is not all the burden of Axastrr'.
Joyce Leonard, 4107 Briarvood Way, said she spoke on behalf of the -
Palo Alto Branch of the American Association of University Homan,
,arid the Association wishes to re -affirm its position on the uses
of the undeveloped lands in the Palo -Alto foothills, particularly
the 515 acne to be acquired from Arastra. AAIJW's position is
basically that the City maintain as much apes space as pose/hie
in the foothill area for reasons of 1) watershed values. The
head waters of three of Palo Alto's creeks are located there.
2) to preserve the land in its presently desirable state of
natural equilibrium, if the laud is tampered with may it be very
vulnerable to soil creep. 3) provide visual relief and an aesthetic
setting for the surrounding ur5an area. 4) for health and safety
factors, seismic and fire characteristics of the land and 5) the
general well being of the citieena of Palo Alto. MW bases this
position on its support for the Livingston & Blaney is d use report
on the Pain Alto foothills in 1972, as well as its continue support
for open space ensure'.
Frank Manfredi, 219 Addison Avenue, said what disturbs him most is
that this earth was here long before these parasites who ate claiming
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i/7076
money for land that they bought for nothing And who now want to make
a killing at the expense of the people. The City should have taken
this land by eminent domain. It was a mistake to give these parasites
$7 million. It io not worth $1 million. it is time that the people
said land is for people, not for people to make a profit so they
can live forever without having to pay the going rate. They want to
live for nothing and wake us carry the load. The City should confis-
cate the land. The land belongs to the people. He cited land he
bought to live in the mountsins in Santa Cruz and paid $10,000 for,
thinking he would have a place for retirement. It has fallen down
the mountainside, and he lies to jack it up from all sides.
Larry Klein, 1433 Dana, said he spoke first as vice. President for
the Committee of Green Foothills. The Committee regrets the decision
that the Council has apparently taken to settle and compromise this
Lawsuit. When the public input was given to the Council approximately
10 months ago, this recollection was that virtually no one spoke in
favor of a compromise. Almost all of the people urged City Council
to appeal this lawsuit. Indeed, the action taken by the City Council
was to appeal. CGF feels it vas very essential for this lawsuit to
be appealed. There are primarily two grounds for that. One, perhaps
the overriding thing, is the very unfortunate precedent this may
establish for, not only this community, but other governmental juris-
dictions as well. The use of zoning is at issue here and to have
the idea become widespread that a city or county cannot enact the
type of very 1eegiti ate zoning that the City of Palo Alto enacted
four year ago would be extremely unfortunate. They recognize that
part of the settlement apparently is that there will be an expungeu nt
of Judge Sch.acke'e decision, but it is difficult, if not impossible,
to expunge something that has already been written end decided.
They feel that the appeal should have been taken so the City could
get a definitive statement .of the law in this area, so that Judge
Schnacke's unfortunate decision could be overruled. This is true,
not only from the wider governmental standpoint, but also fret the
staa>sdpoint of twat is going to stand that Judge Schnacke stated
abut the City of Palo Alto. Their reading of the case indicates
that be was in effect saying that there was a deliberate malicious
plot on the part of the then sabers of the City Council to take
this property under the guise of, in effect, a fraud or sham of
the Zoning Ordinance. All current and former memhers of the City
Council know that the Judge's decisions and his statements to
that effect are absolutely erroneous and d untruthful. Thus, to
let Jodge gchnacke's decision stand, to whatever extent it does
stead, is to allow a blot to remain on the honor of the City of
Palo Alto. For these reasons we very much regret what is Council's
apparent decision to settle and compromise this lawsuit. Mt. Klein
said in his jet, owning this land is a entry mere opportunity
for the City of Palo Alto. It is a very valuable atseet for our
City. Ito public ownership will now allow us to have options
which mare not available to us . when this land was being monad
and continued to be hold ira private ownership. The citizens hope
and anticipate that the Council will act with all deliberate care
to sera a very extensive and careful planning process goes on with
regard to the use of this property. It is the Committee's hope
that this band W11l remain in open space to , the maxims extent
fearasiblae,aad that there will be at great deal of citizen input -
with regard to its future use. 00 think that laiteserving this land
in epee specs will be ceded by future seseretions as one of the
most courageous farsighted amts this Council, or indeed any other
moils could take. idea all know, looking back over the history
of Palo Alto, that sons of the other actions that past moils
1217
6/7/76
have taken have been very controversial at the time. For example,
the purchase of the land in Foothills Park from Dr. Lee was
controversial, and yet there is hardly anyone in Palo Alto
now who would not regard that as a very fine and extraordinary
decision, Similarly, they feel that future generations will look
back and say that the keeping of this land in open space was a
similarly wise decision.
Speaking as Individual, Mr. Klein said he would address some matters
of procedure. With regard to the decision --making process that
has led to this eettl nt, he found himself, as a citizen, some-
what taken back. He had read the staff reports and they are
unillumiaating. It is very difficult for a citizen to make any
judgment whatsoever as to whether the settlement is too high, too
low, just right, or anything else. It is very hare! for a citizen to
make any judgment as to whether the legal merits of the case required
that there be a settlement at this point. There is no case presented
in Mr. Booth's 'memorandum to Council to set forth anything like
that. The Brown Act ally a the City Council to meet in Executive
Session with regard to litigation, but this litigation was not an
automobile fender -bender case or something of that nature. This
is an extraordinary case, and he felt Council owed a great deal
more communication to the public as to where they were going in
this matter. There could have been much more coomunicatic;n as to
what was involved here, the values at issue:: and things of that
nature, without in any way compromising the City's legal position.
Secrecy always breeds suspicion. We have seen that all too often
in Washington and it is very unfortunate to see it here. It would
have been much more helpful if citizens had heard, over these past
10 months, much move from the City Council as to where we were
going.
?1r. Klein continued that if has become commonplace in large litigations
of this sort that before a settlement of this type be undertaken an
outside law firm be brought in to give a final viewpoint on whether
the settlement made sense or not, whether an appeal should be taken,
and ell the legal ramifications. There le nothing in the record
that this has been doe*. The City would have been very well advised
to have employed an *dditioeal outside counsel who was not previously
cone ted with the case in any way whatsoever to give its views as
to what courses of action the City should take. Mr. Klein said
those are his feelings with regard to the procsdures the Council
folioed in arriving where they are tonight. What is more
important ars the procedures to be followed in the future with -
regard to the uses of this property. It is recognised that citizen*
elect the City Council to secke decisions for them, bait it seems that
every so often there ere decisions that the city has to take that
should be submitted to the voters. Bo issues end Changes to the
Charter, for example. before this property is finally comitted to
some definitve public use, Mk. Klein advised and urged that the
City commit itself to having such a public vote. We are going to
buy this property for $7.4 million plus. It is presumed we will
then have a Lot of debate as to whet its use will be. People
tonight have urged Council to keep it in open space and Council
has heard others saying sell it off. !!r. Klein urged that before
any final decision is made, either through the park dedication
process or through en id hoc process developed for this particular
property, that the natter be submitted to a vote of. the people.
Councilmen 5eahre said Mt. Klein had heard his earlier atataesnt which
1'2,1 6
6/7/76
was considered discourteous, although truthful,
statement tonight. involves more political smoke
blown around this town since the last election.
long had he been practicing law?
Mr. Klein &eked if this is a discussion of the issue?
Mayor Norton declared a point of order.
Councilman Ratathra said the purpose of that question is that Mr. Klein
certainly knows something about legal risks.
Councilman Sher said this line of questioning is not relevant.
Councilman Beahre said Mr. Klein has been critical of this Council
which has done its best to bail the City out of an impossible
situation and he wanted to correct the record once again. There
are risks involved and if Mr. Kielce wanted to go to the taxpayer
and :defend the position of this Council or any succeeding Council
on a price of, say, $15 minion, more power to him. We are
involved with a saieersb1e situation. The Council did, iec.identaliy,
consult with expert counsel, In fact, with the gentleman who won
the Petaluma case.
and Mr. Klein's
than has been
Re asked how
Mr. Klein said that is preciaely the information that should have
bean given to the public.
Councilman Bcahrs replied knowiog the legal risks, there are only
certain things you can do.
Naeyor Norton said there were no other indications from th.e audience
that people would llke to speak, so the ratter will be returned
to the Council.
Councilman Berwald said he welcomed the rests from the public.
We all find *t a little bit strange and amusing that we had so
many people here on the [massage parlor item, end so few people
on time $7.5 million compromise of Araetra, It oft to tell
mil something about the apathy towards or co fideace in the
Council. Briefly commenting on some of the public icput this
evening and tracing some of the imp that brought us to tbie
point, Councilman Berwald recalled that back in 1963 and 1964, he
vas a member of the Citizens Regional Committee for Foothills
Flaming. Its members were from surrounding cities, and
moat of them could be clammed as genuine conservationists and
environmentalists -- a weederful grouse. As a result of that
thirteen the of deliberation, the derision was adds to develop
a total environmental design for the foothills with a minimum of
development a mazionat of ogee space. Recognizing that there
yes going to be a critical nosed for housins, quite wisely that
group at that time felt that there mucus[ be some development
end some ope v - space. Nothing happened from 1963 until 1967 and
at that time, Nr, iiers>ralid said he put his bat in the ring to
become a candidate for City touncil for. the purposes of advocating
such * developmemt playa, which he did, and with fired on the
epode. During the course of deliberations at that time and up
throes November of 1972 Oen the property in geasties laks >rseaasaed
001, these was an extremely vocal population in Palo Alto and the
eras, there was alp the Livingston and Al*ymey study, and the
resat of that resas the decision that mO as.de. Re voted yes,
. Beehrs voted no . and some others wbo were here the voted
for lt. le retrospect, maybe it Iris a geed decision at a bed
1219
07/741
one, but it does not serve any useful purpose to talk about whether
it was good or bad or assess blame to anyone. Council felt at
the time that this was what the citizens wanted, we felt the
zoning was logical and appropriate. Going back to Messrs. Henderson
and Klein's comments. Mr,. &leie's very quick association of
Washington, D.C. to this council was a bit unfortunate, but
at the. sauce time Berwald said he agreed with Mr. Klein's statment
about opennee . Mr. Berwald had commented during the course of
these months on the fact that there perhaps should have been
more discrimination in what the Council could release and what
it could nit, so if Council has been less than open, it was
because of legal risks that it has kept most of this information
in Executive Session. The Broom Act does not discriminate between
fender -benders and $7.0 million suits, but on the other hand, he
could see opportunities to have released more information but,
having been involved in the decisions, there was no secrecy in
the sense that that word is used. Alan Henderson said that in
view of John Bestirs' comments there must be a gre* deal he does
not know, and that is one of those statements that is not warranted
whatsoever. Councilman Berwald he had been on the negotiating
teat, and the negotiations were carried on honorably by both parties.
City staff tonight was accused of poor legal advice and this is
probably scapegoatism. He did not blame staff. If there is any
blame, it is at Council level. If Council made a bad decision,
they will find out about it. He felt it was a good decision and
it is a reasonable settlement. He spoke of the months and months
of agony and the days of getting up at six ana.m. and getting to bed
at 2 a.m. and the very hard work that was done by people on the
negotiating team and on the Council with months of Executive
Sessions plus months of legal work done by the City Attorney and
the several consulting attorneys, the fine work done by the City
Manager and the Controller and the Planning $toff, and by everyone
in the City. This led him to the conclusion that it is itt the
public interest to > ettie this matter and in the interest of
equity, he did not think the property owners are waking a lot
of money out of this, in fact, quite to the contrary. The risks
of going ahead were more thank they were to settle. Thera are
still a number of things we should not talk about openly and good
judgment and prudence dictates that they should not talk about
them openly because the City does have additional law suits
against it. Any accusation thee this Council has been less than
candid or has operated in some clandestine manner is _ ebeolutely
false.
Councilman B.erwald said he thought someone said the former Council
was committed to going all the way. At name time, he thought
most of the Council:members were committed to go ell the way and
for good and sufficient sons decided that the risks of going
that way were greater. The comment was mode that the Council was
acting in response to the citizenry at the time that tha commitment
ent
was made to go all than way. The Council has always acted in
response to the citizenry in his opinion. That goes for any Council,
whether it is the Council . majority that someone of us consider as
one side or the other. - One of the things about this Council has
been, end he .could say this: without risk of any challenge on the
part of the Council, is that it la a great Councils in terms that
we differ, argue, and fright but there is respect an all sides,
end 1 do not know of anyone here who has ever conducted themselves
in any way that was less than superb. He said he did not resent
implications otherwise, but would say that in his opinion they are
not true, A* far es the proposed utility users tax saki property tax,
he tended toward the property tax, but that is still before the
Finance and Public Works Committee who will talk about it and
make some recommendations to Council. There may be sonae other
new kinds of ways to finance this. The need to restore the
Capital Improvement Prograem. in one year was mentioned, and why
not do that in three or four years. That is a reasonable observa-
tion and it ought to be discussed. In regard to future urea of
the property, the Mayor has said that such die;cession is premature.
In regard to talk about openness, there was an appeal by some of
the people at an earlier Council to have this put to a vote, and he
felt it should have bean in retrospect, And if there is ever any
change in the property, he agreed it ought t� be put to a vote.
This was the toughest decision he had ever been called on to
participate in, and yet he could understand the feelings about
the lack of information. It is perfectly understandable. If he were
out there he Would feel the same way. How could Council make a
decision involving $7.5 million, without having told anybody very
much about it for months and months. That ix just the way it was.
lie was going to support the motion to settle the matter on the basis
on the basis that has been recommended.
Councilman Carey said he has heard aome things from ail people tonight
that disturb him. The Council has spent many months agonizing and
searching their souls on the decision that has been announced and
that they ars faced with tonight. It was not e:sy and it was not
mede out of any preconceived position. It was not made out of any
political position. .The absence of political rhetoric Iu the
closed sessions was remarkable; it was virtually non-existent. And
therefore, when he hears, on both sides, attempts to make this iuto
some kind of political issue, it disturbs lie. This f s not the
kind of issue that: could have been discussed in a public form, prior
to settlement. To do so, to his mind, would be like playing seven
card stud with your cards face up and your opponents face down.
You just do not get in the game, because you are going to get beaten.
To discuss this settlement, and the debate that occurred, now is
also somewhat difficult because there are other lawsuits pending.
Not only do wt have to be cognizant of that, but eo does the public.
1psfullyz some day there will be no further litigation, and at that
point we can all sit dawn and discuss the intricacias of how this
Council arrived at its decision. Mr. Carey said he felt it is e
good one, and that is so becaess it is hurting both sides. It is
hurting the City because it is costing us a lot of money e— and
parenthetically when a speaker tonight says had we put this to at
vote four years sago, ws could have bought it at ore -third of the
coat, he could only remind hire that land prices have gone up
sdbataentially. ' He felt the price is fair in light pf all the
circumstances. It is a compromise settlement -- nothing note and
nothing leas. The advantage to the City is that the City acquires
the laud. Those who said that is the get advantage because it
give* us more option are dead right; we knew that. That is one
of the reasons Council comprca iced this litigation. Secause it
gave the City more options. . On tine j of er hand, it hurt Arsatra.
At .least to our knowledge, and in light of t heir "own public state -
se eta, that firs has lost -$7 million of bard mossy from their
experience of acquiring this land in Pal Alto and trying to gat it
t oned. They have lost see y, they did not get stormy, and they lost
that non sfte r - rescsivirag the compromise settleMent figure of
approximately $7.5 eillioe. NO tbimks it is s good compromise, be-
cause nobody really feels very seed about it, an4 therefore he can
only coaciude that no one was really a victor.
With respect to the future of this 1and,Councilman Carey said he
vaunted to assure everyone that not only he but all Counciimembers
have absolutely no pre -commitment to what will be done with thin
land, and they will not have any pre -commitment for some time to
ce>aes. He endorsed full public debate, not only as to the method
of ultimate payment for this land, but as to any ultimate use. He
also endorsed the idea o.'; bringing it to a public vote. Those
items remain for discussion at future meetings of this Council and
by the public and they would all like to hear the public's feelings
about this. Many issues have been raised tonight which were
considered in great depth by this Council. For example, the continuation
of appeal so as to set precedent, not only for this City, but other
cities, was considered. Personally, he did not think the City of
Palo Alto should have to foot the bill to set legal precedents for
all the cities in the State; maybe they all ought to chip in, He
did not want to dent too much about what changed between 10
months ago sad four years ago and tonight, but obviously there
were some changes. It is coon knowledge that several significant
cases have come down from the appellate courts in the last six months.
Those who are interested in the law or who are lawyers who will
read those cases and read the memorandum of opinion, and get some
insight into some of the issues that this Council wrestled with.
There is nothing of a secret nature that is detrimental to the
people of Palo Alto. if there was any secrecy, it was only by
necessity and only under the Brown Act which was estabii.ahed for,
in his opinion, good and proper reasons. And that is the way it
was used. It was used to the public's advantage, and not to hide
any significant facts from the public. It was only done by necessity,
CCUMIIMAD Sher said he is not going to make his speech now but will
reserve that until the: budget a end gent motion is made. His question
concerns the proposed new revenue sources in the staff memorandum.
Those will be discussed in the Finance Committee, so there is no
need to get into greet detail, but one speaker did suggest that - if
the recommended utility users tax were imposed, it would never be
moved. Such a tax would not be like the State males tax, which
the City shares, but it would be one that would have to be imposed
each and every year if it ware to continue in the City, is that
right?
Mr. Sipel confirmed there would be no problem in setting it up
that way, It could expire at the end of each fiscal year and
Council could continue it or change the rate if they wished to do
so.
Councilman Sher said it ell depends .on hov it is set up in the
first instance. The staff report. suggests that in order to get
the Capital Improvement Fund back to an acceptable level,
staff reeds the tax for this year and suggests it would be
necessary as well in the year that follow*, but it would be possible
in setting it up to make e. commitment that- it would be reviewed
annually and not automatically continued, is that right?
Ms. Sipel rimed yes, and staff would recommend that Council
look at it annually.
Councilman. Sher .aid he would .like to count on utility users
tax. It is his stn view that if e decision is ode to move the
utility users tax Coe it Ought to examine the possibility of
applying the so-called lifeline approach to the tax. In connection
with the City's electric metes, there ia a stepped rate and for a
=stain Wit, a so-called lifeline amount, that is the
rate. We will, be exploring the utility tax in the Finance
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6/7/76
Committee and asking staff to look at that possibility, that is,
excluding the tax on that lifeline amount, and in the same way,
in regard to the proposal for a utility users tax on telephone*,
to explore the fe eeibility of not having it apply to some minimum
amount that would provide the minimum telephone basic services.
He said he talked with Mr. Sipel about this in advance, and
Mr. Sipel gave hire no hard figures but indicated that this could
be explored, end he would hope We would be able to explore that
in Finance Committee, and as a member of the Committee. he would
see that that point is examined.
Councilmen Beahrs said he had spoken earlier in defense of this
Council which hoes had the unhappy obligation of preetding over
the problems we have and Mr. Carey elaborated on that to a higher
degree and be supported his esaatements. Beyond that, some of
the diecussione, both from the Council and the public would indicate
that there should be name criticism of the current staff. He would
like to correct that impression as well. The current staff are not
at all responsible for the situation that exists today. He said
he must commend the City Attorney for his very high standards of
practice and his counsel which has been exemplary as far as
Mr. Beahrs is concerned, and he has had about forty years of
experience. Generally speaking, he has never seen a higher level
of professional conduct than Council has witnessed from this staff,
and they have not been responsible in any sense for the original
decision and some of the problems that developed from it. He
wished he could say as much concerning some of their predecessors.
Councilman Comstock said the agenda item: concerns a list of
necessary actions to bring to a conclusion the proposed compromise
settlement over litigiation against the City, and one action is
to legally and specifically provide the money for the settlement
and in additiou, at lest as an interim action, to obtain some
short term funds. There has been a lot of input by members of the
audience and quite a few cummenta by the Council and certain
elam ts concern his and he might speak to that first. At least
in soaae ieetances:s, there hes been a thread of remarks that someone
is right or wrong or someone did something wrong. a while ago, and
he would urge both his colleagues end members of the public not
to pursue that too march. What watts done as fear as the aiming, etc.,
a number of years ago is done and it in turn caused a series of
its to occur which have led to where we are, and this Counncil
and etaff, as it site here, have taken one or a number of steps
in dealing with that. There is no way the Council can pass the
resolution a propriatim$ thaw monies and putting in limbo all
these projects and go merrily onward as though nothing had happened.
Council and staff realises that and the community is already telling
us that. Secondly, we cannot engage in the rather substantial
disrupter of our financial position that this represents and go
forward as though nothing had heppened. It is very clear from
Listening to the audience and the Council that there is a vide
diversity of opinion and there will he. and what ultimately
happens to the land will have to be thrashed out, as well as tow
we ultimately straighten out these financial swatters. We have all
received phone calls and nembers of` 'the public have probably been
discussingdiscussiog this with emu other. All these possibilities, bond
Beau , taxes, concerns that have boom expressed this evening.
ar• not things the Council will be doing this *waning. At least
not with my vote. ''fie wLU be no utility veers metes imposed
toniaht. The land will not be seed tonight to the park district
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4/7/7*
or anybody. Council has expressed themselves on that. The community
has said they want this to be an open and carefully developed public
process, and he agreed. He personally is not committed to one tax
or another or bonds or no boucle. He wants to discuss that and have
the Council consider it carefully, but it is quite apparent that
the Council intends to do that. Finally, a lot of comments have
been made about information that people did and did not have, and
he shared that frustration. When negotiations were going on, there
were a uu aber of occasions when he way dying to talk to someone about
it besides the Council, Be' is not a lawyer and he had to be bound by
two things, the advice of Council's own counsel, and secondly, cwt
he had committed to his colleagues. Council had ita sessions and
agreed that it was necessary that there be a high degree of
confidentiality about its actions. He agreed to that, and he had to
be bound by it. Be had to have other Councils ebert. good faith and
trust and the reverse i3 certainly true. He assured the public that
the press did not let the down on that regard. They hounded Council
and )r. Booth when Council referred the press to him to cement on
these very delicate matters. The Council chose deliberately and
collectively to conduct a substantial portion of these negotiet.ions
and their deliberations in private executive session, and they did
this with the advice and :direction of the City Attorney, and they
did not choose to have some of these discussions publicly, The
result is that we have come to an end point and the public has
not been privy to our discussions, and that is ccrtainly not the
Yule, Any Monday night the public can come down here and hear
Council talk about a great variety of things rat considerable length
and you may be disappointed and that was not the case here, but it
was not to do anything except to put the City io the best possible
position in the resolution of this matter. He could not pass
judgment on the resolution Council has came to, whether it is a
good or bad thing, and he is not sure he will be able to a year
from now. The public will be testing Council on this decision
because it will have financial impacts. People have said put
on a property tax or a utility tax or in bonds, and he thinks they
are all saying to Council in dii f Brent ways, they want people to
know what is going on and do not want the money to be hidden and
people want to keow what the impact of this action is. He agrees
with that concept, and he vents to have the public here help
Council develop the ors, SO be hoped that Councill tonight
will reach an agreement on the actions oa the agenda end that the
public will go away assured that there has to be a lot of work carne
and at least one Councilman here is committed to going back and
'carefully examining the short teem disruption* that have occurred
in the Capital Improvement Program, financing, etc.
Counnilman Eyerly said his fellow Couucilmembers have very aptly
expressed the agony that the have been through this past year
ore this decision. He thought when he cams on the Council, he
was going to serve the Council and be here on lb2da►y alights, but
he soon found that Council was here in Executive Session most of
the time and that seemed to talus most of the effort. Thet is
behind them now. He thought they bad M. a Bawd decision and the
public will learn es ti goes alone that it wee a very good decision.
Conternine some of the statements made tonight, on electric rates
the Finance Committee has been thresh the issue of reining electrical
rates within the Utility Department and bas been very strongly
advised that the City is taking as maxiuie percentage of profit out
of that department now end that if they try to build that percentage
up,Out City could well be in tole. The sits ation with the San
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6/7/76
Francisco Water Dintrlct is a key not to remember. As far as tax
revenues, new taxes, the Finance Committee is not yet through with
the Finance Committee is not yet through with the next year's
budget or the problems of the Arastra case and the financing,
and it might be that there won't be any new taxes. Time will
tell, and it will be coming down for public surveyaanFe within
the end of the month. Another point, there has been some cogent
here concerning the Arastra case impacting the operating budget,
it could have an effect that way, but in actuality, the operating
budget has outgrown itself. The City's income has fallen behind
its expenses and before there was any decision to try to settle
the Arastra case the City. was looking at how to get its expenses
in line with its income, so it has been very necessary, regardless
of this settlement, to cut back. on the operating budget.
Councilman Clay said he had been elected to Council after the O -S
zoning vas implemented and litigation had already begun and one
thing he car; say has happened to him over the last couple of
years that he has been on the Council is that he has learned a
lot of lee sitting in Executive Sesa►ions with his colleagues on
the Council, most of whom are attorneys. He thought all of them
were for a while. He heard language he had never heard before.
As the cane proceeded, he felt that the outcome was always
uncertain, The signs were both positive and negative. For example,
the Petaluma case decision came down and that seemed positive.
Judge Schnacke asked the City to attempt to settle this caee with
a forced decision and that did not sound very positive, The
Vaughn grocery case from Los Angeles came down and that sounded
positive. So, for him, until Judge Schnacka's decision was made
there was that great une;srtainty in his mind, and though that
decision came with some surprise, it came with great impact,
and there are still questions in his mind as to what the final
outcome would be if the case were to have proceeded through the
entire legal process. It is rather futile to try to guess what that
outcome night have been, because we are looking at a reasonable
compromise. Moreover, that decision is really the first milestone
of the nett couple of years or the next few months are going to be
very interesting and taxing times for Council and citizens because
there is still' the matter of land use, and whereas there has not
been much citizen input to this point in time, primarily because
the litigation hags taken place, he guaranteed you that aver the
next several months there will be a vast mount of citizen input
and that hopefully, that the final outcome is an outcome everyone
will be pleased with.
Mayor Morton stated his has been involved in foothills decisions for
seven years and four beyond that on the planning Commission. This
is another episode in the foothills dialogue that to him goes
back to the year one. Hs thinks it is a vary important dialogue
and tonight's decision is important, but in reflecting back an what
bee happened, ha supported the Livingston and Hlay ey recommendation
which vacs ova form of obtaining open apace, be supported the O -S zone,
which is in a sans: the subject of tha litigation before Council
tauight, and be is in no way apologetic for that support, in fact, he
is proud of it. Hs has been intimately involved in the filing of law
suits and in the interim decisions that have been made at varies
trials at appellate levels along the way, both affecting Palo Alto
and other municipalities throughout the Stage, and occasionally
throughout the nation. Hart he vented the city to know is
thst taking all these things into account, and taking into account
what he regarded as an entirely erroneous decision of Judge Schnacke„
12 2 3.
6!7/76
r
and all these considerations, he thinks the proposed settlement
before Council tonight is sound and one that all we members support.
Mayor Norton said he would not go into all the reasons why he feel*
that way. He hoped the public has confidence that he, without -any
diminishing his interest in the ultimste open space goals of this
community, thinks thia`Is a good settlement. He does this on the
strong advice of counsel, not just o 0e, but a whole bunch of then.
And taking into. account all the factors of risk as best as Council
can evaluate those factors, both as attorneys and as laymen, and
notwithstanding the fact that the City could theoretically appeal
its little heart out on this matter and spend three more years going
to the Supreme Court of the United States, he thinks there is good
argument in favor perhaps of not doing that in this particular case.
Having made that decision, he remembered when he was paying damages
in an auto accident case that ie that kind of case you get nothing
in exchange, here the City ie getting 515 acres of prime land, land
that anyone who has not seen it, should take the trouble to take a
look at one of these days, for what in his opinion is a reasonable price
under all the circumstances. Mayor Norton said he persoually likens
the Council's opportunity tonight to the farsightedness of the Council
in the '30's when they bought the Baylands, the Council of the '50's
that bought Foothills Park, 1200 acres, and if this Council supports
the settlement tonight and goes ahead and closes the arrangement,
by hindsight this Council will have made the sae kind of sensible
decision that we think those Councils made at the time, and he is
sure they made some sacrifices alao to carry through what they
thought was au important commitment. So he wholeheartedly supports
this settlement, notwithstanding the concerns that have been
expressed by people who perhaps have different points of view
and different aspects. He hoped the public would trust Council's
judgment because they have spent a lot of time on this. With that,
he hoped they might address the items on the agenda.
MOTION: Councilman Berwald moved, aecouded by Comstock, that the
acquisition of the Arastre property has no significant environmental
impact on the City of Palo Alto,
The motion carried unanimously.
! ION% Councilman terwald moved, seconded by Comstock, to adopt
the following ordinance:
"ORDINANCE OF THE COUNCIL OP TU CITY O1►
PALO ALTO AMENDING THE BUDGET POE THE FISCAL
YEAR 1975-76 TO ESTABLISH A CAPITAL I "RdY -
MINT PROJECT FOR THE VAST A LITIGATION
SET"TL "
Councilman Sher said in all frankness he had some concerns about the
settlement including not only the amount but the necessary depletion
of the Capital Improvement Fund and Its reduction to the level of
$.6 million, When Council is advised that the safe level for this
reserve -is $2 million and -it is necessary to build to that level.
Some of his concerns relate particularly to the timing of the settle-
ment, and the paymette by the -City were resolved during the iaat
states of the negotiations which he felt produced some improvements,
but n nstbelsss, scam of his concerns remain.. Oa the ocher hand, the
decision has been made to effectuate the settlement and so now it
is encumihent au the City Council to deal with the financial implications
of it, that is to provide the funds to pay the settlement, 434 is
1 2 2 6
6/7/76
regard to this matter, obviously they have no choice, they must freeze
the capital projects as indicated aryl than rake steps to restore the
balance of the Capital t provstent Fund. So he would support the
budget enemdment as the only way to finance the settlement, but did
so on the full expectation that the recommendations of the staff in
regard to new revenues, and the comments made there about the so-
called required capital projects, will be fully reviewed by the
Finance and Public Works Committee and the City Council before the
1976-77 budget and the Capital improvement Program are adopted, and
of course the public will have full opportunity to be involved in
that review. Re wanted to pledge as others have done earlier tonight,
that in regard to the future use of this land, that question will not
be decided in Executive Session. That question will be fully aired
in public and the public will have full opportunity to participate
in the proceee.
corrected
see pg. 2
7/6/76
Councilman &sabre said he would vote most reluctantly in favor of
thin ordinance, but he did not see any aiteruative to such action
if the City is to otherwise avoid extreme legal riake, and he
personally, in the tiny months of negotiation would have much
preferred to have had this thing go the whole route and legal process
and then the Council wouldn't have any political problems. If the
judicial system in this country has done very well by the public
in the last few years.
The motion was approved can unanimous vote.
MOTION: Councilmen Berwald moved, seconded by Witherspoon, the
approval of the contract on title insurance_
The notion was approved on unanimous vote.
MOTION: Councilwoman Witherspoon introduced the following resolution.
and moved, seconded by Norton, its adoption:
RESOLUTION t1O.5216 entitled "A RESOLUTION
AUTICSIZING AND SIDING PCR THE ISSUANCE
Of $5.5 !MILLION PRINCIPAL AST FOR THE
CITY f1P PALO ALTO REVENUE ANTICIPATING NOTES"
The motion was approved cm onseineus vote.
MOTION: Couuci1amn Beahrs introduced the following resolution and
saved, 'seconded by aerweld its adoption:
RESOLUTION MO. 5217 entitled "A RESOLUTION
AWARDING SALE OP NOTES -- $3,500,000 SUE
ANTICIPATION NOTES"
The notion was approved on unanimous vote.
Coumcilman Carey asked since the sal* of the revenue antic/potion
motes is not yet firm, is Council's first resolution sufficient to
handle that contingency on the budget ant.
Mt. Sipel replied yes, it ia.
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i/7,7'
tit
The Council recessed to an Executive Session on litigation from
10:00 p.m. to 10:32 p.m.
1. Stan Cottrell, 990 Blair Court, expressed concern about
Council procedures when receiving kaput from citizens
and said that Council cannot expect to have the citizens'
trust if they introduce infl tory remarks'. He gave
examples regarding recent discussion of the Veterans
Building and mention of squandering hundreds and thousands
of dollars for radicals and funds and not apending one cent
for those who have served, bled and died for their country,
and we know the programs that were being referred to and it
is true that scene of the people who benefited from those
programs were radical, some of them were bums and some
of them were radical damn buns, some of them also were
reactionary rednecks, some of theta also were those sae
people who had fought and died and bled for their country.
Another example would be where gibers of the community do
comae to address Council about their concerns and their
opinions and they are accused of being political or making
political statements. Okay, some of them are political,
but particularly when it hrppens as it did tonight, after
a blatantly political statement from a member of the; Council,
he thought it understandable that that alight happen. He
concluded by pleading with Council, before making comments
such as he had alluded to, to stop and thin and keep in
mind .that it is that we want to do as a community, and
what people are trying to do when they come here to express
their concerns.
2. Nanette Htnko, 3172 Emerson Street, said many people who
listen to Council do so at home. She wanted to reassure
-Council that oho for one, appreciates the amount of work
that thin Council hike put in on the litigation and feels
confident that their decision will turn out to be a good
ono as the years gp by, Working intimately with the
problems of negotiating land. she can appreciate the good
sense that it taus a public body sometime, to make a
courageous decision that is, perhaps different from what
the public expected you to do and she also realizes the
importance for Council not to be discussing some of these
-important Batters with the public, they have further
litigation mead of these. She di4 want Council to know
that at least one member of the public is appreciative of
the amount of time anoi effort they have put into this.
•
The Council recessed to an Executive Session to discuss employee
ne otlstions.
1 2 2 8
6/7/76
The Executive Session and City Council meeting of June 7, 1916,
adjourned et 11:12 p.m.
ATTEST:
it Y Clerk
APPROVE:
Mayor
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