HomeMy WebLinkAbout2011-03-14 City Council Agenda PacketSpecial Meeting
Council Conference Room
March 14, 2011
6:00 PM
Agenda posted according to PAMC Section 2.04.070. A binder containing supporting materials is
available in the Council Chambers on the Friday preceding the meeting.
1 March 14, 2011
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER
DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY
CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS.
ROLL CALL
ACTION
1.Acceptance of the Long Range Financial Forecast 2011-2021
7-8 PM STUDY SESSION
2.Infrastructure Blue Ribbon Commission Study Session
COUNCIL CHAMBERS
8 PM SPECIAL ORDERS OF THE DAY
3.Presentation of Proclamation for the Student Exchange Group of Tsuchiura and
Introduction of Tim Wong who will be respresenting Palo Alto in a marathon in Tsuchiura
CITY MANAGER COMMENTS
ORAL COMMUNICATIONS
Members of the public may speak to any item not on the agenda; three minutes per speaker. Council reserves the
right to limit the duration of Oral Communications period to 30 minutes.
APPROVAL OF MINUTES
February 14, 2011
Approval of Minutes February 14, 2011
CONSENT CALENDAR
Items will be voted on in one motion unless removed from the calendar by two Council Members.
4.The Parks and Recreation Commission and Staff recommend that Council approve the
revised Park and Open Space Rules and Regulations
2 March 14, 2011
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER
DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY
CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS.
AGENDA CHANGES, ADDITIONS, AND DELETIONS
HEARINGS REQUIRED BY LAW: Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and put up to three minutes for concluding remarks after other members
of the public have spoken.
ACTION ITEMS
Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished
Business and Council Matters.
5.Recommendations and Direction for Modifying Historic Review of Contributing Structures
Proposed for Demolition in the Professorville Historic District
6.Update Regarding Sustainable Communities Strategy (SCS) and Regional Housing Needs
Allocation (RHNA)
COUNCIL MEMBER QUESTIONS, COMMENTS, AND ANNOUNCEMENTS
Members of the public may not speak to the item(s)
ADJOURNMENT
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who
would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may
contact (650) 329-2550 (Voice) 24 hours in advance.
PUBLIC COMMENT
Members of the Public are entitled to directly address the City Council/Committee concerning any item that is
described in the notice of this meeting, before or during consideration of that item. If you wish to address the
Council/Committee on any issue that is on this agenda, please complete a speaker request card located on the table
at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not
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3 March 14, 2011
MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER
DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY
CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS.
Additional Information
Standing Committee Meetings
FINANCE COMMITTEE PACKET
1.Finance Committee Meeting of March 15, 2011
CITY COUNCIL RAIL COMMITTEE PACKET
Standing Committee Packets from the City Clerk
CITY/SCHOOL LIAISON COMMITTEE PACKET
Standing Committee Packets from the City Manager
Schedule of Meetings
Schedule of Meetings from the City Clerk
Tentative Agenda
Tentative Agenda from the City Clerk
Informational Report
Update on Fundraising Efforts by the Family Resources Foundation in Palo Alto
Public Letters to Council
Public Letters to Council from the City Clerk
City of Palo Alto (ID # 1446)
City Council Staff Report
Report Type: Action Items Meeting Date: 3/14/2011
March 14, 2011 Page 1 of 9
(ID # 1446)
Council Priority: City Finances
Title: Long Range Financial Forecast 2011-2021
Subject: Acceptance of the Long Range Financial Forecast 2011-2021
From:City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that the City Council review and accept the attached forecast of revenues
and expenses, as well as revisions requested by the Finance Committee and described below.
Background
Attached to this report is the City’s updated General Fund Long Range Financial Forecast (LRFF)
for the fiscal years 2011 through 2021, along with CMR 1315:11 which accompanied the report
presented to the Finance Committee on February 1, 2011. After Council reviews and gives final
direction on the Forecast, staff will revise and reprint the report.
The LRFF identifies key issues that will guide the upcoming FY 2012 budget process and affect
the City’s future financial condition. It is not, however, itself a budget; nor is it a commitment to
implement the spending or revenues outlined in the Forecast.
Discussion
Due to the slow pace of the economic recovery and diminished sources of City revenues, our
Forecast assumes slow growth in all revenue categories, and slower salary growth than in past
Forecasts. On the expense side, pension costs show significant increases due to the reduced
2009 investment performance of the PERS portfolio and revised demographic assumptions
adopted by PERS.
The Base Model included in the attached report and presented to the Finance Committee
included a number of assumptions which the Finance Committee believed to be overly
optimistic. Specifically, the Finance Committee requested the following changes to the Base
Model:
March 14, 2011 Page 2 of 9
(ID # 1446)
1. The Base Model assumed health care cost increases in line with the assumptions used in our
January 2009 Retiree Medical Actuarial Valuation –6.5% increases in the first three years of the
forecast, and 6.0% increases in the last seven years. The Finance Committee asked us to use
10% annual cost increases (as was assumed in our Pessimistic Scenario, on page 15 of the
report) given the City’s history of double digit health care cost increases over the last 10-year
period and the anticipated impact of healthcare reform legislation on these costs.
2. The Base Model incorporated Transient Occupancy Tax revenue from the Ming’s Hotel,
beginning in FY 2013. The Finance Committee asked staff to delete that revenue, due to the
uncertainty of the Hotel’s opening date.
3. The Base Model assumed a continued 7.75% discount rate for the PERS investment portfolio,
while the Pessimistic Scenario assumed a revised 7.5% discount rate. The Finance Committee
asked that the Base Model include the lower discount rate since the PERS Board is likely to vote
to approve an investment mix that will result in this rate of return. Staff assumed that the PERS
rate increases resulting from the discount rate change will be in the middle of the range
indicated by CalPERS, starting in 2013.
4. The original Base Model assumed sharply increasing PERS rates in FY 2012, 2013, and 2014,
due to the latest PERS actuarial report. After 2014, however, the Base Model assumed no
further increases for the duration of the Forecast period. Our Pessimistic Scenario assumed 3%
annual increases after 2014. The Finance Committee requested that we use the latter
assumption in the Revised Base Model since it is likely that PERS rate increases will continue
into the future.
5. Lastly, the Finance Committee asked that the Base Model include, at a minimum, an
additional $10 million per year invested in infrastructure, beginning in FY 2012, increasing by
3% a year, as we had shown in two of our alternate Infrastructure scenarios.
In addition to the five changes above requested by the Finance Committee, staff also made an
additional revision to the Base Model:
6. The Base Model had assumed that no staff would receive a salary increase in 2012, but that
in 2013, Miscellaneous employees, after three years of salary freezes, would receive a 2%
increase. Public safety employees were assumed to begin 2% annual increases in 2014 after a
two-year salary freeze. Staff has revised the model so that all bargaining units have three years
of no salary increases before receiving 2% annual increases.
The bottom-line effects of each of the above changes to the Base Model are summarized in
Chart 1 on the following page:
March 14, 2011 Page 3 of 9
(ID # 1446)
Chart 1: Impacts of Finance Committee Requested Changes to Original LRFF Base Model
FY
2012
FY
2013
FY
2014
FY
2015
FY
2016
FY
2017
FY
2018 FY 2019
FY
2020
FY
2021
10-year
Total
(2012-
2021)
Original Base Model Net Surplus (Deficit)
(2.2)
(4.3)
(4.4)
(3.3)
(2.4)
(1.1)0.4 1.7 2.3 2.9
(10.4)
Finance Committee-Requested Changes*
1
Health Care Costs Increase 10% per
year
(0.1)
(0.4)
(0.8)
(1.2)
(1.7)
(2.2)
(2.8)(3.5)
(4.3)
(5.2)
(22.1)
2
Eliminate assumed TOT revenue from
Ming's Hotel -
(0.3)
(0.3)
(0.3)
(0.3)
(0.3)
(0.4)(0.4)
(0.4)
(0.4)
(3.1)
3
Assume PERS discount rate decreases
to 7.5% -
(1.6)
(1.7)
(1.7)
(1.7)
(1.8)
(1.8)(1.8)
(1.9)
(1.9)
(16.0)
4
Assume PERS rates increase 3% per
year from 2015-2021
(1.8)
(3.7)
(5.7)
(7.7)(9.8)
(12.0)
(14.3)
(55.0)
5
Additional $10MM/yr infrastructure
investment
(10.0)
(10.3)
(10.6)
(10.9)
(11.3)
(11.6)
(11.9)
(12.3)
(12.7)
(13.0)
(114.6)
6
All units with 3-year salary freeze
(one-year deferral of PD increase) - - - 0.3 0.3 0.3 0.3 0.3 0.4 0.4 2.3
Resulting Revised Base Model Net Surplus
(Deficit)
(12.3)
(17.0)
(17.5)
(18.5)
(20.2)
(21.6)
(23.1)
(24.9)
(27.6)
(30.5)
(213.0)
* Change #6 was added by staff without Finance Committee request.
Note that impacts of the individual changes are imprecise due to the compounding impacts of all the changes taken together.
Given the six requested changes described above, the Revised Base Model is summarized in
Chart 2 below (See Attachment B for complete Revised Base Model).
March 14, 2011 Page 4 of 9
(ID # 1446)
Chart 2: Summary of Base Model Revised as Requested by Finance Committee
2011-2021 LRFF -SUMMARY OF BASE MODEL REVISED AS REQUESTED BY FINANCE COMMITTEE
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
TOTAL REVENUES 139,433 140,962 144,009 146,326 151,193 156,387 161,601 167,270 173,273 179,150 184,632 190,165
ORIG INFRASTR INVESTMT INCL.9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
TOTAL EXPENDITURES 139,399 141,899 146,289 152,981 158,062 163,934 170,508 177,316 184,423 191,761 199,542 207,591
SUBTOTAL NET SURPLUS
(DEFICIT)33 (937)(2,280)(6,655)(6,869)(7,547)(8,908)(10,046)(11,150)(12,611)(14,911)(17,426)
ADDITIONAL INFRASTR
INVESTMT*--10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
GRAND NET SURPLUS (DEFICIT)$ 33 $ -$(12,280)
$
(16,955)
$
(17,478)
$
(18,474)
$
(20,163)
$
(21,639)
$
(23,090)
$
(24,910)
$
(27,579)
$
(30,473)
TOTAL INFRASTRUCTURE INVESTMENT 9,802 20,438 21,152 21,903 22,674 23,472 24,299 25,155 26,042 26,961 27,913
* Per Finance Committee Request, pending Council direction
The Revised Base Model shows a projected net deficit for FY 2011 of $0.9 million, and a deficit
of $12.3 million for FY 2012. Over the ten-year period from FY 2012 through FY 2021,
cumulative deficits are projected at $213.0 million.
Council direction on infrastructure funding is still pending. The Council has established an
Infrastructure Blue Ribbon Commission to identify funding solutions for the City’s unmet and
deferred infrastructure maintenance needs. Without the additional $10 million infrastructure
investment, the deficit would be projected to decrease to $2.3 million in FY 2012 and the
cumulative projected deficit for the ten-year period would be $98.4 million. The FY 2012
proposed budget will address the $2.3 million gap.
Given that the estimated (unaudited) Budget Stabilization Reserve balance for June 30,2011 is
$26.5 million, that Reserve would be depleted in fiscal year 2013, or early in fiscal year 2016
without the additional infrastructure investment, if the City were to rely only on reserves to
balance its budgets. Moreover, the Infrastructure Reserve is projected to dip to $3.81 million at
year-end FY 2011, having started the year at $8.97 million. This makes it clear that permanent
changes are needed to match resources with expenditures to address this projected long-term
structural gap.
Chart 3 shows the annual surpluses (deficits) in the original LRFF Base Model (as presented to
the Finance Committee on February 1), the Based Model revised as requested by the Finance
Committee with the exception of the additional infrastructure investment, and the Base Model
as revised by all five of the Finance Committee requests.
March 14, 2011 Page 5 of 9
(ID # 1446)
Chart 3
LRFF Annual Surplus (Deficit) in Original and
Revised Base Models
(2.2)(4.3)(4.4)(3.3)(2.4)(1.1)0.4 1.7 2.3 2.9
(12.3)
(17.0)(17.5)(18.5)(20.2)(21.6)(23.1)(24.9)
(27.6)
(30.5)
(10.2)(10.4)(10.6)(11.5)(12.7)(13.6)(12.2)
(14.2)(15.0)(14.6)
(35.0)
(30.0)
(25.0)
(20.0)
(15.0)
(10.0)
(5.0)
-
5.0
FY
201
2
FY
201
3
FY
201
4
FY
201
5
FY
201
6
FY
201
7
FY
201
8
FY
201
9
FY
202
0
FY
202
1
Annual Surplus (Deficit) in Millions $$
Original Base Model Net Surplus (Deficit)Finance Committee Requested Changes but not Infrast
All Finance Committee-Requested Changes
In addition to the Alternate Scenarios prepared as part of the original LRFF report, staff added
the following three scenarios for comparison purposes:
1. One in which the Finance Committee requested changes are in place, with the following
exception: PERS rates increase by 1.5% per year from FY 2015 through FY 2021, rather than
increasing by 3% per year during that period. Given the unknown future increases in pension
rates, staff suggests examining an alternative rate of increase for 2015-2021 of 1.5%. This
shaves off $23.3 million of the deficits projected in the Forecast (See Attachment D for
complete model) for a projected ten-year deficit of $189.8 million.
March 14, 2011 Page 6 of 9
(ID # 1446)
PERS Portfolio Returns as of Year-End 6/30 (%)
2.5
10.5
3.7
16.6
19.1
-24.0
13.3
-5.1
11.812.3
-6.1-7.2
12.519.5
20.1
15.3
16.4
11.8
12.5
6.5
8.9
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
Year
Returns (%)
Source: CalPERS December 31, 2010
2. One in which the Finance Committee requested changes are in place, and all salary increases
are deferred by an additional year (all bargaining units would receive no salary increases for
four years). Therefore, no salary increases occur in 2012 or 2013; in 2014 the Miscellaneous
group receives a 2% increase; in 2015 Miscellaneous and Fire groups receive a 2% increase; and
from 2016 onward all groups receive a 2% increase. This results in a savings of $13.7 million
over the ten years. (See Attachment A for a summary of salary increase assumptions in the
Revised Base Model and updated scenarios. See Attachment E for complete model showing
one-year salary increase deferral.)
3. A revision of one of the salary constraint scenarios included in the original LRFF report. This
scenario assumes that no salary increases will occur in any year in which deficits are projected.
Given the increased deficits in the Revised Base Model, there are no salary increases in the ten-
year period for this scenario. The ten-year savings are $46.9 million and the cumulative deficits
are $166.2 million (See Attachment F for complete model).
Chart 4 on the following page summarizes the revenue impact of the revised scenarios
described above.
March 14, 2011 Page 7 of 9
(ID # 1446)
Chart 4: Summary of New Scenarios
Long Range Financial Forecast 2011-2021
SUMMARY OF NEW SCENARIOS MODIFYING BASE MODEL AS REVISED BY FINANCE COMMITTEE REQUEST
(Millions of Dollars)
FY
2012
FY
2013
FY
2014
FY
2015
FY
2016 FY 2017
FY
2018
FY
2019 FY 2020
FY
2021
10-year
Total
(2012-
2021)
Base Model Revised as Requested by
Finance Committee ---Net Surplus
(Deficit)
(12.3)(17.0)
(17.5)
(18.5)
(20.2)
(21.6)(23.1)(24.9)(27.6)(30.5)(213.0)
---Impact of Alternate Scenarios on Bottom Line ---
PERS rates increase 1.5% per year
after 2014, rather than by 3% in Base
Model
- - -
0.5 1.4 2.3 3.3 4.2 5.3 6.4 23.3
Resulting Net Surplus (Deficit)
(12.3)(17.0)
(17.5)
(18.0)
(18.8)
(19.3)(19.8)(20.7)(22.3)(24.1)(189.8)
Salary increases deferred by one
additional year
- 1.3
1.4
1.4 1.4 1.5 1.6 1.6 1.7 1.8 13.7
Resulting Net Surplus (Deficit)
(12.3)(15.6)
(16.1)
(17.1)
(18.7)
(20.1)(21.5)(23.3)(25.9)(28.7) (199.4)
Revised Salary Constraint Scenario -
No increases in deficit years;
therefore no increases
- 1.4
2.6
3.3 4.3 5.2 6.1 7.0 8.0 9.0 46.9
Resulting Net Surplus (Deficit)
(12.3)(15.5)
(14.8)
(15.2)
(15.9)
(16.4)(17.0)(17.9)(19.6)(21.5)(166.2)
The Forecast does not capture a number of additional risks which are less quantifiable at this
time. First, given the State budget situation, additional State take-aways are possible, either
directly or in the form of pushing down costs of service delivery from the State to local
governments. Secondly, the City’s lease for Cubberley Community Center is due to expire in
December 2014, and negotiations will begin in 2012 for renewal. The lease requires that the
City notify the School District by December 2013 whether it will terminate the lease or exercise
the first of its five-year renewal options. The City’s future costs for the upkeep of the facility, as
well as the leasing costs, are therefore uncertain. Third, the City will undergo its next Retiree
Medical Valuation as of June 30, 2011, with completion expected in the fall of 2011. This
March 14, 2011 Page 8 of 9
(ID # 1446)
valuation will likely increase the City’s Annual Required Contribution, due to the jump in
retirements and the rate of health care cost increases.
This Forecast is not a prediction. It is a snapshot contingent upon a number of assumptions, all
of which are outlined in the report. What comes into sharp focus in this snapshot is the
necessity for change over the next ten years to address what is projected to be a significant
structural deficit. The increasing cost of employee benefits above and beyond the growth in
revenue sources, means that employees will need to bear a larger proportion of the cost of
those benefits. Otherwise the City will either need to cut services or aggressively evaluate
outsourcing options for some of those services.
Palo Alto is far from alone; many agencies are facing similar choices. This Forecast does not
include concessions for Fire or Police that could close the budget gap in FY 2012 and
significantly reduce future gaps.
It is staff’s hope that by examining this snapshot, Council members and staff may identify issues
that must be addressed now to improve the long-term picture. While the FY 2012 budget will
focus on closing that year’s projected deficit, staff and Council must also explore changes for
incorporation into FY 2013 and future budgets.
Resource Impact
As with any financial forecast, the fiscal impacts shown are estimates. Estimates of future
deficits and surpluses, as well as the estimated costs of future financial challenges, are meant to
guide future policy and budget decisions.
Staff will introduce the recommended midyear budget adjustments to the Finance Committee
in March 2011 and continue with the 2011-12 budget process.
Policy Implications
The Long Range Financial Forecast is a tool for Council’s use in making policy decisions
regarding the allocation of resources.
Environmental Review
This report does not require California Environmental Quality Act (CEQA) review.
Attachments:
·Attachment A -Salary Increase Assumptions (PDF)
·Attachment B -Revised Base Model (PDF)
·Attachment C -Revised Base with Slower PERS inc (PDF)
March 14, 2011 Page 9 of 9
(ID # 1446)
·Attachment D -One-Yr Delay in Salary Inc (PDF)
·Attachment E -No Salary Inc if Deficit (PDF)
·Attachment F -1315 Long Range Financial Forecast (PDF)
·Attachment G -Finance Committee minutes of February 1, 2011 excerpt (PDF)
Prepared By:Nancy Nagel, Senior Financial Analyst
Department Head:Lalo Perez, Director
City Manager Approval: James Keene, City Manager
FY 2012 FY 2013 FY 2014 FY 2015
FY 2016 - FY 2021
10-year Total
(2012-2021)
1.1% 1.9% 1.7% 2.0% 2.0% 18.3%
Miscellaneous 0.0% 2.0% 2.0% 2.0% 2.0%
Police 0.0% 0.0% 0.0% 2.0% 2.0%
Fire 0.0% 0.0% 2.0% 2.0% 2.0%
1.1% 1.9% 1.7% 2.0% 2.0%18.3%
Miscellaneous 0.0% 2.0% 2.0% 2.0% 2.0%
Police 0.0% 0.0% 0.0% 2.0% 2.0%
Fire 0.0% 0.0% 2.0% 2.0% 2.0%
1.1% 0.0% 1.9% 1.7% 2.0%16.0%
Miscellaneous 0.0% 0.0% 2.0% 2.0% 2.0%
Police 0.0% 0.0% 0.0% 0.0% 2.0%
Fire 0.0% 0.0% 0.0% 2.0% 2.0%
1.1% -0.2% 0.2% 0.0% 0.0%-0.7%
Miscellaneous 0.0% 0.0% 0.0% 0.0% 0.0%
Police 0.0% 0.0% 0.0% 0.0% 0.0%
Fire 0.0% 0.0% 0.0% 0.0% 0.0%
Overall Salary increase
Overall Salary increase
Overall Salary increase
PERS rates increase 1.5% per year after 2014, rather than by 3% in Base Model
Salary increases deferred by one year
Salary Constraint - No increases in deficit years; no increases beyond rate of revenue growth
Long Range Financial Forecast 2011-2021
SUMMARY OF SALARY INCREASE ASSUMPTIONS
(Percentage increase over prior year)
Overall Salary increase
Base Model Net Surplus (Deficit)
SCENARIO
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,646$ 20,320$ 21,085$ 21,888$ 22,750$ 23,649$ 24,594$ 25,295$ 25,940$ 26,638$
Property Taxes 25,982 25,907 25,323 25,830 26,699 27,665 28,734 29,914 31,177 32,581 34,114 35,227 36,186
Transient Occupancy Tax 6,858 7,021 7,400 7,704 7,946 8,196 8,470 8,771 9,091 9,432 9,701 9,968 10,237
Utility User Tax 11,296 11,429 10,824 10,859 11,069 11,329 11,654 11,708 11,976 12,252 12,528 12,796 13,054
Documentary Transfer Tax 3,707 3,613 4,000 4,219 4,377 4,546 4,723 4,908 5,103 5,310 5,504 5,694 5,948
Other Taxes and Fines 2,047 2,330 2,137 2,384 2,455 2,529 2,605 2,683 2,764 2,846 2,932 3,020 3,110
Subtotal: Taxes 67,881 68,518 69,191 70,642 72,866 75,350 78,074 80,734 83,760 87,016 90,074 92,644 95,173
Charges for Services 19,593 20,068 21,000 21,420 22,063 22,725 23,406 24,109 24,832 25,577 26,344 27,134 27,948
Permits and Licenses 4,720 4,533 4,646 4,739 4,881 5,027 5,178 5,334 5,494 5,658 5,828 6,003 6,183
Return on Investment 2,624 1,646 1,337 1,317 1,314 1,331 1,354 1,380 1,412 1,459 1,489 1,516 1,540
Rental Income 14,397 13,716 13,716 13,991 12,150 12,515 12,890 13,277 13,675 14,086 14,508 14,944 15,392
From other agencies 333 155 155 158 163 168 173 178 183 189 195 200 207
Charges to Other Funds 11,027 10,622 10,698 10,745 11,067 11,399 11,741 12,094 12,456 12,830 13,215 13,611 14,020
Other revenues 2,360 1,490 1,513 1,544 1,590 1,638 1,687 1,738 1,790 1,843 1,899 1,956 2,014
Total Revenues Before Transfers 122,936 120,748 122,257 124,555 126,094 130,152 134,505 138,843 143,602 148,658 153,551 158,008 162,477
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,326 151,193 156,387 161,601 167,270 173,273 179,150 184,632 190,165
Expenditures
Salaries 61,080 59,020 60,003 60,661 61,798 62,843 64,113 65,409 66,730 68,078 69,453 70,855 72,286
Benefits 32,900 29,525 29,645 33,593 37,136 40,684 43,524 46,983 50,589 54,407 58,365 62,672 67,150
Subtotal: Salaries and Benefits 93,980 88,545 89,648 94,254 98,934 103,527 107,637 112,391 117,319 122,485 127,818 133,527 139,436
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfer 131,988 128,475 130,435 134,684 140,915 145,505 150,873 156,924 163,188 169,730 176,480 183,649 191,062
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
Additional Transfer to Infrastructure for
Backlog 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
TOTAL EXPENDITURES 146,625 139,399 141,899 156,289 163,281 168,671 174,861 181,764 188,909 196,363 204,060 212,210 220,639
Net Operating Surplus/(Gap)(1,678) 33 (937) (12,280) (16,955) (17,478) (18,474) (20,163) (21,639) (23,090) (24,910) (27,579) (30,473)
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678) 33 (937) (12,280) (16,955) (17,478) (18,474) (20,163) (21,639) (23,090) (24,910) (27,579) (30,473)
Reserve
Comprehensive Annual Fin. Rpt. Recon (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (12,280)$ (16,955)$ (17,478)$ (18,474)$ (20,163)$ (21,639)$ (23,090)$ (24,910)$ (27,579)$ (30,473)$
*In FY 2011, Adopted Budget assumed 90-10 plan implementation for Miscellaneous group effective April 1 2011.
2011-2021 LRFF - BASE MODEL, REVISED AS REQUESTED BY FINANCE COMMITTEE
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Cumulative %
Change
2010-2021
Revenues
Sales Taxes 8.43% 0.71% 3.43% 3.76% 3.81% 3.94% 3.95% 4.00% 2.85% 2.55% 2.69%
Property Taxes (2.54%) 2.00% 3.36% 3.62% 3.86% 4.11% 4.22% 4.50% 4.71% 3.26% 2.72%
Transient Occupancy Tax 7.90% 4.11% 3.13% 3.15% 3.35% 3.55% 3.65% 3.75% 2.85% 2.75% 2.70%
Utility User Tax (4.18%) 0.32% 1.93% 2.35% 2.87% 0.46% 2.29% 2.30% 2.25% 2.14% 2.02%
Documentary Transfer Tax 7.90% 5.48% 3.75% 3.85% 3.90% 3.92% 3.97% 4.05% 3.65% 3.45% 4.47%
Other Taxes and Fines 4.42% 11.55% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Subtotal: Taxes 1.93% 2.10% 3.15% 3.41% 3.62% 3.41% 3.75% 3.89% 3.51% 2.85% 2.73%40.21%
Charges for Services 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Permits and Licenses (1.56%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Return on Investment (49.07%) -1.49% -0.24% 1.31% 1.76% 1.91% 2.31% 3.38% 2.01% 1.81% 1.61%
Rental Income (4.73%) 2.00% -13.15% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
From other agencies (53.47%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Charges to Other Funds (2.99%) 0.44% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Other revenues (35.87%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Revenues Before Transfer (0.55%) 1.88% 1.24% 3.22% 3.34% 3.23% 3.43% 3.52% 3.29% 2.90% 2.83%32.16%
Operating Transfers-In (15.02%) 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL REVENUES (2.75%) 2.16% 1.61% 3.33% 3.44% 3.33% 3.51% 3.59% 3.39% 3.06% 3.00%31.20%
Expenditures
Salaries (1.76%) 1.10% 1.87% 1.69% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02%
Benefits (9.89%) 13.32% 10.55% 9.55% 6.98% 7.95% 7.68% 7.55% 7.28% 7.38% 7.15%
Subtotal: Salaries and Benefits (4.61%) 5.14% 4.96% 4.64% 3.97% 4.42% 4.38% 4.40% 4.35% 4.47% 4.42%48.37%
Contract Services 19.01% -1.97% 4.34% 2.61% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Supplies & Materials 13.79% 8.55% 16.13% 2.99% 3.00% 3.00% 3.00% 3.00% 3.00% 2.99% 3.01%
General Expense 11.85% -2.64% 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Rents and Leases 5.74% 16.74% 1.94% 3.04% 2.95% 2.99% 3.02% 3.04% 2.95% 2.97% 2.99%
Facilities and Equipment (73.93%) 1.55% 1.96% 2.99% 2.90% 3.02% 2.94% 3.04% 2.95% 3.05% 2.96%
Allocated Charges 5.72% -1.75% 2.00% -4.92% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Expenditures Before Tran (1.18%) 3.26% 4.63% 3.26% 3.69% 4.01% 3.99% 4.01% 3.98% 4.06% 4.04%44.76%
Transfers to Other Funds
Operating Transfers Out (64.92%) -29.78% 4.03% 4.04% 4.04% 4.03% 4.02% 4.01% 3.99% 4.03% 4.00%
Transfer to Infrastructure (0.99%) 6.49% 3.97% 4.07% 4.01% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL EXPENDITURES (3.22%) 10.14% 4.47% 3.30% 3.67% 3.95% 3.93% 3.95% 3.92% 3.99% 3.97%50.48%
Net Operating Surplus/(Gap)(44.16%) 1210.47% 38.06% 3.08% 5.70% 9.14% 7.32% 6.71% 7.88% 10.71% 10.50%
PERCENTAGE CHANGES IN REVISED BASE MODEL
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,646$ 20,320$ 21,085$ 21,888$ 22,750$ 23,649$ 24,594$ 25,295$ 25,940$ 26,638$
Property Taxes 25,982 25,907 25,323 25,830 26,699 27,665 28,734 29,914 31,177 32,581 34,114 35,227 36,186
Transient Occupancy Tax 6,858 7,021 7,400 7,704 7,946 8,196 8,470 8,771 9,091 9,432 9,701 9,968 10,237
Utility User Tax 11,296 11,429 10,824 10,859 11,069 11,329 11,654 11,708 11,976 12,252 12,528 12,796 13,054
Documentary Transfer Tax 3,707 3,613 4,000 4,219 4,377 4,546 4,723 4,908 5,103 5,310 5,504 5,694 5,948
Other Taxes and Fines 2,047 2,330 2,137 2,384 2,455 2,529 2,605 2,683 2,764 2,846 2,932 3,020 3,110
Subtotal: Taxes 67,881 68,518 69,191 70,642 72,866 75,350 78,074 80,734 83,760 87,016 90,074 92,644 95,173
Charges for Services 19,593 20,068 21,000 21,420 22,063 22,725 23,406 24,109 24,832 25,577 26,344 27,134 27,948
Permits and Licenses 4,720 4,533 4,646 4,739 4,881 5,027 5,178 5,334 5,494 5,658 5,828 6,003 6,183
Return on Investment 2,624 1,646 1,337 1,317 1,314 1,331 1,354 1,380 1,412 1,459 1,489 1,516 1,540
Rental Income 14,397 13,716 13,716 13,991 12,150 12,515 12,890 13,277 13,675 14,086 14,508 14,944 15,392
From other agencies 333 155 155 158 163 168 173 178 183 189 195 200 207
Charges to Other Funds 11,027 10,622 10,698 10,745 11,067 11,399 11,741 12,094 12,456 12,830 13,215 13,611 14,020
Other revenues 2,360 1,490 1,513 1,544 1,590 1,638 1,687 1,738 1,790 1,843 1,899 1,956 2,014
Total Revenues Before Transfers 122,936 120,748 122,257 124,555 126,094 130,152 134,505 138,843 143,602 148,658 153,551 158,008 162,477
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,326 151,193 156,387 161,601 167,270 173,273 179,150 184,632 190,165
Expenditures
Salaries 61,080 59,020 60,003 60,661 61,798 62,843 64,113 65,409 66,730 68,078 69,453 70,855 72,286
Benefits 32,900 29,525 29,645 33,593 37,136 40,684 43,040 45,612 48,296 51,155 54,118 57,390 60,794
Subtotal: Salaries and Benefits 93,980 88,545 89,648 94,254 98,934 103,527 107,153 111,021 115,026 119,233 123,571 128,245 133,079
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988 128,475 130,435 134,684 140,915 145,505 150,389 155,554 160,895 166,478 172,233 178,367 184,705
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
Additional Transfer to Infrastructure for
Backlog 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
TOTAL EXPENDITURES 146,625 139,399 141,899 156,289 163,281 168,671 174,378 180,393 186,616 193,112 199,813 206,928 214,282
Net Operating Surplus/(Gap)(1,678) 33 (937) (12,280) (16,955) (17,478) (17,991) (18,792) (19,346) (19,839) (20,662) (22,296) (24,117)
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678) 33 (937) (12,280) (16,955) (17,478) (17,991) (18,792) (19,346) (19,839) (20,662) (22,296) (24,117)
Drawdown on Budget Stabilization Reserve
Comprehensive Annual Fin. Rpt. Recon. (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (12,280)$ (16,955)$ (17,478)$ (17,991)$ (18,792)$ (19,346)$ (19,839)$ (20,662)$ (22,296)$ (24,117)$
*In FY 2011, Adopted Budget assumed 90-10 plan implementation for Miscellaneous group effective April 1 2011.
2011-2021 LRFF - REVISED BASE MODEL WITH SLOWER PERS INCREASES AFTER 2014
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Cumulative %
Change
2010-2021
Revenues
Sales Taxes 8.43% 0.71% 3.43% 3.76% 3.81% 3.94% 3.95% 4.00% 2.85% 2.55% 2.69%
Property Taxes (2.54%) 2.00% 3.36% 3.62% 3.86% 4.11% 4.22% 4.50% 4.71% 3.26% 2.72%
Transient Occupancy Tax 7.90% 4.11% 3.13% 3.15% 3.35% 3.55% 3.65% 3.75% 2.85% 2.75% 2.70%
Utility User Tax (4.18%) 0.32% 1.93% 2.35% 2.87% 0.46% 2.29% 2.30% 2.25% 2.14% 2.02%
Documentary Transfer Tax 7.90% 5.48% 3.75% 3.85% 3.90% 3.92% 3.97% 4.05% 3.65% 3.45% 4.47%
Other Taxes and Fines 4.42% 11.55% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Subtotal: Taxes 1.93% 2.10% 3.15% 3.41% 3.62% 3.41% 3.75% 3.89% 3.51% 2.85% 2.73%40.21%
Charges for Services 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Permits and Licenses (1.56%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Return on Investment (49.07%) -1.49% -0.24% 1.31% 1.76% 1.91% 2.31% 3.38% 2.01% 1.81% 1.61%
Rental Income (4.73%) 2.00% -13.15% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
From other agencies (53.47%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Charges to Other Funds (2.99%) 0.44% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Other revenues (35.87%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Revenues Before Transfer (0.55%) 1.88% 1.24% 3.22% 3.34% 3.23% 3.43% 3.52% 3.29% 2.90% 2.83%32.16%
Operating Transfers-In (15.02%) 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL REVENUES (2.75%) 2.16% 1.61% 3.33% 3.44% 3.33% 3.51% 3.59% 3.39% 3.06% 3.00%31.20%
Expenditures
Salaries (1.76%) 1.10% 1.87% 1.69% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02%18.35%
Benefits (9.89%) 13.32% 10.55% 9.55% 5.79% 5.98% 5.88% 5.92% 5.79% 6.05% 5.93%
Subtotal: Salaries and Benefits (4.61%) 5.14% 4.96% 4.64% 3.50% 3.61% 3.61% 3.66% 3.64% 3.78% 3.77%41.60%
Contract Services 19.01% -1.97% 4.34% 2.61% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Supplies & Materials 13.79% 8.55% 16.13% 2.99% 3.00% 3.00% 3.00% 3.00% 3.00% 2.99% 3.01%
General Expense 11.85% -2.64% 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Rents and Leases 5.74% 16.74% 1.94% 3.04% 2.95% 2.99% 3.02% 3.04% 2.95% 2.97% 2.99%
Facilities and Equipment (73.93%) 1.55% 1.96% 2.99% 2.90% 3.02% 2.94% 3.04% 2.95% 3.05% 2.96%
Allocated Charges 5.72% -1.75% 2.00% -4.92% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Expenditures Before Tran (1.18%) 3.26% 4.63% 3.26% 3.36% 3.43% 3.43% 3.47% 3.46% 3.56% 3.55%39.94%
Transfers to Other Funds
Operating Transfers Out (64.92%) -29.78% 4.03% 4.04% 4.04% 4.03% 4.02% 4.01% 3.99% 4.03% 4.00%
Transfer to Infrastructure (0.99%) 6.49% 3.97% 4.07% 4.01% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL EXPENDITURES (3.22%) 10.14% 4.47% 3.30% 3.38% 3.45% 3.45% 3.48% 3.47% 3.56% 3.55%46.14%
Net Operating Surplus/(Gap)(44.16%) 1210.47% 38.06% 3.08% 2.93% 4.46% 2.94% 2.55% 4.15% 7.91% 8.16%
PERCENTAGE CHANGES IN REVISED BASE FORECAST WITH SLOWER PERS INCREASES AFTER 2014
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,646$ 20,320$ 21,085$ 21,888$ 22,750$ 23,649$ 24,594$ 25,295$ 25,940$ 26,638$
Property Taxes 25,982 25,907 25,323 25,830 26,699 27,665 28,734 29,914 31,177 32,581 34,114 35,227 36,186
Transient Occupancy Tax 6,858 7,021 7,400 7,704 7,946 8,196 8,470 8,771 9,091 9,432 9,701 9,968 10,237
Utility User Tax 11,296 11,429 10,824 10,859 11,069 11,329 11,654 11,708 11,976 12,252 12,528 12,796 13,054
Documentary Transfer Tax 3,707 3,613 4,000 4,219 4,377 4,546 4,723 4,908 5,103 5,310 5,504 5,694 5,948
Other Taxes and Fines 2,047 2,330 2,137 2,384 2,455 2,529 2,605 2,683 2,764 2,846 2,932 3,020 3,110
Subtotal: Taxes 67,881 68,518 69,191 70,642 72,866 75,350 78,074 80,734 83,760 87,016 90,074 92,644 95,173
Charges for Services 19,593 20,068 21,000 21,420 22,063 22,725 23,406 24,109 24,832 25,577 26,344 27,134 27,948
Permits and Licenses 4,720 4,533 4,646 4,739 4,881 5,027 5,178 5,334 5,494 5,658 5,828 6,003 6,183
Return on Investment 2,624 1,646 1,337 1,317 1,314 1,331 1,354 1,380 1,412 1,459 1,489 1,516 1,540
Rental Income 14,397 13,716 13,716 13,991 12,150 12,515 12,890 13,277 13,675 14,086 14,508 14,944 15,392
From other agencies 333 155 155 158 163 168 173 178 183 189 195 200 207
Charges to Other Funds 11,027 10,622 10,698 10,745 11,067 11,399 11,741 12,094 12,456 12,830 13,215 13,611 14,020
Other revenues 2,360 1,490 1,513 1,544 1,590 1,638 1,687 1,738 1,790 1,843 1,899 1,956 2,014
Total Revenues Before Transfers 122,936 120,748 122,257 124,555 126,094 130,152 134,505 138,843 143,602 148,658 153,551 158,008 162,477
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,326 151,193 156,387 161,601 167,270 173,273 179,150 184,632 190,165
Expenditures
Salaries 61,080 59,020 60,003 60,661 60,661 61,798 62,843 64,113 65,409 66,730 68,078 69,453 70,855
Benefits 32,900 29,525 29,645 33,593 36,949 40,366 43,421 46,843 50,411 54,190 58,108 62,372 66,806
Subtotal: Salaries and Benefits 93,980 88,545 89,648 94,254 97,610 102,164 106,264 110,956 115,820 120,920 126,186 131,825 137,661
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988 128,475 130,435 134,684 139,591 144,142 149,500 155,489 161,689 168,165 174,848 181,947 189,287
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
Additional Transfer to Infrastructure for
Backlog 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
TOTAL EXPENDITURES 146,625 139,399 141,899 156,289 161,957 167,308 173,488 180,328 187,410 194,798 202,427 210,508 218,864
Net Operating Surplus/(Gap)(1,678) 33 (937) (12,280) (15,631) (16,114) (17,101) (18,728) (20,140) (21,525) (23,277) (25,876) (28,699)
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678) 33 (937) (12,280) (15,631) (16,114) (17,101) (18,728) (20,140) (21,525) (23,277) (25,876) (28,699)
Drawdown on Budget Stabilization Reserve
Comprehensive Annual Fin. Rpt. Recon. (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (12,280)$ (15,631)$ (16,114)$ (17,101)$ (18,728)$ (20,140)$ (21,525)$ (23,277)$ (25,876)$ (28,699)$
*In FY 2011, Adopted Budget assumed 90-10 plan implementation for Miscellaneous group effective April 1 2011.
2011-2021 LRFF - BASE MODEL, REVISED AS REQUESTED BY FINANCE COMMITTEE,
WITH SALARY INCREASES DEFERRED BY ONE YEAR
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Cumulative %
Change
2010-2021
Revenues
Sales Taxes 8.43% 0.71% 3.43% 3.76% 3.81% 3.94% 3.95% 4.00% 2.85% 2.55% 2.69%
Property Taxes (2.54%) 2.00% 3.36% 3.62% 3.86% 4.11% 4.22% 4.50% 4.71% 3.26% 2.72%
Transient Occupancy Tax 7.90% 4.11% 3.13% 3.15% 3.35% 3.55% 3.65% 3.75% 2.85% 2.75% 2.70%
Utility User Tax (4.18%) 0.32% 1.93% 2.35% 2.87% 0.46% 2.29% 2.30% 2.25% 2.14% 2.02%
Documentary Transfer Tax 7.90% 5.48% 3.75% 3.85% 3.90% 3.92% 3.97% 4.05% 3.65% 3.45% 4.47%
Other Taxes and Fines 4.42% 11.55% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Subtotal: Taxes 1.93% 2.10% 3.15% 3.41% 3.62% 3.41% 3.75% 3.89% 3.51% 2.85% 2.73%40.21%
Charges for Services 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Permits and Licenses (1.56%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Return on Investment (49.07%) -1.49% -0.24% 1.31% 1.76% 1.91% 2.31% 3.38% 2.01% 1.81% 1.61%
Rental Income (4.73%) 2.00% -13.15% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
From other agencies (53.47%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Charges to Other Funds (2.99%) 0.44% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Other revenues (35.87%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Revenues Before Transfers (0.55%) 1.88% 1.24% 3.22% 3.34% 3.23% 3.43% 3.52% 3.29% 2.90% 2.83%32.16%
Operating Transfers-In (15.02%) 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL REVENUES (2.75%) 2.16% 1.61% 3.33% 3.44% 3.33% 3.51% 3.59% 3.39% 3.06% 3.00%31.20%
Expenditures
Salaries (1.76%) 1.10% 0.00% 1.87% 1.69% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02%16.00%
Benefits (9.89%) 13.32% 9.99% 9.25% 7.57% 7.88% 7.62% 7.49% 7.23% 7.34% 7.11%
Subtotal: Salaries and Benefits (4.61%) 5.14% 3.56% 4.67% 4.01% 4.42% 4.38% 4.40% 4.35% 4.47% 4.43%46.48%
Contract Services 19.01% -1.97% 4.34% 2.61% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Supplies & Materials 13.79% 8.55% 16.13% 2.99% 3.00% 3.00% 3.00% 3.00% 3.00% 2.99% 3.01%
General Expense 11.85% -2.64% 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Rents and Leases 5.74% 16.74% 1.94% 3.04% 2.95% 2.99% 3.02% 3.04% 2.95% 2.97% 2.99%
Facilities and Equipment (73.93%) 1.55% 1.96% 2.99% 2.90% 3.02% 2.94% 3.04% 2.95% 3.05% 2.96%
Allocated Charges 5.72% -1.75% 2.00% -4.92% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Expenditures Before Transfers (1.18%) 3.26% 3.64% 3.26% 3.72% 4.01% 3.99% 4.01% 3.97% 4.06% 4.03%43.41%
Transfers to Other Funds
Operating Transfers Out (64.92%) -29.78% 4.03% 4.04% 4.04% 4.03% 4.02% 4.01% 3.99% 4.03% 4.00%
Transfer to Infrastructure (0.99%) 6.49% 3.97% 4.07% 4.01% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL EXPENDITURES (3.22%) 10.14% 3.63% 3.30% 3.69% 3.94% 3.93% 3.94% 3.92% 3.99% 3.97%49.27%
Net Operating Surplus/(Gap)(44.16%) 1210.47% 27.28% 3.09% 6.12% 9.51% 7.54% 6.88% 8.14% 11.17% 10.91%
PERCENTAGE CHANGES IN ONE-YEAR-SALARY-INCREASE-DEFERRAL SCENARIO
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,646$ 20,320$ 21,085$ 21,888$ 22,750$ 23,649$ 24,594$ 25,295$ 25,940$ 26,638$
Property Taxes 25,982 25,907 25,323 25,830 26,699 27,665 28,734 29,914 31,177 32,581 34,114 35,227 36,186
Transient Occupancy Tax 6,858 7,021 7,400 7,704 7,946 8,196 8,470 8,771 9,091 9,432 9,701 9,968 10,237
Utility User Tax 11,296 11,429 10,824 10,859 11,069 11,329 11,654 11,708 11,976 12,252 12,528 12,796 13,054
Documentary Transfer Tax 3,707 3,613 4,000 4,219 4,377 4,546 4,723 4,908 5,103 5,310 5,504 5,694 5,948
Other Taxes and Fines 2,047 2,330 2,137 2,384 2,455 2,529 2,605 2,683 2,764 2,846 2,932 3,020 3,110
Subtotal: Taxes 67,881 68,518 69,191 70,642 72,866 75,350 78,074 80,734 83,760 87,016 90,074 92,644 95,173
Charges for Services 19,593 20,068 21,000 21,420 22,063 22,725 23,406 24,109 24,832 25,577 26,344 27,134 27,948
Permits and Licenses 4,720 4,533 4,646 4,739 4,881 5,027 5,178 5,334 5,494 5,658 5,828 6,003 6,183
Return on Investment 2,624 1,646 1,337 1,317 1,314 1,331 1,354 1,380 1,412 1,459 1,489 1,516 1,540
Rental Income 14,397 13,716 13,716 13,991 12,150 12,515 12,890 13,277 13,675 14,086 14,508 14,944 15,392
From other agencies 333 155 155 158 163 168 173 178 183 189 195 200 207
Charges to Other Funds 11,027 10,622 10,698 10,745 11,067 11,399 11,741 12,094 12,456 12,830 13,215 13,611 14,020
Other revenues 2,360 1,490 1,513 1,544 1,590 1,638 1,687 1,738 1,790 1,843 1,899 1,956 2,014
Total Revenues Before Transfers 122,936 120,748 122,257 124,555 126,094 130,152 134,505 138,843 143,602 148,658 153,551 158,008 162,477
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,326 151,193 156,387 161,601 167,270 173,273 179,150 184,632 190,165
Expenditures
Salaries 61,080 59,020 60,003 60,661 60,530 60,661 60,661 60,661 60,661 60,661 60,661 60,661 60,661
Benefits 32,900 29,525 29,645 33,593 36,967 40,232 43,703 47,435 51,437 55,738 60,192 64,886 69,777
Subtotal: Salaries and Benefits 93,980 88,545 89,648 94,254 97,497 100,893 104,364 108,096 112,098 116,399 120,853 125,547 130,438
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988 128,475 130,435 134,684 139,478 142,871 147,600 152,629 157,967 163,644 169,515 175,669 182,064
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
Additional Transfer to Infrastructure for
Backlog 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
TOTAL EXPENDITURES 146,625 139,399 141,899 156,289 161,844 166,037 171,589 177,468 183,688 190,277 197,095 204,229 211,641
Net Operating Surplus/(Gap)(1,678) 33 (937) (12,280) (15,519) (14,843) (15,201) (15,867) (16,418) (17,004) (17,944) (19,598) (21,476)
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap)(1,678) 33 (937) (12,280) (15,519) (14,843) (15,201) (15,867) (16,418) (17,004) (17,944) (19,598) (21,476)
Drawdown on Budget Stabilization Reserve
Comprehensive Annual Fin. Rpt. Recon. (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (12,280)$ (15,519)$ (14,843)$ (15,201)$ (15,867)$ (16,418)$ (17,004)$ (17,944)$ (19,598)$ (21,476)$
*In FY 2011, Adopted Budget assumed 90-10 plan implementation for Miscellaneous group effective April 1 2011.
2011-2021 LRFF - BASE MODEL REVISED AS REQUESTED BY FINANCE COMMITTEE, PLUS NO SALARY
INCREASES IN DEFICIT YEARS
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Cumulative %
Change
2010-2021
Revenues
Sales Taxes 8.43% 0.71% 3.43% 3.76% 3.81% 3.94% 3.95% 4.00% 2.85% 2.55% 2.69%
Property Taxes (2.54%) 2.00% 3.36% 3.62% 3.86% 4.11% 4.22% 4.50% 4.71% 3.26% 2.72%
Transient Occupancy Tax 7.90% 4.11% 3.13% 3.15% 3.35% 3.55% 3.65% 3.75% 2.85% 2.75% 2.70%
Utility User Tax (4.18%) 0.32% 1.93% 2.35% 2.87% 0.46% 2.29% 2.30% 2.25% 2.14% 2.02%
Documentary Transfer Tax 7.90% 5.48% 3.75% 3.85% 3.90% 3.92% 3.97% 4.05% 3.65% 3.45% 4.47%
Other Taxes and Fines 4.42% 11.55% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Subtotal: Taxes 1.93% 2.10% 3.15% 3.41% 3.62% 3.41% 3.75% 3.89% 3.51% 2.85% 2.73%40.21%
Charges for Services 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Permits and Licenses (1.56%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Return on Investment (49.07%) -1.49% -0.24% 1.31% 1.76% 1.91% 2.31% 3.38% 2.01% 1.81% 1.61%
Rental Income (4.73%) 2.00% -13.15% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
From other agencies (53.47%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Charges to Other Funds (2.99%) 0.44% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Other revenues (35.87%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Revenues Before Transfe (0.55%) 1.88% 1.24% 3.22% 3.34% 3.23% 3.43% 3.52% 3.29% 2.90% 2.83%32.16%
Operating Transfers-In (15.02%) 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL REVENUES (2.75%) 2.16% 1.61% 3.33% 3.44% 3.33% 3.51% 3.59% 3.39% 3.06% 3.00%31.20%
Expenditures
Salaries (1.76%) 1.10% -0.22% 0.22% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%-0.69%
Benefits (9.89%) 13.32% 10.04% 8.83% 8.63% 8.54% 8.44% 8.36% 7.99% 7.80% 7.54%
Subtotal: Salaries and Benefits (4.61%) 5.14% 3.44% 3.48% 3.44% 3.58% 3.70% 3.84% 3.83% 3.88% 3.90%38.79%
Contract Services 19.01% -1.97% 4.34% 2.61% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Supplies & Materials 13.79% 8.55% 16.13% 2.99% 3.00% 3.00% 3.00% 3.00% 3.00% 2.99% 3.01%
General Expense 11.85% -2.64% 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Rents and Leases 5.74% 16.74% 1.94% 3.04% 2.95% 2.99% 3.02% 3.04% 2.95% 2.97% 2.99%
Facilities and Equipment (73.93%) 1.55% 1.96% 2.99% 2.90% 3.02% 2.94% 3.04% 2.95% 3.05% 2.96%
Allocated Charges 5.72% -1.75% 2.00% -4.92% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Expenditures Before Tran (1.18%) 3.26% 3.56% 2.43% 3.31% 3.41% 3.50% 3.59% 3.59% 3.63% 3.64%37.94%
Transfers to Other Funds
Operating Transfers Out (64.92%) -29.78% 4.03% 4.04% 4.04% 4.03% 4.02% 4.01% 3.99% 4.03% 4.00%
Transfer to Infrastructure (0.99%) 6.49% 3.97% 4.07% 4.01% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL EXPENDITURES (3.22%) 10.14% 3.55% 2.59% 3.34% 3.43% 3.50% 3.59% 3.58% 3.62% 3.63%44.34%
Net Operating Surplus/(Gap)(44.16%) 1210.47% 26.37% -4.35% 2.41% 4.38% 3.47% 3.57% 5.53% 9.21% 9.58%
PERCENTAGE CHANGES IN NO SALARY INCREASE SCENARIO
City of Palo Alto (10 # 1315)
Finance Committee Staff Report
Report Type: Meeting Date: 2/1/2011
Title: Long Range Financial Forecast 2011-2021
Subject: Update to Long Range Financial Forecast, 2011-2021
From: City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that the Finance Committee review and comment on the attached forecast
of revenues and expenses and forward It to the full Council.
Background
Attached to this report is the City's updated General Fund Long Range Financial Forecast (LRFF)
for the fiscal years 2011 through 2021. The LRFF Identifies key issues that will guide the
upcoming 2011·2012 budget process and affect the City's future financial condition.
Discussion
Although the Recession was declared officially over as of June 2009, there remain in the range
of 15 million American workers, or 9.4% of the workforce, unemployed. The housing market
shows underwhelming evidence of a rebound, and the general recovery is painfully slow.
Moreover, unemployment statistics are just a subset of a broader problem of under-
employment. Adding in those who are working part-time because they cannot find full-time
work, the total underemployed number Is about 22 million Americans.
The Impact of these economic developments on our Forecast Is reflected In slow growth
assumptions in all revenue categories, and slower salary growth than In past Forecasts. On the
expense side, pension costs show significant Increases due to the reduced investment
performance of the PERS portfolio and revised demographic assumptions adopted by PERS, A
summary of our Base Model -our best estimate of the fiscal picture over the next ten years -
appears below.
February 01, 2011
(10111315)
Page 10f4
Sublotal:
Return on
Investment
Total Revenues
Before
TOTAL
GRAND NET
SURPLUS
2011-2021 LRFF -BASE MODEL SUMMARY
FY 2010 FY 2011 FY 2011
Actual FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
The Base Model shows a projected net deficit for FY 2011 of $0.9 million, and a deficit of $2.2
million for FY 2012. Over the eleven-year period from FY 2011 through FY 2021, cumulative
deficits are projected at $11.3 million.
This is a much improved fiscal picture compared to the one presented in February 2010.
Looking at just FY 2011-2020, for comparison pursposes, last year's Forecast showed a
cumulative deficit of $147.5 million, while this year's Base Model projects a cumulative $14.2
million deficit over the same period, with much of the improvement due to the significant
Budget reset accomplished by the FY 2011 Adopted Budget.
On October 5, 2010, however, staff presented the Finance Committee with an update to the
2010-20 Forecast that predicted an even rosier $1.2 million surplus over the ten-year period
from 2011-2020. This downward revision to this projection is primarily due to an adjustment in
revenue projections: UUT projections came down by $22.9 million for the 2011-2020 period,
due to the cancelled rate increases; property tax projections came down $14.3 million; on the
other hand, Documentary Transfer Tax estimates increased $8.6 million for the ten year period,
and Sales Tax estimates increased $5.5 million.
In addition to the Base Model, staff prepared a number of Alternative Scenarios, including:
• one in which salary increases are tied to projected revenue increases -either harming
the General Fund (GF) by $3.4 million over ten years or helping it by $7.3 million, the
latter achieved by withholding salary increases in years when an increase would cause a
deficit;
February 01, 2011
(ID # 1315)
Page 2 of 4
• an optimistic one in which Public Safety bargaining units accept reductions comparable
to those implemented in the Miscellaneous group, and revenues grow slightly more
quickly -putting the GF $40.1 million to the better over ten years;
• a pessimistic one in which medical costs Increase by 10% per year every year over the
ten-year period, PERS adopts a 7.5% discount rate, and PERS rates continue to escalate
not only for FY 2012, 2013, and 2014, but every year beyond as well -causing an
additional $137.7 million in expense over ten years;
• three scenarios in which the GF increases its annual Infrastructure investment by either
$10 or $15 million -which eliminates the unfunded backlog and funds a portion of the
projected Future Infrastructure Needs, as well as increasing deficits, but by varying
degrees depending on whether $10 or $15 million is invested and whether the GF issues
a General Obligation bond.
This Forecast is not a prediction. It Is a snapshot contingent upon a number of assumptions, all
of which are outlined in the report. The overall color of the snapshot, however, is one of
"business as usual" -or business as it is in FY 2011, assuming that over the next 10 years, the
same size workforce will provide basically the same services, and the revenue base will
continue its recent anemic course. It is staff's hope that by examining this snapshot, Council
members and staff may identify issues that must be addressed now to improve the long-term
picture, and that as a result incorporate into the FY2012 budget changes that will improve the
City's outlook for future years.
RESOURCE IMPACT
As with any financial forecast, the fiscal impacts shown are estimates. Estimates of future
deficits and surpluses, as well as the estimated costs of future financial challenges, are meant to
guide future policy and budget decisions.
Staff will introduce the recommended midyear budget adjustments to the Finance Committee
in March 2011 and continue with the 2011-12 budget process. Staff's proposed FY 2012 budget
will include recommendations to balance the budget.
POLICY IMPLICATIONS
The Long Range Financial Forecast is a tool for Council's use in making policy decisions
regarding the allocation of resources.
ENVIRONMENTAL REVIEW
This report does not require California Environmental Quality Act (CEQA) review.
ATTACHMENTS:
• Attachment A: Long Range Financial Forecast FY 2011-2021 (PDF)
February 01, 2011 Page 3 of 4
(lD 111315)
Prepared By:
Department Head:
City Manager Approval:
February 01, 2011
(ID # 1315)
Page 4 of 4
LONG
RANGE FINANCIAL
Fiscal Years 2011 to 2021
FORECAST
TABLE OF CONTENTS
I. INTRODUCTION 1
II. EXECUTIVE SUMMARY 1
IV. UPDATED MODEL 7
III. ECONOMIC OUTLOOK 3
V. ALTERNATE SCENARIOS 14
VI. CONCLUSIONS 20
VII. ENDNOTES 21
VIII. APPENDICES 22
City of Palo Alto 1
2011
INTRODUCTION
I. INTRODUCTION
This report is the City’s updated General Fund Long Range Financial Forecast (LRFF) for the fiscal years 2011
through 2021. The LRFF identifies key issues that will guide the upcoming 2011-2012 budget process and
affect the City’s future financial condition.
II. EXECUTIVE SUMMARY
Although the Recession was declared officially over as of June 2009, as of December 2010, there remained in
the range of 15 million American workers, or 9.4% of the workforce, unemployed. The housing market shows
underwhelming evidence of a rebound, and the general recovery is painfully slow. Moreover, unemployment
statistics are just a subset of a broader problem of under-employment and long-term unemployment. Adding
in those who are working part-time because they cannot find full-time work, the total underemployed num-
ber is about 22 million Americans, including 6 million who have been unemployed for over six months.
The impact of these economic developments on our Forecast is reflected in slow growth assumptions in all
revenue categories and slower salary growth than in past Forecasts. On the expense side, pension costs show
significant increases due to the reduced investment performance of the PERS portfolio and revised demo-
graphic assumptions adopted by PERS. A summary of our Base Model – our best estimate of the fiscal picture
over the next ten years – appears below.
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Subtotal: Taxes 67,881 68,518 69,191 70,642 73,166 75,659 78,394 81,066 84,103 87,372 90,440 93,021 95,559
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,626 151,503 156,707 161,932 167,613 173,629 179,517 185,008 190,551
TOTAL EXPENDITURES 146,625 139,399 141,899 146,163 150,906 155,913 160,007 164,304 168,695 173,237 177,850 182,733 187,698
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (2,154)$ (4,280)$ (4,410)$ (3,300)$ (2,372)$ (1,082)$ 393$ 1,667$ 2,275$ 2,853$
2011-2021 LRFF - BASE MODEL SUMMARY
2 City of Palo Alto
2011
The Base Model shows a projected net deficit
for FY 2011 of $0.9 million, and a deficit of
$2.2 million for FY 2012. Over the eleven-year
period from FY 2011 through FY 2021, cumula-
tive deficits are projected at $11.3 million.
This is a much improved fiscal picture compared to the one presented in February 2010. Looking just at FY
2011-2020, for comparison purposes, last year’s Forecast showed a cumulative deficit of $147.5 million, while
this year’s Base Model projects a cumulative $14.2 million deficit, with much of the improvement due to the
significant Budget reset accomplished by the FY 2011 Adopted Budget.
On October 5, 2010, however, staff presented the Finance Committee with an update to the 2010-20 Forecast
that predicted an even rosier $1.2 million surplus over the ten-year period from 2011-2020. The current Base
Model’s downward revision to the October projection is primarily due to an adjustment in revenue projections:
UUT projections came down by $22.9 million for the 2011-2020 period, due to cancelled rate increases; property
tax projections came down $14.7 million; on the other hand, Documentary Transfer Tax estimates increased
$8.6 million for the ten year period; and Sales Tax estimates increased $6.0 million.
In addition to the Base Model, staff has prepared a number of Alternative Scenarios, including:
• one in which salary increases are tied to projected revenue increases – either harming the General Fund
(GF) by $3.4 million over ten years or helping it by $7.3 million, the latter achieved by withholding sal-
ary increases in 2014 and limiting the increase in 2015 to avoid deficits. (see page 14 and Appendix 1);
• an optimistic one in which Public Safety bargaining units accept reductions comparable to those imple-
mented in the Miscellaneous group, and revenues grow slightly more quickly – putting the GF $40.1
million to the better over ten years (see pages 14-15 and Appendix 1);
• a pessimistic one in which medical costs increase by 10% per year every year over the ten-year period,
PERS adopts a 7.5% discount rate, and PERS rates continue to escalate not only for FY 2012, 2013, and
2014, but every year beyond as well – causing an additional $137.7 million in expense over ten years
(see page 15 and Appendix 1);
• three scenarios in which the GF increases its annual infrastructure investment by either $10 or $15 mil-
lion – which eliminates the unfunded backlog and funds a portion of the projected future infrastructure
needs, as well as increasing deficits, but by varying degrees depending on whether $10 or $15 million is
invested and whether the GF issues a General Obligation bond (see pages 16-18 and Appendix 1).
EXECUTIVE SUMMARY
Alternate Scenarios include:
• Salary Increases Constrained to Revenue Growth Rate
• Optimistic
• Pessimistic
• Additional Infrastructure Funding
This Forecast is not a prediction. It is a snapshot
contingent upon a number of assumptions.
City of Palo Alto 3
2011
This Forecast is not a prediction. It is a snapshot contingent upon a number of assumptions, all of which are
outlined below in the report. The overall color of the snapshot, however, is one of “business as usual” – or
business as it is in FY 2011, assuming that over the next 10 years, the same size workforce will provide the
same services, and the revenue base will continue its recent anemic course. It is staff’s hope that by examining
this snapshot, Council members and staff may identify issues that must be addressed now to improve the
long-term picture, and as a result, incorporate into the FY 2012 budget changes that will improve the City’s
outlook for future years.
III. ECONOMIC OUTLOOK
The Great Recession was declared officially over as of June 2009 by the National Bureau of Economic
Research;i yet there remain 15 million unemployed American workers, the housing market shows spotty
evidence of rebounding, and the overall recovery is painfully slow. Moreover, there is an unprecedented
disconnect between rising corporate profits and the rate of job creation.
U.S. unemployment was in the 9.6% range for the third quarter of 2010, jumping to 9.8% in November,ii be-
fore dropping to 9.4% in December. Yet unemployment statistics tell only part of a story which also includes
the long-term unemployed and the underemployed. The U.S. Department of Labor uses a measure known as
U-6 to quantify both the unemployed and others working part-time who want full-time work but cannot find
it. The Department’s November 2010 Job report showed the U-6 rate hit 17.1% in September, decreased
slightly to 17.0% in October and November, and then dropped to 16.7% in December.iii That 16.7% underem-
ployment rate translates to 14.8 million Americans unemployed, and another 7 million underemployed, to
total about 22 million Americans who want full-time work but cannot find it. Furthermore, 6 million people
have been unemployed for longer than 6 months, many of whom will face challenges reintegrating into the
industries from which they came.iv
Source: Gallup
ECONOMIC OUTLOOK
4 City of Palo Alto
2011
The housing market is showing tepid recovery, with large variations by region and area. Pending sales of U.S.
existing houses jumped by a record 10 percent in October 2010, following a 1.8 percent drop in September
2010. Many took this as a sign that the housing industry was in recovery, yet the October 2010 figures were 22
percent below pending sales of October 2009.v
In California, home prices have largely stabilized in the $250,000 range, after declining some 57% from the
peak to the trough of the housing market.vi
In Santa Clara County, a 13-month trend of year-over-year home price increases was reversed in November
2010 by a sharp 7.3 percent drop in the median price to $510,000, as reported by DataQuick, a real estate in-
formation service. In San Mateo County, the median price dropped 3.7 percent or $617,500 from a year ago,
and sales dipped 2.7 percent. However, sales in the high end were strong in San Mateo County. One Data-
Quick analyst observed, “It all varies at the neighborhood level, and the bigger picture is that home prices are
essentially flat across the board.”vii
According to the State’s Legislative Analyst’s Office (LAO), “California’s recession started even earlier than the na-
tion’s and was deeper. While U.S. employment dropped about 5 percent since 2007, employment in CA declined 9
percent (1.4 million jobs). Unemployment in the state – under 5 percent as recently as 2006 – has topped 12 percent
for over a year now, with only 53,000 jobs recovered out of the 1.4 million lost. In 2009, personal income in Califor-
nia actually dropped 2.4 percent – the first annual decline since 1933…”viii As recently as August 2010, the state’s
unemployment rate rose by 0.1% to 12.4 percent after declining or holding steady for the last four months.ix
The main cause of the state’s economic implosion has been the housing market. Though the collapse of the
state’s residential housing sector appears to
have ended, growth is expected to be weak.
Furthermore the state’s construction sector –
having endured a crushing 40 percent em-
ployment decline since 2007—is not on track
to regain its pre-recession strength in the fore-
seeable future.x
“A year ago this time most people were holding on
to jobs, and very few people were quitting.
Now...people are leaving and being replaced. That’s
what gets things going again.”
— Sterling Infosystems
ECONOMIC OUTLOOK
City of Palo Alto 5
2011
ECONOMIC OUTLOOK
Nationally, consumers are spending more, but month-to-month results vary. The Conference Board
Consumer Confidence Index, which had improved in November 2010, decreased slightly in December. The
Index now stands at 52.5 (1985=100), down from 54.3 in November. This index is based on a survey of 5,000
US households.
Consumers’ holiday spending improved compared to last year, but not as much as analysts had hoped. Octo-
ber 2010 retail levels had climbed by the most in seven months, with purchases rising 1.2% over the previous
month, and 7.3 percent above October 2009. This rise was led by a 5% gain among auto dealers, compared to
September, and sales excluding automobiles advanced just 0.4%.xi At the same time, American’s personal in-
come grew at a faster pace than it had for much of the year, and consumer spending expanded.xii
As the LAO described it, “the slow recov-
ery results from a combination of (1) excess
inventories of residential and commercial
real estate, (2) severely depressed eco-
nomic confidence among both individuals
and firms, and (3) for many consumers, a
considerably weakened financial capacity
to spend and invest…. While businesses
have been spending more in recent quar-
ters to address equipment, software, and
other needs they deferred during the reces-
sion, they remain very reluctant to hire.”
In the last month or so, some businesses
have noticed a pick-up in the job market.
In early December 2010, an executive from
Sterling Infosystems, a firm that helps
companies screen employees, said, “A year ago this time most people were holding on to jobs, and very few
people were quitting. Now you’ve got churn. People are leaving and being replaced. That’s what gets things
going again.”xiv
Furthermore, since its trough in June 2009, the Federal Reserve’s index of industrial production is up almost 10%.
Part of this is due to strong demand from abroad as the rest of the world recovers from the global downturn.xv
Projections
The U.S. can expect “very sluggish growth” for the foreseeable future. Beacon Economics, a California-based
economic research and analysis firm, projected in early November 2010 that the national unemployment rate
would stay above 8 percent until the 3rd quarter of 2012.xvi The LAO was even more pessimistic, predicting
that unemployment would remain above 9 percent throughout 2012.xvii Most pessimistic of all, a January 9,
2011 New York Times article predicted that “at the current rate, the economy will need 72 to 90 months to
recapture the jobs lost during the Great Recession. And that does not account for the five million jobs needed
to keep pace with a growing population.”xviii
General Fund Major Revenues (in millions)
$19.5
18 .0
$25.8
$13.3
Sales Tax
$7.4
Transient Occup.
Tax
$3.1
$9.5
$4.0
$5.8
$1.3
Documentary
Transfer Tax
$25.3
Property Tax
$8.1
$26.0
Utility User's Tax
$5.4
$10.8
$11.3
$-
$4.0
$8.0
$12.0
$16.0
$20.0
$24.0
$28.0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Fiscal Year
6 City of Palo Alto
2011
For California, Beacon forecasted an unemployment rate above 12 percent through 2nd quarter 2011, dipping to
10% in late 2012, and that “it will be well into 2015 before California reaches its pre-recession peak of 15.2 million
jobs.”xix In Silicon Valley, while the overall regional economy is improving, hiring has not picked up significantly.
The Bay Area Council released its fall Business Confidence Survey in December 2010, and the results show
that Bay Area CEO’s and executives are feeling more positive about the Bay Area economy. However, they
expect the current status quo of slow growth and recovery to continue. The Business Confidence Index – the
number that distills the survey findings – registered at 58 out of 100, up 2 points from the last survey, but still
down 4 points from May 2010. A reading over 50 signals positive economic times, while below 50 is negative.
In January 2009, the index reached its all-time low of 31.
The Survey also indicated that 56% of executives expect their workforces to remain the same over the next 6
months, while 27% planned to increase their workforce. 50% of Bay Area companies with over 10,000
employees expect to increase their workforce over the next six months, an increase of 41 points since last
quarter’s survey.xx
With unemployment at a relatively low rate of 5.8% in November 2010, Palo Alto has been spared the higher
unemployment rates experienced by the rest of Santa Clara County, which remained at 10.8% in November.
Yet Palo Alto’s unemployment rate was more than double its 2007 pre-recession rate of 2.5%.
Source: California Employment Development Department
Impact of Economic Outlook on the Forecast
The impact on our Forecast of these economic developments is slow growth assumptions in all revenue cate-
gories. On the flip side, the recession’s affect on labor markets allowed salary growth assumptions to decrease
relative to past Forecasts. Specific assumptions are detailed in the discussion of the Model below.
ECONOMIC OUTLOOK
Unemployment Rates Nov
2007
Nov
2008
Nov
2009
Nov
2010
Santa Clara County 4.7% 7.0% 11.5% 10.8%
City of Palo Alto 2.5% 3.7% 6.2% 5.8%
City of Palo Alto 7
2011
IV. UPDATED MODEL
ASSUMPTIONS USED IN THE BASE MODEL
The Base Model represents staff’s “Best Guess” of where the General Fund Budget is headed if it continues in
the general direction set out by the 2011 Budget and given the conditions surrounding revenues and expendi-
tures that staff can discern as of this writing.
Staff assumes the following in the Base Model:
EXPENSES
1. Miscellaneous employees, after experiencing salary freezes in 2010, 2011 and 2012, will receive a 2% salary
increase in 2013 and each year thereafter through 2021.
2. All Safety employees will have a salary freeze in 2012 and 2013, after which they will also receive 2%
annual increases. Prior to this, Fire received a 4 to 5 percent salary increase in 2010 but not in 2011; Police
received a 6 percent salary increase in 2011. The City is in the process of negotiating concessions with the
IAFF and will begin similar talks with PAPOA in the near future.
3. PERS rates will rise as estimated in the most recent PERS valuation, dated October 2010, as follows:
The Base Model assumes that after 2014, pension rates will remain constant through 2021.
4. Transfers to the Infrastructure Fund will follow the 5-year CIP Budgeted amounts, which are $9.8 million
in FY 2011, $10.44 million in FY 2012, increasing by 4% per year through FY 2021. (Alternate Infrastructure
scenarios are discussed below on pages 16-18.)
5. Technology Fund repayments of $1.225 million per year continue in 2012 and 2013, after which the Fund
will have been completely repaid.
6. Library Operating Cost increases of $0.25 million are incorporated into FY 2012 Operating Costs, and
from FY 2013 onward $1 million in increased costs are included.
UPDATED MODEL
Fiscal Year Miscellaneous
Rates
Safety Rates
2011 17.56% 24.7%
2012 21.73% 30.13%
2013 23.10% 32.30%
2014 - 2021 26.20% 37.80%
8 City of Palo Alto
2011
7. Medical insurance costs will increase each year at the rate assumed by Milliman Associates in their
January 2009 Actuarial Report for the City. That is, 6.5% per year in FY 2012, 2013, and 2014; 6% for FY
2015-2021.
8. Savings from Miscellaneous Group’s Two-Tier Retirement Structure (2% at 60) begin in FY 2013 – 2 years
after the date of implementation – as PERS rates generally have a two-year delay.
9. Savings from the Miscellaneous Group’s 90-10 Medical cost-sharing plan are assumed to begin in April 1,
2011. Employees will ramp up to paying 10% of medical premiums over 3-4 years.
10. The FY 2011 projection for non-salary expense is $0.9 million above the FY 2011 Adopted Budget. In FY
2012, non-salary expense increases by 1.5 percent; in FY 2013, it increases by 2 percent. In FY 2013 and be-
yond, annual increases are assumed at 3 percent, which approximates the average annual rate of inflation
for the Bay Area during the past ten years.
UPDATED MODEL
General Fund LRFF Expenditure by Type
Adopted FY 2011 Budget
Supplies & Material
2.3%
Contract Services
7.3%
Transfer to Infrastructure
7.0%
Operating Transfers-Out
0.8%
Allocated Charges
11.0%
Facilities & Equipment
0.3%
General Expense
7.2%
Rents & Leases
0.5%
Salary & Benefits
63.5%
Total Budgeted Expenditures = $139.4 million
Due to rounding error % may not equal 100%
City of Palo Alto 9
2011
UPDATED MODEL
Salaries, Benefits, and Number of Employees (FTE)
$55.6 $57.0 $60.4 $62.1 $61.1 $60.0 $61.2 $61.8 $63.0 $64.3
$27.3 $29.9 $30.9 $29.5 $32.9 $29.6 $33.5 $35.1 $39.4$38.3
580580580623647 650
653 652
580580
$-
$20
$40
$60
$80
$100
$120
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Fiscal Year
Mi
l
l
i
o
n
s
-
100
200
300
400
500
600
700
Nu
m
b
e
r
o
f
E
m
p
l
o
y
e
e
s
(F
T
E
)
Salaries Benefits Full-Time Equivalent Permanent Employees (FTE)
`
General Fund LRFF Revenue by Type
Adopted FY 2011 Budget
From other agencies
0.1%
Charges for Services
14.4%
Chgs. to Other Funds
7.6%
Other Revenue
1.1%Operating Transfers-In
13.4%
Rental Income
9.8%
Permits and Licenses
3.3%
Return on Investment
1.2%
Documentary Transfer Tax
2.6%Other Taxes and Fines
1.7%
Utility Users Tax
8.2%
Transient Occupancy Tax
5.0%
Property Tax
18.6%
Sales Tax
13.1%
Total Budgeted Revenues = $139.3 million
Due to rounding error % may not equal 100%
10 City of Palo Alto
2011
REVENUES
1. FY 2011 sales tax revenue is estimated at $19.5 million, a $1.3 million increase above the FY 2011
Adopted Budget. $0.8 million of the increase is due to stronger sales tax performance in the 3rd calendar
year quarter and indications of a stronger 4th quarter in retail sales. The remaining increase is a conse-
quence of the State’s “triple flip” underpayment for FY 2010 which will be remitted in FY 2011. Based on
the new projections for FY 2011, revenue of $19.6 million and $20.3 million are projected for FY 2012 and
2013, respectively.
2. The property tax projection for FY 2011 is $25.3 million -- $0.6 million below the FY 2011 adopted budget,
and $0.7 million or 2.7 percent below FY 2010 receipts. This is due to the sizeable number of commercial
property appeals on properties’ assessed values which the County has received. These appeals will be
processed over the next 2-3 years, with a corresponding drag on City property tax receipts.
3. The FY 2011 estimate for Transient Occupancy Tax (TOT) is now $7.4 million, a $0.4 million increase from
the FY 2011 Adopted Budget amount. In FY 2010, TOT revenues ceased their prior downward trend and
began to rise. Occupancy and daily rates increased from 66.2% and $145 per day in October 2009 to 80.5%
and $150 per day in October 2010. These trends, along with the opening of the new Hotel Keen in May
2010, have led staff to forecast higher revenues in FY 2011 and forthcoming years. An additional uptick in
FY 2013 is due to the potential opening of a new Ming’s Hotel. Although additional hotels are expected to
open over the next 3-5 years, their receipts have not been included in the Forecast.
4. The Documentary Transfer Tax revenue projected for FY 2011 is $4.0 million, nearly $0.4 million above
the Adopted Budget. Through the middle of this fiscal year, revenue results have been running nearly
equal to those of the prior year. Staff believes, however, that property transaction activity will increase in
the second half of this year and lead to slightly higher transfer taxes at year-end.
5. The FY 2011 projection for Charges for Services increased by $1.0 million compared to the FY 2011
Adopted Budget. This includes an increase of $0.6 million for plan check fee revenue due to increased
building and development activity within the City, and an increase of $0.4 million as a result of the year-
end reconciliation of the Stanford joint service agreements for public safety.
BASE MODEL
The Base Model is included below. The first table shows projections over the 10 years, and the second table
shows year-over-year percentage changes in each category. The Base Model shows a projected net deficit for
FY 2011 of $0.9 million, and a deficit of $2.2 million for FY 2012. Over the eleven-year period from FY 2011
through FY 2021, cumulative deficits are projected at $11.3 million.
UPDATED MODEL
City of Palo Alto 11
2011
The October 5, 2010 Update to the Long Range Financial Forecast of 2010-2020 had shown a balanced budget
in FY 2011 and a deficit of $1.6 million in FY 2012. Since then, the following adjustments were made:
• 2011 revenues increased by about $1.5 million – primarily in Sales Tax, Planning and Building fees,
and in the Joint Service Agreement with Stanford
• Contract Services expense increased by $0.4 million- due primarily to the restructuring of the
Development Center and the standards of coverage study for the Fire Department
• General expense increased by $0.4 million – primarily due to Measures R (firefighter charter
amendment) and S (election date change) election costs
• Operating Transfers out increased by $0.5 million due to loans to the Airport and Refuse funds
Also, since the October update, the following changes were made in FY 2012 projections:
• Revenues decreased by $1.1 million – primarily because of the cancelled electric rate increase, which
cut projected UUT revenue by $1.3 million. Property tax estimates were cut by $0.7 million
• Sales Tax estimates were increased by $1.1 million, mostly due to the timing of the State’s “triple flip”
process
• Salaries and benefits increased by $1.6 million to align budgeted with actual overtime expenses,
adding $0.8 million—on top of a $0.8 million overtime increase in FY 2011
• The Infrastructure transfer was originally planned to increase by an additional $1 million per year
starting FY2012, but given the budget gap, staff cut the additional $1 million, bringing it back to the
recommended budgeted transfer of $10.4 million
UPDATED MODEL
12 City of Palo Alto
2011
UPDATED MODEL
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,646$ 20,320$ 21,085$ 21,888$ 22,750$ 23,649$ 24,594$ 25,295$ 25,940$ 26,638$
Property Taxes 25,982 25,907 25,323 25,830 26,699 27,665 28,734 29,914 31,177 32,581 34,114 35,227 36,186
Transient Occupancy Tax 6,858 7,021 7,400 7,704 8,246 8,505 8,790 9,102 9,434 9,788 10,067 10,344 10,622
Utility User Tax 11,296 11,429 10,824 10,859 11,069 11,329 11,654 11,708 11,976 12,252 12,528 12,796 13,054
Documentary Transfer Tax 3,707 3,613 4,000 4,219 4,377 4,546 4,723 4,908 5,103 5,310 5,504 5,694 5,948
Other Taxes and Fines 2,047 2,330 2,137 2,384 2,455 2,529 2,605 2,683 2,764 2,846 2,932 3,020 3,110
Subtotal: Taxes 67,881 68,518 69,191 70,642 73,166 75,659 78,394 81,066 84,103 87,372 90,440 93,021 95,559
Charges for Services 19,593 20,068 21,000 21,420 22,063 22,725 23,406 24,109 24,832 25,577 26,344 27,134 27,948
Permits and Licenses 4,720 4,533 4,646 4,739 4,881 5,027 5,178 5,334 5,494 5,658 5,828 6,003 6,183
Return on Investment 2,624 1,646 1,337 1,317 1,314 1,331 1,354 1,380 1,412 1,459 1,489 1,516 1,540
Rental Income 14,397 13,716 13,716 13,991 12,150 12,515 12,890 13,277 13,675 14,086 14,508 14,944 15,392
From other agencies 333 155 155 158 163 168 173 178 183 189 195 200 207
Charges to Other Funds 11,027 10,622 10,698 10,745 11,067 11,399 11,741 12,094 12,456 12,830 13,215 13,611 14,020
Other revenues 2,360 1,490 1,513 1,544 1,590 1,638 1,687 1,738 1,790 1,843 1,899 1,956 2,014
Total Revenues Before Transfers 122,936 120,748 122,257 124,555 126,394 130,462 134,824 139,174 143,945 149,014 153,917 158,385 162,862
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,626 151,503 156,707 161,932 167,613 173,629 179,517 185,008 190,551
Expenditures
Salaries 61,080 59,020 60,003 60,661 61,798 63,047 64,321 65,621 66,947 68,299 69,678 71,085 72,520
Benefits 32,900 29,525 29,645 33,467 35,061 38,331 39,389 40,566 41,752 42,999 44,228 45,632 47,022
Subtotal: Salaries and Benefits 93,980 88,545 89,648 94,128 96,859 101,378 103,710 106,187 108,698 111,299 113,907 116,718 119,543
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988 128,475 130,435 134,558 138,840 143,356 146,946 150,720 154,567 158,544 162,569 166,840 171,169
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
TOTAL EXPENDITURES 146,625 139,399 141,899 146,163 150,906 155,913 160,007 164,304 168,695 173,237 177,850 182,733 187,698
Net Operating Surplus/(Gap) (1,678) 33 (937) (2,154) (4,280) (4,410) (3,300) (2,372) (1,082) 393 1,667 2,275 2,853
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678) 33 (937) (2,154) (4,280) (4,410) (3,300) (2,372) (1,082) 393 1,667 2,275 2,853
Drawdown on Budget Stabilization Reserve
Comprehensive Annual Fin. Rpt. Recon. (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (2,154)$ (4,280)$ (4,410)$ (3,300)$ (2,372)$ (1,082)$ 393$ 1,667$ 2,275$ 2,853$
*In FY 2011, Adopted Budget assumed 90-10 plan implementation for Miscellaneous group effective April 1 2010.
2011-2021 LRFF - BASE MODEL
City of Palo Alto 13
2011
UPDATED MODEL
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Cumulative %
Change
2010-2021
Revenues
Sales Taxes 8.43% 0.71% 3.43% 3.76% 3.81% 3.94% 3.95% 4.00% 2.85% 2.55% 2.69%
Property Taxes (2.54%) 2.00% 3.36% 3.62% 3.86% 4.11% 4.22% 4.50% 4.71% 3.26% 2.72%
Transient Occupancy Tax 7.90% 4.11% 7.02% 3.15% 3.35% 3.55% 3.65% 3.75% 2.85% 2.75% 2.69%
Utility User Tax (4.18%) 0.32% 1.93% 2.35% 2.87% 0.46% 2.29% 2.30% 2.25% 2.14% 2.02%
Documentary Transfer Tax 7.90% 5.48% 3.75% 3.85% 3.90% 3.92% 3.97% 4.05% 3.65% 3.45% 4.47%
Other Taxes and Fines 4.42% 11.55% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Subtotal: Taxes 1.93% 2.10% 3.57% 3.41% 3.62% 3.41% 3.75% 3.89% 3.51% 2.85% 2.73%40.77%
Charges for Services 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Permits and Licenses (1.56%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Return on Investment (49.07%) -1.49% -0.24% 1.31% 1.76% 1.91% 2.31% 3.38% 2.01% 1.81% 1.61%
Rental Income (4.73%) 2.00% -13.15% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
From other agencies (53.47%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Charges to Other Funds (2.99%) 0.44% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Other revenues (35.87%) 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Revenues Before Transfers (0.55%) 1.88% 1.48% 3.22% 3.34% 3.23% 3.43% 3.52% 3.29% 2.90% 2.83%32.48%
Operating Transfers-In (15.02%) 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL REVENUES (2.75%) 2.16% 1.82% 3.33% 3.44% 3.33% 3.51% 3.59% 3.39% 3.06% 3.00%31.46%
Expenditures
Salaries (1.76%) 1.10% 1.87% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02% 2.02%
Benefits (9.89%) 12.89% 4.76% 9.33% 2.76% 2.99% 2.92% 2.99% 2.86% 3.17% 3.05%
Subtotal: Salaries and Benefits (4.61%) 5.00% 2.90% 4.67% 2.30% 2.39% 2.37% 2.39% 2.34% 2.47% 2.42%27.20%
Contract Services 19.01% -1.97% 4.34% 2.61% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Supplies & Materials 13.79% 8.55% 16.13% 2.99% 3.00% 3.00% 3.00% 3.00% 3.00% 2.99% 3.01%
General Expense 11.85% -2.64% 2.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Rents and Leases 5.74% 16.74% 1.94% 3.04% 2.95% 2.99% 3.02% 3.04% 2.95% 2.97% 2.99%
Facilities and Equipment (73.93%) 1.55% 1.96% 2.99% 2.90% 3.02% 2.94% 3.04% 2.95% 3.05% 2.96%
Allocated Charges 5.72% -1.75% 2.00% -4.92% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
Total Expenditures Before Transfers (1.18%) 3.16% 3.18% 3.25% 2.50% 2.57% 2.55% 2.57% 2.54% 2.63% 2.59%29.69%
Transfers to Other Funds
Operating Transfers Out (64.92%) -29.78% 4.03% 4.04% 4.04% 4.03% 4.02% 4.01% 3.99% 4.03% 4.00%
Transfer to Infrastructure (0.99%) 6.49% 3.97% 4.07% 4.01% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00%
TOTAL EXPENDITURES (3.22%) 3.00% 3.24% 3.32% 2.63% 2.69% 2.67% 2.69% 2.66% 2.75% 2.72%28.01%
Net Operating Surplus/(Gap)(44.16%) 129.90% 98.65% 3.05% -25.18% -28.11% -54.39% -136.28% 324.67% 36.49% 25.40%
PERCENTAGE CHANGES IN BASE FORECAST FOR REVENUES AND EXPENSES
14 City of Palo Alto
2011
V. ALTERNATE SCENARIOS
Staff developed several alternate scenarios of the model, to ascertain the impacts of different assumptions on
the City’s bottom line. The scenarios are described below, and a summary of the results of all scenarios may be
found on page 19.
SALARY CONSTRAINT SCENARIOS
In the first of two Salary Constraint Scenarios, combined salaries and benefits were constrained to increase at
a rate no greater than the expected rate of increase in revenues in each year. This resulted in lower increases
in salaries and benefits than the Base Model in fiscal years 2012, 2013, and 2014 – when PERS rate increases
dramatically drive up the cost of benefits, leaving little room for salary increases. In each year after 2014,
however, salary increases of 2.75% to 3.5% are possible while remaining within the revenue growth con-
straint. Since the Base Model assumes continued 2% salary increases starting in 2013, this alternate scenario
costs the City an additional $3.4 million over the ten years.
In the second Salary Constraint Scenario, combined salaries and benefits were constrained at no greater per-
centage than the expected revenue increase, and salaries were not permitted to increase in any year in which
that would cause a deficit. Therefore, in this modified salary scenario, salaries did not increase in 2014, and
increased by just 1.5% in 2015 (compared to rising by 3.4% in the first salary constraint scenario), and in 2016-
2021, increases were nearly identical to the above scenario. This second scenario would save the City $7.3
million over the 10 years, compared to the Base Model.
OPTIMISTIC SCENARIOS
The following Optimistic Scenarios were introduced to the model:
• Public Safety employees agree to the 90-10 plan for medical and retiree medical costs, joining the Miscel-
laneous employees for whom that plan will start April 1, 2011. This saves the General Fund $4.8 million
over the ten years.
• Public Safety employees agree to a second tier retirement formula for new employees of 2% at 55, again
joining the Miscellaneous group which already has a 2% at 60 second tier. This saves the General Fund
$3.5 million over the eight years (there is a lag of two years before PERS rates decrease with a new tier).
• Revenues are projected to grow at an annual rate of 3.38% (Compound Annual Growth Rate, or CAGR),
as opposed to the 3.02% CAGR in the Base Model projected revenues, providing an additional $29.4 mil-
lion over the ten years.
The full Optimistic Scenarios model can be found in Appendix 1.
ALTERNATE SCENARIOS
City of Palo Alto 15
2011
PESSIMISTIC SCENARIOS
The following Pessimistic Scenarios were introduced to the model:
• Public Safety Salaries begin to rise in 2013, after just one year of salary freeze for Police, and two years for
Fire. Rather than having their salaries frozen for three years as they were for Miscellaneous employees,
this scenario assumes a 2% annual increase for all employees beginning 2013. This costs the General Fund
an additional $4.8 million in salary alone, plus another $1.4 million in PERS expense over the ten years.
• The PERS Discount Rate is changed to 7.5% from 7.75%. In December 2010, the PERS Board voted to ap-
prove an investment mix that likely means the assumed discount rate will decrease by 0.25% to 7.5%.
This will translate to an increase in PERS rates starting 2013 of 1.5% to 3% for Miscellaneous employees
and 3% to 5% for Safety employees. If we assume the center of that range for each group, the impact will
be $18.3 million in additional PERS costs over the nine years through FY 2021.
• PERS rates continue to increase after 2014. Rather than increasing each year – FY 2012, 2013, and 2014, and
then remaining constant, PERS rates continue to increase 3% per year from 2015 on. This costs the General
Fund an additional $59.1 million in those seven years.
• Medical Costs increase by 10% per year. Rather than increasing at the rate assumed by the City’s actuary-
in the 6.0 to 6.5% range - this scenario assumes a 10% annual increase in medical costs, costing the General
Fund an additional $24.4 million over the ten years – both in premiums for active employees, and addi-
tional annual required contribution for retiree medical.
• Revenues increase by an average (CAGR) of 2.72% instead of the 3.02% CAGR in the Base Model. Thus
the City brings in $34.6 million less in revenues over the ten years.
The full Pessimistic Scenarios model can be found in Appendix 1.
ALTERNATE SCENARIOS
16 City of Palo Alto
2011
INFRASTRUCTURE SCENARIOS
In these scenarios, it is assumed that the City will at minimum erase its infrastructure backlog over the
ten-year period of the Forecast. In quantifying the backlog as well as future needs, staff was aware that the
Public Works Department is in the process of updating these estimates for the Blue Ribbon Infrastructure
Commission’s efforts. However, since that process is not yet complete, staff used the numbers from an inter-
departmental staff analysis completed in 2008 and delineated in pages 297-298 of the FY 2011 CIP Budget.
(See Appendix 2, as well as CMR 167:08) These numbers are expressed in 2007 dollars.
Staff quantified the infrastructure needs for fiscal years 2009-2013 at $153.2 million, and the projected backlog
for FY 2014 to 2018 at $55.0 million, for a total ten-year backlog of $208.2 million. The FY 2009-2013 CIP fund-
ing plan included $64.2 million in funding, and the LRFF assumes an additional $61.2 million in funding for
FY 2014-2018, leaving an unfunded backlog of $82.9 million.
In Infrastructure Scenario 1, the General Fund invests an additional $10 million per year in 2012, increasing
by 3% per year, of which $8.3 million pays down the backlog each year (with that amount also growing by
3% per year), and the remainder funds a portion of projected future needs as well as additional operating
costs associated with the additional infrastructure work. Also in 2008, staff identified an additional $208
million ($148 million identified by staff in 2008 plus an assumed $60 million for the Public Safety Building) in
future infrastructure needs – meaning needed renovations and replacements of City facilities such as Fire
Stations, the Police Building, the MSC, and the Animal Shelter, that are likely if not inevitable over the next
several years. That brings the total infrastructure needs to $416 million.
ALTERNATE SCENARIOS
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,626 151,503 156,707 161,932 167,613 173,629 179,517 185,008 190,551
Total Expenditures Before Transfers 131,988 128,475 130,435 134,558 138,840 143,356 146,946 150,720 154,567 158,544 162,569 166,840 171,169
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
Additional Transfer to Insfrastructure to Erase Backlog 8,287 8,536 8,792 9,056 9,328 9,607 9,896 10,193 10,498 10,813
Additional Transfer to Insfrastructure to fund Future Needs 413 427 441 456 471 486 502 519 536 554
Additional Maintenance staff 260 267 273 280 287 294 302 309 317 325
Additional Operating Expenses for 1,039 1,070 1,102 1,136 1,170 1,205 1,241 1,278 1,316 1,356
Additional Infrastructure Investments*
Subtotal Additional Infrastructure Investmt 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
TOTAL EXPENDITURES 146,625 139,399 141,899 156,163 161,206 166,522 170,934 175,559 180,288 185,177 190,149 195,401 200,746
GRAND NET SURPLUS (DEFICIT) (1,678)$ 33$ (937)$ (12,154)$ (14,580)$ (15,019)$ (14,227)$ (13,627)$ (12,675)$ (11,548)$ (10,632)$ (10,393)$ (10,195)$
Balance of Unfunded Backlog at year-end (2011 dollars) 82,875$ 74,587$ 66,300$ 58,012$ 49,725$ 41,437$ 33,150$ 24,862$ 16,575$ 8,287$ -$
Balance of Future Needs at year-end 208,280$ 207,867$ 207,440$ 206,999$ 206,543$ 206,072$ 205,586$ 205,083$ 204,564$ 204,028$ 203,474$
2011-2021 LRFF - INFRASTRUCTURE SCENARIO 1 - INCREASE INVESTMT BY $10MM PER YR STARTING 2012
City of Palo Alto 17
2011
In this scenario, the General Fund cumulative deficit increases by $114.6 million beyond that in the Base
Model. The backlog is eliminated, and the unfunded balance of future needs is reduced to $203 million by
2021.
In Infrastructure Scenario 2, the City issues a $100 million general obligation bond at an assumed interest rate
of 5% and a 25-year amortization period. Again by investing an additional $10 million per year (increasing
by 3% per year), the General Fund can use the bond proceeds to complete the unfunded portion of the back-
log in the first 3 to 4 years, pay its $7.1 million annual debt service, and apply the remaining $3 million to-
wards the future needs and additional construction management costs. This scenario also increases the com-
pound GF deficits by about $114.6 million over the ten years; it brings down the future needs balance to $160
million in 2021. However, at that time, the City would still owe about $106 million in principal and interest on
the bond.
Note that in this scenario and in Scenario 3, any cost savings due to completing the backlog in 3 to 4 years
rather than in 10 years have not yet been estimated, and are not included in the analysis.
ALTERNATE SCENARIOS
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,626 151,503 156,707 161,932 167,613 173,629 179,517 185,008 190,551
Total Expenditures Before Transfers 131,988 128,475 130,435 134,558 138,840 143,356 146,946 150,720 154,567 158,544 162,569 166,840 171,169
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
Debt Service on Infrastructure Bond 7,099 7,099 7,099 7,099 7,099 7,099 7,099 7,099 7,099 7,099
Additional Transfer to Insfrastructure to Fund Future Needs - - 210 500 3,450 3,750 4,050 4,375 4,685 5,015
Additional Maintenance staff - 267 273 280 287 294 302 309 317 325
Additional Operating Expenses for 2,901 2,934 3,026 3,048 419 450 490 516 567 609
Additional Infrastructure Investments*
Subtotal Additional Infrastructure Investmt 10,000 10,300 10,609 10,927 11,255 11,593 11,941 12,299 12,668 13,048
TOTAL EXPENDITURES 146,625 139,399 141,899 156,164 161,205 166,522 170,934 175,559 180,289 185,177 190,149 195,401 200,746
GRAND NET SURPLUS (DEFICIT) (1,678)$ 33$ (937)$ (12,155)$ (14,580)$ (15,019)$ (14,227)$ (13,627)$ (12,675)$ (11,548)$ (10,632)$ (10,393)$ (10,195)$
Balance of Unfunded Backlog at year-end 82,875$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Balance of Future Needs at year-end 208,280$ 185,910$ 185,910$ 185,700$ 185,200$ 181,750$ 178,000$ 173,950$ 169,575$ 164,890$ 159,875$
Balance of 25-year Bond "Debt Service Liability" -$ 170,382$ 163,283$ 156,184$ 149,084$ 141,985$ 134,886$ 127,787$ 120,687$ 113,588$ 106,489$
2011-2021 LRFF - INFRASTRUCTURE SCENARIO 2 - INCREASE INVESTMNT BY $10MM PER YR WITH $100MM BOND
18 City of Palo Alto
2011
All of the above Infrastructure scenarios illustrate the order of magnitude of the financial impact on the Gen-
eral Fund of addressing the infrastructure backlog in a timely manner. With an additional $10 million per
year the City can erase the backlog over 10 years without a bond, and much more rapidly with a bond. If the
City is willing to take on the increased liability of a general obligation bond, it can eliminate the backlog in
the next few years and make greater headway with funding needed renovations. Again, precise estimates of
the volumes of backlog and future needs, as well as cost trade-offs involved with issuing a general obligation
bond for infrastructure, remain to be developed more completely by Public Works staff in concert with the
Blue Ribbon Commission.
Given the City’s limitations in generating new revenue, finding the funding for the additional infrastructure
needs would require a reduction in expenses—including programs and/or services, and salaries and benefits.
The table at right summarizes the results of all Alternate Scenarios, compared to the Base Model.
ALTERNATE SCENARIOS
In Scenario 3, the General Fund invests an additional $15 million per year, increasing by 3% per year, in infra-
structure. It issues the $100 million bond, applying the remainder of the $15 million after debt service to fu-
ture needs and additional operating costs required by the additional infrastructure projects. This scenario in-
creases the compound GF deficits by about $172 million over the 10 years, brings down the future needs bal-
ance to $109 million in 2021, but leaves a balance of $106 million in unpaid principal and interest payments on
the bond.
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,626 151,503 156,707 161,932 167,613 173,629 179,517 185,008 190,551
Total Expenditures Before Transfers 131,988 128,475 130,435 134,558 138,840 143,356 146,946 150,720 154,567 158,544 162,569 166,840 171,169
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,122 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
Debt Service on Infrastructure Bond 7,099 7,099 7,099 7,099 7,099 7,099 7,099 7,099 7,099 7,099
Additional Transfer to Insfrastructure to Fund Future Needs 4,150 4,540 4,950 5,370 8,480 8,920 9,375 9,850 10,350 10,840
Additional Maintenance staff 260 267 273 280 287 294 302 309 317 325
Additional Operating Expenses for 3,491 3,544 3,592 3,641 1,017 1,075 1,135 1,190 1,236 1,308
Additional Infrastructure Investments*
Subtotal Additional Infrastructure Investmt 15,000 15,450 15,914 16,391 16,883 17,389 17,911 18,448 19,002 19,572
TOTAL EXPENDITURES 146,625 139,399 141,899 161,164 166,355 171,827 176,397 181,187 186,084 191,147 196,298 201,735 207,270
GRAND NET SURPLUS (DEFICIT) (1,678)$ 33$ (842)$ (17,155)$ (19,729)$ (20,325)$ (19,690)$ (19,255)$ (18,471)$ (17,518)$ (16,781)$ (16,727)$ (16,719)$
Balance of Unfunded Backlog at year-end 82,875$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Balance of Future Needs at year-end 208,280$ 181,760$ 177,220$ 172,270$ 166,900$ 158,420$ 149,500$ 140,125$ 130,275$ 119,925$ 109,085$
Balance of 25-year Bond "Debt Service Liability" -$ 170,382$ 163,283$ 156,184$ 149,084$ 141,985$ 134,886$ 127,787$ 120,687$ 113,588$ 106,489$
2011-2021 LRFF - INFRASTRUCTURE SCENARIO 3 - INCREASE INVESTMNT BY $15MM PER YR WITH $100MM BOND
City of Palo Alto 19
2011
ALTERNATE SCENARIOS
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Total
(2012-
2021)
(2.2) (4.3) (4.4) (3.3) (2.4) (1.1) 0.4 1.7 2.3 2.9 (10.4)
0.6 1.6 3.0 2.0 1.0 (0.1) (1.4) (2.6) (3.4) (4.1) (3.4)
Resulting Net Surplus
(Deficit)(1.5) (2.6) (1.4) (1.3) (1.3) (1.2) (1.0) (0.9) (1.1) (1.3) (13.8)
0.6 1.7 3.2 3.3 2.4 1.3 0.0 (1.1) (1.8) (2.5) 7.3
Resulting Net Surplus
(Deficit)(1.5) (2.6) (1.2) 0.0 0.1 0.2 0.4 0.6 0.5 0.3 (3.2)
0.2 0.3 0.4 0.5 0.5 0.5 0.5 0.6 0.6 0.6 4.8
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 3.5
0.1 0.6 1.0 1.5 2.3 3.2 4.2 4.8 5.5 6.1 29.4
0.6 1.1 1.7 2.5 3.4 4.4 5.4 6.2 7.1 7.7 40.1
Resulting Net Surplus
(Deficit)(1.6) (3.2) (2.7) (0.8) 1.0 3.3 5.8 7.9 9.3 10.6 29.7
-
- (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) (0.6) (0.6) (0.6) (4.8)
(1.8) (1.9) (2.0) (2.0) (2.0) (2.1) (2.1) (2.2) (2.2) (18.3)
(1.9) (4.0) (6.1) (8.3) (10.5) (12.9) (15.4) (59.1)
(0.1) (0.5) (0.9) (1.4) (1.9) (2.5) (3.1) (3.8) (4.6) (5.6) (24.4)
(0.7) (2.0) (2.5) (3.1) (3.6) (3.9) (4.0) (4.4) (4.9) (5.5) (34.6)
(1.2) (4.7) (5.7) (6.8) (11.7) (14.8) (17.8) (21.2) (24.9) (28.9) (137.7)
Resulting Net Surplus
(Deficit)(3.3) (9.0) (10.1) (10.1) (14.1) (15.8) (17.4) (19.5) (22.6) (26.0) (148.1)
Scenario 1: $10 MM
add'l / yr (10.0) (10.3) (10.6) (10.9) (11.3) (11.6) (11.9) (12.3) (12.7) (13.0) (114.6)
Scenario 2: $10 MM/yr +
$100MM bond (10.0) (10.3) (10.6) (10.9) (11.3) (11.6) (11.9) (12.3) (12.7) (13.0) (114.6)
Resulting Net Surplus
(Deficit) for Scenarios 1 & 2 (12.2) (14.6) (15.0) (14.2) (13.6) (12.7) (11.5) (10.6) (10.4) (10.2) (125.1)
Scenario 3: $15 MM/yr +
$100MM bond (15.0) (15.4) (15.9) (16.4) (16.9) (17.4) (17.9) (18.4) (19.0) (19.6) (172.0)
Resulting Net Surplus
(Deficit)(17.2) (19.7) (20.3) (19.7) (19.3) (18.5) (17.5) (16.8) (16.7) (16.7) (182.4)
SUMMARY OF ALL SCENARIOS
Long Range Financial Forecast 2011-2021
(Millions of Dollars)
Lower Revenue Forecast
Salaries & Bens. Constrained
to < Revenues
--- Impact of Alternate Scenarios on Bottom Line ---
Base Model Net Surplus
(Deficit)
Salaries & Bens. Constrained
to < Revenues, Increases Only
When No Deficit
Safety joins 90-10 Plan
Higher Revenue Forecast
Infrastructure
Safety agrees to second tier
at 2% at 55
Optimistic:
Pessimistic:
PERS Adopts 7.5% Discount
Rate
PERS rates increase 3% per
year 2015-2021
Health Care Costs increase
10% per year
Safety receives 2% Salary
Increase in 2013
Total Optimistic Scenarios
Total Pessimistic Scenarios
20 City of Palo Alto
2011
VI. CONCLUSIONS
This Long Range Forecast shows a much improved fiscal picture compared to the one presented in February
2010. Last year, the Forecast showed a cumulative deficit of $147.5 million between 2011 and 2020 (ten years).
This year, the Base Model projects a combined $16.5 million deficit over the same period. Much of the im-
provement is due to the significant Budget reset accomplished by the FY 2011 Adopted Budget. The October
5, 2010 update to last year’s Forecast had predicted a much rosier $1.2 million surplus over the ten-year pe-
riod from 2010-2020, but since then revenue projections have been adjusted: UUT projections came down by
$22.9 million over the course of 2011-2020, due to cancelled rate increases; property tax projections came
down $14.7 million; yet Documentary Transfer Tax estimates increased $8.6 million for the ten year period,
and Sales Tax estimates increased $6.0 million.
There remain in this Forecast $11.3 million in cumulative deficits over the 2011-2021 period that must be ad-
dressed. If the City addresses its infrastructure backlog in a robust fashion, those deficits could increase
eleven-fold to $125 million. On the flip side, if Public Safety bargaining units agree to changes already ac-
cepted by the Miscellaneous groups – specifically a second retirement tier for new hires and the 90-10 medical
cost sharing plan – the eleven-year deficits would shrink by approximately 73% (or $8.3 million). Faster-than-
expected revenue growth would also help.
However, darker developments are also easily imagined. Specifically, PERS rates could easily jump due to
either a small decrease in the assumed discount rate (costing $18 million over nine years) and/or annual ad-
ditional rate increases of 3% after 2014 (costing an additional $59 million). Those increases alone would put
us in the same negative position as erasing our entire unfunded infrastructure backlog, yet would not put a
dime towards that critical need.
Palo Alto is not alone in finding its pension and health care liabilities to be increasingly difficult to sustain.
While the organization has successfully begun to restructure these benefits with non-safety staff, there still is
a strong concern going forward due to continued PERS rate projection increases and revenues failing to close
the growing gaps. The City must continue to make difficult choices to ensure that it keeps its AAA credit rat-
ing, stays fiscally balanced, and lives within its means.
CONCLUSIONS
City of Palo Alto 21
2011
VII. ENDNOTES
i. Legislative Analyst’s Office, “The 2011-12 Budget: California’s Fiscal Outlook,” November 2010, page 13
ii. Bloomberg News, “U.S.Economy: Sales at Retailers Climb by Most in Seven Months,” by Timothy R. Homan,
Nov 15, 2010
iii. Joseph Lazzarro, “Tell-Tale Stat: US Underemployment Rate Rose to 17.1% in September,”
www.bloggingstocks.com posted October 11, 2010
iv. Beacon Economics, “Beaconomics: A quarterly economic forecast for the US and California from Beacon Eco
nomics,” Vol. 3, no. 1, January 2011, page 5
v. Courtney Schlisserman and Timothy R. Homan, “Pending home sales surge 10% in October,” San Francisco
Chronicle, December 3, 2010
vi. Beaconomics, Op.Cit, page 12
vii. Pete Carey: “Bay Area home prices, sales dip,” San Jose Mercury News, December 17, 2010
viii. Legislative Analyst’s Office, “The 2011-12 Budget: California’s Fiscal Outlook,” November 2010, page 13-14
ix. California Dept of Finance “Finance Bulletin,” October 2010
x. Legislative Analyst’s Office, Op.Cit., pages 15-16
xi U.S. Census Bureau News, “Advance Monthly Sales for Retail and Food Services October 2010,” released Nov
15, 2010
xii. Jonathan Cheng, “Dow Rallies 150.91 in Preholiday Sessions,” Wall Street Journal.com, November 24, 2010
xiii. Legislative Analyst’s Office, “The 2011-12 Budget: California’s Fiscal Outlook,” November 2010, page 13-14
xiv. Tom Abate, “Rise in jobless rate spurs benefits, tax-cut debate,” San Francisco Chronicle, December 4, 2010
xv. Beaconomics, Op.Cit., page 6
xvi. Beacon Economics, “Beaconomics: A Quarterly Economic Forecast for the U.S. & California,” August 2010
xvii. Legislative Analyst’s Office, “The 2011-12 Budget: California’s Fiscal Outlook,” November 2010, page 13
xviii. Michael Powell, “Profits Are Booming. Why Aren’t Jobs?,” New York Times, January 9, 2011
xix. Beaconomics, January, 2011, Op.Cit., pages 11 and 14
xx. Bay Area Council, Press Release: After slight dip over the summer, Bay Area Business Confidence Trends Up
ward Again, December 13, 2010
ENDNOTES
22 City of Palo Alto
2011
VIII. APPENDICES—APPENDIX 1: ALTERNATE SCENARIOS
APPENDICES
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,646$ 20,320$ 21,085$ 21,888$ 22,750$ 23,649$ 24,594$ 25,295$ 25,940$ 26,638$
Property Taxes 25,982 25,907 25,323 25,830 26,699 27,665 28,734 29,914 31,177 32,581 34,114 35,227 36,186
Transient Occupancy Tax 6,858 7,021 7,400 7,704 8,246 8,505 8,790 9,102 9,434 9,788 10,067 10,344 10,622
Utility User Tax 11,296 11,429 10,824 10,859 11,069 11,329 11,654 11,708 11,976 12,252 12,528 12,796 13,054
Documentary Transfer Tax 3,707 3,613 4,000 4,219 4,377 4,546 4,723 4,908 5,103 5,310 5,504 5,694 5,948
Other Taxes and Fines 2,047 2,330 2,137 2,384 2,455 2,529 2,605 2,683 2,764 2,846 2,932 3,020 3,110
Subtotal: Taxes 67,881 68,518 69,191 70,642 73,166 75,659 78,394 81,066 84,103 87,372 90,440 93,021 95,559
Charges for Services 19,593 20,068 21,000 21,420 22,063 22,725 23,406 24,109 24,832 25,577 26,344 27,134 27,948
Permits and Licenses 4,720 4,533 4,646 4,739 4,881 5,027 5,178 5,334 5,494 5,658 5,828 6,003 6,183
Return on Investment 2,624 1,646 1,337 1,317 1,314 1,331 1,354 1,380 1,412 1,459 1,489 1,516 1,540
Rental Income 14,397 13,716 13,716 13,991 12,150 12,515 12,890 13,277 13,675 14,086 14,508 14,944 15,392
From other agencies 333 155 155 158 163 168 173 178 183 189 195 200 207
Charges to Other Funds 11,027 10,622 10,698 10,745 11,067 11,399 11,741 12,094 12,456 12,830 13,215 13,611 14,020
Other revenues 2,360 1,490 1,513 1,544 1,590 1,638 1,687 1,738 1,790 1,843 1,899 1,956 2,014
Total Revenues Before Transfers 122,936 120,748 122,257 124,555 126,394 130,462 134,824 139,174 143,945 149,014 153,917 158,385 162,862
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,626 151,503 156,707 161,932 167,613 173,629 179,517 185,008 190,551
Expenditures
Salaries 61,080 59,020 60,003 60,129 60,406 60,690 62,745 64,743 66,967 69,300 71,574 73,561 75,565
Benefits 32,900 29,525 29,645 33,382 34,812 37,698 39,002 40,400 41,869 43,427 44,938 46,526 48,096
Subtotal: Salaries and Benefits 93,980 88,545 89,648 93,511 95,217 98,388 101,747 105,143 108,836 112,727 116,512 120,087 123,661
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988 128,475 130,435 133,941 137,198 140,366 144,983 149,676 154,705 159,972 165,174 170,209 175,287
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
TOTAL EXPENDITURES 146,625 139,399 141,899 145,546 149,264 152,923 158,044 163,260 168,833 174,665 180,455 186,102 191,816
Net Operating Surplus/(Gap) (1,678) 33 (937) (1,537) (2,638) (1,420) (1,337) (1,328) (1,220) (1,036) (938) (1,094) (1,265)
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678) 33 (937) (1,537) (2,638) (1,420) (1,337) (1,328) (1,220) (1,036) (938) (1,094) (1,265)
Drawdown on Budget Stabilization Reserve
Comprehensive Annual Fin. Rpt. Recon. (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (1,537)$ (2,638)$ (1,420)$ (1,337)$ (1,328)$ (1,220)$ (1,036)$ (938)$ (1,094)$ (1,265)$
2011-2021 LRFF - SALARIES AND BENEFITS CONSTRAINED TO RATE OF REVENUE GROWTH
*In FY 2011, Adopted Budget assumed 90-10 plan implementation for M iscellaneous group effective January 1, 2010. Given the likely April 1 2010 implementation date, an
additional expense (foregone savings) is anticipated. For remaining years in the Forecast, savings are
City of Palo Alto 23
2011
APPENDICES
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,646$ 20,320$ 21,085$ 21,888$ 22,750$ 23,649$ 24,594$ 25,295$ 25,940$ 26,638$
Property Taxes 25,982 25,907 25,323 25,830 26,699 27,665 28,734 29,914 31,177 32,581 34,114 35,227 36,186
Transient Occupancy Tax 6,858 7,021 7,400 7,704 8,246 8,505 8,790 9,102 9,434 9,788 10,067 10,344 10,622
Utility User Tax 11,296 11,429 10,824 10,859 11,069 11,329 11,654 11,708 11,976 12,252 12,528 12,796 13,054
Documentary Transfer Tax 3,707 3,613 4,000 4,219 4,377 4,546 4,723 4,908 5,103 5,310 5,504 5,694 5,948
Other Taxes and Fines 2,047 2,330 2,137 2,384 2,455 2,529 2,605 2,683 2,764 2,846 2,932 3,020 3,110
Subtotal: Taxes 67,881 68,518 69,191 70,642 73,166 75,659 78,394 81,066 84,103 87,372 90,440 93,021 95,559
Charges for Services 19,593 20,068 21,000 21,420 22,063 22,725 23,406 24,109 24,832 25,577 26,344 27,134 27,948
Permits and Licenses 4,720 4,533 4,646 4,739 4,881 5,027 5,178 5,334 5,494 5,658 5,828 6,003 6,183
Return on Investment 2,624 1,646 1,337 1,317 1,314 1,331 1,354 1,380 1,412 1,459 1,489 1,516 1,540
Rental Income 14,397 13,716 13,716 13,991 12,150 12,515 12,890 13,277 13,675 14,086 14,508 14,944 15,392
From other agencies 333 155 155 158 163 168 173 178 183 189 195 200 207
Charges to Other Funds 11,027 10,622 10,698 10,745 11,067 11,399 11,741 12,094 12,456 12,830 13,215 13,611 14,020
Other revenues 2,360 1,490 1,513 1,544 1,590 1,638 1,687 1,738 1,790 1,843 1,899 1,956 2,014
Total Revenues Before Transfers 122,936 120,748 122,257 124,555 126,394 130,462 134,824 139,174 143,945 149,014 153,917 158,385 162,862
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 144,009 146,626 151,503 156,707 161,932 167,613 173,629 179,517 185,008 190,551
Expenditures
Salaries 61,080 59,020 60,003 60,129 60,329 60,460 61,377 63,362 65,539 67,824 70,050 71,994 73,956
Benefits 32,900 29,525 29,645 33,382 34,812 37,698 39,002 40,400 41,869 43,427 44,938 46,526 48,096
Subtotal: Salaries and Benefits 93,980 88,545 89,648 93,511 95,141 98,158 100,379 103,763 107,409 111,250 114,988 118,520 122,053
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988 128,475 130,435 133,941 137,122 140,136 143,615 148,296 153,278 158,495 163,650 168,642 173,679
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
TOTAL EXPENDITURES 146,625 139,399 141,899 145,546 149,188 152,693 156,676 161,880 167,406 173,188 178,931 184,535 190,208
Net Operating Surplus/(Gap) (1,678) 33 (937) (1,537) (2,562) (1,191) 31 52 208 441 586 473 343
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678) 33 (937) (1,537) (2,562) (1,191) 31 52 208 441 586 473 343
Drawdown on Budget Stabilization Reserve
Comprehensive Annual Fin. Rpt. Recon. (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (1,537)$ (2,562)$ (1,191)$ 31$ 52$ 208$ 441$ 586$ 473$ 343$
*In FY 2011, Adopted Budget assumed 90-10 plan implementation for Miscellaneous group effective January 1, 2010. Given the likely April 1 2010 implementation date, an
additional expense (foregone savings) is anticipated. For remaining years in the Forecast, savings are
2011-2021 LRFF - SALARIES AND BENEFITS CONSTRAINED TO RATE OF REVENUE GROWTH, WITH NO
INCREASES WHEN DEFICITS WOULD RESULT
24 City of Palo Alto
2011
APPENDIX 1: ALTERNATE SCENARIOS, CONTINUED
APPENDICES
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,714 20,387 21,162 21,951 22,820 23,733 24,670 25,388 26,034 26,664
Property Taxes 25,982 25,907 25,323 25,523 26,477 27,520 28,688 30,016 31,458 33,060 34,811 35,996 37,016
Transient Occupancy Tax 6,858 7,021 7,400 7,731 8,476 8,633 8,931 9,239 9,614 9,974 10,102 10,375 10,644
Utility User Tax 11,296 11,429 10,824 10,909 11,119 11,379 11,707 11,761 12,029 12,306 12,581 12,848 13,105
Documentary Transfer Tax 3,707 3,613 4,000 4,231 4,391 4,562 4,741 4,929 5,127 5,337 5,513 5,695 5,829
Other Taxes and Fines 2,047 2,330 2,137 2,396 2,473 2,566 2,664 2,770 2,881 2,996 3,110 3,227 3,348
Subtotal: Taxes 67,881$ 68,518$ 69,191$ 70,504 73,323 75,822 78,682 81,535 84,842 88,342 91,506 94,175 96,606
Charges for Services 19,593 20,068 21,000 21,525 22,225 23,058 23,934 24,892 25,887 26,923 27,946 28,994 30,081
Permits and Licenses 4,720 4,533 4,646 4,762 4,917 5,101 5,295 5,507 5,727 5,956 6,165 6,396 6,636
Return on Investment 2,624 1,646 1,337 1,322 1,324 1,339 1,361 1,386 1,421 1,466 1,493 1,519 1,542
Rental Income 14,397 13,716 13,716 14,059 12,251 12,710 13,193 13,721 14,270 14,841 15,404 15,982 16,581
From other agencies 333 155 155 159 164 170 177 184 191 199 206 214 222
Charges to Other Funds 11,027 10,622 10,698 10,798 11,149 11,567 12,006 12,486 12,986 13,505 14,018 14,544 15,090
Other revenues 2,360 1,490 1,513 1,551 1,602 1,662 1,725 1,794 1,866 1,940 2,014 2,090 2,168
Total Revenues Before Transfers 122,936$ 120,748$ 122,257$ 124,680 126,953 131,429 136,373 141,504 147,190 153,173 158,752 163,913 168,926
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947$ 139,433$ 140,962$ 144,134 147,185 152,470 158,256 164,262 170,858 177,788 184,352 190,537 196,615
Expenditures
Salaries 61,080 59,020 60,003 60,661 61,798 63,047 64,321 65,621 66,947 68,299 69,678 71,085 72,520
Benefits 32,900 29,525 29,645 33,006 34,505 37,564 38,467 39,518 40,589 41,745 42,838 44,098 45,339
Subtotal: Salaries and Benefits 93,980$ 88,545$ 89,648$ 93,667 96,303 100,611 102,788 105,139 107,536 110,044 112,516 115,183 117,859
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988$ 128,475$ 130,435$ 134,097 138,284 142,589 146,024 149,672 153,405 157,289 161,178 165,305 169,485
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
TOTAL EXPENDITURES 146,625$ 139,399$ 141,899$ 145,702 150,350 155,146 159,085 163,256 167,533 171,982 176,459 181,198 186,014
Net Operating Surplus/(Gap)(1,678)$ 33$ (937)$ (1,568) (3,165) (2,676) (830) 1,006 3,325 5,806 7,893 9,339 10,600
Drawdown on BSR for BOA - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678)$ 33$ (937)$ (1,568) (3,165) (2,676) (830) 1,006 3,325 5,806 7,893 9,339 10,600
Drawdown on Budget Stabilization Reserve
Comprehensive Annual Fin. Rpt. Recon. (89)$ -$ -$
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT)(1,767)$ 33$ (937)$ (1,568)$ (3,165)$ (2,676)$ (830)$ 1,006$ 3,325$ 5,806$ 7,893$ 9,339$ 10,600$
2011-2021 LRFF - COMBINED OPTIMISTIC SCENARIOS
City of Palo Alto 25
2011
APPENDICES
FY 2010
Actual
FY 2011
Adopted
FY 2011
Projected FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021
Revenues
Sales Taxes 17,991$ 18,218$ 19,507$ 19,578$ 20,257$ 21,016$ 21,825$ 22,680$ 23,592$ 24,542$ 25,270$ 25,811$ 26,405$
Property Taxes 25,982 25,907 25,323 25,630 26,442 27,349 28,371 29,491 30,672 31,973 33,428 34,368 35,129
Transient Occupancy Tax 6,858 7,021 7,400 7,674 7,914 8,476 8,762 9,074 9,401 9,750 10,027 10,303 10,575
Utility User Tax 11,296 11,429 10,824 10,809 11,018 11,278 11,602 11,655 11,923 12,198 12,475 12,743 13,002
Documentary Transfer Tax 3,707 3,613 4,000 4,209 4,362 4,530 4,706 4,890 5,084 5,289 5,479 5,665 5,914
Other Taxes and Fines 2,047 2,330 2,137 2,360 2,390 2,432 2,480 2,542 2,612 2,691 2,766 2,842 2,920
Subtotal: Taxes 67,881 68,518 69,191 70,260 72,384 75,080 77,746 80,332 83,283 86,443 89,445 91,732 93,944
Charges for Services 19,593 20,068 21,000 21,210 21,475 21,851 22,288 22,845 23,474 24,178 24,855 25,538 26,241
Permits and Licenses 4,720 4,533 4,646 4,692 4,751 4,834 4,931 5,054 5,206 5,362 5,512 5,664 5,819
Return on Investment 2,624 1,646 1,337 1,312 1,306 1,324 1,348 1,375 1,406 1,454 1,454 1,471 1,520
Rental Income 14,397 13,716 13,716 13,853 11,805 12,012 12,252 12,558 12,904 13,291 13,663 14,039 14,425
From other agencies 333 155 155 157 159 161 165 169 173 179 184 189 194
Charges to Other Funds 11,027 10,622 10,698 10,805 10,940 11,132 11,354 11,638 11,958 12,317 12,662 13,010 13,368
Other revenues 2,360 1,490 1,513 1,529 1,548 1,575 1,606 1,646 1,692 1,742 1,791 1,841 1,891
Total Revenues Before Transfers 122,936 120,748 122,257 123,818 124,368 127,969 131,691 135,618 140,095 144,966 149,565 153,482 157,402
Operating Transfers-In 22,011 18,684 18,705 19,453 20,232 21,041 21,882 22,758 23,668 24,615 25,599 26,623 27,688
TOTAL REVENUES 144,947 139,433 140,962 143,271 144,599 149,009 153,573 158,376 163,763 169,581 175,164 180,105 185,090
Expenditures
Salaries 61,080 59,020 60,003 61,172 62,395 63,643 64,916 66,215 67,539 68,890 70,267 71,673 73,106
Benefits 32,900 29,525 29,645 33,392 37,180 40,923 42,487 48,142 52,071 56,159 60,461 65,063 69,844
Subtotal: Salaries and Benefits 93,980 88,545 89,648 94,564 99,576 104,567 107,403 114,357 119,610 125,048 130,729 136,736 142,950
Contract Services 8,899 10,180 10,591 10,382 10,833 11,116 11,449 11,792 12,146 12,510 12,885 13,272 13,670
Supplies & Materials 2,867 3,242 3,262 3,541 4,112 4,235 4,362 4,493 4,628 4,767 4,910 5,057 5,209
General Expense 9,341 10,022 10,448 10,172 10,375 10,686 11,007 11,337 11,677 12,027 12,388 12,760 13,143
Rents and Leases 627 663 663 774 789 813 837 862 888 915 942 970 999
Facilities and Equipment 1,734 452 452 459 468 482 496 511 526 542 558 575 592
Allocated Charges 14,540 15,371 15,371 15,102 15,404 14,646 15,085 15,538 16,004 16,484 16,979 17,488 18,013
Total Expenditures Before Transfers 131,988 128,475 130,435 134,994 141,557 146,545 150,639 158,890 165,479 172,293 179,391 186,858 194,576
Transfers to Other Funds
Operating Transfers Out 4,737 1,122 1,662 1,167 1,214 1,263 1,314 1,367 1,422 1,479 1,538 1,600 1,664
Transfer to Infrastructure 9,900 9,802 9,802 10,438 10,852 11,294 11,747 12,217 12,706 13,214 13,743 14,293 14,865
TOTAL EXPENDITURES 146,625 139,399 141,899 146,599 153,623 159,102 163,700 172,474 179,607 186,986 194,672 202,751 211,105
Net Operating Surplus/(Gap) (1,678) 33 (937) (3,328) (9,024) (10,092) (10,127) (14,098) (15,844) (17,405) (19,508) (22,645) (26,015)
Drawdown on BSR for BOA - - - - - - - - - - -
Net Operating Surplus/(Gap) (1,678) 33 (937) (3,328) (9,024) (10,092) (10,127) (14,098) (15,844) (17,405) (19,508) (22,645) (26,015)
Drawdown on Budget Stabilization Reserve -
Comprehensive Annual Fin. Rpt. Recon. (89)
Subtotal (89) - - - - - - - - - - -
GRAND NET SURPLUS (DEFICIT) (1,767)$ 33$ (937)$ (3,328)$ (9,024)$ (10,092)$ (10,127)$ (14,098)$ (15,844)$ (17,405)$ (19,508)$ (22,645)$ (26,015)$
2011-2021 LRFF - COMBINED PESSIMISTIC SCENARIOS
26 City of Palo Alto
2011
APPENDIX 2: CITY EXPENSE CHARTS
APPENDICES
Citywide Healthcare Expenses
$0
$5
$10
$15
$20
$25
$30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Mil
l
i
o
n
s
Active Employees Retirees
Citywide Pension Expense
$6.1
$4.8 $3.8 $2.4
$15.6
$18.2 $19.5$20.8
$22.9
$20.0 $19.5
$23.3 $24.8
$28.9
$6.9
$28.5
$0
$5
$10
$15
$20
$25
$302000200120022003200420052006200720082009201020112012201320142015Mi
l
l
i
o
n
s
City of Palo Alto 27
2011
APPENDIX 3: EXCERPT FROM CIP BUDGET – BASIS FOR INFRASTRUCTURE
SCENARIO ASSUMPTIONS
APPENDICES
28 City of Palo Alto
2011
APPENDICES
APPENDIX 3: EXCERPT FROM CIP BUDGET – BASIS FOR INFRASTRUCTURE
SCENARIO ASSUMPTIONS, CONTINUED
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AMERICANS WITH DISABILITIES ACT STATEMENT
Contributors Nancy Nagel
Tarun Narayan
Christine Paras
Lalo Perez
Joe Saccio
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The City of Palo Alto is located in northern Santa Clara County, approximately
35 miles south of the City of San Francisco and 12 miles north of the City of San Jose.
Spanish explorers named the area for the tall, twin-trunked redwood tree they camped
beneath in 1769. Palo Alto incorporated in 1894 and the State of California
granted its first charter in 1909.
Phone:650-329-2100 Fax:650-325-5025
City of Palo Alto
250 Hamilton Ave
Palo Alto, CA 94301
www.cityofpaloalto.org
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1
FINANCE COMMITTEE
Regular Meeting
Tuesday, February 1, 2011
Excerpt from the Finance Committee minutes of
February 1, 2011
Chairperson Scharff called the meeting to order at 7:10 p.m. in the Council
Conference Room, 250 Hamilton Avenue, Palo Alto, California.
Present: Scharff (Chair), Schmid, Shepherd
Absent: Yeh
3. Update to Long Range Financial Forecast, 2011-2021.
Director of Administrative Services, Lalo Perez gave a brief presentation of the
upcoming budget forecast. He started with a ten year view beginning with Fiscal
Year 2012. Staff was requesting feedback from the Finance Committee
regarding their thoughts on the forecast as it was presented.
Senior Financial Analyst, Nancy Nagel presented the assumptions and the
information the base model showed. She compared the differences between the
presented and past forecasts and walked through the alternate scenarios. She
explained there was an anticipated slow growth to financial revenue recovery
over the next ten year period. In the base model the anticipated growth would
average 3.1 percent per year, the landfill was a revenue based program and
therefore the closure meant there would be a $2.2 million loss in rent per year
beginning in 2013 to the General Fund. In terms of salaries, it was assumed
there would be no increases during the Fiscal Year 2012; for 2013 it had been
assumed the miscellaneous group would receive a 2 percent increase and for
2014 and the subsequent years there would be a 2 percent increase. In terms
of pensions, Staff had received an update from the Public Employee Retirement
System (PERS) it was determined by 2014 PERS would be 12.5 percent of the
General Fund budget. The 2012 figures were certain where the 2013 and 2014
figures were assumptions. Health care costs were assumed to increase by the
same percentages as in the actuarial valuation of retiree medical which was 6.5
percent per year for the first three years and 6 percent for the subsequent
2
years. The miscellaneous 90/10 cost sharing plan would begin on April 1, 2011.
For infrastructure the base model assumption was the financial reserve would
be that which was budgeted in the Capital Improvement Project (CIP) budget
which increased 4 percent per year. She noted earlier models included an
additional million dollars per year due to the need for increased funding in
infrastructure. Recent trends indicated City wide there would be a four fold
increase in pension costs between Fiscal Years 2001 and 2011. She stated for
the first five years of the forecast the expenses were higher than the revenues.
Later in the forecast the expenses level out into surplus. She summarized the
projections for the upcoming years as, in 2011 the deficit was $.9 million, in
2012 a $2.2 million, and she stated if you were to add the deficit with the
surplus together between 2011 and 2021 it added to a deficit of $11.3 million.
Mr. Perez stated the current forecast was more manageable than the previous
year; although, the Council may still have difficult decisions to make. He noted
if there were concessions from the safety labor groups there would be no gap in
2012. The current negotiations were with the Fire Department since the Police
Department was still under contract until June 30, 2011. He stated 41 percent
of the City’s budget was spent on the safety division, approximately $57
million. In the non-safety labor groups the City restructured to a two-tier
retirement system and will be beginning the cost sharing for the health care
premiums. He stated the structural changes have been effective, although if
there was still a deficit of $2 million that could likely lead to Staff showing the
Finance Committee recommendations in the proposed budget with eliminations
of services and a reduction in the work force.
Council Member Schmid stated the Utility Users Tax (UUT) passed coincident
with the assuming responsibilities of the Palo Alto Unified School District
(PAUSD). The payments to the PAUSD increased and he asked what the rates
of acceleration for those payments were.
Mr. Perez stated the increase was based on the inflation of the prior December.
For example Staff was currently calculating for December 2010 which was an
increase of 0.8 over the $6 million figure.
Council Member Schmid stated the UUT appeared to have doubled over the last
15 years. He asked whether the City was receiving a proportionate increase of
that tax each year.
Mr. Perez stated a small portion of the UUT was distributed to the PAUSD with
the remainder staying with the City.
Council Member Schmid stated if there was an increase in the utility rates of 6
percent, 3 percent would be going to the PAUSD.
3
Mr. Perez explained there were two sides to the UUT, the commodities and the
phone and taxes. He clarified the correlation between the UUT commodities was
related to rate increases. He noted there was a decrease of approximately
$250,000 in the phone area of the UUT due to a correction by a major
telephone carrier.
Council Member Schmid asked if the telephone tax went directly to the City or
was it part of the overall UUT sharing with the PAUSD.
Mr. Perez stated all the tax revenue was General Fund monies so all of it was
received directly to the City from the telephone companies.
Council Member Schmid stated the expectation of rents was increasing at a
slower rate than that of the other items listed.
Mr. Perez stated rents were tied into the cost of inflation and Staff felt the rate
of increase was along the appropriate line. He mentioned Stephen Levy, a local
economist had indicated if the revenues were in a 2 to 3 percent growth the
rents anticipated were reasonable.
Council Member Schmid stated in reviewing the base scenario of the forecast
the actual savings does not begin until 2015. He asked if the assumptions being
presented were realistic assumptions in a base case model. With the goal of the
base case model not being a forecast but more of a cure for what that City had
to deal with.
Mr. Perez stated the assumption was that the City was not going to see the
increases and absorb them but rather utilize them to renegotiate labor
agreements. He noted employees needed to give greater contributions to the
City as expenditures exceeded revenues. He clarified there needed to be a
balance between employee contributions and revenues.
Council Member Schmid stated the forecast showed an optimistic view with
regard to the safety labor groups accepting certain conditions. If that is the
case then there was twice the optimism that PERS would be able to run their
operation effectively.
Mr. Perez stated the PERS pension program results area were largely unknown
and therefore difficult to predict.
Council Member Schmid stated he saw there were assumptions being made in
the areas of retiree medical costs and pensions. He stated concerns with the
risks of putting in base case-assumptions regarding CalPERS making positive
strides in both the medical and pension arenas.
4
Mr. Perez stated the concerns were legitimate and he agreed. Unfortunately,
there was nothing else for Staff to base their assumptions on. The projected
PERS rates through 2014 were set for now and the medical actuary
assumptions were at 6 percent; those numbers were used to create the base
model figures.
Council Member Shepherd stated her first concern was the health care costs
which increased by 15-16 percent in the last year. She noted a recent court
ruling that influenced her opinion regarding the 6 percent increase being too
low. She felt CalPERS did not have a strong investment strategy. She stated her
understanding was if the safety labor groups joined the pension and health care
plans that contribution would provide cushion against the budget deficits. She
had a conflict with the projected infrastructure budget which she felt was too
low. As part of her infrastructure concern, she noted the Cubberley transaction
in 2014 might change which could add revenue or reduce expenses.
Mr. Perez stated the City paid approximately $6 million to the PAUSD for the
use of Cubberley and other sites. He noted the current contract had the option
to exercise a five-year extension which Council would need to decide in
December of 2013.
Council Member Shepherd stated the rents at Cubberly showed $0.60 to $0.70
per square foot for artists, she asked whether there were increases to the rents
or whether the rents had been reviewed as a potential source of funding to
make improvements to the facility.
Mr. Perez stated those were valid issues and were decision points being brought
forward for Council consideration. He stated the Infrastructure Blue Ribbon
Commission (IBRC) had requested information regarding the utilization of
assets and whether or not we were getting the market return for the facilities.
The answer was no, because of prior Council policy decisions which had allowed
for lower than market rents to non-profit organizations.
Chair Scharff agreed that the base case model was wildly optimistic and did not
consider the infrastructure issues. He noted each alternative scenario appeared
to cost an additional $10 million annually for infrastructure.
Mr. Perez stated that was an accurate assessment until the backlog is updated.
Chair Scharff stated the $10 million should be budgeted no matter which
scenario was chosen and the deficits should be shown so Council could make an
informed decision.
Mr. Perez stated what was being reviewed at the time was a forecast; Council
would have the opportunity make policy decisions during the proposed budget
process.
5
Chair Scharff stated if the City was serious regarding the intent of the IBRC and
resolving the infrastructure deficit the budget, whether forecasted, proposed or
actual it needed to reflect all of the necessary figures. He asked what Staff was
seeking from the Committee.
Mr. Perez stated Staff was looking for feedback from the Committee in regards
to what items in the forecast needed to be re-worked for a more proficient
discussion. He confirmed the Committee was requesting the base case model
should include the PERS increase of 3 percent after FY 2014, the 10 percent for
health care instead the assumed 6 percent, and the $10 million annually for
infrastructure.
Council Member Schmid asked for clarification on the amount of funds being
spent on the Capital Improvement and asked if it was funneling through the
Infrastructure Fund. The amount being spent on capital improvements was $20
million with $10 million of the total going through the Infrastructure Reserve.
His understanding was a large portion of the funds were used for technology
and vehicle replacement although a reasonable portion was reflecting Staff time
spent on infrastructure.
Mr. Perez stated that there were multiple sources of funding outside of the
General Fund such as State or Federal grants.
Council Member Schmid asked for clarification about why the amount being
budgeted was $10 million and the amount necessary was higher.
Mr. Perez stated the amount showed in the forecasted budget was the amount
being transferred into the Fund where there were remaining dollars from an
ongoing annual transfer.
Council Member Schmid stated to clarify there needed to be $20 million added
to the fund per year to make up for the long term forecast needing $400 million
over twenty years.
Mr. Perez stated the $20 million amount was subject to change with inflation
although it was a good number to bring to the discussion.
Council Member Schmid asked for an accurate amount that was being spent
each year on infrastructure including the $10 million from the Infrastructure
Reserve and the amount from other sources.
Mr. Perez stated Staff would return with firm numbers to assist in the
explanation in the multiple funding sources and resources.
Chair Scharff asked for clarification between Capital Projects and maintenance
of existing Capital Infrastructure.
6
Mr. Perez clarified there was an amount of ongoing work or maintenance
considered Capital. There was a certain amount that needed to be completed
each year as well as an amount of work that was considered backlog which
needed to be included in the numbers budgeted.
Acting Director of Public Works, Mike Sartor stated there was routine custodial
work or operating maintenance that was funded out of the Operating Budget.
Maintenance of a building came from the Capital Budget for items such as
roofing, unfinished or refurbished interior work, any project greater than
$50,000. Capital Improvements were when a building was remodeled or ground
breaking a new facility.
Council Member Schmid asked for clarification on the annual sidewalk
maintenance which was shown on the backlog schedule.
Mr. Sartor stated there were projects under contract which were annual Capital
Improvement Projects (CIPs) such as sidewalk maintenance.
Council Member Schmid asked whether that type of work was listed in the
Public Works budget or the Infrastructure Reserve Fund.
Mr. Sartor stated both funds were utilized. He clarified Infrastructure reserve
Fund monies were managed by the Public Works Department.
Council Member Schmid asked whether there were Public Works funds included
independent of the Infrastructure Reserve.
Mr. Perez stated the Public Works Department had an Operations Budget which
indeed incurred costs for the maintenance such as sidewalks.
Mr. Sartor explained the sidewalk maintenance program was unique to Palo
Alto. Part of the sidewalk Capital budget included the concrete crews who
perform the concrete work in the field.
Mr. Perez stated in an effort to eliminate future confusion in the terminology
being used surrounding the budget, the IBRC was altering the use of the term
maintenance which was used in both the Capital and the Operating Budgets.
Council Member Schmid asked why the Cubberley site, the bicycle or pedestrian
pathways, and the public safety building were not listed in the backlog
schedule.
Mr. Sartor stated the public safety building was mentioned in the note below
the backlog schedule although not significantly pointed out in the backlog itself.
He noted the list was currently being revised and prioritized.
7
Council Member Schmid stated the Cubberley site should be included.
Mr. Perez stated he felt the need could be identified although a note should be
retained informing the reader there were pending policy decisions.
Council Member Schmid stated he understood a portion of the facility was being
rented from the Palo Alto Unified School District (PAUSD) and the City owned
eight acres.
Mr. Perez noted there were two policy decisions needing to be made
surrounding both the Cubberley site and the eight acres. The option to renew
the lease on the Cubberley site from the PAUSD was under consideration as
was the use of the eight acres by the Foothill/De Anza Community College. The
question at hand was whether the Capital Improvement Projects should be
completed without either of those options being decided.
Chair Scharff asked whether Staff would be bringing forward structural changes
that could offset the anticipated deficit of $11 million in 2012.
Mr. Perez stated that in the base there is an increase assumption that could be
removed. It would remove a million dollars in deficit in 2013. He add that if
there is no structural change there would be no salary increases.
Chair Scharff asked whether there was adequate Staff and resources to make
and identify the requested changes.
Mr. Perez stated given the current available resources he felt uncertain about
whether the changes could be made by the given timeframe of April 2011.
Council Member Schmid suggested if Staff returned to the full Council with a
decision on infrastructure and present their proposed changes it may alleviate
some necessary Staff strain.
Mr. Perez clarified Staff would have a separate discussion with the Council
regarding funding the additional $10 million for Infrastructure Reserves. He felt
a decision of that magnitude would be better served as a direction to Staff by
the full Council. He stated ensuring the full Council was going in the same
direction benefited the Staff performing the work.
Council Member Schmid stated the goal would be to present the actual updated
base number for the infrastructure data.
Mr. Perez stated Staff was not necessarily close to confirming the base data on
the needs for the infrastructure and noted recently the 17 members of the IBRC
had broken into three committees to corroborate the data.
8
Council Member Shepherd stated Council had given a clear direction to the
IBRC to examine the infrastructure needs and return to Council with a
methodology for paying for them. It was expected to have substantial figures
by the close of 2011; although since the IBRC was not ready with the data she
asked if Staff could present an anticipated timeframe.
Mr. Perez stated the IBRC members had significant concerns regarding which
funding sources should be involved in their discussions; Staff had informed
them which Funds were used for what type of work. They had informed Staff
they were not clear as to the timeline expected of them by Council. They
requested to present to Council their ideas and thoughts on their timeline and
request input form the Council.
Mr. Sartor stated there was a Study Session scheduled for March 14, 2011 to
review their work to date.
Mr. Perez suggested a Study Session on the Long Range Financial Forecast on
March 14th with the revisions requested by the Finance Committee the same
day the IBRC presented their work.
Chair Scharff stated he did not see there would be a need for less than $10
million per year in any of the presented scenarios.
Council Member Shepherd stated the current percentage of employees retiring
had been left off of the forecast; although having added in those figures it
would clearly alter the data. She asked how difficult it would be to consider the
trend in order to grasp a better understanding of when the 50/50 would begin,
where the City was paying for the same number of people who were retired as
were employed.
Mr. Perez stated the forecast was based on the assumption there would be no
changes to the 90/10 plan which would trigger another wave of retirements by
the end of March 2011. He stated there may be a difference in the numbers
with the rate of health care increases moving forward due to the dated health
care medical costs being used. A new actuarial as of June 30, 2011 will be
completed in the Fall of 2011.
Council Member Shepherd stated there seemed to be a trend in the increase of
regulatory costs which was occurring annually. She noted those costs did not
appear in the forecast and asked why.
Mr. Perez stated the lack of regulatory cost data placed under the impact
section was an oversight. He clarified Staff was reviewing the Legislative
information in an attempt to verify the costs and benefits that may be
implemented.
9
Council Member Shepherd stated the City needed to be aware of costs that
have not been implemented although could have future impacts to the budget,
such as Open Space shifting to CalFire. She voiced concern for services being
taken from the community in order for the City to stay regulated.
Mr. Perez stated Staff would include known information regarding the State
Legislative decisions as they could impact the City financials.
Council Member Schmid stated CalPERS had considered the average employee
was retiring at 30 years although Staff indicated the reality was after 22 years.
Ms. Nagel stated the time an employee worked prior to retirement was a
separate number than the retiree medical discussion. She clarified one reason
the PERS rates were inclining at such a steep rate for the next three years was
because of a new demographic study performed by PERS.
Mr. Perez stated Staff had compiled the financial impact of the retiree however
did not calculate the actual number of years employed prior to retirement. He
stated the concern was, as restructuring occurs within an agency, there were
fewer public employees therefore there was fewer people contributing to the
need of the funding. At some point there needs to be consistency for PERS to
be able to pay out, if that need is not met, there will be rate increases.
CITY OF PALO ALTO
PROCLAMATION
WELCOMING EXCHANGE STUDENTS AND CHAPERONES FROM
TSUCHIURA CITY, IBARAKI, JAPAN
WHEREAS, the exchange program between middle schools is the foundation of the
Sister City program, which attempts to promote international and intercultural
understanding amongst the youth; and
WHEREAS, the two cities have worked together to involve their respective middle
school students and their families in cultural and educational exchanges and special
programs; and
WHEREAS, the opportunity to host Tsuchiura students here and to send Palo Alto
students to Tsuchiura, Japan has proven to be mutually beneficial.
NOW, THEREFORE, I, Sidney A. Espinosa, Mayor of the City of Palo Alto, on
behalf of the City Council, hereby express our heartfelt welcome and record
congratulations and the best wishes from the City of Palo Alto, on the occasion of the
visit of Ms. Manami Wada, Ms. Ayano Yamada and 16 students (Naoto Muromachi,
Megumi Maruo, Uto Morita, Mayu Yanagida, Shingo Shoda, Aya Matsumoto, Masanobu
Noguchi, Minako Okazaki, Ryoma Kinoshita, Asaka Imaizumi, Shu Komatsuzaki,
Izumiko Imoto, Kenjiro Kodaira, Mai Okawa, Keita Isaka, Minami Okada).
I wish to thank Tsuchiura City for their generosity and hospitality tended toward young
people from Palo Alto for the last 18 years.
Presented: March 2011
________________________
Sidney A. Espinosa
Mayor
1
City of Palo Alto
PARK AND OPEN SPACE REGULATIONS
(Last Updated June 2022)
Contents
R1-1. DEFINITIONS................................................................................................................... 2
R1-2. APPLICABILITY ............................................................................................................... 2
R1-3. CLOSURE OF FACILITIES - AUTHORITY ....................................................................... 2
R1-4. CONTENTS OF PERMIT APPLICATION; SUBMISSION ................................................. 3
R1-5. ACTION ON PERMIT APPLICATION ............................................................................... 3
R1-6. FOOTHILLS PARK – RESERVATIONS AND VEHICLE ENTRY ...................................... 4
R1-7. PERMIT – EXHIBITION .................................................................................................... 5
R1-8. HOURS OF PARK CLOSURE .......................................................................................... 5
R1-9. HAZARDOUS GAMES OR ACTIVITIES ........................................................................... 5
R1-9A. USE OF METAL DETECTORS IN PARKS .................................................................... 6
R1-10. PICNIC SITE USAGE ..................................................................................................... 6
R1-10A. LYTTON, COGSWELL AND KING PLAZA................................................................... 6
R1-10B. LYTTON PLAZA NOISE REGULATION ....................................................................... 7
R1-11. RACQUET COURT (TENNIS AND PICKLEBALL) USAGE ............................................ 7
R1-12. ATHLETIC FIELD USE ................................................................................................... 8
R1-13. PEERS PARK AND JOHNSON PARK VOLLEYBALL USE ............................................ 8
R1-14. SKATEBOARD FACILITY .............................................................................................. 9
R1-15. GOLF COURSE ............................................................................................................. 9
R1-16. SWIMMING .................................................................................................................... 9
R1-17. BOAT USE ....................................................................................................................11
R1-18. BICYCLES, SKATEBOARDS AND ROLLER SKATES ..................................................11
R1-19. HUMAN FLIGHT ...........................................................................................................12
R1-20. TRAIL USE SPEED LIMITS ..........................................................................................12
R1-20A. USE OF DESIGNATED TRAILS, PATHS AND RECREATIONAL LAWN AREAS IN
OPEN SPACE LANDS ..............................................................................................................12
R1-21. COMMERCIAL ACTIVITIES AND SOLICITATION ........................................................12
R1-21A. COMMERCIAL PHOTOGRAPHY AND FILMING .......................................................12
R1-22. RESTROOMS ...............................................................................................................13
R1-23. UNAUTHORIZED USE OF KEYS OR LOCKS ..............................................................13
R1-24. WATER POLLUTION ....................................................................................................13
R1-25. HARMFUL SUBSTANCES ............................................................................................13
R1-26. LITTERING ...................................................................................................................13
R1-27. DISPOSAL OF EFFLUENT ...........................................................................................14
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R1-28. SMOKING .....................................................................................................................14
R1-29. FIREWORKS.................................................................................................................14
R1-30. ANIMALS ......................................................................................................................14
R1-31. NUISANCE DOGS ........................................................................................................15
R1-32. DOG EXERCISE AREA ................................................................................................15
R1-33. UNAUTHORIZED CONSTRUCTION ACTIVITIES ........................................................16
R1-34. USE OF UTILITIES .......................................................................................................16
R1-35. GATHERING WOOD IN OPEN SPACE AREAS ...........................................................16
R1-36. PARKING RESTRICTIONS ...........................................................................................16
R1-37. OPERATION OF MOTOR VEHICLES ...........................................................................17
R1-37A. VEHICLE WEIGHT LIMIT ON BAYLANDS ROADS AND PARKING LOTS ................17
R1-38. VIOLATION – PENALTY ...............................................................................................17
R1-39. PLAYGROUNDS ...........................................................................................................17
R1-40. COMMUNITY GARDENS ..............................................................................................17
R1-1. DEFINITIONS
The following words and phrases, whenever used in these regulations, shall be
construed as defined in these regulations.
A. "City" means the City of Palo Alto.
B. "department" means the Community Services Department of the City.
C. "facility" or "park facility" means any body of water, land, campsite, garden, trail,
levee, recreation area, building, structure, system, equipment, machinery or
other appurtenance owned, managed, controlled or operated by the Community
Services Department.
D. “director” means the Director of Community Services of the City.
R1-2. APPLICABILITY
The provisions of these regulations apply to all facilities under the jurisdiction of the
Community Services Department.
R1-3. CLOSURE OF FACILITIES - AUTHORITY
The director shall have the authority to close any park facility or portion thereof and
require the exit of all persons therein when he or she determines that conditions exist in
said facility or portion thereof which presents a hazard to the facility or to public safety.
No person shall use, enter or remain in any facility, Park or Open Space which has been
posted as being closed under this authority.
A. The Open Space, Parks and Golf Division Manager shall have the authority
to close Open Space trails which have been designated as “seasonal trails”
when weather conditions predispose the trail or surrounding habitat to
damage or erosion. Such trail closures will be posted on park bulletin
boards and at the affected trail junctions.
B. The Open Space, Parks and Golf Division Manager shall have the authority
to temporarily close Open Space trails or facilities when the damage of flora
or fauna are threatened by humans or their pets. Such facility closures will
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be posted on park bulletin boards and at affected trail junctions or facilities.
R1-4. CONTENTS OF PERMIT APPLICATION; SUBMISSION
Whenever a permit is required by provision in these regulations, an application shall be
filed with the director stating:
A. The name of each applicant, sponsoring organization and the person(s) who is in
charge of or responsible for the proposed activity;
B. The address and telephone numbers of each person and/or entity named in
subsection (A);
C. The name of the Park, Open Space land, building, field or tennis courts
requested for the activity, specifically identifying the location of the activity within
the park or room within the building;
D. The date and starting time of the proposed activity, together with the anticipated
arrival time of guests; The finish time of the proposed activity, including cleanup;
E. The number of persons expected to attend the activity;
F. Additional City facilities requested, such as personnel, tables, chairs, etc;
G. The nature of the proposed activity or activities, including equipment and
vehicles to be brought into the Park or Open Space lands; nature and duration of
the use of such equipment; nature and duration of the use of any amplified
sound; whether fees or donations for service will be solicited or collected; and
whether alcohol will be served.
H. Proof of Palo Alto residency may be required for the permit application.
I. The necessity for street closure in order to hold an event.
J. The permit application shall be filed with the director by no later than seven (7)
days prior to the date of the special event.
R1-5. ACTION ON PERMIT APPLICATION
The director shall issue a permit within five (5) business days after submission of a
completed application if:
A. The proposed activity or use of the facility will not unreasonably interfere with or
detract from the general public enjoyment of the facility;
B. A facility with the required occupancy load capacity is available;
C. All conditions, including, where applicable, the payment of fees, approval of the
Director of Community Services and insurance coverage, security deposits
and/or requirements are met;
D. The proposed activity or use will not entail unusual, extraordinary or burdensome
expense or security operation by the department;
E. If the proposed special event will have more than twenty-five (25) individuals in
attendance, involve road closures, traffic control, or the need for inter-
departmental review (for example, for a “fun run” or a “live music” event), an
additional City-wide special event application from the Police Department may
be required for the event. City-wide special event permit applications are not
generally required for standard picnic reservations. Completed City-wide special
event permit applications may be filed as early as one year before the event but
must be received no later than 30 days before the actual event date, and no later
than 90 days before the actual date of the event if the event requires a street
closure.
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F. The facilities desired have not been reserved for other use;
G. Special conditions requested in applications are reasonable and feasible.
H. The proposed activity will not negatively impact habitat, wildlife, or vegetation in
the Park or Open Space area.
I. Residency requirements, if any, have been satisfied.
R1-6. FOOTHILLS PARK – RESERVATIONS AND VEHICLE ENTRY
A. Resident Reservation Preference. The Towle Campground, Oak Grove Group
Picnic Area, and the Interpretive Center meeting room at Foothills Park shall
have Resident Reservation Preference in making reservations. No other facility
existing as of December 2020 shall have Resident Reservation Preference.
Resident Reservation Preference shall be one that permits residents to have
access to reservations for no longer than the first 25% of the time period during
which reservations for the subject facility may be made. Thus, if the facility in
question is made available for reservation by residents for 4 weeks’ time prior to
the date of the reservation, the facility must be made available for reservation by
non-residents for at least 3 weeks’ time before the date of reservation.
(Note: This rule is governed by the 2020 settlement agreement regarding
Foothills Park).
B. Vehicle Entry Fee. All motor vehicles entering Foothills Park shall be subject to a
vehicle entry fee within the limits set by the Municipal Fee Schedule and
according to the fees set below. Violators shall be subject to administrative
citation for failure to comply with park regulations per PAMC 22.04.030. This
regulation does not apply to City councilmembers, staff, contractors, or
volunteers while conducting official City business/operations in Foothills Park.
Foothills Nature Preserve Vehicle Entry Fee
Foothills Nature Preserve – daily entry for
vehicles that have up to 9 person
capacity
• $6 per vehicle per day;
• Free for City-designated preserve
volunteers, and vehicles with a valid
disabled person parking placard or
license plate.
Free on the following days:
• First Saturday in December
• Third Monday in January (MLK Day)
• First Tuesday in March
• Last Wednesday in April
• Third Thursday in June
• First Friday in October
Foothills Nature Preserve – daily entry for
vehicles that have 10-24 person capacity
$30 per vehicle per day
Foothills Nature Preserve – daily entry for
vehicles that have 25 person or more
capacity
$60 per vehicle per day
(Only available in conjunction with group
permit)
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Foothills Nature Preserve – annual pass
for motor vehicles
(Annual pass allows entry for a motor
vehicle with a capacity of up to 9 persons)
• $65 per year for non-residents;
• $50 per year for Palo Alto residents
and City of PA employees;
• 25% discount for seniors (65+);
• 50% discount for students aged 16-24
(student must be present when
entering)
• Free for active military, veterans,
permanent disability, and low-income
visitors
Foothills Nature Preserve – daily entry for
vehicles in conjunction with a City-
permitted student field trip
Free
Foothills Nature Preserve – library free
pass program
Free regular vehicle (up to 9 person
capacity) entry with pass. Passes
available at Palo Alto libraries, subject to
conditions on pass.
Foothills Nature Preserve – fourth grade
annual pass program
Free. Valid for one year, beginning in
August of the year the student begins 4th
grade and ending the following August
31. Pass allows entry of one regular
vehicle (up to 9 person capacity) when 4th
grader is present.
R1-7. PERMIT – EXHIBITION
No person shall fail to produce and exhibit a permit he or she claims to have upon
request of any department employee, contracted park ranger or any public or peace
officer who desires to inspect the permit for the purpose of enforcing compliance with
any regulations of this chapter.
R1-8. HOURS OF PARK CLOSURE
For purposes of enforcement of the Park and Open Space closure restrictions
promulgated in Chapter 22.04 of the Palo Alto Municipal Code, the terms “sunset” and
“sunrise” are defined with reference to a table of times that is determined annually and
posted at Open Space facilities. Closure times specified in Chapter 22.04 as
implemented by this regulation shall be posted prominently at each Park or Open Space
facility and shall be posted on the City’s web site.
R1-9. HAZARDOUS GAMES OR ACTIVITIES
The playing of games and/or activities involving propelled or thrown objects which are
sharp or heavy (such as stones, shot puts, arrows or javelins) are prohibited except when
a permit is issued by the director in areas compatible for such use. Except in designated
areas of Mitchell Park where inflatable structures can be used by City staff or designated
contractors as part of a City-sponsored program, inflatable structures, miniature trains
designed or used for passengers, pony rides, and dunking tank attractions are prohibited
in Parks or Open Space areas.
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R1-9A. USE OF METAL DETECTORS IN PARKS
Metal detectors for the purpose of scavenging can only be used within park facilities in
such a fashion where turf or landscaped areas are not disturbed, cut or dug into.
R1-10. PICNIC SITE USAGE
Group picnic site reservations at Mitchell Park Arbor, East Meadow, Pine Grove and
Redwood areas; and Rinconada Park Sequoia area are available to Palo Alto residents
only. No more than 60 individuals shall occupy a group picnic site at Mitchell Park Arbor,
East Meadow and Redwood areas; 100 individuals at the Pine Grove picnic area; 75
individuals at Rinconada Park Sequoia picnic area; or 150 individuals at Foothills Park
Oak Grove. No more than 15 individuals shall occupy any table in an individual picnic
site at Mitchell Park and Rinconada Park. With the exception of the two table/one
barbecue at individual picnic sites of Mitchell Park, each group of participants shall not
occupy more than one individual site.
R1-10A. LYTTON, COGSWELL AND KING PLAZA
A. Use of tables: For permitted events and activities, no more than four six-foot
tables are permitted at one time at Cogswell Plaza; no more than ten six-foot
tables are permitted at Lytton Plaza; and no more than twenty six-foot tables are
permitted at King Plaza. Tables shall not be arranged in a configuration longer
than twelve-foot wide span and there must be a minimum of three-feet between
sets.
B. The City shall be compensated the full cost of replacement of any chair, tables or
other furnishings damaged by the event or special use.
C. Special event organizers must cover existing trash receptacles and provide their
own waste stations (compost/recycle/trash) that they will then be responsible for
removing after the event.
D. Damage deposits may be required for any special event or use at the discretion
of City staff.
E. No tables, tents or other structures shall be set up closer than ten (10) feet from
the nearest structure.
F. Shade canopies may be authorized in a permit so long as the shade structure
measures ten-foot by ten-foot, or less. Canopies shall be weighted or anchored
to prevent blowing over.
G. Stage platforms shall be no higher than twenty-four inches tall and ten-feet by
twelve-feet in maximum area.
H. As per the Chapter 22.04 of the Palo Alto Municipal Code, no alcoholic beverages
may be served or consumed at these plaza parks.
I. No barricades or cordoning off areas of the plaza.
J. No jump/bounce houses are permitted on plaza.
K. Special event organizers must supply a layout of all items to be placed within
plaza and be approved by City staff before the event.
L. As per Palo Alto Municipal Code Section 22.04.160, no commercial solicitation or
business transactions other than those associated with and supportive of City
programs or City-sponsored activities for which a permit has been issued by the
director is permitted in parks or plazas.
M. As per Palo Alto Municipal Code section 22.04.300, open flames, including
candles, are not allowed without a permit from the Director in these Plazas.
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R1-10B. LYTTON PLAZA NOISE REGULATION
A. A permit under Palo Alto Municipal Code Section 22.04.040 is not required of any
person in order to engage in the playing of an amplified musical instrument at
Lytton Plaza, which otherwise meets the requirements of sections 9.10.050 and
22.04.180 and subject to the following: the playing of an amplified musical
instrument occurs on a first-come, first-served basis during the following days and
times of day: (a) Monday through Thursday, 5:00 PM to 10:00 PM; (b) Friday,
5:00 PM to 11:00 PM; (c) Saturday, noon to 11:00 PM; and Sunday, noon to 10:00
PM. The term “first-come, first-served” means the first person or group of persons
to commence playing an amplified musical instrument at Lytton Plaza shall be
entitled to play to the exclusion of all others for a period not exceeding three (3)
consecutive hours.
B. A City-wide special event permit application is required of any person seeking to
engage in the playing of an amplified musical instrument at Lytton Plaza outside
of the days and times of day specified in paragraph A above. No unpermitted
amplified musical instrument may be played during the period of time for which a
person holds a permit to play an amplified musical instrument.
C. Paragraph A notwithstanding, a person may file a City-wide special event permit
application to play an amplified musical instrument within the time period specified
in R1-4. If a City-wide special event permit is issued, the permit holder’s right to
play any musical instrument at Lytton Plaza will take precedence over any person
claiming the right to play under the first-come, first-served basis condition set forth
in paragraph A of this Rule.
D. The director will post or caused to be posted to the department’s web site the
days and times of days for which reservations to play musical instruments have
been secured.
E. The preceding paragraphs notwithstanding, the playing of any acoustic musical
instrument at Lytton Plaza is permitted during posted park use hour or, if no hours
are posted, during the regular park use hours.
F. A City-wide special event permit application shall be filed whenever a group of
more than twenty-five (25) persons attends the playing of any musical instrument
or musical instruments regardless of whether any instrument is amplified or
acoustic.
G. The noise ordinances set forth in Palo Alto Municipal Code chapters 9.10 and
22.04 shall apply to all persons playing amplified and acoustic musical
instruments at Lytton Plaza.
R1-11. RACQUET COURT (TENNIS AND PICKLEBALL) USAGE
Any person or group using a City racquet court shall do so according to the following
rules:
A. No person shall operate, drive or ride a bicycle, unicycle, roller skates, roller
blades, skateboard or other coasting device on City-owned tennis courts.
B. No person shall provide or offer lessons for compensation on City-owned
tennis courts except as part of a City-sponsored program, class or camps.
C. City-owned racquet courts may be reserved for City programs and tournament
play only.
D. All players must use the court control board to determine which court they shall
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play on and their playing position.
E. No individual person can occupy a court by him or herself if other persons are
waiting to play.
F. Unleashed dogs are not permitted within courts.
G. No person shall play a sport other than tennis or pickleball on City-owned
courts unless expressly allowed via permit issued by the Community Services
Department.
H. Mitchell Park racquet courts 6 and 7 are dual-use courts with designated
pickleball and tennis times. Pickleball has priority from 8:00 AM to 2:30 PM seven
days a week. Tennis has priority from 3:00 PM to 10:00 PM seven days a week.
If courts are not in use, anyone can use the court but must vacate the space if
the priority sport arrives and needs the space.
R1-12. ATHLETIC FIELD USE
Any person or group using a City athletic field shall do so according to the following
rules:
A. No activity other than softball (or Little League baseball) is permitted at El
Camino Park softball field unless expressly allowed by permit.
B. No activity other than baseball is permitted at Baylands Athletic Center
Baseball Field unless expressly allowed by permit.
C. No activity other than softball is permitted at Baylands Athletic Center
Softball Field unless expressly allowed by permit.
D. No person shall use an athletic field which is posted (on-site, on-line, or by voice
message) as being closed, whether the closure is for excess rainfall or for field
maintenance or other reason.
E. Field markings applied to athletic fields shall be allowed by permit only and must
follow City of Palo Alto Open Space, Parks and Golf Division guidelines.
F. Soccer goals must be anchored at all times when located on the playing fields.
When goals are not being utilized for play, they must be secured off the playing
fields in a manner which will not permit tipping or any hazardous condition that
might cause injury to any person. When a field is being utilized for multiple
purposes, goals that interfere with the intended use of the field shall be provided
by the user groups that require the use of a soccer goal. These goals must be
assembled and disassembled before and after each event. The storage of these
goals can be coordinated with the Recreation Division. Any goal left on site will
be removed and stored until a removal/storage fee of $75.00 is paid.
R1-13. PEERS PARK AND JOHNSON PARK VOLLEYBALL USE
Any person or group playing volleyball or related game at Peers or Johnson Parks shall
do so according to the following rules:
A. Drop-in volleyball or related game play is permitted only in the posted area at
Johnson Park or on the north end of Peers Park.
B. The volleyball area may be reserved for volleyball play, by permit, only on the
first Saturday and first Thursday of each month. The director may make
additional weekend days available for reservation during the months of June,
July and August.
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R1-14. SKATEBOARD FACILITY
The Skateboard Facility, located in John Lucas Greer Park, is for skateboard use only.
Use of roller blades, scooters, bicycles, or any other equipment other than skateboards
is prohibited. Any person using or playing upon the skateboard facility shall do so
according to the following rules:
A. Each person skateboarding in the Skateboard Facility must wear a helmet,
elbow pads and knee pads.
B. Use of roller blades, scooters, bicycles, or any other equipment, other than
skateboards is prohibited.
C. No more than seven persons shall skate in the bowl at any given time.
D. No person shall do a body flip while riding a skateboard.
E. No person shall ride a skateboard facing entirely backwards.
F. Two or more persons may not ride on the same skateboard.
G. No person shall ride a skateboard on their knees.
H. No person shall cause a skateboard to shoot out away from their feet or body.
I. No persons shall skateboard in tandem within three (3) feet in front or behind
another rider.
J. No glass containers are allowed in the facility.
K. No skateboarding is allowed when the facility is wet or while it is raining.
L. Trash receptacles are to be used to dispose of waste or any other unwanted
items.
No person shall use, remain in or enter the Skateboard Facility outside of regular park
hours between 10:30 PM and sunrise (PAMC 22.04.320). No person shall enter or
remain in the Skateboard Facility when that facility is posted as being closed, whether
such closure is because of excess moisture or hazard or for any other reason.
R1-15. GOLF COURSE
Any person or group using or playing upon the golf course shall do so according to the
following rules:
A. No person shall use the golf course, or any portion thereof, without first having
obtained a receipt or other written authorization in due form so to do.
B. No golf player shall cut in on, or double back over, any portion of the course, or
to play upon the course without a receipt duly issued for the round being
played.
C. No golf player shall refuse to or fail to show such golf receipt or other written
authorization to any employee connected with the municipal golf course, when
requested to do so.
D. No person shall willfully or maliciously injure any turf on the golf course or in any
way destroy or injure property thereon or remove property or equipment from the
golf course.
E. Privately owned power golf carts are not allowed to be used on the municipal
golf course.
R1-16. SWIMMING
No person shall swim, bathe or wade in any water or waterways within any park facility
when such activity is prohibited and so posted by the director. No person shall use,
remain in or enter the Rinconada Pool facility between the hours listed as follows:
January 1 through June 15 9:00 PM – 6:00 AM. June 16 through December 31 10:00
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PM – 6:00 AM.
Rules for the safe use of the Rinconada Swimming complex:
A. Children 7 years of age and younger must be directly supervised by a chaperone
16 years of age or older. Chaperones must wear a swimsuit, accompany the child
in the water and be within arm’s length at all times. Children may not be left
unattended in the facility at any time.
B. All swimmers must wear swimsuits. Clothing including undergarments is not
permitted. Clean overshirts are permitted for modesty or sun protection as long
as they are worn over swimsuits. Infants and toddlers who are not yet toilet trained
must wear swim diapers.
C. Flotation devices including water wings, padded swimsuits and inner tubes are
not permitted except US Coast Guard approved lifejackets.
D. Flippers, snorkel masks, and hard balls are not permitted.
E. All persons entering the facility must pay, including those not intending to swim,
except children 2 years of age and younger.
F. Patrons must pay again to re-enter the facility after leaving.
G. Walk at all times on the pool deck.
H. Bicycles, rollerblades, scooters, and skateboards are not permitted on the pool
deck.
I. Dogs, cats and other animals are not permitted on the pool deck (does not apply
to service animals as defined by state and federal law).
J. Fighting, roughhousing, chicken fighting, screaming, profane language, and
pretending to drown is not permitted in the facility.
K. Patrons are not permitted to sit on guard chairs, lane lines, starting blocks or
railings.
L. Barbecues, alcohol and glass/breakable containers are not permitted in the
facility.
M. Food and drinks must be consumed at picnic tables, on grass and farther than 10
feet from poolside.
N. Heed instructions from Lifeguards and overhead announcements at all times.
O. Aquatics staff reserves the right to ask anyone who violates these rules to leave
the facility.
P. To maintain a safe environment, pool rules are subject to change at any time.
Lap Pool:
A. Swimmers must be able to swim competently for at least one lap to enter the deep
end and/or use the diving boards. Lifeguards have sole discretion. Please ask for
a swim test.
B. Lap swimmers using lap lanes during recreation swim may use flippers,
kickboards and snorkels as needed. Flippers, kickboards and snorkels are not
permitted outside of the lap swim lanes. Non-lap swimmers are not permitted to
swim across lap lanes.
Diving boards:
A. One person on the board and ladder at a time.
B. Wait to dive until area is clear.
C. Walk or perform a proper diving approach. Do not run on the diving board.
D. Bounce only once and jump/dive off the end of the board facing forward.
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E. Divers may not jump to anyone in the pool and must swim to the wall unassisted.
After diving, swim out toward the closest ladder. Do not swim under, between or
in front of the diving boards.
Wading Pool:
A. Swimmers must be able to reach the foot pedals to use the “Aquaducks.” Pedaling
with hands is not permitted.
B. Swimmers may not sit on or otherwise block the water pressure of the fountains.
Slide:
A. Swimmers must be no taller than the slide to use it.
B. One person is permitted on the slide and ladder at a time. Form line on the ground.
C. Do not stand, jump or push other swimmers off the top of the slide.
D. Swimmers must go down slide sitting, feet first.
R1-17. BOAT USE
The dock at Foothills Park and the sailing platform at the Baylands Nature Preserve is
intended for the hand launching of canoes, kayaks, small inflatable boats and boats less
than sixteen feet in length. The launching of any larger vessel is prohibited. While hand
carts may be used to carry boats from the parking lot to the dock or sailing platform,
hand carts or other personal equipment may not be used on the docks or left unattended
in the immediate vicinity of the dock or sailing platform. Items left unattended will be
impounded by a park ranger or police officer.
A. Sail boards, sail craft and motorized boats are prohibited on Boronda Lake in
Foothills Park.
R1-18. BICYCLES, SKATEBOARDS AND ROLLER SKATES
A. Bicycles are prohibited on unpaved trails of Foothills Park. Skateboards, roller
skates or blades, scooters, and other coasting devices are prohibited in Foothills
Park.
B. Bicycles are prohibited on unpaved trails of Open Space parks and preserves,
unless designated for bike access within the Pearson-Arastradero and Baylands
Preserves. Skateboards, roller skates or blades, or other coasting devices are
prohibited in Open Space parks and preserves, except on paved, multi-use bike
paths.
C. Helmets: No person shall operate a bicycle or similar device on Parks or Open
Space preserves without wearing an A.N.S.I. or Snell-approved bicycle helmet
for head protection. No parent or guardian shall allow any child under the age
of 18 to ride a bicycle without a helmet.
D. Unsafe operation: No person shall operate a bicycle in a reckless or negligent
manner so as to endanger public property, or the life, limb, or property of any
person or animal. No person shall ride in or upon a portion of a bicycle not
intended for passengers. No person shall operate a bicycle while wearing
earphones that interfere with hearing ambient noise.
E. No person shall leave a bicycle, scooter or skateboard in any place or
position where other persons may trip over or be injured by it.
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R1-19. HUMAN FLIGHT
No person shall hang-glide, parachute, parasail or engage in any human flight on, over,
or into park or Open Space, except by written permit in designated areas.
R1-20. TRAIL USE SPEED LIMITS
The maximum speed for all trail uses is 15 miles per hour, unless a lesser maximum
speed is posted, and no person shall exceed the maximum speed on any trail; however,
no person shall operate a bicycle, or ride a horse or other such animal at a speed greater
than is reasonable, prudent, or safe. Bicyclists and equestrians are required to slow to 5
miles per hour when passing others or approaching blind turns.
R1-20A. USE OF DESIGNATED TRAILS, PATHS AND RECREATIONAL LAWN
AREAS IN OPEN SPACE LANDS
No person other than authorized City staff or other persons specifically authorized by City
staff shall walk, run or tread in any Open Space lands except on designated trails, paths,
recreational lawn areas or roads, unless expressly permitted to do so pursuant to park
regulations or a special use permit. “Designated trails” is defined as those trails which
appear on current City of Palo Alto park maps, planning documents, trail guides and/or
those trails marked with City directional signs.
R1-21. COMMERCIAL ACTIVITIES AND SOLICITATION
Commercial activities are prohibited in Parks and Open Space lands unless they are
associated with and supportive of City programs or City-sponsored activities for which a
permit has been issued by the Director. Persons soliciting for donations or engaging in
commercial activities approved by the Director shall comply with all applicable laws,
including those requirements for permits issued under Title 4 of the Palo Alto Municipal
Code as applicable.
R1-21A. COMMERCIAL PHOTOGRAPHY AND FILMING
No person shall photograph or film for commercial purposes in City Parks or Open Space
except pursuant to a permit authorizing such activity or except for those activities
associated with and supportive of City programs or City-sponsored events. For the
purpose of this section, “photograph or film for commercial purposes” means the
recording, on any medium, of still or motion images that involves the use of professional
models or commercial articles filmed or photographed for the purpose of commercial
advertising, or the use professional casts, settings, or crews in any motion picture,
television, or similar production. This section shall not apply to the commercial operation
of cameras as part of the bona fide reporting of news, or for small photo or film events,
consisting of a single photographer or videographer with a total group size of no more
than 24 persons (permit is required for exclusive use of any area of park land), as long
as all other rules and regulations are followed.
A. Applications shall be submitted not less than ten (10) working days before the
proposed use.
B. No sound amplification equipment, which will disturb the peace, may be used
in connection with any photo shoot, except when used by City employees or
safety officers for purposes of crowd control.
C. No permit shall be granted for any event between the hours of 8:00 PM and
9:00 AM without the prior approval of the Director.
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D. No permit shall be granted when the closure would result in hampering prompt
access to an area or location by emergency vehicles.
E. Wherever appropriate, the City will require the applicant to provide and erect
barricades according to City specifications for public safety. The person or
persons making the application shall be responsible for placing and dismantling
all barricades. All barricades shall be removed within one-half (1/2) hour of the
ending time of the event. Barricades shall also be immediately removed upon
request of any authorized officer or employee of the City. In some situations,
the Permittee may be required by the City to provide traffic control and a
qualified flag person if City streets or parking lots are involved.
R1-22. RESTROOMS
Male persons shall not enter any restroom or washroom set apart for females, and
female persons shall not enter any restroom or washroom set apart for males; except,
this shall not apply to persons with special needs or their accompanying attendants or
children under the age of six years old who are accompanied by a person who is of the
sex designated for that facility and who has reason to be responsible for such person.
R1-23. UNAUTHORIZED USE OF KEYS OR LOCKS
No person other than one acting under the direction of the Director shall duplicate or
cause to be duplicated a key used by the department for a padlock or door lock of any
type or description, nor shall any person divulge the combination of any lock so equipped
to any unauthorized person. No person, other than the one acting under the direction of
the director, shall use a key to access any Park and/or Open Space facilities. The director
may issue keys to user groups. Said user groups must use the keys for permitted activity
only and return issued keys to the City upon completion of the activity. No person shall
place a lock upon any gate or fence in any Park or Open Space area without prior
permission from the Director.
R1-24. WATER POLLUTION
While within the boundaries of any park facility, no person shall throw, discharge or
otherwise place or cause to be placed in the waters of any fountain, pond, lake, stream,
bay or other body of water or in any tributary, stream or drain flowing into such waters
any substance, matter or thing, liquid or solid, including but without limitation to, particles
or objects made of paper, metal, glass, garbage, rubbish, rubber, fuel, plant material,
food matter, fiber and plastics.
R1-25. HARMFUL SUBSTANCES
No person shall possess, place, or apply any substance harmful to any person, property,
wildlife, or vegetation on Park or Open Space lands.
R1-26. LITTERING
No person within any City Park, Open Space lands, and City operated community garden
shall leave any garbage, trash, cans, bottles, papers or other refuse elsewhere than in
the receptacles provided therefor. Disposing of garbage, trash, cans, bottles, papers or
other refuse not generated within City Park or Open Space lands is prohibited. PAMC
22.04.230.
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R1-27. DISPOSAL OF EFFLUENT
No person shall deposit waste water, sewage or effluent from sinks, portable toilets, or
other fixtures upon or into the ground or water.
R1-28. SMOKING
No person shall smoke any substance in any public places or any area that is within
twenty feet of bleachers, backstops, or play structures or any area designated as a
playground, nature trail or nature area or in or on any park facility where smoking is
posted as being prohibited. Pursuant to Palo Alto Municipal Ordinance 9.14.010 (i),
public places are defined as: "Public places" means enclosed areas within publicly and
privately-owned buildings, structures, facilities, or complexes that are open to, used by,
or accessible to the general public. Public places include, but are not limited to, stores,
banks, eating establishments, bars, hotels, motels, depots and transit terminals, theaters
and auditoriums, enclosed sports arenas, convention centers, museums, galleries,
polling places, hospitals and other health care facilities of any kind (including clinics,
dental, chiropractic, or physical therapy facilities), automotive service centers, general
business offices, nonprofit entity offices and libraries. Public places further include, but
are not limited to, hallways, restrooms, stairways, escalators, elevators, lobbies,
reception areas, waiting rooms, indoor service lines, checkout stations, counters and
other pay stations, classrooms, meeting or conference rooms, lecture rooms, buses, or
other enclosed places that are open to, used by, or accessible to the general public.
R1-29. FIREWORKS
No person shall possess, give, sell, discharge, set off, or cause to be discharged, on or
into any portion of Park or Open Space lands any firecrackers, missiles, rockets,
fireworks, or explosives.
R1-30. ANIMALS
No person other than public or peace officers, rangers, city naturalists, animal control
officers in the discharge of their duties shall:
A. Hunt, molest, harm, provide a noxious substance to, frighten, kill, trap, chase,
tease, shoot or throw missiles at any animal within the boundaries of any park
facility, nor remove nor have in his possession the young, eggs or nest of any
such creature;
B. Abandon any animal, dead or alive, within any park facility;
C. Remove any animal not his own from within any park facility; exception is made
to the foregoing in that proper season, fish may by fished and removed from areas
designated for fishing by licensed persons, in accordance with the California Fish
and Game Code and other related laws, and boarded horses may be removed
from a park facility, upon proper notification to the department;
D. Bring into or maintain in or upon any park facility any dog, cat or other animal
unless such animal at all times is kept on a leash (extended no further than six
(6) feet while in Open Space lands) and under full control of its owner or
custodian; provided, however, the Director may designate areas and times within
which persons may exercise, show, demonstrate or train unleashed animals
under full control or their owners or custodians. No person shall allow a dog, cat,
or domesticated animal, even if leashed, to disturb, chase, molest, injure, or take
any kind of native wildlife, whether living or dead, or remove, destroy, or in any
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manner disturb the natural habitat of any animal on Parks or Open Space land.
PAMC 22.04.155
E. Permit cattle, sheep, goats, pigs, or other animals owned by him/her or in his/her
possession to graze within the boundaries of any park facility without express
approval of the director;
F. No person shall keep or raise cattle, horses, sheep, or other livestock on Park
or Open Space land, unless pursuant to a lease, license, or other entitlement of
use granted by the City of Palo Alto.
G. Ride or lead a horse, pony, mule, burro or other animal onto or over any park
facility, other than at times and upon roads or trails designated for riding of
animals; except with approval of the Director.
H. No person owning or having custody or control of any dog shall permit such dog
to defecate on any public street, sidewalk, park or parkway without immediately
removing the resulting excrement at the time of occurrence. The excrement so
removed shall not be disposed of on any property listed in this chapter except in
public refuse receptacles. Persons using service animals are exempt from this
section.
I. No person owning or harboring any dog or other animal shall allow or permit such
dog or animal to swim, bathe or wade in any water or waterways within any park
facility when such activity is prohibited and so posted by the Director.
R1-31. NUISANCE DOGS
No person shall allow or have on Park or Open Space land a dog that is threatening or
a nuisance to people, other animals, or property. This includes, but is not limited to
growling, barking, bearing of teeth, or challenging in any manner, people, animals, or
property. PAMC 6.20.040 Care should be taken with leashed pets in playgrounds to
ensure that their presence does not impact children’s use and they should be removed
upon request from other playground users.
R1-32. DOG EXERCISE AREA
A. Dogs may be allowed off leash only within the designated dog exercise areas in
Hoover Park, Greer Park, Mitchell Park, and Peers Park.
B. Dogs must be licensed, vaccinated, and wearing a collar with ID and license tag.
C. Dogs must be leashed until safely inside the dog park and returned to a leash
prior to exiting.
D. Dog owners must remain in the fenced area and monitor and manage their dogs
at all times.
E. Dogs behaving aggressively must be removed from the dog park immediately.
F. Dog waste must be picked up.
G. Children accompanying dog owners must be closely supervised.
H. No more than three dogs per person.
I. No food or alcohol.
J. The small dog section is for dogs 25lb and less. The mixed size dog section is
for both large and small dogs. (Applicable at dog parks with this option.)
K. Dog Park Hours are 7:00 AM to 9:00 PM.
L. The City of Palo Alto assumes no liability for the users of this area. Use these
facilities at your own risk.
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R1-33. UNAUTHORIZED CONSTRUCTION ACTIVITIES
No person shall deposit any earth, sand, rock, stone or other substance within any park
facility, nor shall he/she dig or remove any such material from within any park facility,
nor shall he/she erect or attempt to erect any building, wharf or structure of any kind by
driving or setting up posts or piles, nor in any manner appropriate or encumber any
portion of the real property owned by, operated, controlled or managed by the
department without a permit from the director.
R1-34. USE OF UTILITIES
A. Electrical, phone, data communication, and cable receptacles in Parks and Open
Space may only be used or accessed for private use within the terms of a special
use permit granted by the Community Services Department.
B. Gas fixtures, water faucet spigots and irrigation water outlets that require a key or
opening device in Parks and Open Space may only be used or accessed for
private use within the terms of a special use permit granted by the Community
Services Department.
C. Sanitary sewers or storm drains in Parks or Open Space areas may not be
used for the clean-out of personal septic systems under any circumstances.
R1-35. GATHERING WOOD IN OPEN SPACE AREAS
Gathering wood from or possessing wood that has been gathered from Open Space
areas is not permitted.
R1-36. PARKING RESTRICTIONS
No person shall park a motor vehicle, except an authorized emergency vehicle, or when
in compliance with the directions of a peace officer, ranger, or City employee, in any of
the following places:
A. In areas where prohibited by "NO PARKING" or “FIRE LANE - DO NOT
BLOCK” signs.
B. On any fire trail.
C. On any equestrian or hiking trail.
D. In such a place or manner as would block or obstruct any gate, entrance, or exit.
E. In such a place or manner as to take up more than one marked parking space
in any authorized parking area.
F. In such a place or manner as to block or obstruct the free flow of traffic.
G. Within 15 feet of a fire hydrant.
H. Adjacent to any curb painted red.
I. In any Park or Open Space land after sunset except pursuant to a written permit.
J. In areas signed for permit parking on Park or Open Space land without a written
permit.
K. In any other place on Park or Open Space land not designated by the City as an
authorized area.
The gravel parking lot at the Towle Campground at Foothills Park may only be used for
parking by persons with camping reservations. There is a limit of 2 vehicles for the eight
person campsites and 4 vehicles for sixteen-person campsites. The parking area is
restricted to passenger vehicles and small trucks. Recreational vehicles, trailers or other
self-contained vehicles (regardless of size, weight or number of axles) are not allowed
in the Towle Campground parking lot or beyond the gate at the edge of Orchard Glen
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Picnic Area. Recreation vehicles or other self-contained vehicles may not be parked in
Foothills Park over-night. Non-camping guests should park in the available day-use
parking lots.
R1-37. OPERATION OF MOTOR VEHICLES
No person shall operate, propel, or leave standing any motor vehicle on Park or Open
Space land, except:
A. Emergency vehicles operated within the scope of official use.
B. Upon roads, trails, or paths, which may from time to time be set aside and
posted by the City for the use of specifically designated vehicles.
C. Upon roads and parking areas open to the public during regular open hours.
D. Motor vehicle includes, but is not limited to, any vehicle as defined by section
415 and/or 670 of the California Vehicle Code, motorcycles, off-road vehicles,
"dirt bikes", and similar vehicles.
This section shall apply to all motorized bicycles, carts, scooters, hoverboards,
skateboards, and electric personal assistive mobility devices (Segway or similar device)
except those devices used by disabled persons.
R1-37A. VEHICLE WEIGHT LIMIT ON BAYLANDS ROADS AND PARKING LOTS
No person shall operate or park any vehicle in excess of 6,000 pounds weight on any
roads or within any parking lot of the City-owned Baylands or John Fletcher Byxbee
Recreational Areas.
R1-38. VIOLATION – PENALTY
A. The Director shall have authority to revoke a permit upon a finding of violation by
the permittee or persons acting under the permit of any regulation contained in
this chapter or upon a finding of violation of other City ordinance or law of this
state in the exercise of the permit.
B. The Director or designee shall have the authority to eject from any park facility
any person acting in violation of regulations contained in this chapter.
R1-39. PLAYGROUNDS
No person shall use personal exercise equipment, including dumbbells and exercise
straps, at any playground if it inhibits children from using the playground, or if the exercise
equipment negatively impacts the playground surfacing or equipment.
R1-40. COMMUNITY GARDENS
The City of Palo Alto provides, subject to availability and a license agreement, space for
Palo Alto residents to enjoy organic gardening. All persons visiting the Community
Gardens must comply with the following rules:
A. No dogs are allowed within the fenced area of any garden location except service
dogs. PAMC 6.16.100
B. No smoking inside the Community Garden area or on pathways around the
garden. PAMC 9.14.050
C. Garden visitors must stay on designated paths, and refrain from picking any
produce or flowers subject to PAMC 22.04.270.
D. Wood chips at the garden are supplied only for the plot renters at the Community
Garden for use within the Community Garden and shall not be removed by
DocuSign Envelope ID: 715523E6-6912-4A8F-B1C4-8AF471D83212
18
unauthorized persons.
E. Compost bins are for Community Gardeners use only subject to PAMC 5.20.030.
The Director may promulgate guidelines for the registration and use of the community
gardens that do not conflict with these rules.
APPROVED:
City Manager Date:
Director, Community Services Date:
Adopted by City Council June 24, 2002; Revised June 28, 2004; Revised January 24,
2005. Revised February 3, 2006. Revised April 14, 2008. Revised March 14, 2011.
Revised November 19, 2012 Revised May 20, 2013, Revised March 5, 2018, Revised
February 2, 2021. Revised June 2022.
DocuSign Envelope ID: 715523E6-6912-4A8F-B1C4-8AF471D83212
6/9/2022
6/11/2022
City of Palo Alto (ID # 1346)
City Council Staff Report
Report Type: Action Items Meeting Date: 3/14/2011
March 14, 2011 Page 1 of 5
(ID # 1346)
Council Priority: Land Use and Transportation Planning
Title: Modifying Professorville Historic Review
Subject: Recommendations and Direction for Modifying Historic Review of
Contributing Structures Proposed for Demolition in the Professorville Historic
District
From: City Manager
Lead Department: Planning and Community Environment
Recommendation
Staff recommends that Council direct staff to work with the Historic Resources Board and
residents of Professorville to develop: 1) a written process for review of any future proposed
demolitions of Contributing Structures in Professorville, including the CEQA process
requirements; 2) early review of the design by the Historic Resources Board and the public; and
3) preparation of compatibility criteria for new construction in Professorville.
Executive Summary
In October, 2010, the City Council, following review of the 405 Lincoln Avenue demolition
request, directed staff to return to Council with an outline of a process for timely review of
proposals regarding demolitions of Contributing Structures in the Professorville National
Register Historic District. The focus of the assignment was to ensure that future applicants of
proposals in Professorville would have a clear understanding of the City’s requirements,
including environmental review as required by the California Environmental Quality Act (CEQA).
Staff has reviewed the key issues related to Council’s request, and recommends that any future
evaluation of demolition proposals in Professorville include: 1) a revised CEQA review process,
including an Initial Study in most cases, and 2) an early review of any proposals by the Historic
Resources Board (HRB). Staff also recommends updating the City’s website to reflect this
process clearly and working with the HRB and the community to revise the compatibility criteria
for Professorville.
Background
On October 25, 2010, the City Council certified the Environmental Impact Report (EIR) for the
405 Lincoln Avenue Single-Family Residential Replacement Project, which analyzed the
environmental impacts from the demolition of an existing Contributing Structure in the
Professorville National Register Historic District and the compatibility of the proposed
March 14, 2011 Page 2 of 5
(ID # 1346)
replacement structure with the Historic District. It had taken three years to process the
application for 405 Lincoln to allow demolition of the existing structure on the property. Three
factors contributed to the elongated timeframe for processing the project: 1) an EIR had been
required for the project; 2) there were no established criteria for determining compatibility for
a replacement structure with the Historic District or how to address a Contributing Structure in
the District; and 3) there was no established process for the Historic Resources Board to
evaluate early in the process the proposed design of the replacement structure for consistency
with the district. When the City Council reviewed the EIR for the 405 Lincoln project, concern
was expressed that the Council and the HRB had limited latitude in modifying the project given
the process that had been undertaken. As a result, the Council directed staff to return to
Council “with a clear and concise understanding of the CEQA process” for Contributing
Structures in Professorville and to define the “rule of operation in the historic district.” Minutes
from the October 25, 2010, City Council meeting are included in Attachment A. The City
Manager’s report for the item is included as Attachment B.
Discussion
As a result of the Council direction received on October 25, 2010, staff reviewed the process
undertaken for the 405 Lincoln project. Staff has focused its review and recommended process
changes to three areas involving applications for historic structures in the district since these
are areas that the City can control in the process: 1) environmental review; 2) criteria for
replacement structures in Professorville: and 3) public review of proposed replacement
structures.
Environmental Review
The City required preparation of an EIR for the 405 Lincoln project immediately upon the
applicants’ filing of the demolition permit request, since staff assumed that the building itself
was an historic resource and/or its removal from the Historic District would significantly impact
the integrity of the district. In addition, there was initial public controversy regarding the
removal of a Contributing Structure from the District that contributed to staff’s call for an EIR.
As a result, the City did not require an Initial Study to be prepared, which is a preferred option
under CEQA that could have ruled out the need for preparation of an EIR. The EIR would have
been avoided only if the City had criteria to ensure conformity of the replacement structure
with the Historic District.
As part of the Initial Study, a historic report would have evaluated the significance of the loss of
the individual structure and the impact on the district as a whole from the loss of a Contributing
Structure and, in the case of 405 Lincoln, determined that the impact was less than significant.
If the City had established criteria for replacement buildings, the Initial Study could have
concluded that the project would need to be conditioned to ensure conformity with those
criteria. A Mitigated Negative Declaration could then have been issued for the project.
Much of the environmental review complexity was driven by the early trial court decision that
the demolition of the Juana Briones House was a “discretionary” action subject to full CEQA
review, and direction by the trial court to prepare an Environmental Impact Report (EIR). This
March 14, 2011 Page 3 of 5
(ID # 1346)
decision resulted in a very conservative approach to 405 Lincoln, with a determination that an
EIR was necessary. Staff notes that, since the date of the 405 Lincoln action by Council, the
Juana Briones House trial court decision has been overturned and an appeal to the California
Supreme Court has been rejected. Currently the state of the law is that issuance of a ministerial
permit, like a demolition permit, by itself does not trigger CEQA. So demolition in and of itself
may not dictate the need for CEQA review, although if it is coupled with a discretionary action,
such as the City’s Individual Review process a two-story replacement structure, CEQA would be
triggered.
Staff recommends that for any future proposals for demolition in Professorville involving
Contributing Structures, an Initial Study should be prepared to determine the significance of the
loss of the proposed structure both individually and on the District. If the building is individually
significant or its removal significantly affects the integrity of the district, an EIR will be required;
otherwise, the project could qualify for a Mitigated Negative Declaration. For projects involving
a building individually listed on the City’s Inventory or eligible for listing on the State or National
Register, an EIR will be required so preparation of an Initial Study would not be necessary.
Compatibility Criteria
For the 405 Lincoln project, the historic consultant that prepared the historic evalution for the
existing structure and its significance within the historic district for the EIR also developed a set
of draft compatibility criteria based on the Secretary’s Standards for Rehabilitaition of Existing
Structures. These criteria were used in the EIR to evaluate the compatibility of the proposed
replacement structure with the historic district. These draft criteria could be further developed
and reviewed by the Historic Resources Board to provide clear direction for both new
structures and remodels in the Professorville Historic District.
Any compatibility criteria would require that new development would have to be differentiated
from the existing historic structure(s) and not overwhelm or dominate historic structures,
consistent with the Secretary’s Standards for Rehabiliatation; however, the new development
could be varied in style ranging from traditional to modern. Although modern design like that
of the replacement house for 405 Lincoln may be considered compatible with historic
structures, the criteria could restrict new development to specific styles/types to ensure
retention of a more traditional look and feel for Professorville if that is the desire of the
community.
Staff recommends that the draft compatibility criteria developed for the 405 Lincoln project
provide the framework for developing a set of permanent critieria to be reviewed by the HRB
after discussions with the Professorville community.
Public Process
Another issue that was of concern to Council , the HRB and the public was the lack of a public
process to solicit input early in the design of the replacement structure. By the time the HRB
reviewed the project, the applicant had made numerous costly changes to the design, the draft
March 14, 2011 Page 4 of 5
(ID # 1346)
EIR was completed evaluating the proposed design, and the EIR identified specific changes to
the design in order for the project to be compatible with the Historic District. As a result, the
HRB had limited ability to recommend revisions to the design unless the Board recommended
that the EIR was inadequate. This also was a constraining and frustrating situation for the
Council. Early discussion with the HRB could have avoided this situation; however, currently
there is no mandatory procedure that requires early consultation with the board.
Staff recommends that the review process for any proposed demolitions or new construction in
Professorville be required to undergo a preliminary HRB review/discussion to identify the
general design parameters of the new structure and that the intial design be reviewed by the
HRB prior to completion of any environmental review. After completion of the CEQA process,
the Board would make its official recommendation on the project. Staff also recommends that
the City’s HRB website be updated to include information describing the importance of the
Professorville historic district and retention of both Significant Buildings and Contributing
Structures in the District, incentives for preservation in the District, and the required process
for demolition applications.
Meeting with Professorville Residents
On January 6, 2011, staff met with five residents of Professorville and Councilmember Holman
to discuss Professorville and the status of staff’s recommendations to the City Council regarding
the review process for any demolition applications of Professorville properties. Staff assured
the group that the City recognized the importance of retention of the historic buildings within
Professorville and their relationship to the integrity of the historic district. It was recognized by
all that although the historic preservation ordinance does not prohibit demolition in the
District, the CEQA process currently applied to the district is a disincentive to demolition,
particularly for signifcant buildings or structures whose removal could adversely affect the
integrity of the district.
The neighborhood group suggested that additional protections such as prohibiting demolitions
of both Significant Buildings and Contributing Structures in Professorville should be
incorporated within the Historic Preservation Ordinance. Another suggestion from the group
was support for creation of a conservation overlay district for Professorville that would require
a similar process for implementation and similar restrictions as that required for the Single
Story Overlay process. The group also recommended that the Historic Preservation webpage
on the City’s website be updated to identify process requirements for Professorville properties
as well as incentives for preservation and that the City undertake a re-evaluation of
Contributing Structures within Professorville for individual placement on the City’s Historic
Inventory. Staff reminded the group that some of these suggestions exceeded the scope of the
direction from Council to staff;however, staff would include a summary of the discussion in this
staff report.
Conclusion
Staff recommends that for any future proposals in Professorville the City follow the steps
March 14, 2011 Page 5 of 5
(ID # 1346)
identified above for CEQA review and that staff require early review of any proposals by the
HRB. These changes can be implemented immediately. Staff also recommends updating the
City’s website to reflect this process clearly and to underscore the importance of preservation
of the Professorville Historic District. This task should be accomplished within three months.
Staff work with the HRB and the community to revise the compatibility criteria should be
accomplished by the end of the calendar year. For this task, staff will request that limited
consultant assistance be provided to ensure any approved criteria is consistent with federal
requirements for retention of the National Register District status for Professorville.
Resource Impact
In order to fully develop compatibility criteria for new structures in Professorville that would
address neighborhood issues as well as ensure compatiblity with historic standards, staff
recommends that the City Council allocate $15,000 to hire a historic consultant to provide
guidance to staff and the HRB in augmenting the draft criteria prepared as part of the 405
Lincoln project. This funding request will be included in the 2011-2012 budget.
Attachments:
·Attachment A: October 25, 2010 Council Excerpt Minutes (DOC)
·Attachment B: October 25, 2010 CMR re: 405 Lincoln (PDF)
Prepared By:Julie Caporgno, Chief Planning & Transportation Official
Department Head:Curtis Williams, Director
City Manager Approval: James Keene, City Manager
Page 1
ATTACHMENT A1
2
City Council3
Special Meeting of October 25, 20104
Excerpt Sense Minutes5
6
Public Hearing:Consider Certification of Final EIR for the Proposed 405 7
Lincoln Avenue Single Family Residential Replacement Project and approval 8
of Demolition Delay and Record of Land Use Action for the Existing 9
Residence at 405 Lincoln Avenue Which is Listed as a Contributing Structure 10
in the Professorville National Register Historic District and a Contributing 11
Resource to the Professorville Historic District on the City’s Historic 12
Inventory.13
14
Director of Planning & Community Environment, Curtis Williams stated the 15
item being discussed was in regards to the proposed Demolition Delay 16
Request and the Final Environmental Impact Report (FEIR) of 405 Lincoln 17
Avenue. He stated the revised Record of Land Use Action (ROLUA) for 405 18
Lincoln Avenue, Mitigation Monitoring Program answers to the Council 19
questions, and materials relating to the 2000 Historic Preservation Ordinance 20
were distributed to the Council prior to this evening’s meeting. He provided a 21
presentation as outlined in Staff Report CMR 387:10.22
23
David Bower, Historic Resources Board Chair, stated the Historic Resources 24
Board (HRB) focused on whether or not a single building represented part of 25
a historic district. The HRB felt the building was not significant enough to be 26
a Category 1 building. It was significant to the greater Professorville Historic 27
District and for that reason the HRB felt the expansion retention option was 28
the best environmentally sound option. He noted the owners did not find 29
that option to be acceptable. The HRB felt the Environmental Impact Report 30
(EIR) was complete and recommended the Council to pursue the expansion 31
retention option and if there was a replacement building, HRB asked that it32
come back to the Board since it had not been addressed in the hearings.33
34
City Attorney, Gary Baum stated the project had several legal issues; one 35
was whether the structure was of historical significance and governed by 36
California Environmental Quality Act (CEQA) guidelines. He stated the test 37
was whether the site was associated with events that made significant 38
contributions to the broad patterns of California History and Cultural 39
Heritage, was the building associated with the important lives in our past,40
did it embody the distinctive characteristics of a time period, region or 41
method of construction or represent the work of an important creative 42
individual or possess high artistic values, or has yielded or may likely to yield 43
important information in prehistory or history. He stated the City’s historical 44
Page 2
consultant, the EIR consultant, and Staff concluded the structure on its own 1
was not historically significant. It was a contributing structure and not a 2
Category 1 or 2. Palo Alto Municipal Code 16.49.020c was raised because it 3
stated that every structure within the historical district was significant. The 4
City was required to follow CEQA standards which stated that being within a 5
historic district on its own did not make it a historic structure. The FEIR 6
determined the demolition would not have a significant unavoidable impact 7
upon the district as long as the mitigation measures were included and the 8
primary one was compatible to the districts. The Juana Briones case was 9
triggered and went to a writ trial in Santa Clara County Superior Court and 10
found the City’s Demolition Delay procedure discretionary and required an 11
EIR. The case was on appeal and he did not anticipate the court would 12
change the determination. That was the reason for bringing the item before 13
the Council today. The Demolition Delay did not fit well with CEQA. The City 14
was required to follow CEQA and to analyze the Demolition Delay. There 15
were liability issues for the City depending on how the Council ruled.16
17
Council Member Klein asked if the demolition delay was on an automatic 18
turnaround of 3 to 4 months, would that prevent concerns in the future. 19
20
Mr. Baum stated yes. 21
22
Council Member Klein asked whether there were structures within 23
Professorville where the HRB would find destruction possible. 24
25
Mr. Bower stated yes. The HRB allowed demolition in Professorville on in-fill 26
projects built in the 1950’s and 1960’s that did not contribute to the overall 27
characteristics of the district. He noted a group of individuals and building 28
professionals, of which six owned historic buildings, found the structure to 29
be worth saving. The structure had historic value in terms of who built it, the 30
people who had lived there and the architectural style.31
32
Council Member Klein asked about buildings built prior to 1930.33
34
Mr. Bower stated the answer remained as previously stated although the 35
demolition was dependent upon the soundness of the structure.36
37
Mr. Baum stated making Demolition Delay ministerial or automatic would 38
address part of the question but we still would need to determine what the 39
appropriate change or fix would be to Individual Review (IR) because that 40
could be viewed as discretionary.41
42
Council Member Holman stated Demolition Delay allowed property owners to 43
explore other options besides demolition. She found the environmentally 44
Page 3
superior alternative was not explored and not required. She asked if the 1
owners had explored other options or were encouraged by Staff to retain the 2
building. 3
4
Chief Planning & Transportation Official, Julie Caporgno stated the issue was 5
addressed during discussions of the property becoming a single-family home 6
and she noted an EIR was required. A historic oak tree was on the site at the 7
time which prohibited the expansion. The Applicants were well into the 8
design of the project when the health of the tree was questioned and for 9
safety reasons needed to be removed. 10
11
Council Member Holman stated according to the CEQA guidelines the project 12
alternatives had to satisfy the project objectives and asked how specific that 13
needed to be.14
15
Mr. Baum stated the Applicant provided an outline of the project objectives. 16
A degree of specificity was needed, it was not considered to be a viable 17
alternative if a project did not meet the objectives. 18
19
Council Member Holman stated she thought to satisfy the project goals were 20
to “generally accomplish the project goals.” She asked if that was the correct 21
terminology.22
23
Ms. Caporgno stated that was the proper CEQA language. It was not 24
necessary to accomplish every project objective but overall the project 25
objective should be met by the ultimate project. 26
27
Mr. Williams stated Staff reviewed both options, the alternatives, and the 28
letter submitted by the Applicant. There were significant hurdles in the cost 29
of trying to make the building work in similar size and functionality of the 30
home. The financial feasibility and realistic nature of the alternatives needed 31
to be met.32
33
Ms. Caporgno stated the HRB had recommended a basement be added in 34
order to meet the square footage requirement. The structure needed to be 35
lifted in order to facilitate a basement although the building configuration 36
made it difficult.37
38
Council Member Holman stated applying CEQA to a single-family home for 39
demolition was an interesting facture. The City’s code did not assure a 40
maximum Floor Area Ratio (FAR). It was necessary to satisfy other criteria 41
and asked how this was applicable to the project.42
43
Page 4
Mr. Williams stated the key issue was whether to demolish or not. The City’s 1
code did not prohibit demolitions and it was difficult to say whether there 2
would be a loss in the anticipated square footage. 3
4
Council Member Holman asked if the FAR was one the issues driving the 5
inability to expand the existing structure.6
7
Mr. Williams stated the FAR would be met by the proposed home and asked8
where Council Member Holman’s concern was coming from. 9
10
Council Member Holman stated because the environmentally superior 11
alternative was to retain the existing building it did not seem feasible to 12
accomplish the proposed FAR. It meant the proposed FAR was tied to what 13
made the environmentally superior alternative feasible or not.14
15
Mr. Williams stated it was not a case of variance or a situation trying to 16
attain a special approval. The project was in the IR process which could not 17
be used to limit the FAR. He stated the issue of demolition was first and 18
foremost and the feasibility of building another alternative was to not only 19
achieve FAR but also cost and functionality of the home.20
21
Council Member Holman stated the policy implications in Staff Report CMR 22
387:10 indicated if contributing status automatically determined significance 23
or broader ramifications for the City, all contributing structures in 24
Greenmeadow and Green Gables would be subject to preparation of an EIR. 25
She previously had asked the question and was given a different implication 26
which was, Greenmeadow had a single-story overlay, and the issue that 27
would trigger CEQA in Greenmeadow would be the application for Home 28
Improvement Exception (HIE) in conformance with the Secretary of Interior 29
Standards.30
31
Mr. Williams stated that was true for Greenmeadow because of the overlay 32
but not with Green Gables. He asked Council Member Holman if she was 33
saying there would not be a Demolition Delay. Demolition Delay triggered 34
CEQA for single and two-story homes. 35
36
Council Member Holman asked if Greenmeadow had a Demolition Delay.37
38
Ms. Caporgno stated neither Greenmeadows nor Green Gables had a 39
Demolition Delay. She stated if there was a request for demolition of a site, 40
information or design of the replacement structure needed to be provided 41
and would trigger CEQA. Green Gables allowed two-story buildings because 42
it did not have a single-story overlay.43
44
Page 5
Council Member Holman clarified CEQA would not apply to Greenmeadow 1
because it had a single-story overlay,would not trigger an IR and that the 2
decision made at this evening’s meeting would not affect Greenmeadow. 3
4
Ms. Caporgno acknowledged the above statements.5
6
Council Member Scharff asked specifically what Council was being asked for 7
in relation to the revised Record of Land Use Action (ROLUA).8
9
Mr. Baum stated Staff’s recommendation was for Council to approve the 10
ROLUA. The ROLUA should embody all the recommendations listed on the 11
first page of the Staff Report unless something was dropped by accident.12
13
Ms. Caporgno stated Staff’s recommendation was to adopt the ROLUA that 14
embodied all the recommendations including one correction that needed to 15
be made.16
17
Council Member Scharff asked what the correction was.18
19
Mr. Williams stated Staff’s recommendation was to incorporate the HRB’s 20
review of the replacement structure to satisfy one of the conditions and for 21
the record, to include the mitigation monitoring checklist that was set “at 22
places” at this evening’s meeting.23
24
Council Member Scharff asked which mitigations Staff was referring to.25
26
Mr. Williams stated they were included in the Mitigation Monitoring Program 27
from the DEIR and were “at places.”28
29
Mr. Baum stated they were omitted from the ROLUA because it had not been 30
provided until today.31
32
Council Member Scharff asked if the mitigation measures were being asked 33
to be compatible with the Professorville District and made reference to the 34
Secretary of Interior Standards which seemed to be two different issues.35
36
Mr. Williams stated it was consistent with the Secretary of Interior Standards 37
for Rehabilitation as they applied to the Professorville District.38
39
Ms. Caporgno stated Standard 9 dealt with components of both rehabilitation 40
and new construction. The Staff reviewed and identified the elements that 41
made up the structure’s compatibility. She stated most of the elements had 42
been met except for those called out in the mitigation measure and the need 43
for an increased articulation forum; 1) to provide more organized elevation 44
Page 6
composition, 2) need for greater use of traditional elements executed in 1
non-traditional materials, 3) need for warmer color palette, and 4) the need 2
for further simplification in residential building eave lines. All elements 3
needed to be met by the project evaluated in the EIR.4
5
Council Member Scharff asked Staff if the following had occurred; 1) the 6
Applicant approach the City, 2) the City suggest a historic consultant to 7
advise them on how to make their project compatible with the Secretary of 8
Interior Standards, and 3) did the Applicant hire the consultant.9
10
Ms. Caporgno stated the City selected an EIR consultant and a historic 11
consultant to prepare the analysis since an environmental review was 12
required. There were no guidelines that defined compatibility since it was a 13
new structure in the district. The historic consultant prepared compatibility 14
standards based on the Secretary of Interior Standards and discussed them 15
with the Applicant. The Applicant designed the house with the intent to meet 16
the compatibility standards. The compatibility standards developed by the 17
City based on the Secretary of Interior Standards were the parameters used 18
to build the house. The Applicants had hired a separate consultant to 19
evaluate the City’s conditions.20
21
Council Member Scharff asked if the City’s consultant found the standards to 22
be compatible with Secretary of Interior Standards.23
24
Ms. Caporgno stated several of the compatibilities were met with the 25
exception of the four she previously stated.26
27
Council Member Price asked should the item return to the HRB,what the 28
expectations for the Applicant were in regards to the parameters, latitude, 29
and timeframe.30
31
Mr. Williams stated the City’s Historical Code required the HRB to review 32
replacement structures within a historic district. The direction would be for 33
the HRB to look at the replacement structure, focus on the four criteria of 34
mitigations mentioned and provide Staff with input and advice on how the 35
mitigations were being implemented by the Applicant. Staff would review the 36
HRB’s findings and the historic consultant’s findings prior to making a 37
determination. The estimated timeframe would be a 6 to 8 week process in 38
agendizing the item with the HRB and have them report back to Staff for a 39
determination. The Applicant could work on any outstanding issues if they so 40
desired which would lengthen the process.41
42
Council Member Schmid stated the Council had rejected the environmentally 43
superior alternative as it did not meet the project objectives as listed in 44
Page 7
Section 3.2 of the DEIR. He stated he had not read or heard discussion as 1
why Staff felt Section 3.2 overrode the HRB’s discussion and felt the issue 2
would need to go back to Staff to determine why one was superior to the 3
other.4
5
Mr. Williams stated the ROLUA indicated the alternative was rejected, as not 6
being feasible and not meeting the project objectives. It was for those 7
reasons Staff recommended the EIR be certified and the Demolition Delay be 8
approved. The Applicant would proceed with the demolition under the 9
Demolition Delay if both actions were taken, absent any other kind of 10
specific action by the Council. A replacement structure would require HRB’s 11
input.12
13
Council Member Schmid stated there were two recommendations before the 14
Council including the HRB’s recommendation and he wanted to know why 15
Staff preferred the replacement rather than the expansion.16
Ms. Caporgno stated Staff needed to rely on how the objectives were being 17
met by the Applicant. Staff supported the replacement structure because the 18
Applicant had submitted a letter outlining why structurally it was not feasible 19
for the building to be retained, and to get the adequate square footage from 20
an expansion project.21
22
Council Member Scharff stated it was the document from the Applicant that 23
Staff agreed was the preferred alternative.24
25
Ms. Caporgno stated that was correct and the document was attached to the 26
Staff Report.27
28
Mr. Baum stated the Council was the lead agency and part of certifying the 29
EIR included choosing one of the alternatives.30
31
Council Member Shepherd stated it was her understanding that the HRB had 32
agreed with the Palo Alto/Stanford Historical Society that the building should 33
be considered as a preemptive category and not a discretionary category. 34
She asked if it would have made a difference in the recommendations if Staff 35
had agreed with the consideration of the home in the Professorville District.36
37
Mr. Williams asked Council Member Shepherd if she meant by preemptive if 38
the building was classified as a Category 2.39
40
Council Member Shepherd stated yes.41
42
Mr. Williams stated absolutely.43
44
Page 8
Council Member Shepherd asked Staff to explain why the City was not in 1
agreement with the Palo Alto Historical Society and the HRB. She asked if it 2
was because Staff had categorized the building.3
4
Mr. Williams stated some of the structures had been reviewed and 5
categorized by number. Not all contributing structures were categorized 6
unless there was a need. He explained the historical consultant hired by the 7
City confirmed the structure in question was not of significant historical 8
value and therefore did not require to be categorized. The EIR was based on 9
the recommendations by the historical consultant.10
11
Council Member Shepherd stated it was her understanding that the HRB 12
found the structure to be a prescriptive building.13
14
Mr. Bower stated the discussion brought out the ambiguity of the Secretary 15
of Interior Standards. It was a set of standards and together when applied to 16
a district or an individual building, then you come to a determination of 17
whether or not it was significant.18
19
Ms. Caporgno stated the FEIR mentioned the three factors that went into 20
why Staff determined the structure was not significant as a contributor. The 21
structure did not affect adversely the integrity of the district, it was not a 22
significant style, it was small and single-story and not an obvious building in 23
the district.24
25
Council Member Shepherd asked if the HRB reviewed the mitigation list or 26
were they only required to review the DEIR.27
28
Mr. Williams stated it was his understanding the HRB’s review was 29
mandatory.30
31
Ms. Caporgno stated the HRB supported the DEIR which identified the four 32
mitigations.33
34
Vice Mayor Espinosa asked Staff to explain how the City would approach 35
issues of this setting precedent in projects moving forward.36
37
Mr. Williams stated it would be a combination of Staff adjusting to the 38
process such as starting with a study and a historical analysis prior to 39
making a determination whether an EIR would be necessary. Council had the 40
authority to determine whether every contributing structure had an impact 41
under CEQA rule. He felt the Demolition Delay Ordinance should no longer 42
be discretionary. Anything that needed to be accomplished beyond the 43
Individual Review (IR) should return to Council in a policy format.44
Page 9
1
Council Member Holman referred to CMR 387:10, page 5 regarding the three 2
criteria used to ascertain the significance of the structure. She stated No. 2 3
noted 405 Lincoln Avenue was one of the smallest contributors in the 4
district, No. 3 noted the structure was a single story and was not considered 5
a dominant presence in the district.6
7
Ms. Caporgno stated the combination of three factors helped to determine 8
the structure was not a significant contributor were; 1) the building did not 9
have a dominant style, 2) it was unobtrusive, and 3) the building itself was 10
small; therefore, a rebuild would not create a significant loss to the district.11
12
Council Member Holman asked Staff to differentiate between No. 2 and No. 13
3 clarifying the building was one of the smallest contributors and not a 14
dominant presence.15
16
Ms. Caporgno stated that the demolition would not have a significant impact 17
due to; 1) it being only 2,000 square feet, 2) a single story, and 3) the 18
building did not have a dominant style in the district.19
20
Public hearing opened at 10:34 p.m. 21
22
Allen Akin, Applicant, stated the house was referred to as a contributor 23
under the District Nomination Form. The form defined the characteristics of 24
the Professorville District and noted 405 Lincoln Avenue lacked all of the 25
necessary characteristics. The Building was not associated with a Stanford 26
Professor, did not possess one of the architectural styles and lacked ample 27
material landscaping. The EIR had concluded 405 Lincoln Avenue was not a 28
significant contributor. He stated the City’s historic consultant had set 29
guidelines for compatibility as part of the EIR and great efforts had been 30
made to produce a design that was consistent with the Secretary of Interior 31
Standards. The categorizing of the house had been examined in two surveys 32
and found not to be significant and not required to be a numbered category. 33
The functionality of the alternative design was insufficient to meet the needs 34
which were identified and covered in the description attached to the Staff 35
Report including lack of yard space and lack of accessibility for disabled 36
parents.37
38
Tom Jack, Palo Alto, supported the demolition of the building. He had 39
worked on historic homes for several years and found no compelling reason 40
to preserve the structure in question. He resided a few blocks from 405 41
Lincoln Avenue for 41 years and urged the demolition and replacement.42
43
Page 10
Jason Trindade, Palo Alto, urged the City to review issues considered as 1
variances and apply them accordingly to the home.2
3
Carmo Trindade, Palo Alto, stated there had been insufficient discussion with 4
the Historic Resources Board (HRB) to determine a Demolition Delay.5
6
Drew Maran, Palo Alto, was in support of replacing the structure. The energy 7
consumption in a restored home was greater than the carbon footprint of a 8
new home.9
10
Michael Dreyfus, Palo Alto, spoke on how unjust the Applicant had been 11
treated in the process. He stated on the issue of preservation, to restore the 12
home to exactly what it looked like would be like building a new home and 13
would not be preserving anything.14
15
Michelle Arden read a letter from Mark Wardenberg and Terry Alana Hunter 16
in support of the Applicant building a new home.17
Karen Nashville stated the Applicants had complied with all the rules and 18
regulations required of a resident to build a home in the Professorville 19
District and was in support of the project.20
21
Jeanne Lavan read a letter from Susan Haviland who was in support of the 22
project. She stated she had seen the plans and it appeared to be a good job 23
of blending in with the historic neighborhood.24
25
Bill Glazier spoke regarding the Applicants having performed all of the 26
necessary requirements to remodel the home. He was in support of the 27
remodel and requested Council approval of the project.28
29
Joe Barta stated the house in question was not of significant historic 30
importance to Professorville nor was it made of sound structure and he 31
supported the remodel.32
33
Beth Bunnenberg spoke of the history of the creation of Professorville. The 34
historic relevance of the homes within Professorville were historic not based 35
on their structure but by their history itself. She noted the Draft 36
Environmental Impact Report (DEIR) recommended environmentally 37
superior alternatives that would maintain the integrity.38
39
Richard Brand stated Professorville was made up of small houses and unique 40
characteristics. He supported the Staff recommendation.41
42
David Lieberman stated according to the National Historic Registry, the 400 43
block of Lincoln Avenue was not part of the historic preservation. City Staff 44
Page 11
had declared the Applicants had met every requirement to receive a 1
demolition permit; therefore a permit should be granted.2
3
Barbara Wallace stated the cumulative impacts of demolition of the home 4
had raised great concern with a number of residents. She noted there had 5
been no community outreach to the neighbors for their consideration.6
7
Stephen Cassidy, as counsel for the Applicant, stated for CEQA purposes the 8
historic resource was Professorville and not the residence itself. The EIR had 9
concluded the residence itself was not significant to Professorville. The DEIR 10
and the FEIR supported the notion even as a contributor home, the 11
demolition and construction of a new residence would not have a material 12
impairment to the Professorville District; which was the CEQA standard. He 13
clarified the issue in front of the City Council was the adequacy of the EIR. 14
He noted the Applicant had demonstrated a willingness to ensure the issue 15
brought forth would be addressed to the extent possible.16
17
Public hearing closed at 11:23 p.m.18
19
Vice Mayor Espinosa stated the City had some debate over the years 20
regarding historic preservation. He noted the leadership role of the Historic 21
Resources Board (HRB) to maintain and treasure the historic structures of 22
Palo Alto was well respected. He stated there was a process in place to assist 23
the citizens who purchase property; unfortunately, the process had 24
undergone a change during the Applicants’ request for renovation.25
26
MOTION: Vice Mayor Espinosa moved, seconded by Council Member 27
Scharff to: 1) certify the Final Environmental Impact Report finding it 28
complete and adequate under the requirements of the California 29
Environmental Quality Act (CEQA), 2) find the Demolition Delay request for 30
an existing structure at 405 Lincoln can be satisfied with the minimum 60 31
day moratorium, 3) approval of the Record of Land Use Action, 4) refer 32
review of any revised plan for the site to the Historic Resources Board for 33
evaluation of compatibility with the Professorville Historic District, and 5) 34
include in the Record of Land Use Action the Mitigation Monitoring Checklist,35
with the inclusion that the City Council finds the environmental impact is 36
reduced to less than significant due to incorporation.37
38
Council Member Scharff stated in review of the EIR it appeared there were 39
no significant impacts to the District nor was the property a significant 40
historic structure. He requested the Council support the Motion.41
42
Council Member Holman requested the Motion be repeated and the portion 43
regarding the FIER be clarified.44
Page 12
1
Vice Mayor Espinosa repeated the Motion and asked for Staff clarification on 2
Section 6 and 7 of the Record of Land Use Action (ROLUA).3
4
Mr. Williams stated Section 6 and 7 reflected similar verbiage in regards to 5
the ROLUA. He clarified the language in the Staff Report referred to the HRB 6
reviewing and revised plan for the site and comment to the Director of 7
Planning.8
9
Council Member Scharff asked Staff whether the action being requested 10
should be placed in Section 6 or 7 of the ROLUA.11
12
Mr. Williams stated the language would be more suited to be added into 13
Section 7 as a condition to read as follows: revised plan for replacement 14
structure shall be reviewed by HRB and comments provided to the Director 15
of Planning for determination.16
17
Council Member Holman stated the FEIR did not focus on the demolition of 18
the resource but rather the replacement structure. The City Charter noted 19
that all historic structures were of significance where as the FEIR failed to 20
recognize the project as such. She wanted to express the neighbors in 21
Professorville had spoken out in unison for retention of the structure which 22
made a statement to her regarding the importance for the neighborhood to 23
maintain its history.24
25
Council Member Price stated she would be supporting the Motion. 26
27
Council Member Klein stated the current process was in need of repair. He 28
noted public policy throughout the City allowed for demolition with the 29
exception of the Downtown District; CEQA should not be allowed to blindside 30
the policy. He stated he supported the Motion and requested to add the 31
following verbiage to Section 7: to insure the HRB hearing was held and 32
their advice given to the Director of Planning within a specified time line.33
34
Mr. Williams suggested the language read within 30 days of the Applicants 35
submittal of plans.36
37
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE 38
MAKER AND SECONDER to include in the Record of Land Use Section 7 the 39
Historic Resources Board hearing with comments to the Planning Director 40
will be within 30 days of the applicant submitting their plans.41
42
Council Member Klein requested in Section 5 the language read “shall be 43
satisfied within 60 days from the date of City Council action”.44
Page 13
1
Mr. Williams clarified the language presented by Staff read “a delay of 60 2
days after the date of this action but no sooner than the date of all Planning 3
approvals had been granted”.4
5
Council Member Klein suggested striking the portion of the language 6
referring to the Planning approvals.7
8
INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE 9
MAKER AND SECONDER change the last part of the sentence in Section 5 10
to-this time period shall be satisfied within 60 days of October 25, 2010.11
12
Council Member Shepherd felt had a Study Session with the HRB occurred 13
early in the process of this project there may have been more understanding 14
and less delay. She requested Staff return to Council with a clear and 15
concise understanding of the CEQA process and the defined rule of operation 16
in a historic district. She shared her concern with a project being underway 17
for three and a half years prior to Council or any Board or Commission 18
having been privy to it. She stated she would be supporting the Motion.19
20
Council Member Holman asked what happened if after the 30 days the plans 21
were not deemed to be acceptable by the HRB or the Director of Planning.22
23
Mr. Williams stated the HRB advises and therefore had the ability to state 24
whether there were compatibility concerns. He clarified if the plans did not 25
meet the standards set forth, the project would be denied. He noted 30 days 26
was an adequate timeframe to get a project before the HRB. 27
28
Council Member Holman stated if the HRB recommended to the Director of 29
Planning a project which was not compatible, what happened at that point.30
31
Chief Planning and Transportation Official, Julie Caporgno stated the Director 32
of Planning would not have a decision in 30 days. The Director used the HRB 33
recommendations to complete the Individual Review (IR) process which may 34
take up to 60 days.35
36
Council Member Klein stated his proposed language accepted and 37
incorporated into the Motion did not affect the Director’s timeframe.38
39
Council Member Holman clarified the Director could return the project to the 40
HRB if the findings were not compatible.41
42
Council Member Klein stated the idea was for the HRB to provide advice to 43
the Director of Planning within the 30 days from the date of submission.44
Page 14
1
Ms. Caporgno stated the EIR had focused the compatibility discussion to the 2
mitigation measures with the four components which would be the 3
determination for compatibility. There were suggestions in the EIR as to how 4
the mitigations could be met. 5
6
Council Member Holman stated if a building was demolished prior to the new 7
construction beginning, the site was left as a patch of dirt and weeds. She 8
asked why there needed to be a 60 day demolition schedule.9
10
Council Member Klein stated the process needed to move forward quickly 11
and presenting a timeline gave the perception of an end time.12
13
AMENDMENT:Council Member Holman moved, seconded by Council 14
Member XXX to delete the demolition prior to the approval of the permits.15
16
AMENDMENT FAILED DUE TO LACK OF A SECOND17
18
City Attorney, Gary Baum noted there was a change to Section 4 to read 19
“the City Council hereby finds the Environmental Impact has been reduced 20
to a level less significant due to incorporation of the mitigation measure as 21
listed in the mitigation monitoring check list including mitigation measure 4-22
1”.23
24
Mayor Burt asked for an estimated timeframe for Staff to return the 25
improved process to Council with the adopted changes.26
27
Mr. Williams stated Staff could return to Council with a report showing the 28
key components within three months.29
30
MOTION PASSED:8-1 Holman no31
32
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
CMR: 387:10
DATE: OCTOBER 25, 2010
REPORT TYPE: PUBLIC HEARING
SUBJECT: Certification of the Final Environmental Impact Report (FEIR) for the
proposed 405 Lincoln Avenue Single Family Residential Replacement
Project and approval of Demolition Delay in conjunction with a request
for a Demolition Permit for the existing residence at 405 Lincoln Avenue,
which is listed as a Contributing Structure in the Profess orville National
Register Historic District and a contributing resource to the Professorville
Historic District.
EXECUTIVE SUMMARY
The, project is the demolition and replacement of a single family house in the Professorville
Historic District. The existing house is listed as a contributing structure to Professorville on both
the National Register of Historic Places and on the City's Historic Inventory. An Environmental
Impact Report has been prepared for the proj ect addressing the impacts from loss of the
contributing structure, its loss on the district and the compatibility of the proposed replacement
structure within the historic district. The EIR concluded that the project impacts are less thm
significant. The proposed project is subject to the City's Historic Preservation Ordinance
requiring a demolition moratorium of a minimum of 60 days up to a maximum of one year prior
to demolition of the existing structure.
RECOMMENDATION
Staff and the HRB recommend that the City Council:
1. Certify the Final Environmental Impact Report finding it complete and adequate under
the requirements of the California Environmental Quality Act (CEQA)
2. Find that the Demolition Delay request for the existing structure at 405 Lincoln can be
satisfied with the minimum 60 day nloratorium ; and,
3. Refer review of any revised plan for the site to the Historic Resources Board for
evaluation of compatibility with the Professorville Historic District.
CMR: 387:10 Page.! of7
BACKGROUND
On June 14, 2007, the owners/applicants of the single family residence at 405 Lincoln Ave.
applied for HRB review of a Demolition Delay request to enable demolition of the existing
house, a Spanish Colonial Revival constructed circa 1923. The applicants had been advised by
staff that since the property is listed as a contributing resource to the Professorville National
Register Historic District on the City's Historic Inventory, it is subject to a demolition
moratorium in accordance with the City'S Historic, Preservation Ordinance and that the
demolition of the existing structure would be allowed once a two month to one year demolition
moratorium had been satisfied. The structure is also listed on the National Register of Historic
Places as a contributing structure in the Professorville Historic District.
Shortly after submission of the application for Demolition Delay in June, the City Attorney
determined based upon a trial court ruling in a City of Palo Alto lawsuit that the demolition delay
process was subj ect to the California Environmental Quality Act; and, therefore, environmental
review was required. The City decided to prepare an Environmental Impact Report (EIR) for the
project since, absent mitigation, demolition of the building had the potential for resulting in a
direct adverse impact on the Professorville Historic District.
On August 10, 2007, the applicants submitted the additional request and deposit for preparation
of an EIR for the project. The EIR would provide CEQA-required documentation for the
following two City approvals required for the project: Demolition Delay'and Individual Review
of the replacement structure. The applicants' architect conlpleted an initial design of the
replacement structure in early 2008, and submitted the plans to the City for review for
compatibility with the Professorville Historic District. Over the next year and a half, the plans
for the replacement structure were modified several times as a result of meetings with staff and
the historic architect hired by the City to evaluate the project as part of the EIR process. The EIR
was to evaluate significance of the loss of the individual structure, the effects of removal of the
contributing structure on the Professorville district and the compatibility of the proposed
replacement structure on the district.
In August, 2009, the applicant submitted final plans for the replacement residence to be analyzed
for compatibility with the Professorville Historic District in the project EIR. Over the following
year, multiple iterations of the design were reviewed and discussed by the City's historic
consultant, staff, the project architect and the owners. The DEIR began circulation on July 27,
2010 for a 53 day review period, ending circulation on September 17, 2010. Twenty-one letters
and emails were received on the EIR during the circulation period. On September 1, 2010, the
HRB held a public hearing to take testimony on the adequacy of the DEIR. Thirteen speakers
provided testimony at the hearing; the majority expressed concern regarding the loss of the
existing structure. The minutes from the September 1 st meeting are included in the Final
Environmental Impact Report (Attachment A) along with responses to each of the issues raised
by the speakers. On October 6, 2010, the HRB held its second hearing on the project focusing on
the length of the Demolition Delay requirement and the evaluation of the replacement structure
and its compatibility with the Professorville Historic District. The minutes from that meeting are
attached (Attachment B).
CMR: 387:10 Page 2 of7
DISCUSSION
For this project, the City Council is being asked to act on two items. First, the City Council is
required to detennine if the Final Environmental Impact Report (FEIR) for the proj ect is
complete and adequate under the provisions of the California Environmental Quality Act
(CEQA). If the City Council certifies the FEIR, then the Council should detennine the
appropriate time limit for the Demolition Delay moratorium as provided for in the City's Historic
Preservation Ordinance, which ranges from the mandatory two month period up to a maximum
of one year.
Summary and Adequacy ofEIR
The following criteria were used in the D EIR to determine if the proj ect would result in a
significant cultural resource impact. Although not officially adopted by the City Council,
these criteria are consistently used by the City on projects with historic resources
requiring environmental review.
• Adversely affect (resource has lost its integrity) a historic resource listed or
eligible for listing on the National andlor California Register, or listed on the
City's Historic Inventory; or
• Eliminate important examples of maj or periods of California history or prehistory
The evaluation in the DEIR by the historic consultant concluded that the existing
residence at 405 Lincoln is not considered a "historic resource" based on California state
criteria established in the CEQA guidelines nor does its removal within the Professorville
Historic District result in a loss of the district's integrity as a historic resource; therefore,
the DEIR concluded that the demolition of the existing residence at 405 Lincoln results in
a less than significant impact. However, the DEIR concludes that the proposed
replacement structure could be incompatible with the district and, as a result, adversely
affect the integrity of the district since the color and materials palette, building eave lines,
fenestration and massing characteristics, wood trellis and shading elements are not
sufficiently reflective of the Spanish Eclectic style and not sufficiently compatible with
the district. The DEIR identifies mitigations that would reduce these impacts to a less
than significant level and suggests ways to implement these mitigations, but other options
could be considered. The applicant has agreed to comply with these mitigation measures.
DEIR Alternatives
The DEIR addresses three alternatives to the proposed project and their ability to meet the
applicant's objectives for the project and identifies an environmentally superior
alternative. The No Project alternative would result in no impacts on the district;
however, none of the project objectives could be realized by this alternative. Alternative
2, Retention and Expansion of the Existing Residence, is considered the environmentally
superior alternative since the 'building would be retained within the district; however, the
design of the addition has the potential to result in impacts to the existing structure
CMR: 387:10 Page 3 of7
dependent on the extent and nature of the building alterations. This alternative would not
meet the project objective.
The third alternative, Relocation of the existing residence, would have the same impact
on the district as the project since the site would be redeveloped with a new building.
In addition, relocating the existing residence outside the district would not achieve any
benefit since the existing residence's historic value is as a contributor in the Professorville
Historic District.
Key Environmental Issues
Of the various comments received on the DEIR, the two that were most significant from a
CEQA adequacy standpoint to be addressed in the FEIR were:
• The cumulative impact from the loss of the structure on the Professorville district;
and
• The significance of the existing structure, individually and as a contributor.
The DEIR concludes that the cumulative impact from loss of the structure at 405 Lincoln
would not result in a significant impact due to the fact that the district retains its historic
integrity after removal of this one contributor and that the district has had limited change
over time. To further support that position, staff did further research on the status of
demolitions and alterations in the Professorville district. The two reports appended to the
FEIR identify that there are 195 parcels in the Professorville area. 115 of these parcels
are in the National Register District area; 80 are in the Expanded District area. Over the
last ten years (1999-2010) the number of non-contributors in the district has remained
constant at 50 (25% of the district parcels). 12% of the National Register district area
consists of non-contributors with 45 % non-contributors in the Expanded District. Since
designation of the National Register District in 1980, four demolitions have occurred in
that area. One demolition has occurred in the Expanded District since its listing on the
City's Historic Inventory in 1993. As a result the FEIR concludes that the cumulative
loss from the removal of the contributing structure at 405 Lincoln results in a less than
significant impact on the district.
EIR Conclusions
The DEIR concludes that the loss of the individual building at 405 Lincoln results in a
less than significant impact both individually and on the Professorville district. Although
additional information was provided in the comments received on the DEIR regarding the
owners of the house and their significance locally in the community, the FEIR concludes
that this information does not elevate the structure to a level of significance for CEQA
purposes. The structure does not meet the National or California criteria for individual
listing on either the federal or state register, it is not singled out on the National Register
CMR: 387:10 Page 4 of7
form as a significant building, nor is it designated on the City's Inventory as an individual
structure in one of the four categories of significance.
Regarding its significance as a contributor to the district, although it is recognized that the
demolition of the house would cause an interruption in the system of relationships that
constitutes the Professorville historic district, this particular interruption is considered less
than significant because:
1. The structure at 405 Lincoln is not an example of one of the dominant styles of the
Professorville historic district for which the district is listed on the National
Register. These styles are Craftsman, Shingle, Wood Bungalow, Colonial Revival
or a mixture of these styles.
2. The structure at 405 Lincoln is one of the smallest contributors in the district; and
3. The structure at 405 Lincoln is one story and is not considered a dominant
presence in the district.
Policy Implications of Conclusions
It also should be noted that if "contributing" status automatically deternlines significance,
there are broader ramifications for the City; all contributing structures in Greenmeadow
and Green Gables, both National Register districts, would be subject to preparation of an
EIR and City Council override of impacts if any changes were proposed to contributing
structures in those districts that were inconsistent with Secretary of Interior's standards or
if any contributing structure was proposed for demolition.
Length of Demolition Delay
The second issue for determination by the Council is the length of the demolition delay, which
may vary between 60 days and one year. The sixty-day moratorium required for this application
should be considered adequate based on the following:
1. This project has been on file for the last three years but since the Demolition Delay
process requires CEQA review, it has not been possible to proceed with the Demolition
Delay request in a timely manner. In compliance with the intent of the Denlolition Delay
process, this three-year period has provided sufficient opportunity for the any merrlber of
the public interested in relocating the house to conle forward since its availability has
been well publicized; and there has been adequate time to gather information about the
property's significance, which is documented in the DEIR.
2. A precedent for limiting the review based on extenuating circumstances was set in 2000
when the HRB allowed the minimum demolition delay of 60 days for a residential
structure located at 364 Kingsley after a protracted three year administrative process by
the property owner to obtain a demolition permit.
3. The applicants have been sufficiently exposed to extensive and comprehensive historic
information about their property, and they have engaged. in considerable dialogue with
CMR: 387:10 Page 5 of7
qualified historic and architectural consultants regarding the historic integrity of the
property.
4. This process has continued for two years longer than the maximum moratorium time limit
considered appropriate by the Historic Preservation Ordinance.
Historic Resources Board Discussion and Recommendation
The HRB held its second hearing on the project on October 6, 2010. The focus of the discussion
was the demolition delay process and the future plans for the project site. During public
testimony, five speakers spoke opposing the new structure; one speaker was in favor of the
proposed project.
The board considered that the DEIR was adequate recognizing that the CEQA process had not
been completed since the FEIR was not yet available. For the reasons cited in the discussion of
Demolition Delay below, the board concluded that the Demolition Delay process should not be
extended beyond the minimum 60 day requirement. The board supported the environmentally
superior alternative described in the DEIR which retains the existing structure and allows for
expansion rather than demolition. As a result, the board did not discuss the proposed
replacement structure and its compatibility with the historic district or its compliance with the
DEIR mitigations.
The Board recommendation to the City Council included the following:
1. The DEIR is adequate under CEQA;
2. The Demolition Delay should be limited to 60 days if the building is to be demolished
and the demolition should not occur prior to issuance of a building permit.
3. The Environmentally Superior Alternative should be pursued if legally possible (see
Attachment C) and any new plan for the site should return to the HRB for review and
recommendation to the Director of Planning regarding compatibility with the
Professorville Historic District and conformance with the EIR mitigations.
CONCLUSION
In conclusion, staff and the HRB recommend that: 1) the FEIR is complete and adequate under
the requirements of the California Environmental Quality Act; 2) the Demolition Delay
moratorium has been satisfied and the minimum 60-day requirement is adequate, but recommend
the ,demolition permit should only be issued in conjunction with the building permit; and 3) the
Single Family Individual Review project should be referred to the HRB prior to action by the
Director of Planning to ensure that the structure is compatible with the Professorville Historic
District and complies with the compatibility findings and the mitigation requirements in the
FEIR.
PREPARED BY:
CMR: 387:10
JULIE CAPORGNO
Chief Planning Official
Page 6 of7
DEPARTMENT HEAD REVIEW: __ (1..;;:;;;;:;.;;...~_....;:......;~;;;;....~-~_';;o""",,;.. . ...;;....;. ___ _
CURTIS WILLIAMS, Director
Planning and Community Environment
CITY MANAGER APPROVAL:
ATTACHMENTS.
Attachment A: Minutes from October 6, 2010 HRB meeting
Attachment B: Final Environmental Impact Report (Councilmembers only)
Attachment C: . Letter from Michelle Arden regarding Alternative Design
COURTESY COPIES
'Michelle Arden and Allen Akin
CMR: 387:10 Page 7 of7
ATTACHMENT A
HISTORIC RESOURCES BOARD
MINUTES
MEETINGS ARE CABLECAST LIVE ON GOVERNMENT ACCESS CHANNEL 26
ROLLCALL:
Board Members:
David Bower, Chair
Wednesday, October 6, 2010
REGULAR MEETING -8:00 AM
Council Chambers
Civic Center, 1st Floor
250 Hamilton Avenue
Palo Alto, California 94301
Staff:
Natalie Loukianoff, Vice-Chair, absent
Roger Kohler
Julie Caporgno, Chief P&T Official
Gary Baum, City Attorney
Diana Tamale, Admin. Associate
Patricia DiCicco
Beth Bunnenberg
Michael Makinen
Martin Bernstein
NEW BUSINESS
Public Hearings
Public hearing regarding 1) recommendation by the Historic Resources Board to the City
Council on the Demolition Delay process for the existing residence at 405 Lincoln Avenue
listed on both the National Register of Historic Places and on the City's Historic Inventory as
a Contributing Structure in the ProfessorVille Historic District; and 2) for review and
recommendation to the Director of Planning and Community Environment of the proposed
replacement residence for compatibility with the Professorville Historic District. A Draft
Environmental Impact Report has been prepared for the project.
Chair Bower: Thank you, Diana, this is a continuation, and I think that's the appropriate
term, of the meeting that began on September 1st of this year, and it is a review of the
proposed demolition and the review of the Replacement Structure that the demolition
would allow. We have already had part of this hearing that we had in September,
reviewed the Environmental Impact Report (EIR), the draft report, and that report is now
final, is that right? Okay, so we won't be addressing that directly this morning because
we've already had that portion of the hearing.
City of Palo Alto
HRB October 6,2010
Page 1
So we want to start this morning with the Demolition Delay, but let me first say that -1
want to first say that the procedure will be slightly different today because we're not
going to have an open -I'm not opening the Public Hearing about the EIR unless the
Board feels that we should do that, and we'll get to that. So we're limiting it today to
public testimony for those who did not comment on -and the last time on the EIR, we
would allow that comment, but only people who did not comnlent before. Other
comments we'll allow on the demolition and the structure reviewed.
So the process that we will follow this morning is I'll announce the Agenda item, we'll
open the Public Hearing on the Demolition Delay and the Replacement Structure. We'll
ask the Applicant t to present for ten minutes their materials on those two topics. The
Applicant can also make a presentation on the EIR if you choose. You chose not to last
time, but that's available to you since you did not make comments. We'll take Public
Con1ments on the Demolition Delay and the Replacement Structure. We'll close -the
Applicant will have an opportunity to address those comments, close the Public Hearing,
and then the Board will discuss these particular issues and make the recommendations
and Motions.
Boardmenlber Bunnenberg: 1 need to recuse myself from this item due to a conflict of
interest in tenns of commenting too early on the DEIR. So 1 should recuse myself at this
point, but 1 wish to submit a comment card on the Demolition Delay.
Chair Bower: All right, before we begin the hearing, there is an Oral· Communications
period for anyone who wants to speak on any item that is not on the Agenda today. 1
have not received any requests to do that, so we'll move forward with the next item of
business which is Approval of Minutes for September 1 st and September 15th• Any
corrections in the Minutes from any of the Boardmembers. No corrections.
Motion and second to approve minutes from September 1,2010.
All right, September 15th meeting minutes. 1 was not at that meeting, so 1 won't vote, but
-and Mike wasn't either. That means there are only three people voting on it and no
quorum, so we will just do that next -we'll reschedule that for our next meeting.
Then I'll open the meeting, the hearing to review the Demolition Delay and the
Replacement Structure for 405 Lincoln. I'd like to have Julie present that, if you would,
the Staff Recommendations and then Discussion.
Julie Caporgno, Chief Planning and Transportation Official: Thank you, Chair Bower. I
wanted to give you a little bit of a background on the Demo Delay process and the City'S
Historic Preservation Ordinance. The Preservation Ordinance allows demolition of any
structure in Professorville after the Demolition Delay process has been satisfied. The
Demolition Delay process is for a minimum of two months, up to one year, and the Board
makes a recommendation to the City Council and the City Council makes the
deternlination as to the extent of the Demolition Delay Moratorium.
City of Palo Alto
HRB -October 6, 2010
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The only area in Palo Alto that prohibits demolition of historic properties is in the
Downtown CD and only for Category 1 and 2 properties. The reason I wanted to identify
that, or go through the process, although I know the Board is familiar with it, but there's
been some -some of the comments that we've received from the public have indicated
that, in our discussions with the applicants when they first came in, that there was some
misinformation provided to them, that demolition isn't allowed in Professorville, and
that's' not the case.
The only restriction is the Demolition Delay process. The change that has occurred·
since/within the last three years, from the time that the applicants purchased the 405
Lincoln property, submitted an application for a Demolition Delay and then proceeded
with it was that the City because of a recent court decision, now considers the Demolition
Delay process discretionary and, therefore, environmental review is required. So for this
project we required an Environmental Impact Report to be prepared but, as far as the
Demolition Delay process, that was in place before. It's the same as it was previously.
As I mentioned, we require now CEQA review for a Demolition Delay moratorium. This
project is the only one that has come forward since that decision has been nlade and the
EIR for the project, as you know, addressed the significance of the existing building. It
also addressed the loss of the historic structure on the District and it addressed the
compatibility of the replacement structure within the District.
Eventually, the City Council will have to make a determination as to the adequacy of the
EIR. You held a Public Hearing on that EIR during your last meeting, and the Council
will also have to identify the length of the Demolition Delay Moratorium if the EIR is
found to be adequate.
We are asking the Board today to make a recommendation on the Demolition Delay, the
extent of the time required prior to issuance of a demolition permit. We're
recommending that you determine that either it's the minimum or the entire Demolition
Delay process has been satisfied because of the fact that this project has been ongoing for
three years, and there has been sufficient Public Notice that the project is underway.
There is an IR sign at the property, which indicates that there is an IR application on file.
Many of the people from the Historic Preservation sector are aware of this, and so the
opportunities for helping find a relocation site-well, in this particular case, a replacement
site really wouldn't satisfy anything because the importance of the building is in the
context of the District, but I think that the rationale behind the Demolition Delay process
has been satisfied, so that's why Staff is recommending that you either recommend the
two-month delay or you conclude that it has been satisfied.
The other thing that we would like you to do this morning is to evaluate the Replacement
Structure and is compatibility with the Professorville Historic District. The
Environmental Impact Report that you had reviewed previously analyzed the new
structure in the context of the Professorville Historic District and it identified that there
were certain shortcomings with the proposed project. The applicant has made some
revisions to the proj ect to address those impacts that were identified in the EIR and
City of Palo Alto
HRB-October 6,2010
Page 3
provide mitigations that were outlined in the EIR; we are requesting that the Board
review the Replacement Structure based within that context.
The other item that I wanted to raise was, at the hearing on September 1 st, there was a
former Boardmember as well as I think some of the current Boardmembers concerned
about the existing District's integrity; there was discussion about a percent(:l,ge of
retention of structures and what would -how much, or was there a threshold for a
percentage that would be meaningful for retention of the integrity of the District.
There isn't a magic number, but we can give you the data, or I can give you the data as to
how many parcels are in the Professorville Historic District, and also how many are
contributors and noncontributors, and how many have been modified or removed over the
period of time since the District was incorporated, how many structures have been
denl01ished.
First of all, there are 199 parcels in Professorville, and this includes the expanded area,
and 50 of those parcels are noncontributing and 147 are contributing and one parcel is
vacant. In the National Register District itself, there are 114 properties, and there are 100
contributors and 14 noncontributors which is only 12 percent of the District, and 88
percent of the District is contributing to the integrity of the District.
In the expanded area there, alone, there are 82 parcels. Forty of them are contributors
and 36 are noncontributors, with 56 percent of them contributing. I think if you add in
the expanded area to the overall picture it somewhat skews the integrity of the District.
My understanding of when that expanded District was fonned was it was done to try to
clean up the boundaries, and so a lot of parcels that were included in the expanded
District at the time were noncontributing structures.
Since 1980, there have been four (4) contributors demolished in the National Register
District, and since 1993 (when the District was expanded) one significantly altered
contributor was demolished that is in the expanded District. So if you look at the District
as a whole, since 1980 five structures have been demolished; when you take into
consideration just the National Register District, there are four (4) demolished with 88
percent integrity.
So, from a standpoint of this one structure, the Historic Consultant who evaluated the loss
on the District from the removal of the structure concluded that its loss would not be
significant and the District would retain its integrity because it's not an exemplary
building for the architectural style and the loss of this one contributing building is not
going to have significant impacts on the integrity of the District.
John Wagstaff, EIR Consultant: I would only add that the thrust of the mitigation
program in the EIR is to -the intent is to provide for a design that is, itself, a replacement
design which would be compatible with the District. That's the whole thrust of the
Design Review Process that has caught on over these many months., and the fmal tweaks
that are recommended in the Draft EIR.
City of Palo Alto
HRB October 6,2010
Page 4
Ms. Caporgno: Then, the final thing I wanted to add was that I had mentioned at the
meeting on September 1 st that when the final EIR is prepared you all will receive a copy
of it. We're still in the process of addressing the comments that were made at the Public
Hearing, as well as the comments that were received in writing, and we should have the
Final EIR available next week.
The discussion of the Final EIR by the City Council is currently scheduled for October
25th, so we are obligated by State Law to have the Final EIR out at least ten days before
the Public Hearing, so if we are going to go on October 25th, we'll have to have the Final
EIR available on the 15th of October. So we will definitely be getting the Board a copy of
the Final EIR as well as it will be posted online.
Any conunents (either at the meeting on Septelnber 1 st or anyone who has submitted
comments in writing), will either be getting a copy of the Final EIR, or will at least have
-we will be sending them email information on how they can access the Final EIR online
because some of them, if we have email-only addresses, we can't send them anything, but
we can send them a link to the Final EIR which will be posted online.
That concludes our Staff Report, and we're here for any questions you might have.
Chair Bower: Excuse me, let me ask a couple of questions, just so I can get the sense of
what we want to accomplish here today.
Should the Board, or are we expected to, vote to accept the EIR as we saw it? Do we
have any -is there any issue about making Motions about that document?
City Attorney, Gary Baum: It's my opinion that the Historic Resources Board can make
a recommendation to the Council to accept the EIR, or to make changes to the EIR, or
both.
Chair Bower: Or reject it?
Mr. Baum: Accept with changes or reject. Rejection alone isn't going to provide them
with enough guidance. You need to tell them what the issues are.
Chair Bower: Okay, and then we would discuss and make a Motion to either -to
establish the Demolition Delay timeframe, is that correct? Could we elinlinate any delay,
since we've had a three-year period? .
Mr. Baum: Yes.
Chair Bower: Okay, and then the final one, which is compatibility of the new structure
with the Historic District. Has the Staff finished their negotiations with the client and the
client's architect about the issues that were raised in the EIR report?
City of Palo Alto
HRB -October 6,2010
Page 5
Ms. Caporgno: The project is going to have to go through, and I forgot to mention this,
the Individual Review (IR) process. Staff has looked at it kind of in an initial evaluation
in conjunction with IR guidelines, and we've had the City's outside consultant evaluate it
too, but there hasn't been any decision made on it, and that -the EIR needs to be certified
by the City Council before the Director of Planning can make a decision on the IR.
We are recommending that the Board make comments regarding the Replacement
Structure, and if they need more time, that's something you could do--continue that item,
based on whatever concerns you identify for an ensuing hearing, you could do that, but
the critical component today for you to get through is the Demolition Delay process so
that recommendation can be made to the City Council.
Chair Bower: Okay, thank you. So I think where we should begin is with an Applicant
presentation, and then we'll just follow the list of Standard Procedure. So, we'd like to
hear from the Applicants. And, again, I'd like very much not to go back to the
Environmental Impact Report. You have an opportunity to address that, because you
haven't, but for the rest of the audience, I'd like to have that remain closed.
Allen Akin. Project Applicant: In fact, that's my preference as well. I'm Allen Akin.
Good morning, everyone. My wife Michelle Arden and I are the owners of 405 Lincoln.
Before we continue, I would just like to confirm that you have the material that's new
that we provided for you for this meeting. That should include our comments on our
responses to the comments on the EIR, and also the excerpts from Dr. Kirk's analysis.
So, if you have those two things, that certainly covers everything that we need to say,
concerning the EIR.
If you're ready to proceed, then I think the right thing to do is to ask Bob Peterson to give
you a presentation on the house, and we'll go from there, and I will be available for any
questions you may have.
Chair Bower: Okay, that's fine, thank you.
Bob Peterson, Project Architect: Hi, I'm Bob Peterson, Architect, in Palo Alto. I'm
going to run through a quick outline concerning the replacement building. The things I
want to touch on are the program/the process we've gone through and then the design of
the building to have it compa,tible with the District.
I've been working with Allen and Michelle on this for quite a while. They are current
residents of Palo Alto. They've lived here a long time. They want to stay here. They
like the community. They have two small children, and they have two pairs of
grandparents, and the building needs to accommodate this kind of intergenerational
family. The grandparents are here for extended periods, over the year, and will continue
to do that. .
City of Palo Alto
HRB -October 6, 2010
Page 6
The process that we've been going through for several years now, early on we had some
preliminary designs and it became clear that the only way to really get the things that I
think needed to be done was to do a Review Process, periodically, as we've moved
through it. So we did just that. We started with the bare piece of ground, and the
program, and the requirements to try and make it be compatible, and in each phase we
met with the Historic Consultant. .
We made -usually, we had two or three schemes. We discussed them all, we got advice
from the Historic Consultant, we made changes, we came back with alternatives, and we
moved through that, repeatedly.
The first one was to look at the site, and the existing parameters. Now, the existing
building is about -it's right on the 20-foot setback on the front. Because of the
contextual setback, this building is at 33 feet back. There is quite a difference there.
One of the things that we were aware of, and looked at initially, was the impact on the
closest neighbor. This obviously pushed -the new structure would be well back from
where the existing was, so that helped for privacy and light issues. However, the new
structure is two stories and, even though the existing neighbor is two stories, this would
have an impact on privacy and light.
We looked at that, and we've done a number of things to mitigate that, and the owners of
the n~w building are as concerned about privacy and light as the existing ones. So that's
the sort of thing that there needs to be some dialogue there to make sure that we can
satisfy both partners on that.
We took a look at the garage placement, and in this case, we moved the garage back in
the rear yard, a long ways from the street, because we didn't want to have a garage
impact with doors facing the street. The new garage will not face the street at all. It's
back in the comer. It doesn't make a big impact because it's integrated into the building
itself, so it's a very quiet situation there.
The orientation is critical in the design of all buildings, and the south and southeast is the
ideal orientation for outdoor living, and that was instrumental in how we layout the
house. In terms of privacy for the next door neighbor that works to their advantage, and
that is the orientation is toward the south and the southeast, meaning that's where the
major glass is, the major views out, and so the orientation to the neighbor is really minor
things, like some of the windows are to the closets and things like that.
Now, the other things that really played in our favor is the existing landscaping there is
really significant. It's been there a long time. The owners, the new owners, have every
intention to maintain it and make it more lush, and we have the house placed so that we
don't have to interfere with any of that, so there will be a lot of screening from th~ street.
So that is definitely an advantage.
City of Palo Alto
HRB-October 6,2010
Page 7
When we looked at the design and the exterior elevations, one of the major things for
compatibility is the relationship over the glass areas to the solid walls, and so we
purposefully reduced.the number and the size of the windows so that we could maintain a
reasonable ratio there that is similar to what is in the neighborhood already. Now, the
only downside to that is that it does impact the new house light and orientation -and the
light inside the house.
What we have done to compensate for that is the use of skylights to dump light right in
the middle there. With the low slope of the roofs, the skylights are almost invisible.
Now, when you look at the elevations, you can see them, clearly, but if you stand on the
sidewalk or in the car, the angle is so low that all you see is the edge of the skylight. So
we're able to add the skylights, get the light, and not have a major impact, and these are
flat skylights, so they're very inconspicuous.
There's a traditional element. There's a front porch to this new building. The entry is
recessed there, so it's very quiet, and it's typical of the neighborhood.
The exterior materials, the walls are integral color stucco. It will be a warm stucco color
and the two big elements on a house, really, are the exterior walls and the exterior roofs.
The roof in this case is a zinc shingle, and if you haven't seen zinc on a roof, it's a very
soft, warm color. It tends to mottle with time a little bit, a completely flat surface, and so
the integral stucco color has that kind of aged look, a little bit mottled, and the roof has
the same thing. The whole intent here was to design a house that was visually very quiet.
We didn't want to compete with any of the historic structures and, in general, we want
the house to be a very quiet structure itself.
The windows are all dark green metal. They are set back to the back of the exterior
walls, and these days (with insulation) all the walls are six inches, at least. It's very
. subtle, but you do get a lot of shadow patterns from placing the windows deep into the
wall, and that's what we're doing here. The windows, themselves, are all going to be
glazed with a sloped glazing bead which we are not doing it to make it fake in any way,
but that's a standard glazing bead you can get, and it gives that subtle look of an older
house and an older window.
Okay, well, I think that's a quick summary. I'd be happy to answer any questions. One
of the reasons we designed in this way, and this is an infill building in an existing
neighborhood, and it obviously makes sense for a Historic District but, in fact, it makes
sense for any infill building in a residential area. So, if you have any questions, I'd be
happy to answer them.
Board Member Bernstein: I've got a couple of questions, and it includes question to the
Staff. This, I think it might be appropriate. When the Staff is ready, I'll ask those
questions too. Great, and I'll wait until they're done.
I've got a question for Staff, and then perhaps the Applicant can respond. First of all, and
Bob I think the most significant comment you made is talking about process, and Review
City of Palo Alto
HRB October 6,2010
Page 8
Process. First of all, and for the Staff, I understand there is a preliminary Review Process
that an applicant can come to the HRB, very preliminarily, correct? Is there a fee for that
Review Process? If it's voluntary, I mean, just -
Ms. Caporgno: There isn't any fee for a preliminary review with the HRB. There isn't
any Staff time in involved, but the project would be brought to you without any
evaluation by Staff.
Boardmember Bernstein: I understand, and then for that review there is no requirement
for an EIR for that preliminary review?
Ms. Caporgno: That's true.
Boardmember Bernstein: And there's no requirement for any historic value -in other
words, there is no fee required. The Applicant can just come before us for the
preliminary comments, non-binding comments from the HRB. ~
Ms. Caporgno: That's correct. I think what -just to clarify. I know that the Board has
always, or recently, has been very encouraging of Applicants bringing forward projects
for preliminary review. I think in this particular case, one of the problems was that it
because it was going to be a new structure in the Professorville District, and the EIR was
involved, and we were having an historic evaluation done by the Historic Consultant, the
Applicant was designing this around the guidelines that had been established by the
Historic Consultant to meet the compatibility determination for Professorville. And so I
think that's the difference between what you review when an addition is designed and it
comes to you early on for your feedback before it's completed. .
Boardmember Bernstein: Thank you, Julie. Bob, you mentioned, early on, and it's been
what, two or three years ago that you started the review process?
Mr. Peterson: Correct.
Boardmember Bernstein: Is there any record, and this goes to the Staff and you, is there
any record that there was any review by any preliminary designs to the HRB? Is there
any record of that?
Ms. Caporgno: I'm sorry, if you could repeat it please.
Boardmember Bernstein: Is there any record, during the two to three past years, has there
been any record of any plans at all coming to the HRB?
Ms. Caporgno: There haven't been any. You have not seen these plans previously, or
any plans regarding this project.
Boardmember Bernstein: So, Bob, you mentioned several review processes of talking to
different people. There's a no-fee review three years ago that could have happened at
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HRB -October 6, 2010
Page 9
HRB. Can you explain if/why we didn't -we just saw these plans four weeks ago? Any
comment on HRB review very early on to get our comments too?
Mr. Peterson: Well, it was clear, made clear to us, the Staff made clear to us that we
were going to have to go through the EIR process, and we wanted to be able to really
have an ongoing cooperative arrangement here from an Historic Consultant who would
help us craft a building that would be acceptable and successful in this District. That
means that we wanted help fronl the very beginning.
As I say, we started with the Site Plan. We had three our four meetings there. Then we
went on to Design and Materials, so there were many, many meetings over a long time.
Boardmember Bernstein: And if all of those meetings, at any time, you said there was a
cooperative effort. So the HRB hasn't seen these plans.
Mr. Peterson: With the Historic Consultant.
Boardmember Bernstein: Right, and the Historic District Consultant, I don't think
they've consulted with the HRB. So where is the feedback from the HRB, is my point,
over the last three years? Those are my questions, yeah.
Mr. Peterson: Just a brief historical note. We actually scheduled an HRB hearing for the
original plan and had to cancel because the Consultant rejected the original set of plans.
So you actually -if things had gone according to schedule, you actually would have seen
. the original set of plans in 2008, but because those plans were rejected, the process
changed.
Boardmember Kohler: I have to comment. I'm sitting here getting really frustrated. We
have the final approval of this project, and so to avoid us, Staff, you should have said
something. The consulting historic architect is a consultant. He doesn't have the final
say. Through the IR process, I've had to work with him two or three tinles, and I've
rej ected several of his comments and said that they just aren't correct, and he said okay.
So, to have us suddenly be put at the end of everything, the huge amount of pressure to
approve everything here because it has taken so long, I'm finding very upsetting, that
suddenly we're the bad guys if we don't approve this today because it's taken everyone
so long.
So it's I don't know what to say. I mean, I'm having a hard time because, number one,
Staff should have said, well, we have the Consultant and we have HRB. We should do
them both together and get this resolved, way ahead of time. And you have Arnold, you
know, the outside individual review person. You know, I've worked 60 new homes with
him, so I know him very quite well, and he's also flexible and adjustable.
So there were three people that should have been working together (the consultant,
Arnold and us) and we've been left out. So I'm not sure what I'm going to do today.
City of Palo Alto
HRB October 6, 2010
Page 10
Ms. Caporgno: Can I respond to that? I think that, because this process differed in the
sense of the Environmental bnpact Report· and the identification of adequate mitigation,
obviously, the Board can look at the evaluation that was done in the EIR, and if you don't
concur with the evaluation, that's your prerogative. You can identify what is a problem,
but I think that we needed an objective outside consultant to look at the Replacement
Structure and provide the direction.
Boardmember Kohler: No, that's not correct. It should have been happening all at the
same time. You don't hire the outside IR without getting input from uS,because we're
the Board that's supposed to recommend this Approval. I know the Council has the final
say, but to leave us out of this whole loop, spend all that money, and all that time, and
then say here it all is, you know, it's a big package, please approve it.
It's just a huge mistake, and when I do an IR review, I meet with Arnold right up front,
and I say, what do you think, and the Staff, you and the other staff members, and we
work out together so we know ahead.
We were just left out of this whole loop, and I'm not -I feel very sad for the homeowners
to have gone through all this. This whole thing should have taken less than a year, and
now what is it, three years? .
Mr. Peterson: Could I add something to that? Our intent was to try and craft a building
that -and bring a building that was worthy of your looking at it. So, in no way, were we
trying to circumvent the HRB.
Boardmember Kohler: I'm not blaming you at all. I'm just saying, somewhere along the
line, considering that we're the Board that has to go through . and look at all this,
somewhere along the line, someone ought to have said, well, you ought to run it through
HRB and see what they think, and now we're sort of sitting here. I feel like I'm under a
huge pressure to approve this because of all of the bad things that have happened, and
I'm just not happy about that. .
Boardmember Makinen: Thank you, Chair Bower, just a couple of things. I missed the
earlier presentation, but I did read through the entire Minutes, 23 pages of them in detail.
Just a recap here, it is my understanding that the EIR will not be -the Final EIR will not
come out until October 15th?
Chair Bower: I could answer that. I think, if understood Julie correctly it can't come out
later than ten days before the Council actually reviews it, is that right?
Ms. Caporgno: I apologize to all of you because I wear hearing aids and I -in my haste
to get over here this morning, I forgot to put them on, so that's why I keep asking if you
can repeat.
The EIR, the Final EIR, will beavailable on October 15th•
City of Palo Alto
HRB -October 6, 20 J 0
Page J J
Boardmember Makinen: Okay, and the EIR now was in the process of incorporating
comments from the public, is that my understanding?
Ms. Caporgno: Yes, the Final EIR will address, or respond, to all the, comments that
were made at the Public Hearing that was held here on September 1 st, as well as any
letters that we've received on the EIR to date.
Boardmenlber Makinen: Are we being asked to approve the preliminary EIR today?
Mr. Baum: The HRB is being asked to give a recommendation to the Council on the
Draft EIR. That's how the system under CEQA works. It's a little unusual for this
committeelBoard because we haven't had an EIR come before you like this for a single
residential structure, but the way the system works is, if this was the Planning
Commission, the Planning Commission would get the Draft EIR, the Council gets the
Final EIR and does the final approval of that, but the Advisory Commissions get the
Draft versions, and then they are allowed to make comments, encouraged to make
comments, as are the public.
Boardmember Makinen: Well, I guess the crux of my question is, why are we having this
meeting today when the Final EIR is due out in a matter of about ten, nine days? We
could have the opportunity to look at the final document, with all the additions that would
be put into it, reflecting the public comment. I just don't get it.
Mr. Baum: You would have heard all of those comments, as well as vast majority of the
responses, but the CEQA process works like that, and that's the way it works statutorily,
that's the way the guidelines work and that's the way it works across the State. This isn't
a Palo Alto setup. Every Planning Commission reviews Draft EIRs to the extent that this
committee does. They're going to review the Draft, and then the Council actually gets a
Final Draft~ and then they'll get a Final version, and so that's the way the process works.
You're being asked to make comments on the EIR and recommendations on that EIR and
those will be considered by the Council.
Chair Bower: If I can make a suggestion to the Boardmembers. I think we all share a
frustration in the process, but let's -this is ultimately the Council's decision, and so let's
provide them with our guidance in how we would -how we evaluate this project.
They're going to make the final decision, and I think we're all frustrated by the EIR
process. It doesn't -this seems backwards to me as well, and so I think that we'll -let's
finish the discussion of these two issues, and then let's make Motions that direct the
Council to take the Actions that we would like to see them take. Is that reasonable?
Pat, did you want to make any comments about it at this point?
Boardmember DiCicco: I feel very frustrated about it as well. I mean, I think everyone
on this Board -and empathetic for the owners. I mean, it's gone on for three years and as
City of Palo Alto
HRB -October 6,2010
Page 12
Roger said, we -you feel like we're under pressure to decide today whether this building
is compatible, and I would have a lot of difficulty making that decision myself.
Boardmember Makinen: One final comment, in addition to what I've previously stated.
We've got at least three our four additional pieces of paper here that were presented this
morning, before we even had a chance to look at them and review them. I think that's
unacceptable to present them at the moment that we're at the meeting here.
Chair Bower: It is frustrating to incorporate that into our work, but I'm assuming that
Staff actually got those, and as I see from one of them, it's got a September 9th date on it,
so I don't know why that wasn't in our packet, but maybe they just came in recently, last
night or something. One of them has a date of October 5th, and so there's not much
opportunity for that to get to us sooner.
I would also like to say that, in the last meeting, I did not have the EIR report to review.
Staff has assured me that it was delivered to my house, and I suspect it was, and so it
wasn't Staffs problem, it was my -the turbulence in my house that probably lost that
document, but -yeah, the dog ate it. I don't have a dog.
Anyway, so I didn't -I was frustrated because that was a difficult position to be in trying
to run a meeting when I didn't have documentation, but it wasn't the Staffs problem, it
was mIne.
Anyway, let's move had a couple of questions for Bob about the project. These are-
on the north side of the proposed building there is an eight-foot setback. Is that the
setback for that area of Palo Alto?
Mr. Peterson: Yes, it is.
Chair Bower: Okay, it's eight feet and not six feet.
Mr. Peterson: Correct.
Chair Bower: So, in looking at the plans, it looks like we have some significant stucco
. texture, but I can't quite· figure it out. Did you -in our last meeting, we had asked for
some sample boards that would show us textures and stuff. Did we get that?
Mr. Peterson: Yes, it was delivered to the City.
Chair Bower: Okay, it looks like -I mean, this is your stucco?
Mr. Peterson: That's correct.
Chair Bower: And so it's going to be smooth, I mean effectively this is like a smooth
surface.
City of Palo Alto
HRB -October 6,2010
Page 13
Mr. Peterson: It would be a sand texture. It's actually a sand, like a sand dash, so it is
not troweled.
Chair Bower: I'm interested in the selection of the zinc shingles. You know, when I was
driving, and I was up over in the neighborhood yesterday looking at the houses
surrounding this property, and there's a significant red tile roof motif there. How does/is
this compatible? How is a zinc shingle compatible with the sort of surrounding
buildings?
Mr. Peterson: Well, what we felt, and the Historic Architect also felt, we're not trying to
simulate any particular style here. We just want something that has some of the
character, and zinc is one of those materials that does look a little -it's very subtle, but
it's a little splotchy, so it looks aged, and so it's an ideal material for that, and that's why
we wanted integral color stucco. It has the same sense of an aged material, so the house
doesn't come on as new and bright and out there. It's very quiet and settles back. So it's
a lightweight material, it's fireproof, long-lasting, and it has those qualities, much of
them like tile except tile is not lightweight and it has a particular character to it. This
District has all kinds of different buildings, obviously.
Chair Bower: There is substantial landscaping screening right now, and as a contractor I
look at the project and I look at the screening and wonder how that survives, and then that
leads me to think about how this house would appear if it didn't have this screening. I
mean, of course, it could come back.
In your pictUre, on page I-A, from the Waverly Street perspective, half of the house is
exposed, and that is the side of the house that has that ten-foot hedge. I imagine -I mean,
it's the intent to try and save as much of that as possible, is that correct?
Mr. Peterson: Absolutely, and to enhance it. As you can see, on that one view in the
photo montage, you see the City's electrical boxes out there. Unfortunately, they're in
the right-of-way, so we can't hide them, but the hedge is going to come around and
completely screen the house there.
Chair Bower: Right, and on page 2-A, when you are viewing the house from the Lincoln
Street side, it's actually totally obscured, the first floor. I guess my question here is,
when I imagine and look at the elevations of the house without landscaping, the roofline
has considerable sort of cut up quality to it. One of the EIR comments from the
Consultants was that those be smoothed out and eliminated, or at least nlodified so that
there was less of a choppy look. I know this is a revision from what we saw last, to some
extent, but I don't see much of that.
Mr. Peterson: Well, we really have been working on that, and we've simplified it quite a
bit from where/when he did his last comments on that, and we're highly motivated (for
energy reasons) to protect the glass and heat gain with the windows and that seems like
the most integrative way to do that.
City of Palo Alto
HRB -October 6, 2010
Page 14
Chair Bower: Right, 110, I'm having -oh, you're talking about having overhangs and
reducing the distance between the top of the windows and the roof by having the roofat
different levels to meet the window, is that what you're talking about?
Mr. Peterson: Well, there's a trade-off. I mean, we're trying to keep that as simple as
possible and it is a reflection of the plan itself, obviously.
Chair Bower: Right, I don't actually see that the roof is simple, and I may be looking at
it as a contractor and not as an architect, but that's not a simple roof, so.
Mr. Peterson: Well, I have to tell you, my father-in-law who was a contractor, said the
only building to build is a square building. The fewer comers you have, the better off
you are. So we are somewhere between that.
Chair Bower: I'm not in that school of thought, but anybody? Thank you, that's all the
questions I have. Anybody else have any questions for the Applicant?
Chair Kohler: Just a modest technical question. The media room in the basement doesn't
really have natural light except from the stairwell, is that -are you going to get that for
the Code? It says that the media room/rec room, down at the bottom of the stairs, there's
not real-
Mr. Peterson: It has light coming down through the stairwell itself.
Boardmember Kohler: Good luck. That's a
Mr. Peterson: Well, fortunately, a media room
Boardmember Kohler: But as long as it's got habitable space and things like that, it's
going to have to have natural light, and whether or not this current regime in the building
department will allow you to do that, I just think -
Mr. Peterson: Yeah, we WIll meet those light requirements.
Boardmember Kohler: Otherwise, you have to take it all out and -
Mr. Peterson: We're really constrained there by getting light wells. You're not allowed
to have them in the front setback.
Boardmember Kohler: I guess the last thing I have is to follow up on the roof materials,
as well. I mean, the house is not a very simple-looking home. It's got a lot of things
going on, and then the fact that the zinc roof, which is how many houses in Palo Alto
have that? I would guess five, ten-
Mr. Peterson: There's not many, but it is a really quiet soft material.
City of Palo Alto
HRB -October 6,2010
Page 15
Boardmember Kohler: It's a great roof, but I just -when I look at the pictures you've
provided, almost all the homes around you are all tile. The house that you're tearing
down is tile, and now we're putting in a roof -a house that is very modem, and then the
roof is also very unusual. So I think if -I don't know what to say, but I just -if the house
was a tile roof, it would probably blend right in and no one would even know it was a
new home, but once it's got that roof on there, it's kind of a signal that this is a new
home, and I think we'll have to talk about, with the Board here, I'n1 not quite sure how
we were supposed to have approached this. .
Mr. Peterson: Well, let me make another comment about that. The character that the
zinc gives is very much like a shingled roof. It turns almost like the same color. It's very
simple. It is a triangular-shaped fairly large shingle, and it's traditional of course all over
Europe and many older cities.
Chair Bower: So it looks something like slate?
Mr. Peterson: Yes, that's right.
Boardmember Kohler: I was thinking of a different zinc roof. That helps a little bit,
yeah, thanks.
Chair Bower: Pat, any comments? Not required.
Boardmember DiCicco: My comment, again, I guess would be more of confusion. On
that Board that we just saw, is that actually a piece of the zinc?
Mr. Peterson: That's cortect.
Boardmember DiCicco: Only, you say it's a large -what's large?
Mr. Peterson: They're about 18 inches square, the shingles.
Boardn1ember DiCicco: And they weather into a different color? That is the color it's
going to be.
Mr. Peterson: No, they -that is the natural color of zinc and it does tend to take a little bit
of mottling over years, but it won't change significantly from what you see there. It's
fairly uniform color now, but with rain and other things it becomes slightly mottled.
Boardmember DiCicco: Well, my only other comment is that it, to me, all of the colors
on the building and the roof appear to be quite in contrast with a lot of the existing
buildings in Professorville, as you have said, and also the roof is a different material.
And, absent mature landscaping, the building would really stand out as not exactly
contributing to Professorville.
City of Palo Alto
HRB -October 6, 2010
Page 16
Mr. Peterson: Well, I think the texture and color of the stucco really will be very soft and
nonconlpetitive to anything around. You can look at the photo montages to see there are
salmon-colored, and white and yellow and all many -and then there's painted shingles
just a couple of houses away, so there's a terrific variety down there now. We're trying
to kind of fit in with all of those.
Chair Bower: And of course we're looking at all these colors and then ten years -it will
be less than ten years if you're using integral color and you don't pain that stucco because
then
Mr. Peterson: You never have to paint it.
Chair Bower: Well, you know, you and I have worked in this business a long time. I've
seen a lot of houses around Palo Alto that started out integral color and then ended up
growing moss on them because the stucco doesn't shed the water; it absorbs it, but you
could -nonetheless, you can still paint it, and it could be a salmon building.
Mr. Peterson: You could paint it. My own house is 20 years old, integral color is just
like it was in the beginning, slightly mottled, but -
Chair Bower: No moss growing.
Mr: Peterson: No, fortunately.
Chair Bower: Okay, if there are no other comments, I think I'd like to move on to the
next phase of this and hear from the public. There are five people who want to speak.
Again, I'd like to limit conlments to the Demolition Delay and the compatibility of the
new building to the District.
PUBLIC COMMENT
Ms. Nancy Clark: My name is Nancy Clark. I live at 225 Addison, and that's in
Professorville. First of all, I'd like to thank you for your services here today and what
you're doing for the community. It's appreciated. I just want to state my support for the
project. I don't -I walk by that house on 405 Lincoln almost every day, sometimes twice
with my dog. I don't think that the existing structure adds anything to the neighborhood.
I'm fully in support of these people, and I'm disappointed about the amount of time and
money they've h~d to spend for the project, as I am sure you all are as well. With that, I
appreciate, again, paying close attention to the details and the lack of historical
significance for the current home. Thank you.
Mr. Jason Trindade: Jason Trindade from 409 Lincoln, and like you, I am very frustrated
with the process that's going on here. I feel that we were hit late in the situation with our
ability to make any suggestions on what was going to happen. Now, I think this is being
viewed in a vacuum, and as Julie has stated, there has only been one demolition in the
main area since 1993. So this is a big deal. It sets a large precedent and the precedent
City of Palo Alto
HRB -October 6,2010
Page 17
that's being set here really needs to be understood in terms of, first, removing a single-
story house and replacing it with a multi-story house. This is an historic district, but that
is one of the issues.
Secondly, it's that if you can demolish in an area where everybody else had to pay a lot
of money and go through Planning and not even be able to move their driveway, you're
applying the wrong standard. And so the standard which used to apply to, say, a
modification, me coming up here and saying may I move the front of my house forward
three feet, has been thrown away. So the precedent set by a demolition decision here
really has far-reaching and negative impacts to any preservation attempts in this District.
I mean, you're not talking about a single thing on the secondary overlay. You're talking
about a property that was in the initial historic circuit, a property that was then confirmed
within the secondary overlay. So, you know, I'm really disappointed about the way that
this procedure has gone. We have some/our concerns as neighbors because we live right
next door. You know we bought the house, it's in a Historic District, and we had to go
by the rules that everyone else had to follow. We paid hundreds of thousands of dollars
in doing our roof. As we have heard, roofing is a big topic here. We had to put the same
tiles right back on. We rebuilt our chimney, saved all the bricks, reused everything that
we could, and our house was built by the same architect as their house was built by. So
to change the rules and make it so that you can demolish a house, but you can't modify a
house, because that's what the decision here for demolition would do, it seems very, very
erroneous to me.
I have a question here. It seems that the idea that the Demolition Delay be shortened is
being represented in terms of credit for tinle served. We all sympathize that this has
taken a long time, but as the Council has stated before, they weren't approached in the
beginning about this, and the sign in front of the property, it says Contact Kathy Morris.
It's the same one that's been there for three years. It hasn't -or two years. It hasn't
changed. It never says when there's a meeting. You know, the members of the public
walk by, and that's what they see.
So, you know, I think that we need to accept the fact that Demolition Delays occur and
exist so that when there's an error, or when there is a procedural issue that should have
been raised and was not raised, it may be raised appropriately in court before the house is
gone. Our consideration here is that the house should be able to be rebuilt on the spot. If
you take away, and you can't rebuild it, and as architects you know pretty well that, hey,
look at the interior. It's not made out of sheetrock; it's lath and plaster. Look at the
exterior, you know. It's not going to be rebuilt with old wood. It's not the sanle type of
building.
This just -accept (if we're going to do this) that, first, that house being more historically
relevant than our house, and replacement of it causing a significant impact in both our
property value because we have a private backyard, a private swimming pool. Now,
having windows over it, that's unacceptable to us. You know, necessitates in our '
replacement of our structure. We have to make significant modifications to our home,
City of Palo Alto Pagel8
HRB -October 6, 2010
which is historic, and there's really no way that we can come up here and say, oh, well,
we'll accept the no nlodification judgment here because we'd just have to point at that
house. Look, you knocked it down. It was more historic than ours. Look, it was built by
the same architect, and then you know we have an -1 mean, lots of people here are
mUltiple homeowners, you know, some people at Eichlers, and we could extend this,
have areas where they don't pennit a building next to it or you know it's never allowed.
Well, hey, look, you took one of the historic buildings, obviously 20 years older, it's not
a tract home, you knocked if down. Where there was a single-story home, you built a
two-story home. There doesn't seem to be a side view from our property to that property,
and I'd really like to see that. You know, it doesn't show how the windows affect ours
and how our property affects that property. You know windows in a closet. A closet
doesn't need windows. A room that you dwell in needs windows, and it needs light, not
necessarily windows. There're things that could be addressed by light wells, which
haven't been addressed.
1 have no desire to see this procedure go on longer and longer, but 1 think it should have
been stopped in the beginning, and if it wasn't stopped in the beginning, then it should
have been looked at in tenns of something which mitigates the impact on the
environment around it, and when you look at what's going to happen, and it's unfortunate
that this is a single-story structure here, because if it wasn't it would change the entire
dialogue.
You wouldn't set a precedent which would make it so that the alterations and the
significant materials impacts to the neighboring houses would be available as a reason or
justification for anybody coming before you to say we get to do what we want, but that's
really what will happen here. 1 mean, what's the relevance of Historic Review when
you've gone and taken one of the more historic homes, on a block where other people
who have just secondary overlay homes and not contributing structures, and are subjects
to guidelines for modifications, and say hey it's gone, it's demolished.
Chair Bower: You're over five minutes; can you summarize for us?
Mr. Trindade: 1 am -okay, it's my opinion that the precedent that would be set by this,
and the direct impacts on our home, are such that they are too broad-reaching to be
pennissible, that this Board and the governing body of the City have been placed here
with our trust, and we have paid taxes to do/for Historic Preservation. We pay hundreds
of thousands of dollars for it. The wrong standard of scrutiny has been applied to this
project. This should have been scrutinized and the only substantial issue is denl0lition
here. It really should have not gone through this EIR process. It should have been, can
we demolish this house? What happens if we demolish this house? And what happens to
the District? 1 think that making anything other than a No Demolition move, at this point
in time due to the procedure, is erroneous. So 1 really would think that, if you consider a
Demolition Delay, you have to understand the legal ramifications of this, meaning that
you can't give credit for time served. That's unacceptable. Thank you.
City of Palo Alto
HRB -October 6, 2010
Page 19
Chair Bower: I neglected to say earlier, there is a five-minute limit so we can get
through. We have several people here today so we'll impose that.
Ms. Carmo Trindade: I'm Carmo Trindade, and I don't think you need worry; I have
only two minutes, or three minutes, so I think you will be pleased with that. I have two
points. Number one is, I think there is frustration from all of you here that I've seen, and
a whole lot of other people, with the process but you just kicked the ball down the road.
You see, that's the point of what's happening most of the time. As I forget, one of you
said here that there should have been consultation with the Historic Resource Board all
through, and then the excuse that they waited three years, but that's not your fault, and
that's not my fault, the neighbors. The fault is that, in fact, you don't go and look for a
house in a historic neighborhood and don't expect any delay any expenditure to be
undertaken because when you hear -I see that somehow made it the victim, and you see it
that we have spent $500,000, or whatever, to date. Well, I've spent far more than that in
trying to keep it the historic portion of that and, doubtless, most of my neighbors have
done so.
Now, the other point that I may want to make is that we talked last time, just the last
meeting about interaction with the neighborhood. My then neighbor next door, one said
that they hadn't been approached at all and talked with and we, ourselves, were
approached about a year after the house was bought, with the intention to demolish it. I
mean, this is not just -and you were not the only ones that -you are not the only ones
who were not informed over the three-year period.
We were not informed for 1-112 years, and the only people it seems were informed were
the Staff and the Applicants and the Applicant, and when we went to see the things, many
things were not available. So I don't think this process has been done at all well, even
though it maybe the first time, as Julie said, the first time that this has happened because
of this thing. It doesn't matter damn, first time.
We should not suffer because that is the first time that the City has got this thing here. I
think the job of the Historic Resources Board is not to worry about mitigations that may
be there, because they think that there is a three-year delay or the $500,000 output on this
type of thing. I don't think this is the thing that could be considered at all. I think what
one has to consider is, is this historic house that has been put in the Register, and does it
fit in or whatever else that it is that we put there? Fit in with the rest of the aesthetic part
of that neighborhood? You walk in and you see a whole comer which is the same type of
construction, and you're going to see a very different thing in that comer. That's my
point that I think the aesthetics are going to be affected.
And, all the more, the City has to make a decision, are they going to have historic
neighborhoods, or not? Because if you are going to have an historic neighborhood, then
you don't destroy it because I can assure you, if 405 is demolished, I will want a permit
the next year or the year after to change my house completely. And there will be nothing
to stand on that you can't do this because that house is far more -the 405 is far more
City of Palo Alto Page 20
HRB -October 6,2010
historic than mine. It was in the primary district. So I just want to point out that the City
and the Historic Board, you all have to make a decision. You can't kick the ball down
the road and say the Council will decide.
What is your decision for the Council? Otherwise why would you need a vote of the
Historic Resources Board? You don't need it. Forget it. Just go straight to the Council.
I mean, I heard the frustration from you, and you and you. Everybody here, that I see the
frustration, but no decision is made. You don't say that we are a Historic Resource
Board, this is what our decision is. I'm expecting that you will do that. Thank you very
much.
Ms. Grace Hinton: Good morning. I'm Grace Hinton representing Palo Alto Stanford
Heritage. We sent a letter to Claire Campbell on Septenlber the 9th, which is the day that
the Public Comments period closed. So this should have been in your packet, but I don't
believe it was. Because you haven't had time to read it, I'd like to use my five minutes to
read this letter.
This is regarding the Environmental Impact Report for 405 Lincoln Avenue. This is
signed by our President, Scott Smithwick, but he is not here today.
Dear Claire:
On behalf of PAST Heritage, I'm writing to comment on the Environmental Impact
Report for 405 Lincoln. The EIR finds that Hthe proposed demolition of the structure
does not equate to the demolition of the District and will not materially alter in an
adverse manner those characteristics that justify the District's inclusion in the National
Register of Historic Places, California Register of Historic Resources or City of Palo
Alto Resources Inventory," and this is the EIR, Section 4.3.5, Impacts and Mitigations,
Impact 4.1.
The EIR justifies this finding by citing Valley Advocates versus the City of Fresno, and
this is a quote, HThe Court of Appeals has also found that just because a building is
identified in a Historic District, it is not a mandatory Historical Resource for purposes of
CEQA." However, the EIR doesn't seem to follow through with the Court of Appeals
Decision in this case.
The question seems to be whether the determination of the significance of the resource is
mandatory, presumptive or discretionary. In their 2008 Land Use Alert, titled CEQA
Lead Agency has discretion to determine whether a building is a significant Historic
Resource, the attorneys, Barbara Schussman and Stephen Kostka, report the following,
HThe Court of Appeal ruled that when the Fresno City Council decided the project was
exempt, it was misinformed as to the discretion it had to find the building was a
significant Historic Resource. The Court then explained how the initial determination,
whether a resource is a significant Historical Resource, should be made depending on
which of the following three categories applies. Mandatory: A lead agency must find a
resource is a significant Historical Resource if it has been listed on, or determined
City of Palo Alto
HRB October 6,2010
Page 21
eligible for, listing on the California Register of Historic Resources. The Court
explained that it is only an official determination by the State Historical Resources
Commission that triggers this mandatory determination.
The second category is Presumptive: A lead agency must presume a resource is a
significant Historical Resource if it has been listed on a local register or included in a
local survey that meets specified criteria unless the preponderance of evidence
demonstrates otherwise.
Discretionary: A lead agency may determine that a resource is a significant Historical
Resource if it does not fit within the mandatory or presumptive categories as long as the
determination is supported by substantial evidence in the record. When such a
determination is made, the criteria to be applied are the criteria for listing on the
California Register of Historical Resources. "
This EIR implies that his resource falls into the discretionary category. We would argue
that it falls into the presumptive category due to its listing an Historic Inventory as a
contributing building. The letter P on its listing sheet denotes its status as contributing to
Professorville. It is a Usignificant building according to Palo Alto Municipal Ordinance
Section 16.49 under definition of significance. USignificant building means any building,
group of buildings or site categorized on an Historic Inventory as number one or number
two and all structures within Historic Districts." This is Ordinance 37.21.1986, thus the
Ordinance, itself, the Ordinance, I might point out of a certified local government has
recognized for over 25 years, the significance of structures within Historic Districts.
The house, itself, has been recognized as a contributing structure to the District for 30
years. Some of have argued that 405 Lincoln sits at the edge of th~ District and is
therefore expendable. However, the original District, as defined by Beech & Begozian,
of Historical and Environmental Consultants, in 1980, and using methodologies
approved by the City and State, deliberately included this structure. It maintains its
integrity and contributes to the unity of the Historic District itself The foundation of an
Historic District is the system of relationships among contributing buildings, grand and
not so grand.
We believe that the premise of this EIR was incorrect. That is to say that it focused not
on the impacts of demolition to the Historic Resource and the Historic District it belongs
to, but rather on the compatibility of the replacement house. As was mentioned several
times during the Public Comments at the September 1st, 2010 HRB meeting, the question
of how many contributing structures can be demolished without compromising the
integrity of the District as a whole was never answered in this EIR.
We believe that the next step in this process requires a reformulation of the EIR to
include impacts that the proposed demolition has on the District itself Failing that, we
believe that the demolition of this resource requires a Statement of Overriding
Considerations by the City Council to provide the public with specific reasons why the
benefit of this proposed project outweighs the adverse effects.
City of Palo Alto
HRB -October 6, 2010
Page 22
We would also like to register protest that the Public Comment period on the EIR does
not extend to the Public Hearing in which the EIR would be discussed. "
This is signed, "Sincerely Yours, Scott Smithwick, President, PAST Heritage. "
Chair Bower: Thank you, Grace. I appreciate you reading that since we didn't have time
to read it ourselves.
Ms. Beth Bunnenberg: Beth Bunnenberg, 2351 Ramona Street, Palo Alto, and I'm
speaking today as an individual. In your consideration of the Demolition Delay for 405
Lincoln, there are two remaining central questions that have come up during discussion.
Please remember that the Applicant and the City have been working on this for a very
long time, but the public did not have a clue about the facts that were to be presented in
the DEIR until a little over a month ago.
The first question emerging is, is this house historic? And I would again call attention to
the Municipal Code, Historic Preservation Chapter, 16.49. Very important language
exists there about Historic Districts, and the definitions section which is .020C, the
statement included is, "The collective value of an Historic District taken together may be
greater than the value of each individual building," and then as stated previously, "All
structures cited within the Historic District are categorized as significant on the
inventory. "
And, again, the other definition is of significant building, which means a building or site
categorized as one or two, and all historic structures within the Historic District. This
certainly sounds like it applies to 405 Lincoln. The City Council needs to be informed of
these provisions and I would again remind you that demolition is a very final act.
Demolition can not be mitigated.
The second question is, what would be the impact on Professorville National Historic
Register District of one or more demolitions? This moves into that area of cumulative
impacts. There are cumulative impacts that have been going for years. Thank you, Julie,
for the report on some of the figures, but just to call attention to a few more things. In the
Dames & Moore Study Phase 2, 1999, there were 200 listed addresses, 50 were
noncontributing.
Looking at those noncontributors, there were nine (9) demolitions producing eight (8)
new houses, and one went for a garden. One (1) house was lost by fire. We're painfully
aware that that becomes a possibility. Seven (7) houses that were built in the early 1990s
lost integrity and became noncontributors. There were 13 new houses built on shared or
subdivided lots. So 30 noncontributors were created during that period, from 1978 to
1999. We don't have statistics from 1999 to 2010 in terms of how many houses have lost
integrity over this period of time, through denl0lition, loss of integrity, natural disasters.
We don't have full information there.
City of Palo Alto
HRB October 6,2010
Page 23
Therefore, in view of the need to reevaluate and properly apply the definitions of the
Municipal Code 16.49.020, showing that all structures in a District are significant, and
we need a survey of the impacts of Professorville demolition, loss of integrity and so
forth. Therefore, I respectfully request that the HRB recommend to the Council the 60-
day or more Demolition Delay as provided in our Ordinance, but the Council needs and
deserves full information on these complex issues. Thank you.
Ms. Barbara Wallace: Good morning, Barbara Wallace, 356 Lincoln. I appreciated very
much that -thorough investigation of the Municipal Code. That's something I
don'tlhaven't had access to or haven't taken the trouble to find out and, although I know
your powers are advisory and limited to persuasion basically, I hope you will consider
rejecting the Staff recommendation to advise no further delay in the demolition process.
We know, it's true, it's been lengthy, and it's been more than a little inconvenient to the
public, the City, the Staff, the HRB and of course the owners who expected little
difficulty in obtaining a demolition permit. There is pressure to accept the Staff
recommendation. It's written there in the recommendation, but I'd like to point out
inadequacies in the DEIR which I believe incorrectly minimizes the loss to the District of
this contributing structure and since my comments, too, from September 1 i h (the last day
of the extended period) were apparently not in your packet.
I was told they were not. They were sent to the Planning Department that day. I feel
somewhat justified in referring back to the DEIR. The DEIR claims that the loss would
not represent a significant irreversible environmental change, yet the National Register
considers the District to be a unified entity. I don't see how removing a contributing
building can be anything but a significant irreversible environn1ental change. You may
wish to consider that.
The DEIR dismisses t~e effect of cumulative impacts on the District when it indicates
that, because there are no concurrent applications for development or demolition, the
CEQA definition of cumulative impacts doesn't apply. That definition refers to two or
more individually effect, which when considered together are considerable, or which
compound or increase other impacts.
Now, I ask you to consider-that, though the demolitions in the District, have been spaced
out, in the immediate area in the early to mid 1990s, the houses at 1110 Waverly and then
1106 Bryant were demolitions and more recently the house at 364 Kingsley, which is
cited by Staff as a precedent for suspending the delay now at this point. These
demolitions have had obvious and adverse effects on the integrity of the Historic District
as it was originally described.
And I have one last point. As I read it, the house is deemed insignificant to the District,
partly because it represents a later architectural style. We know that from the beginning
of the University Park Subdivision that block, known as Shepherds Fields, that was the
block bounded by Waverly, Lincoln, Cowper, Addison, and it remained undeveloped, at
least partly because the owners hoped the City would acquire it for uses of park site, but
City of Palo Alto
HRB October 6, 201 0
Page 24
in 1919, or 1920, the voters rejected that idea, or at least they rejected the cost, which 1
think was somewhere between $10,000 and $14,000, and then in late 1920 the lots went
on the market.
Robert Duryea bought more than one lot. His design of 405 Lincoln, in the newer style
just beginning to be seen in Palo Alto, was known to influence the slightly later intact
Spanish Eclectic houses on Waverly and Lincoln, of which the Trindade house is one.
To diminish its importance to the District, because it varies from the houses of the
generation earlier, seems to violate the notion of a District as a unified entity.
And one last thing that has puzzled me from the beginning. 1 read in the DEIR that the
house had been advertised for sale to be relocated to a replacement site. 1 just would like
to know where those advertisements were. 1 never saw them, and several neighbors
whom I've spoken with, had no notion that was being done. 1 think that's a significant
omission from the general discussion. Thank you.
Ms. Joyce McClure: Hello, my name is Joyce McClure. 1 live at 1005 Bryant. 1 was
also -I also gave comments at the last meeting and 1 know some of you were not here
then. 1 know Roger wasn't here, and 1 just want to remind you that there were a lot of
people here from Professorville standing up in opposition to the demolition of this home.
1 have lived primarily in this District for about 35 years, and when 1 moved in and most
people still believe that these homes are protected, and as the City Staff person has said,
well, they're not.
Anything can be demolished, and that's what the Historic Resources Board, 1 feel by their
name and by how they're presented to the community, should be working to preserve
this. As 1 have heard you talk about feeling sorry for the owners who have had to wait
three years, 1 think you really need to be addressing and thinking about the Professorville
community, people who live here, people who have spent hundreds and hundreds of
thousands of dollars preserving their homes and 1 do believe that this honle is a
particularly poor example of a home that will erode the integrity of the District.
This is a beloved home. This has been owned, as 1 believe, by one family until this
couple bought it, and it is especially beloved because of the family who lived there,
because of it being hand--built by the owner, and because of the significance of the family
in many, many ways who lived here.
1 would really like to see this Board address what's happening in Professorville, and 1
would like to see them make a recommendation to Council that we look into something
that preserves these homes because, while they may have spent $300,000, my home will
be eroded by much more if modem homes are put in there.
Now, 1 formerly lived at 329 Lincoln and was subjected to about 12 years of
construction, and as one of the letters in the packet, 1 think of the next door neighbor,
talks about the loss of privacy. 1 live next door to the Sun Bonn~t House, and the same
thing happened to me in that house. There were windows built. The entire orientation of
City of Palo Alto Page 25
HRB -October 6, 2010
how they entered changed, and it completely destroyed my privacy there, and that and the
Wing House, which also has had two or three years of construction -or, of course, I had
the opportunity to buy a very historical house which I love, and I treasure, but most of the
people in that neighborhood, it's very important to them that it be an Historic
Neighborhood, and I don't see any reason why someone would come in and buy a home
in an Historic Neighborhood and expect to be able to demolish it.
They said they've done research on the home and on the individuals. It is a treasured
home, and I really feel that, as I've seen happen, these different precedents are taking
place and people feel that if this happens that they'll be able to do it as well. Now, I
know most of you are architects, or contractors, and I wish there were more
preservationists on this Board, but people who have bought into that neighborhood and
into expensive homes treasure it.
I just hope -my expectation is that this Board should be protecting and preserving this
neighborhood. Thank you.
Chair Bower: Thank you 'for your comments, all of you. I think I'd like to close the
Public Comment portion now. We have no more, no additional people who would like to
speak. Wauld you like to make any final statements? The Applicant has an opportunity
to respond. It's. not required.
Mr. Akin: I don't know whether it makes sense to reopen so many of these issues that
have been discussed previously on the EIR. I'll make a few brief comments, and mostly
refer you to the material that you already have, which I think covers most of this ground
already.
The comments from Grace considering the letter from Scott Smithwick, this is one of the
areas where I know very well that I'm not qualified to respond and I have talked to our
attorney about it, and Gary I presume you know what's being referred to there. So I defer
to the experts on that question.
There is frequent use of the word "significant" and "historic" in many of these comments,
and one of the things that I've learned the hard way throughout this entire process is that
you have to approach these words with great care, that the level of significance is an
important concept throughout CEQA and also throughout this process.
To say that -in many cases, to say that a resource is significant means only that you are
required to go through the CEQA review process for a number of actions that might be
performed on the resource. It's the job of the EIR to determine whether those actions
actually have a significant adverse impact on either that structure as an individual
resource or on the District.
It's not a simple matter, and I wish I could offer you clarity on that, but all I can do is just
try and work through the process.
City of Palo Alto
HRB -October 6, 2010
Page 26
Let me see, what else is of importance here that hasn't already been covered? Brief
actual correction, we did not buy the house from the Duryea family. There were
intermediate owners, so just a small factual correction there. And I think my wife points
out that we should make it clear that we have been in touch with Eve Debonna's
daughters, for several years, so they are aware all of this is going on.
I think everything else has been covered, concerning the EIR, has been covered
adequately in the other material that you have, so we won't go into that further.
One other brief comment, Boardmember Kohler, you asked about Arnold Mammaella
Arnold was participating in the discussions with Bob Peterson and Michael Garavaglia
and the other Staff members. So his comments have been noted at least several times
during the process.
You know, we did talk about preliminary study sessions with the HRB, and I think the
issue was that the EIR process was so new and so ill-defined at the time that it was
unclear exactly when we could get you involved. Beyond that, I simply don't know. I'd
have to ask Staff what the reasoning was for each of the steps in the process.
As a final general comment, there are always going to be differences of opinion in
nlatters this difficult, and those are driven not only by people's values but also by our
understanding of the facts of the situation and the facts of the law. Everyone, I believe,
will agree that this is an unfortunate situation and we all wish that it had never played out
this way, but what we have to resolve this kind of difficult question is the processes that
are defined by the law and the policies of the City. Difficult as it is, we're trying to work
through those to a conclusion and all I can ask is that you help us do that, just to work
through the process, and we'll accept the outcome at the end.
If you have any further questions, I'll be happy to answer. Thank you.
Chair Bower: Thank you for your contribution. All right, I think we'll now close the
Public Hearing on the Demolition Delay and the compatibility issues.
Roger was just asking me to have the Staff summarize what we're supposed to do here,
but I think I would like to try to formulate that, and then you can -the Staff can comment
on it if I've missed something.
So we have three issues we need to address. We need to, as a Board, address the Draft
Environmental Impact Report which is now finalized. We need to address the
Demolition Delay issue, and we need to address the compatibility issue, and the Board in
making Motions and Recommendations for the City Council to act on can add and
embellish, maybe is not the right word, but upon all the documents and all of the
comments that have been made before us today. Is that correct? I mean, is that basically
the
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HRB -October 6,2010
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Mr. Baum: I would agree, fundamentally, the way you described it as there are the three
pieces: the Draft EIR, the Demo Delay al}d the compatibility issue. The Draft EIR is still
a Draft EIR. It's not final. That's why we're looking for your guidance.
Chair Bower: Right, so it's not complete. All right, so I guess this is the point when we,
as Boardmembers, can discuss these three items. Let's, and I don't have a preference on
how we approach them, but I suggest that we take them one at a time and make a
recommendations to the City Council first about the EIR, then about the Demolition
Delay and finally about the compatibility of the house. So, who would like to begin?
Boardmember Bernstein: On the· DEIR, Draft Environmental Impact Report, just I
assume then, is it correct then that the publics' comments will be included then in the
final EIR?
Mr. Wagstaff: That is correct, including some of the letters that were referenced in the
comments today that were not in your packet. Apparently, the only letters that were
included in your packet were letters that were directly addressed to the Board. A1lletters
that were received within the Public Review Period on the Draft EIR will be included in
the packet, including the ones that were mentioned today, with written responses to all of
the comments therein, and also any associated changes to the EIR itself will be made to
incorporate the information in those letters has been verified.
Boardmember Kohler: On the Draft EIR, I'm not sure what to say. I tried to read all of
it. I'm not sure I got everything. I found on page 6-10, I think that's the page, is that
how it works? It's in the middle, I think, almost in the middle. They aren't numbered
sequentially, I guess. It's four -I guess they go by sections, so section 6, page 10.
It has a comment here that I'm not sure. I don't know in context how this -it's right in
kind of the middle of page where there are architect drawings -no, it's right after the
drawings.
Yeah, okay, Item number -well, there's a few things that I don't quite understand. These
statements -let me go back where 6 begins to -I was trying to understand -I guess we're
talking about alternative methodology and this is -these alternatives on section 6 were
written out by the Draft EIR person, is that how this came about?
Okay. He's talking about alternatives and -well, there's -in the middle there it says
section 6, which is about a little more than a third way tprough.
Mr. Wagstaff: Member Kohler, may I explain section 6 a little bit, give a little preface to
your comments? Under CEQA one of the content requirements, the EIR content
requirements, is to identify alternatives to the proj ect that mayor may not meet the
project objectives, but will reduce and mitigate the impacts of the project.
The alternative that you're referring to on that page is a so-called Replacement Design
Alternative that, in cooperation with the EIR authors, the Applicant's architect prepared a
City of Palo Alto
HRB -October 6, 2010
Page 28
replacement design that was formulated to the extent possible to meet the program
objectives. It's explained what objectives were met, what objectives could not be met
with the replacement design and then this -then there is an evaluation of the comparative
impacts of the replacement design.
So this is a design -this is an alternative that retains the current structure but modifies the
existing structure to the extent possible to meet the program objectives, and some of the
objectives are met, many of the objectives of the Applicant are not, with respect to space,
family requirements and so forth.
Boardmember Kohler: Okay, well it's -well, the first comment on that page says the
expansion of the existing one-story main residential structure would be limited to the
maximal allowable lot coverage available for the residential expansion as listed in total.
That's wrong, so that statement is not correct. The maximal allowable lot coverage for a
one-story home is the maximum Hoor area allowed, so if you're allowed 3600 square feet
of floor area, you're allowed to do 3600 square feet on a one-story house. That's the
change that came through the IR review and we've utilized that and there's a home
underway, and another one underway that is; I know that for a fact. So that's a wrong
-,statement.
It said the expansion -the maximums would be limited to the maximal amount of Hoor
area expansion. That's true. For this two-story expansion, you're then limited to the
maximum floor area. So the idea here was to encourage one-story homes versus two-
story homes, so to encourage one-story homes they said, they said, let's give -jt was
always a detriment. You went to two-story homes, you could get more square feet. So to
create the encouragement to do one-story homes, they now a one-story home can do the
maximal floor area. We have. one on Kelly Way that's about to start and another one on
Carmel Drive which is going to go in for pem1it. Those are both one-story homes up to
the maximum floor area. The one on Kelly Way has just been approved, so I know that
for sure.
So this item number two is also true. Item number three, the Applicant's architect has
stated that construction of a new basement beneath and associated size may retrofit the
existing resident would be very costly and therefore a conceptual outline of a new
basement component under this alternative be limited primarily to the footprint of the
new above-ground story.
Sure, it's -it mayor may not be more costly. There's a house two blocks away at 1128
Webster. If you go by, it's apparently (and depending on who you talk to) the oldest
home in Palo Alto. It was moved from its original location around the comer. It's now at
1128. If you go by it, it's -well, for awhile it was just up on pillars and there's a new
basement being installed under it, and a new addition out the back.
So my thought, when I looked at the plan of the existing house was, and then the
comment was made, you cannot do a basement under the courtyard. Well, technically,
that's true. If we did some porches there, you can do that, but considering this is an old
City of Palo Alto
HRB October 6,2010
Page 29
home, an historic home in an Historic District, if the owner had kept most of this house
and did a basement under the entire home, my guess is that we could have gotten a
Variance or a Honle Improvement Exception to allow the basement to go under that
courtyard to encourage keeping the structure and utilizing the basement for more square
feet.
The other option would have been to allow you to do that and make some second floor
additions and maybe not do the addition at the back. So I think it's just outright
dismissive as being too costly is not really true because there is a home at 2160 Bryant
that had totally jacked up the home and went through Garavaglia revieyv and it sold
recently and the new owner is doing another addition out the back, so it's -and we did
one at 1052 Bryant, and we did one at -David and I did one at 1128 Emerson -29, that's
right, Emerson, and 1128 was an addition I did, and well I did the one at -well, anyway,
never mind.
So it's not uncommon. It's becoming more common because more people are deciding
that they like the look of the older home. So I sort of have to agree with these three
comments but I'm just not sure that those are correct, on page 6-10, and they just aren't
based on reality and, in fact, some contractors will say that they think it's less expensive
because they do have to rework the older home, but in fact -and it's more green. You're
reusing the wood, it's beingrecyc1ed. It's one of the best ways to go.
Then it says, on Table 6, when the maximal allowable -the next floor' $ loss gross of floor
area expansion total based on existing zoning would be 1900 square feet, theoretical floor
area, so I guess that's right, if you added that up, plus the 1400 square foot basement.
Well, that's assuming you don't do a basement under the old house, so that's not exactly
right either. The practical floor area expansion, so I don't know. "I just -so my feeling is,
I think that the new home is, in general, probably not exactly very compatible. It's-I
think the roofing material is a big/relatively large negative. If the new house had a tile
roof it would blend in slightly more with the rest of the neighbors.
There's a house at the comer of Seal and Cowper, which we did many years ago, and
they imported used tile for the top row of tile, and many people think it's a very old
home. It's not, and the house across the street is called the Box on the Box. That's the-
it looks like two storage units apartments stacked on top of each other, which was
approved through the IR, but Arnold did not approve it and Staff has admitted that's a big
mistake, so things happen all over town.
As a Board, we are limited as to what we can do today. The Zoning Ordinance, and the
Ordinance as set up, allows homes to be demolished in this neighborhood. I don't agree
with it, but that's the way the rules are stated, and there is an up to. a one-year delay in
construction.
There's a -since I've been on the Board, we've done three homes that I know of that
were delayed a year and then tom down and rebuilt, and all of those you probably would
not be able to tell they were new homes because they remain traditional style homes.
City of Palo Alto
HRB -October 6, 2010
Page 30
One is shingle and one is -anyway, so as a Board we're somewhat limited by the Zoning
Ordinances. We can't arbitrarily change the Ordinances. 1 think the City Attorney would
agree.
So 1 guess today's decision is as to whether or not to impose -in this section, we're
talking about the EIR and then eventually -so eventually we have to -right now, the EIR
-I didn't. 1 tried to read all of it, but this -that one page was the ones 1 had objections to,
so that's all my comments on that.
Chair Bower: I'd like to -I'm sorry, would you like to make a c01TIJ.11ent.
Mr. W agstaff: Yes, 1 just wanted to respond. 1 can only say that those data were
prepared by professional architects and peer reviewed by professional architects, with
respect to the arithmetic and so forth. 1 should point out that, regardless of those
evaluations and whether the arithmetic is or is not accurate, the conclusion is that the
replacement alternative is, under CEQA, the environmentally superior alternative. On
page 6-20, that conclusion is made.
Boardmember Kohler: But if it is based on page 6-10, then 1 think it's false.
Mr. Wagstaff: Well, it's 6-20 states that although that alternative appears to be more
costly from an environmental standpoint with respect to consistency with the Secretary of
the Interior Standards, that replacement alternative is under CEQA, if you will, the
environmentallypreferable alternative.
Boardmember Kohler: The environmentally preferable alternative is to replace the home.
Mr. Wagstaff: No, the -is to -I'm sorry, the retention and expansion alternative is the
environmentally superior alternative. So the one you were just looking at, and having
issues with the details, regardless of the details that alternative has been identified in the
EIR as the environmentally superior alternative, retention of this and expansion of the
existing structure.
Boardmember Kohler: Well, 1 guess, 1 was just reacting to the page 6-10 where 1 -
Mr. Wagstaff: To the details, right.
Boardmember Kohler: Well, if those were corrected, it would reinforce their statement
on 6-20 to more extent. 1 mean, it would be more ammunition to support that statement,
would be my comment. 1 think that's what 1 was trying to say. 1 didn't say it very well,
sorry.
Boardmember Makinen: Yes, 1 think reading the page 6-20, 1 believe it's the
understanding that 1 gain from reading that paragraph that the expansion or the retention
City of Palo Alto
HRB -October 6,2010
Page 31
is the preferred alternative that has less impact upon the District, from the first paragraph
on paragraph 6.4, the-last sentence.
So it seems to state in the EIR that to keep this structure, not to go ahead with something,
so if I'm interpreting that correct, it says don't build an alternative if you want to have the
least impact on the District. Is that what I'm reading?
Mr. Wagstaff: So under CEQA, the last phase of the CEQA compliance process is to
prepare a Statement of Findings which goes with the ultimate action on the project. So
that Statement of Findings, if the project (as proposed) which is demolition of the
existing structure and its replacement, is the selected project, the Statement of Findings
would have to explain what overriding -considerations were considered by the City and
why that project design was approved rather than this environmentally superior
alternative.
Boardmerrlber Makinen: I don't know what overriding considerations would -
Chair Bower: Pat, you have a comment?
Boardmember Makinen: Let -Gary will correct my terminology.
Mr. Baum: We need to be careful because we're using certain terms-ultimately, when
the Council makes its determination, they have to pass Statement of Findings, and in that
fmdings would explain why one alternative was chosen over the other. So the Council
could choose one of these alternatives or the original proj ect but, whichever is chosen,
they have to explain it, and some of the criteria is that which you have been going
through, and some of it is the project objectives, as well. So it's important that the
project meet the objectives of the Applicant.
Boardmember Makinen: Perhaps it meets the obj ectives of the Applicant, but it doesn't
meet the objectives of the Historic District.
Boardmerrlber DiCicco: I have a comnlent. I think what is very complex about this is
there's sort of parallel issues. Number one, you know, I think Julie has brought up, well,
we have 88 percent are contributing, and so if we would lose one, it's still -you know,
it's not a number carved in stone, but here is a structure that in one way is contributing
significantly -a significantly contributing structure within the District.
Then, in the next paragraph somewhere here, it says it's individually not a significant
historical structure, but it is within the District. So that becomes sort of an issue as well,
and then part of the issue of the alternative that appears to be actually the best in terms of
CEQA, would be retention and expansion of the building, but then it's mentioned that it
would be more expensive and not meet the objectives of the owner of the building.
I see, I agree with Mike that what is the most important issue here also is, is it in
compliance with the outcome and what the -this is a rather you know an involved
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HRB October 6,.2010
Page 32
document, CEQA review, and it -there's -I mean, you can't meet all of these objectives.
It seems really difficult, to me, and Beth has already brought up too, that I don't think
was mentioned in this EIR, that are really more buildings that have beenlbecome less
than significant.
I don't know if this is included in the 88 percent, or -it's -that's kind of vague too.
Ms. Caporgno: My understanding from Dennis Backlund is that most of the alterations
that have occurred in the District, they've all come through you and that, even though it's
mandatory review/voluntary compliance, most if not all of them have retained their
integrity and complied with the direction that came from this Board. There may be one
or two that haven't.
So I don't think the alterations are an issue either. We don't have real specific data on it.
I mean, like building by building, but Dennis is very knowledgeable about what's gone
on, particularly over the last 10 or 15 years, and I think prior to that there weren't a lot of
alterations -from the data he has, it doesn't indicate that there were a lot of alterations.
And Dennis visits the Professorville District, often times, and I don't think that he thinks
that there are many alterations that haven't complied with your direction.
Boardmember DiCicco: I have one more question of the owner and, again, it's hard
doing this materially. You know, I've tried to review it. As Roger has said, it's a lot of
material to look at. There's somewhere a project -when the project was started, or
maybe two years ago, there was a design of what you were going to build and it was
described as a shingle structure, and I wasn't clear as to why it's changed significantly
from your original design.
Mr. Akin: When the project began we talked to Dennis Backlund to try and get some
advice on what the Replacement Structure should be like, and Dennis suggested that for
maximum compatibility with the District it ought to be a brown shingle style, and given
that, as Bob will remember, when we actually started this whole project, thinking it was
going to be Arts and Crafts, that didn't seem like a big leap.
So the original proposal that we made was for a brown shingle style building. When
Michael Garavaglia became involved with the project, he felt that, while perhaps more
compatible with the District as a whole, didn't give enough light to the immediate
neighbors, and so he felt that something that had more features, from the Spanish Eclectic
style, was necessary and so the original design was thrown out and that would have
around September of 2008.
About that time was when we began the incremental redesign process that Bob Peterson
described, where we went back to bare ground and then built up carefully from sighting
plan, elevations, fenestration, the whole works. That cooperatively designed building
became the basis for what you see in the plans now.
City of Palo Alto
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The original version was not -Michael judged that it was not consistent with the
Secretary's standards and so we ended up making further changes and then eventually the
listed mitigations that you see in the Draft EIR.
So it's a little hard to pin down the main iterations the second set of plans went through,
but the first set, the brown shingle set, was simply thrown out. We still have it, if you're
curious, but it's irrelevant now, I think.
Chair Bower: I'm going to try to be brief in my comments. I share Roger's frustration
with the Alternative 6.2.2 because I think that, had that been explored more carefully or
more thoroughly, that the client's objectives -Mr. Akin's and his wife's objectives
probably could have been satisfied because, as Roger mentioned, we put a full basement
under a Professorville house without moving the house. The house stayed where it was,
and then we renovated the inside. I think there's a marginal increase in cost, and I say
that as a contractor, in renovating historic buildings, but the purpose of the renovation is
to maintain the building and if the objective of Mr. Akin and his wife was to have a new
house, then of course there's no way that retention of any building would meet that
objective.
I think, in my rough calculation last night, I was able to almost approach the same floor
area that the new house has, with a full basement and an addition on the side, and that
would largely preserve the building that's there.
I think that the Palo Alto Stanford Heritage letter that Grace read to us is exactly right
on/spot on in terms of the listing of this building. I think it should be listed as
presumptively part of -it's a presumptive category that should be applied here. This
building is part of a significant number of buildings within the District, and my
understanding of the preservation standards, the Secretary of the Interior Standards, is
that we preserve the District.
That's why the District is formed is to give the District a cohesive shape and scope so
that these buildings don't go away. I own a building in San Francisco in the Liberty Hills
Historic District, and those buildings are protected because of that District. We get
benefits from them, and I think the City Council ought to be making efforts to make
significant benefits available to people who are willing to preserve these 'buildings.
Now, that said, I guess what I would like the Board -I'd like to recommend that the
Board create or craft a Motion that supports the EIR, and in particular this 6.2.2
conclusion, and then encourage the City Council to use its authority to pursue that as a
viable option.
I think that we should also recommend that the City Council, at a minimum, adhere to the
60-day Demolition Delay, and then I think we ought to have a list of -I don't even know
how to say this, that we should suggest to the Council modifications to the existing
design that make the building more compatible in alignment with the discussion we've
had today.
City of Palo Alto
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So comments from the Boardmembers on that?
Boardmember Makinen: I completely support everything Chair Bower has stated,
although re-craft your words into a Motion.
Chair Bower: I just wanted to have a -if that's the direction the Board would like to take,
then I think that -
Boardmember Makinen: In my opinion it is, but-
Chair Bower: Right, anybody wants to make a comment, otherwise I'm ready to move
forward with Motions and for the recommendations for the Council, if everyone else is.
Okay, would you like me to make that Motion?
Boardmember Makinen: That would be an excellent -
Chair Bower: So I guess, this Motion would be in three parts, is that acceptable, or
should we do it with three Motions?
Mr. Baum: It can be done in three parts. I p.o want to make one comment that I don't
know necessarily affects the integrity of your Motion. The September 9th letter saying
that it is a presumptive part, I disagree with, legally. That's not what the case says, and
this is not a presumptive Historic Resource in my opinion, and it's also backed up by the
facts and the analysis in the EIR.
Chair Bower: Okay, so-noted. I guess, then I would like to propose that we approve the
Draft EIR with the following comments and additions.
Mr. Baum: Recommend approval.
Chair Bower: Reconlffiend approval, thank you, that the Council to whatever extent it
can pursue 6.2.2 -that's what you're talking about, it's alternative -this is the alternative
to -this is the retention and expansion alternative rather than encourage the demolition of
the house.
Well, I'm on page -oh, 6---it's on page 6-20, so the conclusion is 6.4, so that because
that's an environmentally superior alternative and I feel, and sonle of the other
Boardmembers feel, that this is an opportunity to save a building that we feel is valuable
in the Historic District, and meet most of the -I'm assuming we could probably craft a
way to meet most of the client's objectives, number one.
Then, as far as the Demolition Delay is concerned, I guess -let me pause here. What's
the -when does that delay begin? What's the -what date does that trigger?
City of Palo Alto
HRB -October 6,2010
Page 35
Mr. Baum: It's triggered by the ultimate Council determination. So once the Council
makes its final decision, that's when it starts.
Chair Bower: And then, so the delay
Mr. Baum: I believe that's how it's interpreted.
Chair Bower: All right, and the applicant could apply for the Demolition Permit the day
the Council makes its determination, and then during the 60-day moratorium, the
processing of that permit would occur, is that right, or does the permit application have to
wait for 60 days?
Ms. Caporgno: Yes, if the Council approves the 60-day process, then they would be able
to get the demolition permit subsequently, and I think that the Ordinance is a bit unclear.
I don't think the applicants are proposing to demo the house immediately anyway
because they have a tenant in there, so they would have to -they're probably going to
wait for the IR process to be completed.
If this goes forward, and the Council certifies ,I the EIR and approves the Demo Delay for
60 days, the applicants have to go through the IR process before they would be able to get
Building Permits.
So I'm assuming they'll probably not, once they get the Demo Permit, they may not
demo it immediately.
Chair Bower: All right, you can't actually now demolish the building until the
replacement permit is approved, is that right? I think that's my last experience?
Boardmember Makinen: Chair Bower, need we comment at all on demolition, the
Demolition Delay, since we're not going that direction? We can stay quiet on that?
Chair Bower: It's a possibility. They're asking
Mr. Baum: The Council needs, and the Ordinance requires you to, to comment on the
Demo Delay.
Boardmember Makinen: It would -
Boardnlerrlber DiCicco: I understand the first recommendation we made. I think I'm at
least voting or recommending that the delay moratorium has been satisfied and it
shouldn't -they should be able to proceed within the 60-day period, and then they'll
either obtain it, or they won't, based on the other recommendations. Is that correct?
Chair Bower: It's a Staff question. So can we just say -can I -I guess we're unclear
what the Demolition Delay, what affect it will have at this point, after all of this.
City of Palo Alto
HRB -October 6, 2010
Page 36
Ms. Caporgno: When it will go into -when the Demolition Permit would be granted, is
that the question? I think -the City also has a practice that relates to this that we won't
allow the demolition to be approved and granted until the plans for the Replacement
Structure have been approved.
So if you grant the 60 days, it's not going to occur probably for four or five months, even
if the Council grants the 60 days.
The problem is going to be imposing the year delay because if in faGt they go forward
then the year would constrict them as far as when they could start construction. So that's
why we were suggesting and supporting the 60 days.
Obviously, there's a window, I mean, a range too. You could do four months, but I think
it's normally done two months or a year. It's either two months or a year, that's kind of it
traditionally, and since there haven't been a lot of them, but that's the way that they've
been approved is my understanding.
Chair Bower: All right, do you not want to -I'm actually trying to make this Motion
while we're actually discussing it and I don't think that's exactly the way we should do
this, but I'm -my Motion would be that we recommend that the Council accept the
minimum Demolition Delay, and then just leave it at that, because in fact the
practicalities are that the building won't be demolished until the new building is
approved, and what's more important I think is a. to try and save the existing building
and b., should that not occur, that we want to make sure that the other issues that we have
discussed here today can be applied to the new building to make it more compatible.
So the third part of my Motion would be that the recommendations in the Draft
Environmental Impact Report that mitigate and make the building more compatible be
followed and the ones that I've noted and, again, this is what really occurs during Plan
Review, so for us to be making recommendations about building compatibility while
we're only looking at a bare bones plan is, again, backwards to me, and I think to all of
us, but so-
Boardmember Makinen: Pat suggested that language that would state that the 60-day
moratorium has been satisfied, does that -I don't want to put words in your mouth, Pat,
but I like the way you stated that.
Boardmember DiCicco: I think that was the way it was recommended. It looked like
we're almost contradicting ourselves by these different Motions, but we're, one,
recommending to the City Council to review the alternative of expansion and retention of
the building.
In the next sequence, we're saying do not d~lay -you know, the moratorium has been
satisfied and go ahead and if a permit is going to be approved, go ahead and approve it
for the 60-day period, you know.
City of Palo Alto
HRB October 6, 2010
Page 37
Chair Bower: I think what I'm going to do, I'm going to step back. I want to make a
single Motion that says that we -I just want to deal with the Draft EIR, and then let's deal
with the Demolition Delay, and then finally deal with that. It's going to be simpler.
So just to restate my Motion, and please help me remember this, that we recommended
that Council pursue the 6.4 conclusion of extension and expansion of the existing
building as much as is legally permissible by current California laws and Palo Alto
Planning and Zoning Ordinances.
Is that adequate? Does that adequately cover our concerns?
Boardmember DiCicco: Yes, I think so, I don't know, did you mention that per the Draft,
the very complete Draft EIR, that was their superior recommendation?
Chair Bower: At this point, that's all we have is the Draft EIR. It's not complete.
Boardmember Makinen seconded the motion.
Chair Bower: Is there any discussion. All in favor? Opposed?
Unanimous with Boardmember Bunnenberg recused and Boardmember Lukianoff
absent.
Chair Bower: All right moving on to the Demolition Delay, I see no point in having a
Demolition Delay because it is in effect part of the permitting process. It's built in to the
building permit process. The delay will encompass, will automatically occur when the
review of a new building is processed, and that's assuming that our first recommendation,
which is to try to save the building is rejected by the Council.
Boardmember Kohler: So under the compatibility section the drawings do come back
through us for some sort of approval? Or do they just get built? Do they come back to us
for the design approval? We've only done a few of these, so I'm just trying to remember
we've done, or what's changed.
Ms. Caporgno: I believe that the applicants were hoping that the Board would indicate
their support for the new structure today, and it wouldn't have to come back through you
when the IR process -when it went through the IR process. That doesn't -I mean, the
Board could request that it comes back for further review at that time also.
Chair Bower: I think by our first Motion, which just passed unanimously, the Board
doesn't really want to approve a new building. We'd like to approve a revision to the
existing building, so by your comment, it seems to me that we've already made that
determination, right? Okay. But we're going to do these three. Well, let's make that
part of the third process. Okay, so I would move that we recommend to the City Council
City of Palo Alto
HRB -October 6, 2010
that the Demolition Delay has been satisfied by the three-year process, and that it not be
extended. Is that -all right?
Boardmember Kohler: I'd like to just clarify the time that it has been actually. There's a
difference between starting a project and making an application, so when you officially
became involved, has it been six months, a year, two months? How long has Staff been
involved in working with the owners? But I understand there's no formal application was
applied for, or was there? Is there a date?
Ms. Caporgno: Staff has been involved with this project for three years because the
application was applied -the application for the Demolition pe1ay was applied for
approximately three years ago, and then shortly after, within a month or two of that
application being submitted, the determination was made that we -that the proj ect would
need anEIR.
So then we went through the process of selecting an Environmental Impact Report
Consultant, and there was the discussion about how do you evaluate a new structure. We
told the applicants that they needed to, in this EIR, not only address the loss of the
existing structure, but they needed to identify what would go in its place because that was
equally important. .
So then that necessitated them developing plans for the proj ect, and then working with
the Historic Consultant that was working with our Environmental Consultant to develop
the guidelines that are identified in the EIR for how to evaluate and to design that
structure so that it was compatible with the District.
Boardmember Kohler: I'm sorry, it just blows my mind.
Mr. Baum: I have a point of clarification here, and I suspect the applicant has got these
dates better than I do, but the applicant actually applied or spoke with Staff
approximately 3-1/2 years ago and in June of 2007 they actually formally applied and
requested the Demo Delay issue. Correct me if I'm too far off.
Chair Bower: Yes, Ms. Arden, you wanted to comment.
Ms. Michelle Arden, Applicant: I just wanted to give you the dates, but Gary has already
started. So in July -June 2007 we submitted for -at the suggestion of Staff, actually, we
submitted for demolition. We first met with Wagstaff and Garavaglia, the kickoff
meeting for the EIR, February 2008. We submitted for Individual Review, June 2008.
I guess that's -and then there were five individual meetings with Wagstaff and
Garavaglia and our architect, mostly not us, and City Staff including Arnold Mammae11a
between February 2008 and July 2009.
City of Palo Alto
HRB -October 6, 2010
Page 39
Boardmenlber Bernstein: Staff, just so I can get clarity. So an applicant can apply for a
delay of a demolition, a house -for a house that's not been approved, for a Replacement
Structure that has not been approved. Is that correct?
Ms. Caporgno: When the Applicants applied for the Demolition Delay that was the case
at the time. Subsequently, we have internally modified our process. It went through the
City Attorney's office. We notified the historic conlmunjty as well as real estate people
that -and I think that this came to -the Board had been notified of this, that now and
when a demolition request is made, regardless of whether or not it's for an historic
property or not, that demolition won't be granted until there are plans that have been
approved for the Replacement Structure.
Boardmember Bernstein: Right, and because that was not in place at the time that this
project was applied for, for the demolition, we would ignore the current rule. Is that
correct?
Ms. Caporgno: That's correct. I think the practice that I just mentioned has been in place
for not more than two years, probably about 1-112 to 2 years.
Boardmember Bernstein: Thank you, and that practice applies to this case, even though
this application was made prior to this practice?
Ms. Caporgno: We would -now, it's kind of irrelevant because they are going through
the process. I think that we would support them not removing the structure until their
plans are approved, and you might want to check with thenl. I was under the impression
that they weren't going to demolish immediately. They have tenants on the property,
living in the house. They also, when they came in, I think originally they did not apply
immediately after they purchased the house for the Demolition Delay because they didn't
want to demolish the house until they were ready to build the new structure.
Chair Bower: Gary, this is probably your jurisdiction.
Mr. Baum: Yeah, I was just going to say that it's CEQA that is driving a lot of this and I
opine that you cannot issue a Demolition Permit without a project attached to it because
it's not -it's dividing a project, so that is the genesis of this, but yes this project is subject
to all of that, and the fact that they got caught in the requirement of a full-blown EIR
keeps it as part of all that.
Chair Bower: All right, so the building won't be demolished until a new building is
permitted and approved for permit release, is that what you are saying?
Mr. Baum: That's my understanding.
Boardmember Bernstein: So, I don't know. I would like to know, and I don't know, is it
true that the house cannot be demolished until an approved permit is for any replacement
work, or remodeling work is done?
City of Palo Alto
HRB October 6, 2010
Page 40
Ms. Caporgno: Yes, that is our current practice. So when something comes in to the
Development Center for demolition, the plans have to be approved prior to the demolition
of the structure. I mean, they can apply for the Demolition Permit, but the Demolition
Permit won't be granted until the new structure has been approved.
Boardmember Bernstein: So, I mean, if the Council agrees no further delay on approving
a demolition, no demolition can happen until there is a pernlit in hand?
Ms. Caporgno: Correct. That is why I mentioned before that two months is not probably
going to happen, but I don't think that if the year -we were not supporting a year because
that may constrain their ability to construct.
Chair Bower: Right, yeah, okay, I'd like to modify my Motion then just because I want
to be absolutely clear. I think that's what our questions are all about. So we would
suspend -nly Motion is that the Demolition Delay has been met by the three-year process
of review that this project has already -we would -additionally, we would encourage the
City Council not to allow the building to be demolished until a new building is approved
for permit by the Building and Planning Department for construction.
Boardmember DiCicco: Question, will this new plan be reviewed by our Board?
Chair Bower: Let's get this, let's deal with compatibility, let's deal with that during
compatibility. Can we do that?
Boardmember Kohler: You've tied it into the building permit.
Boardmember DiCicco: So, I'm saying that before they approve a new building, because
it's in an Historic District, would the applicants come to us as a Study Session first before
there are final plans? Again, I mean, these people have had two or three different plans
already.
Chair Bower: Right, it's my intention in the final Motion that we ask this project -that
we get this project back to us with more complete plans, and if that's what's going to
happen, before it gets permitted. That would be my -okay, so are we clear on the
Demolition Delay?
Mr. Peterson: Just one final word. You used the word "new building." Would you
expect the word "new plan?"
Chair Bower: I'm using that term with the assumption that, if we get to the point -no
matter what happens, it's coming back as a different project, I think, because we -I think
the next Motion is going to make it a different proj ecl. Okay, so we can take that out if
you want. New plans.
Mr. Peterson: I would suggest "new plan" if Chair Bower will accept it.
City of Palo Alto Page 41
HRB October 6,2010
Mr. Bower: I accept it, that's fine. All right, Dennis or son1ebody that looks at this tape
can take that language into account, unless you want me to try and restate it again. All
right, if there is no more discussion, we are ready to vote. Okay, all in favor.
The board voted to support with motion with Boardmember Bunnenberg recused.
Boardmember Kohler: I think: that this points out that practice does not make perfect.
Chair Bower: All right, I don't need to make the final motion about compatibility, but
rm happy to start that discussion, unless someone else would like to do it.
Boardmember Bernstein: Yeah, I have some comments about compatibility. Looking at
the plans and compatibility involves massing of the structure, scale of the structure.
Looking at the drawings that the architect provided, and they are on the wall for the
public's view also, and it's particularly on page HRBI-A showing the photo montage of
the proposed new structure on the neighborhood, and I have some reaction to the roofing
planes.
I was trying to articulate it further and what really helped me articulate my concern about
the roofing planes adding massing is the published Palo Alto Single Family Individual
Review Guidelines, and on that, on page 11, it talks about over-encompassing
inappropriate roof forms does not meet guidelines for compatibility of houses in
neighborhoods that don't have that kind of a structure. I'm going to pass this on to
Boardmembers. So it's right there.
Anyways, that's pretty specific and that relates directly. In fact, if I look at the roof plan
where it says it's inappropriate, it reminds me very much of the roof plan proposed for
this project, so that kind of is concert with my sense that it's incompatible because of the
r<?of shapes. I think: that's supported by the IR guidelines of what's not acceptable.
I think: the second -the roof planes, you know, when I look at the photo montage, it's
unique and distinct from the other homes in the neighborhood and so my conclusion is
that the massing is too massive for compatibility, and that's why I would support that this
is not compatible.
Boardmember DiCicco: I think: this has been brought up by Roger also. I believe the
roofing materials are not compatible with the District as well, not traditional materials.
Boardmember Kohler: Yeah, I think I agree with previous comn1ents on that. I don't
think: I'm going to say a whole lot more.
Chair Bower: Okay, so my Motion would be that we ask the. Applicant to return with
revised drawings, should this project move forward. Let's see, after the first two Motions
have been -after the Council has made a decision about the first two Motions, if a new
building, or even an existing modified building is to be built, we'd like to have the
City of Palo Alto . Page 42
HRB -October 6, 2010
Applicant come back to the Board and show us a more complete set of drawings so that
we could make a determination.
Our concerns are that the roof planes are not compatible with the neighborhood and that
they more closely meet the -what is that document? What's it called, the City Guidelines
for New Buildings. Yeah, the Individual Review guidelines, that the roofing materials be
more consistent with the Historic District roof materials, and in the Draft Environmental
Impact Report, there are some concerns raised about distinctive design elements that
serve to direct the interpretation of the building massing and they discuss the entry being
more clearly delineated, and I think I don't want to go through all of those at this point,
but I do think that those issues should be addressed because I think they're appropriate
for this particular District.
I wouldn't have a problem with this design outside of the District, but I think that is our
purpose here, so does anyone want to add another element to that?
Boardmember DiCicco: This might be very minor, but it was brought up by the architect
that there was going to be numerous -it looks like there's at least 15 skylights, and that
they wouldn't be very visible, but I'm not quite sure that that's the case either, and I
guess I'd have to see more detail in the plans.
Chair Bower: Okay, so I think that that's where I'd leave it at this point, unless someone
wants to add anything to amend that. Any discussion? No, all right, all in favor?
Boardmember Kohler: It needs a Second.
Chair Bower: I'm sorry, is there a Second?
Boardmember Bernstein: I will Second Chair Bower's Motion.
Chair Bower: Now there's a Second. Did we have a Second on the last one? Okay, now
we have a Motion and a Second, and no discussion. All in favor?
The board supported the motion with Boardmerrlber Bunnenberg recused.
Chair Bower: Okay, I guess we'll close this portIon of the meeting, close the Public
Hearing on 405 Lincoln.
Boardmember Kohler: I just have a general comment as everyone is cleaning up. It's
that, in the future, I would suggest, and we've been talking about this for years. I don't
know, I've been on the Board 15 years, and it still hasn't happened. If you could -if
there's like, we always had the in-process list -we've also asked for a list of projects in
process.
You know, what the Staff is looking at that might relate to the Historic Board and,
certainly, if this had been on the list three years ago, it might have had a different
City of Palo Alto
HRB:.... October 6,2010
Page 43
outcome in the whole process because I don't think, what I'm trying to say is, if things
came through to us even on a very prelinlinary basis, it might help the applicants, Staff
and everybody have this process work more smoothly. I mean, three years, and we're
just hearing about it last month, is pretty dramatic.
Chair Bower: I was actually going to under -so we're working on other business, and I
was just going to bring that very fact up. I'd like the Staff to prepare a list ofprojects that
are under consideration so we can see it, and I think that we need, as a Board and a Staff,
to actually get/develop a better system for this.
I know CEQA is complicated, and I know it's expensive, but there has to be a better way
for us residents to resolve these issues, and this is just not -it's unfair to all of us. I mean,
everybody, Staff and particularly the homeowners, you know. So I'm not blaming
anybody, but I think we need to do this better.
Ms. Caporgno: I just wanted to respond. I don't think we disagree with you at all. This
has been kind of a nightmare for everyone involved. The applicants are well aware of it,
we haven't had this issue come up before, so we were -you know, what I had said before
about having the Environmental Consultant do an objective -or the Historical Consultant
do an objective analysis of the requirements for compatibility and then evaluate the
house.
We thought that was important because they shouldn't be influenced by anybody because
they are doing the separate CEQA document that need to ensure that the building is
evaluated stringently using the appropriate standards for review. Hopefully, this will
never happen again, but if it does in the future, we need to figure out a way of getting the
Board involved early on, but yet allow that objectivity for the Historic Consultant to be
retained also.
Boardmember Kohler: You know, fifteen-sixteen years ago, I was on the Permit
Streamline Committee with Fred Herman. We met and we -and that's why the
Development Center is where it is because that's what our request was, to have
everything -I mean, I'm not sure it's working because the Development Center is too
successful. There are so many people there and there's not enough staffmost of the time,
and people are waiting. But, on the other hand, our Board looks at some really quirky
things.
We're not out there doing everything, and we don't have very many -I always assunle
that we don't have anything to do and yet I keep -we come with these projects that have
been in process for 18, 20, you know 30 months. Why haven't we heard about it? I bet,
if you had brought that preliminary to us, you could have eliminated a whole bunch of
this stuff that you know you are required to do, but it might have made everyone's job
easier if you had gotten some immediate reaction from the Board but, you know, we
don't know. It goes to the City Council, and we'll just see what they say.
City of Palo Alto
HRB -October 6,2010
Page 44
Chair Bower: Right, I think you ought to encourage any applicant with a project of this
scope and scale to come to this Board in a Study Session. We've done that, repeatedly,
and I think that the project Study Session helps tell the Applicant at an early stage what
we're looking for. It gives the public some opportunity to see it. Then, when they come
back to us, as they have with, for instance, the main library and I can't remember the
other one.
I mean, these projects are now both conlpliant and based on what we as a Board are
looking for, and it's cost effective for the applicant. So a Study Session, and I mean we
can't require it, but I think it's obviously -yeah, it's free, and I mean it's free in terms of
Staff costs, but the applicant has to pay for the presentation and architect, but I think it's,
in the long run, a savings.
Boardmember Kohler: And then there is that house on Waverly that was a remodeling,
and that didn't come to us until after the fact. You know, we never saw it, I don't think.
Oh, yeah, it came for an HIE, and then they didn't do anything that was required of them
in the HIE, and Dennis had to go out there and try to make it work. I think all they ended
up doing was relocating a few windows.
Chair Bower: Do we have any status reports on historic projects? No, okay, staff
announcements? All right, I think we have all the correspondence that we -any
correspondence we have not seen today?
Boardmember Kohler: How is Dennis?
Ms. Caporgno: Dennis is okay. He will hopefully be joining you at your next meeting. I
did have one thing that Diana wanted me to remind you of, that the HRB Joint Meeting
with the City Council, I believe, is scheduled for December 13th• I think she polled all of
you, but just to make sure if you could put it on your calendars. And the Chair and Vice-
Chair will be invited to meet with the Mayor and Vice-Mayor prior to that to go over the
Agenda. So maybe either this month at a later meeting, or next month, you might ..... the
full Board may want to discuss what that Agenda entails.
Chair Bower: Okay, Diana
Boardmember Kohler: Are we required to bring Christmas presents? Holiday presents.
Chair Bower: No. So, actually, that brings me to my next question. What's our next
scheduled meeting?
Ms. Caporgno: It seems that there isn't anything scheduled. We have no known project
coming up in the near future. The Board could schedule a meeting to discuss the Agenda
for the retreat. So if, in fact, we don't get anything in the next couple of weeks, I can talk
to Steven and maybe your first meeting in November, if nothing else, you can at least
discuss the retreat at that meeting.
City of Palo Alto
HRB ..... October 6,2010
Page 45
Chair Bower: Yeah, I think we should definitely schedule a meeting no later than the
first week in November, because that's only a month before the nleeting with the
Council, and we need to prepare for it. We need to discuss what we want to present.
Boardmember Kohler: Is there anything for us to do on high-speed rail? Are we sort of
not in the loop?
Ms. Caporgno: The only thing that I know that the Board is going to be don't know if
anybody has contacted you yet, but the Board is going to have a representative, I believe,
on the Rail Corridor Study Task Force. Oh, and I saw that you distributed that graphic.
Boardmember Kohler: I sent this to you, and I brought some copies, because it's just
shocking to see that this is going to run through Palo Alto. I mean, these things are -it's
just, I can't believe it. There's extra copies, so, yeah, okay, just asking.
Chair Bower: All right, so I think we gone through Staff Approvals. There's no Staff
Approvals, probably, because Dennis is not here. That's the last item on our Agenda.
Ms. Caporgno: Dennis never gave me any information to convey to you, so at this point I
don't think that there's anything to report.
Chair Bower: I'm assuming that our next meeting will be the first Wednesday in
November and we will, at least on that meeting Agenda, discuss our meeting with
Council.
Ms. Caporgno: And I might suggest that you -if there are certain topics that any of you
are interested in, if you could submit them to Staff, and maybe then we can gather those
together and then that would be something for you to work from on your meeting. You
could have some opportunity to digest those before the meeting, and then work from
those at your meeting in November.
Chair Bower: Okay, Staff, I mean, Board, did you hear that? Let's email Diana with
those suggestions about what we want to talk to the Council about next meeting. Our
next meeting would be in the first week of Noverrlber. Hopefully, we'll have everyone
here. We'll, at least in that meeting, discuss our Agenda with the Council and anything
else that Staff has to bring to us. Okay, with no other business, meeting is adjourned.
Meeting adjourned.
City of Palo Alto
HRB October 6,2010
Page 46
ATTACHMENT B
FINAL ENVIRONMENTAL IMP ACT REPORT
AVAILABLE AT
http://www.cityofpaloalto.org/civica/filebanklblobdload.asp?BlobID=25076
ATTACHMENT C
To: City Council
From: Michelle Arden and Allen Akin
Regarding: Alternative Design, 405 Lincoln Ave. Project
October 19,2010
City Council:
As you are aware, the City has completed an Environmental Impact Report (EIR) for our
proposed project at 405 Lincoln Ave. The EIR states that the existing non-category structure is
neither historic nor architecturally significant, and that demolition of the existing non-category
structure would not have a significant negative impact on the Professorville District. It also
concludes that, with some minor mitigations, the proposed new residence meets the Secretary of
the Interior's Standards for Rehabilitation as required by CEQA.
In an EIR, CEQA also requires that an alternative "retention" design be proposed which
retains the existing non-category yet contributing structure. We developed such a design, and it is
included in the EIR. While the EIR concludes that, with mitigations, the new structure meets the
Secretary Interior's Standards, it also concludes -as will always be the case -that the
environmentally superior alternative is a "retention" design, since less environmental change
occurs.
On September 1 st and October 6th, the Historic Resources Board conducted two public
hearings on the project. Choosing to ignore staff recommendations and the EIR's conclusions
about the new design, they recommended to Council that the alternative "retention" design be
preferred.
Over the course of this three year+ project, we spent significant time determining if the
project objectives could be met with a design where the existing structure were retained. We
concluded that they could not. A retention design would require very substantial seismic and
structure upgrades which, for an older structure, can be prohibitive in cost; the costs of this
project have been so substantial to date that it would likely not be affordable for us. Due to
design constraints imposed by the preservation of the current structure, the proposed "retention"
design is several feet higher than the proposed new residence, making it much less desirable for
either of our adjacent neighbors. A two-story back addition, the only option available, will result
in a highly unbalanced mass when seen from Waverley; we feel that it will be abundantly clear
that there was an add-on to an existing structure. Importantly, due to the rather extended U-
shaped shape of the existing structure, a much larger percentage of the lot would be covered by a
structure, effectively resulting in no usable outdoor landscape. Finally, key parts of our program
would not be met. As the existing house is raised off the ground, it would be more difficult to
allow disabled access, which is a requirement. The siting of the existing structure and the back
addition results in poor overall sun orientation. Due to the U -conformation of the existing house,
circulation patterns for a retention design are awkward and dis functional. While not a primary
disqualification, the retention design also results in 20% less total square footage.
We list specifics below.
The seismic & structural upgrade and retrofit of the existing residence would require:
• A complete new foundation
• New lateral bracing of all exterior walls
• New lateral bracing of existing roof
• All new electrical, HV AC, and plumbing systems
• Refurbishing of all interior finishes for all wall, floor and ceiling surfaces
• New insulation in all exterior walls, floors, and ceilings
• Replacement of all interior and exterior doors windows and architectural millwork
• New electrical fixtures, plumbing fixtures, and trim
• New gutters, downspouts and flashing
Architectural, siting, and compatibility shortcomings of the retention design include:
• The expansion is greater in area than the original building and includes a second story.
These two factors will produce a building that will compete with the existing building,
rather than contribute to its integrity.
• The retention design is several feet higher, 28' in lieu of24' 3". One adjacent neighbor
has expressed significant concerns about the height of the second story; the other,
supportive of the proposed new residence, would have a higher two-story addition
considerably closer to their lot. The retention design would be sUboptimal for both
neighbors.
• Given the extended footprint of the existing U-shaped structure, the massing of the two-
story addition will be visibly unbalanced with the single-story structure, especially when
viewed from Waverley. We believe that this will substantially decrease the overall
structure's compatibility with the District.
• The existing building will not meet the Green Building Standards
• Construction costs will exceed the cost of an all-new building
• The fundamental factors necessary for a successful design of residential properties are the
orientation of the sun to the interior and exterior spaces and the circulation pattern for
both the interior of the home and the site. The sun orientation establishes the quality of
light and warmth. The circulation establishes the efficiency and the intuitive connection
between spaces. The existing building shape and location on the site prohibits the design
of a functional building and site plan for orientation and circulation.
• A much larger percentage of the lot would be covered by a structure, effectively resulting
in no usable outdoor landscape. Aside from the obvious loss of functionality, this will
also detract from its compatibility with one of Professorville' s defining characteristics: its
landscaping.
• Unlike the proposed new residence, the garage doors face the street, making the garage
much more prominent.
• Program floor area is reduced by 20% when compared to the proposed new residence.
Sincerely,
Michelle Arden and Allen Akin
City of Palo Alto (ID # 1348)
City Council Staff Report
Report Type: Informational Report Meeting Date: 3/14/2011
March 14, 2011 Page 1 of 4
(ID # 1348)
Council Priority:
Title: Initial Vision Scenario and Housing Needs
Subject: Update Regarding Sustainable Communities Strategy (SCS) and Regional
Housing Needs Allocation (RHNA)
From: City Manager
Lead Department: Planning and Community Environment
Recommendation
This is a status report and no action by the Council is requested, although the Council may
provide comments.
Executive Summary
The Sustainable Communities Strategy/SB375 (SCS) and the Regional Housing Needs Allocation
(RHNA) are planning efforts to encourage a land use and transportation vision that creates
higher intensity, walkable, bicycle-friendly residential and commercial communities around
transit nodes and corridors in the Bay Area. This report provides an update on these planning
efforts, including information regarding: 1) the RHNA Housing Methodology Committee, 2)
Councilmembers meeting with the ABAG Executive Director, 3) the status of preparing a
subregional housing allocation, and 4) the anticipated release of the Initial Vision Scenario by
the regional agencies. Staff and Councilmember Scharff continue to participate in the RHNA
Housing Methodology Committee meetings to determine housing allocations for the 2014-2022
planning period. An Initial Vision Scenario for the SCS is scheduled for release on March 11 and
will be outlined for the Council at the meeting, along with a schedule for review by the Planning
and Transportation Commission and Council.
Background
On January 10, 2011, staff provided a briefing for the City Council on two regional planning
initiatives: a) the Sustainable Communities Strategy, required by Senate Bill 375, and b) the
Regional Housing Needs Allocation (RHNA), the periodic update of housing requirements by the
State and the Association of Bay Area Governments (ABAG). The staff report for that meeting
(Attachment A) is attached for background. Also, a glossary (Attachment F) is provided to
explain some of the terms and acronyms used in the discussion.
Discussion
March 14, 2011 Page 2 of 4
(ID # 1348)
Little activity has occurred since the January update. The discussion below provides information
regarding 1) the RHNA Housing Methodology Committee, 2) Councilmembers meeting with the
ABAG Executive Director, 3) the status of preparing a subregional housing allocation, and 4) the
anticipated release of the Initial Vision Scenario by the regional agencies.
RHNA Housing Methodology Committee
The initial meeting of the RHNA Housing Methodology Committee was held on January 27,
2011 in San Francisco, and a second meeting was held on February 24,2011. The Committee is
comprised of a total of 45 individuals, 33 of which represent local governments, with the
remainder representing business, civic, housing, and environmental organizations in the region.
Of those 33, five are from Santa Clara County,including council members from Mountain View
and Palo Alto (Greg Scharff), and three planning directors or senior staff from San Jose, Santa
Clara County, and Morgan Hill. Alternates are planning directors from Cupertino and Sunnyvale.
The Silicon Valley Leadership Group is among the members of the civic organizations.
The initial meeting focused primarily on providing background on State housing law and the
process for establishing the methodology, how the methodology was established for the
current housing period, and the relationship of the RHNA process to the Sustainable
Communities Strategy. The latter discussion emphasized that the RHNA process will now run
simultaneous with the term of the Regional Transportation Plan (8-year periods) and both will
be integral elements of the SCS. Two memos from ABAG are attached (Attachments B and C)
that provide overviews of relevant housing law and the methodology that was used to establish
the numbers for 2007-2014.
There was also some discussion about what issues and factors might be considered to
contribute to the consideration of the housing methodology. There was no attempt or intent to
make any decisions at this point about which are most important or would be included. At the
second meeting, there was further discussion about the various criteria, as well as a description
of the rationale and requirements of RHNA (Attachment D). The next meeting of the Committee
is scheduled for March 24, at which time a few possible allocation formulas will be presented
for discussion.
Meeting with ABAG Executive Director
On February 28, 2011, Councilmembers Burt, Scharff and Schmid, Planning and Transportation
Commission chair Tuma, the City Manager, and the Planning Director met with the Ezra
Rapport, Executive Director of ABAG, to discuss issues related to the RHNA methodology and
the approach to the Sustainable Communities Strategy. Mr. Rapport spoke to many of the
issues of concern to the City (e.g., housing and employment projections, housing allocation
process, and a sustainable transit network). He emphasized the need to establish an initial
vision that focuses on “places” appropriate to accommodate increased development proximate
to transit, rather than evaluating projections of housing units or employment increases. Mr.
Rapport categorized the SCS as a framework for discussion of the important land use and
transportation issues the region must address to maintain its leadership role in the economy
and environment of the state. He asked that the City of Palo Alto and other cities respond to
March 14, 2011 Page 3 of 4
(ID # 1348)
that concept once the Initial Vision Scenario is released on March 11th. Staff expects that the
Councilmembers who attended will want to comment to the rest of the Council about their
perspectives on the meeting.
Subregional Housing Methodology Option
State law allows for groups of cities and/or a county to form a “subregion” for purposes of
defining housing allocations at a more local level than the regional allocations developed by the
Housing Methodology Committee. The Association of Bay Area Governments (ABAG) has
indicated to cities and counties that, if they wish to form a subregion, they must approve
resolutions to do so by March 16, 2011.
In Santa Clara County, the Executive Board of the Cities Association (made up of one Council
member from each city) considered the issue on February 9, 2011. The Cities Association voted
unanimously not to form a subregion, due to the lack of resources (money, staff, and time for
Councils, commissions, etc. to deliberate) currently available. The Association acted based on
recommendations of the Santa Clara County Managers Association and the Santa Clara County
Association of Planning Officials (Attachment E). The board did, however, approve language
requesting that: 1) the various countywide organizations work cooperatively to participate in
the RHNA process, 2) the cities explore opportunities to share resources and to trade housing
units, 3) the cities develop, when possible, unified countywide positions for the RHNA and SCS
reviews, and 4) the planners organization (SCCAPO) should prepare a white paper suggesting
how to formalize a countywide organization with ongoing resources (similar to the City/County
Association of Governments (C/CAG) in San Mateo County) to be prepared to develop a
subregional approach in the next round of housing allocations (2022). The Planning Director,
City Manager, and Council will continue to participate in ongoing regional meetings and
proposals to represent the City of Palo Alto and to work with other Santa Clara cities and the
County to coordinate review and responses to the greatest effect.
Initial Vision Scenario for SCS
The One Bay Area regional effort (ABAG and MTC) is expected to release an Initial Vision
Scenario for the Sustainable Communities Strategy on March 11, 2011. This document will
outline an “unconstrained” vision of growth areas throughout the Bay Area, adequate to
accommodate the region’s anticipated population and employment growth through 2035. The
fundamental basis for the preliminary plan will be the Planned Development Areas (PDAs) of
potential growth outlined by each city and county. ABAG has indicated that there will be
presentations of the scenario within each county, and that a review and comment period will
be established to allow input by local jurisdictions. Following the input on the Initial Vision
Scenario, iterations of revised plans will be prepared and distributed for further review until a
Draft Vision Scenario is released in early 2012. Assuming the Initial Vision Scenario is released
on March 11, staff will report on it at the Council meeting, as well as providing a schedule for
review by the Planning and Transportation Commission and Council.
Next Steps
March 14, 2011 Page 4 of 4
(ID # 1348)
Staff expects to report on the Initial Vision Scenario upon its release in March (at the Council
meeting if available by then) and will also keep the Council updated regarding the Housing
Methodology Committee’s work. The Planning and Transportation Commission and the Council
will have an opportunity to comment and provide recommendations to the regional agencies
and to consider whether to initiate any legislative or other action outside the prescribed review
process.
Resource Impact
This report results in no immediate impact to the City.
Environmental Review
This update is not subject to environmental review.
Courtesy Copies
Planning and Transportation Commission
Attachments:
·Attachment A: January 10, 2011 CMR 110:11 (PDF)
·Attachment B: January 20, 2011 Memo from ABAG re: RHNA Process Requirements (PDF)
·Attachment C: January 20, 2011 Memo from ABAG re: Review of Last RHNA Cycle (PDF)
·Attachment D: February 16, 2011 Memo from ABAG re: Rationale for the SCS and
Requirements of RHNA (PDF)
·Attachment E: February 10, 2011 Recommendation of Cities Association re: Subregional
RHNA Process (PDF)
·Attachment F: SB375 Glossary (DOCX)
Prepared By:Curtis Williams, Director
Department Head:Curtis Williams, Director
City Manager Approval: James Keene, City Manager
TO:
FROM:
DATE:
REPORT TYPE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
CMR: 110:11
JANUARY 10,2011
STUDY SESSION
Update on Snstainable Commnnities Strategy (SB375) and Regional
Housing Needs Allocation (RHNA) Process
RECOMMENDATION:
Staff recommends that the City Council discuss the status of the Sustainable Communities
Strategy (SCS) and the Regional Housing Needs Allocation Process (RHNA) and provide
comments in anticipation of further actions in February through August.
EXECUTIVE SUMMARY:
This staff report describes Senate Bill 375, the Sustainable Communities Strategy (SCS) and the
effect of the law on local goverrunents as well as the Bay Area as a region, and is based largely
on information provided by the Metropolitan Transportation Commission (MTC) and the
Association of Bay Area Goverrunents (ABAG). The SCS will be developed in paJinership with
regional agencies, local jurisdictions and Congestion Management Agencies (CMAs), such as
the Valley Transportation Authority (VTA), through an iterative process. The regional agencies
have acknowledged that input from local jurisdictions with land use authority is essential to
create a feasible SCS. The SCS does not, however, alter the authority of jurisdictions over local
land use and development decisions.
The pUlpose of this report is to provide Palo Alto City Council members with an overview of the
SCS in relation to local land use policies, transportation implications, and implementation needs,
and will address key policy considerations for the City of Palo Alto. The City will provide input
to several components of the SCS and RHNA processes in the next 6 months, including: a) the
formulation of the regional housing allocation methodology; b) whether to form a subregional
housing allocation effort with other Santa Clara County cities; c) characterization of the "place
types" in Palo Alto that might accommodate increased development over the next 25 years; and
d) response to the Initial Vision Scenario and subsequent iterations to outline the form of
development throughout the region.
CMR: 110:11 Page 1 of 9
BACKGROUND:
Senate Bill 375 (SB375) was enacted in 2008 and is considered landmark legislation for
California relative to land use, transportation and environmental planning. SB375 is intended to
help to implement AB32 (Global Warming Solutions Act), approved in 2006 and requiring
actions to reduce greenhouse gas emissions to 1990 levels by 2020 and by 80% below 2005
levels by 2050. While much of AB32 focuses on emissions from stationary sources (industrial
facilities) or diesel trucks, SB375 is focused on emissions from automobiles and light trucks and
the reduction in vehicle-miles traveled due to more compact land use patterns and potential mode
shifts. A summary of the impacts ofSB375 has been prepared by the Urban Land Institllte (ULI)
and is included as Attachment E.
The legislation calls for the development of a Sustainable Communities Strategy (SCS) in all
metropolitan regions in California. Within the Bay Area, the law assigns joint responsibility for
the SCS to the Metropolitan Transportation Commission (MTC) and the Association of Bay
Area Governments (ABAG). These agencies will coordinate with the Bay Area Air QlIality
Management District (Air District) and the Bay Conservation and Development Commission
(BCDC).
The SCS integrates several existing planning processes and IS reqllired to accomplish the
following objectives:
I. Provide a new 25-year land use strategy for the Bay Area that is realistic and identifies
areas to accommodate all of the region's population, including all income groups;
2. Forecast a land use pattern, which when integrated with the transportation system,
reduces greenhouse gas emissions from automobiles and light trucks and is measured
against the regional target established by the California Air Resources Board (CARB).
The California Air Resources Board (CARB), in response to the mandates of SB375, has set
target GHG emissions from light trucks and passenger vehicles for each of the region's subject to
the provisions of SB375. For the ABAG area, the CARB set targets for a 7% reduction in
emissions by 2020 and a 15% reduction in emissions by 2035.
The SCS is also required to be included as part of the Bay Area's 25-year Regional
Transportation Plan (RTP). By federal law, the RTP must be internally consistent and, therefore,
the $200+ billion dollars of transportation investments typically included in the RTP must align
with and support the SCS land-use pattern. SB375 also requires that an updated eight-year
regional housing needs allocation (RHNA) prepared by ABAG is consistent with the SCS. The
SCS, RTP and RHNA will be adopted simultaneously in early 2013.
The Council and Planning and Transportation Commission have each conducted study sessions
in the past year to better understand the background of SB375, and staffs Comprehensive Plan
Speaker Series included a presentation by ABAG representatives regarding the legislation. In
addition, four Councilmembers and the City Manager and Planning Director attended a meeting
sponsored by the Santa Clara County Cities Association, also involving an ABAG overview of
the objectives and process for developing the Sustainable Communities Strategy.
CMR: 110:11 Page 2 of 9
DISCUSSION:
The goal of the SCS is not only is to reduce greenhouse gas emissions, but to build a Bay Area
that continues to thrive and prosper under the changing cireumstanees of the twenty-first century.
By directly confronting the challenges associated with population growth, climate change, a new
economic reality and an increasing public-health imperative, the SCS is intended to support a
Bay Area that is both more livable and more economically competitive on the world stage. A
successful SCS will:
• Recognize and support compact, walkable places where residents and workers have
access to services and amenities to meet their day-to-day needs;
• Reduce long commutes and decrease reliance on fossil fuels, increasing energy
independence and decreasing the region's carbon consumption;
• Support complete communities that remain livable and aflbrdable for all segments of the
population, maintaining the Bay Area as an attractive plaee to reside, start or continue a
business, and create jobs;
• Support a sustainable transportation system and reduce the need for expensive highway
and transit expansions, freeing up resources for other more productive public
investments;
• Provide increased accessibility and affordability to the most vulnerable populations;
• Conserve water; and
• Decrease our dependence on imported food stocks and their high transport costs.
In recognition of the importance of these other goals, ABAG and MTC will adopt perfonnance
targets and indicators that will help infonn decisions about land usc patterns and transportation
investments. These targets and indicators will apply to the SCS and the RTP and will not weigh
as heavily as greenhouse gas reduction, but will provide additional criteria for use in comparing
the alternative SCS scenarios. The targets are scheduled for adoption by the Joint Policy
Committee (ABAG, MTC) in early 2011 and the indicators will be adopted in the spring of2011.
Planned Development Areas (PDAs)
In many respects the SCS builds upon existing efforts in Bay Area communities to encourage
more focused and compact growth while recognizing the unique characteristics and differences
of the region's many varied communities. FOCUS Priority Development Areas (PDAs) are
locally-identified and regionally adopted infill development opportunity areas near transit. The
City of Palo Alto has identified a PDA for the California Avenue/Park Blvd.lFry's area around
the California Avenue Caltrain station. The PDAs provide a foundation upon which to structure
the region's Sustainable Communities Strategy. PDAs encompass only three percent (3%) of the
region's land area whereas, based upon existing plans, resources, and incentives, the PDAs can
collectively accommodate over fifty percent (50%) of the Bay Area's housing need through
2035.
PDAs have been supported by planning grants, capital funding and technical assistance grants
from MTC. The current RTP allocates an average of$60 million a year to PDA incentivc-related
funding. Future RTPs, consistent with the SCS, will be structured to provide policies and funding
CMR: 110:11 Page 3 of 9
that is supportive of PDAs and potentially other opportunity areas for sustainable development in
the region.
In Palo Alto, the California Avenue Area PDA is coterminous with the City's ongoing Concept
Area Plan for that area. City staff has provided input to ABA G regarding both the existing
development levels and the potential for growth in housing and employment. The PDA analysis
identifies "place types" for different land uses and densities, and the "Transit Neighborhood"
place type has been tentatively designated for the California Avenue Area PDA. This plan
envisions a broad range of development possibilities, with up to 20-50 units per acre of
residential and floor-to-area ratio (FAR) of up to 2.0. These are estimates based on existing
Pedestrian-Transit Oriented Development (PTOD) zoning for the area. If the ongoing planning
for the area results in increased intensity levels, staff will forward that information to ABAG.
In addition to the City'S PDA for the California Avenue Area, VTA has designated all of the El
Camino Real corridor and the University Avenue station area as potential opportunities for
further development ("potential PDAs"). Staff has identified the El Camino Corridor as a "Mixed
Use Corridor" place type and the University Avenue transit area as a "Transit Town Center" for
initial forecasting. Staff has notified ABAG that the City does not consider the San Antonio
Avenue transit station to result in a place type with increased development in Palo Alto.
Attachment D depicts the concept of "pI ace types" used in the fornmlation of the SCS.
Partnership with Local Jurisdictions
To be successful, the SCS will require a partnership among regional agencies, local jurisdictions,
Congestion Management Agencies (CMAs), transit agencies, and other regional stakeholders.
MTC and ABAG are engaged in an exchange of information with County-Corridors Working
Groups throughout the Bay Area. These Groups are organized by county, by sub-regions within
counties, and by corridors that span counties. They typically include city and county planning
directors, CMA staff, and representatives of other key agencies such as transit agencies and
public health departments. Working Group members are responsible for providing updates and
information to their locally elected policymakers through regular reports like this one and
eventually through recommended councilor board resolutions that acknowledge and respond to
the implications of the SCS for each jurisdiction.
Each county has established an SCS engagement strategy and the composition of a
County/Corridor Working Group according to its needs and ongoing planning structure. The City
of Palo Alto Planning Director is working with the Santa Clara County Association of Planning
Officials (SCCAPO), primarily composed of planning directors from each city and from Santa
Clara County, to address these issues. Other City staff members are involved in working groups
of planners and transportation officials coordinated by and supported technically by the Valley
Transportation Authority (VTA). The City/County Managers Association and the Santa Clara
County Cities Association are also active in reviewing key policy actions related to the SCS. In
addition to the County-Corridor Working Groups, a Regional Advisory Working Group
(RA WG), composed of local government representatives and key stakeholders throughout the
region, provides technical oversight at the regional level. The Planning Director is a participant
in those meetings on a monthly basis.
CMR: 110:11 Page 4 of 9
Development of SCS Scenarios
The SCS will be the product of an iterative process that includes a sequence of growth and
supportive transportation scenarios. An Initial Vision Scenario will be presented in February
20 II, followed by more detailed SCS scenarios that refine the Initial Vision Scenario (Spring
and Fall 2011), with a final draft for review in early 2012. The draft project timeline is outlined
in more detail in the "Next Steps" section below and a draft schedule of 2011 milestones and
opportunities for City input is provided as Attachment A.
Initial Vision Scenario
ABAG and MTC will release an Initial Vision Scenario in February 201 1, based in large part on
input from local jurisdictions through the county/corridor engagement process and information
collected through December 2010. The Vision Scenario will encompass an initial identification
of places (place types), policies and strategies for long-term, sustainable development in the Bay
Area. Local governments will identify places with potential for sustainable development,
including PDAs, transit corridors, and employment areas, as well as infill opportunity areas that
lack transit services but offer opportunities for increased walkability and reduced driving.
The Initial Vision Scenario will:
• Incorporate the 25-year regional housing need encompassed in the SCS;
• Provide a preliminary set of housing and employment growth numbers at regional, county,
jurisdictional, and sub-jurisdictional levels;
• Be evaluated against the greenhouse gas reduction target as well as the additional
performance targets adopted for the SCS.
For Palo Alto, the place types factored into the Vision Scenario will include the California
Avenue Area PDA and the El Camino Real corridor and University Avenue transit area, as
outlined previously. The intent of this initial Vision Scenario is to show a development pattern
"unconstrained" by public service limitations, fiscal, transportation, or other infrastructure.
Detailed Scenarios
By the early spring of2011, local governments and regional agencies will evaluate the feasibility
of achieving the Initial Vision Scenario and will produce a series of Detailed Scenarios for
review. The Detailed Scenarios will take into account constraints that might limit development
potential, and will identify the infrastructure and resources that can be identified and/or secured
to support the scenario. MTC and ABAG expect to release a first round of Detailed Scenarios by
July 2011, following multiple discussions and workshops in response to the Initial Vision
Scenario. The County/Corridor Working Groups as well as the RA WG will facilitate local input
into the scenarios, with the release of a Preferred Scenario by the end of 20 II. The analysis of
the Detailed Scenarios and Preferred Scenario will evaluate benefits of the land use alternatives
in reducing greenhouse gas emissions and vehicle-miles traveled, and will also consider the
Perfonnance Targets and Indicators as additional criteria.
Regional Housing Needs Allocation (RHNA)
As described above, the eight-year RHNA must be consistent with the SCS. Planning for
affordable housing in the Bay Area is one of the essential tasks of sustainable development. In
the SCS, this task becomes integrated with the regional land use strategy, the development of
CMR: 110:11 Page 5 of9
complete communities and a sustainable transportation system. The county/corridor engagement
process will include discussions ofRHNA, since both the SCS and RENA require consideration
of housing needs by income group.
The process to update the RHNA will begin in 20 11:
o A Housing Methodology Committee for the region will be appointed in January 2011.
Meetings will continue through September 2011.
o Cities must detennine whether they want to fonn a sub-regional RHNA group by March
2011. If so, they must follow the same timeline for fonnulation as the Methodology
Committee.
o Local jurisdictions will provide input prior to the adoption of the RHNA methodology by
September 20 II.
o The final housing numbers for the region will be issued by the State Department of
Housing and CommWlity Development (HCD) by September 2011.
o The Draft RENA will be released by spring 2012.
o ABAG will adopt the Final RHNA by the end of summer 2012.
o Local governments will address the next round of RHNA in their next Housing Element
update (2014-2022).
The distribution of housing needs will then infonn the Detailed SCS Scenarios.
Councilmember Scharff has been nominated (and has a good likelihood of being appointed) to
the RHNA Methodology Committee. The Committee will include 2 staff from cities (San Jose
and Morgan Hill) and 2 alternates (Cupertino and Sunnyvale), and a staff member from Santa
Clara County. Staff hasn't heard if any City Managers will be selected. While still not
proportional to the County's population or employment, this is an improvement over the last
round of housing review, when only I city staff, 1 county staff, and I Council member were
included across the entire Santa Clara County. The County Planning Directors emphasized the
need for increased numbers and diversity across the representatives from this county, including
an elected official from north County.
Regional Transportation Plan (RTP)
The SCS provides an explicit link between land use choices and the transportation investments in
the region. The regional agencies indicate they will work closely with the VTA and other CMAs,
transportation agencies and local jurisdictions to define financially constrained transportation
priorities in their response to a can for transportation projects in early 2011 and a detailed project
assessment that will be eompleted by July/August 2011. The project assessment will be an
essential part of the development of Detailed SCS Scenarios. The RTP will be analyzed through
2012 and released for review by the end of 2012. ABAG is expected to approve the SCS by
March 2013, and MTC would follow with adoption of the final RTP and SCS by April 2013.
Environmental Review
Regional agencies will prepare one Enviromnentallmpact Report (ErR) for both the SCS and the
RTP. This EIR might assist local jurisdictions in streamlining the environmental review process
for some of the projects that are consistent with the SCS. Regional agencies are investigating the
CMR: llO:l1 Page 6 of 9
scope and strategies for an EIR that could provide the most effective support for local
governments.
Additional Regional Tasks
MTC, ABAG and the Bay Area Air Quality Management District are coordinating the impacts of
CEQA thresholds and guidelines recently approved by the Air District. The Air District is
currently developing tools and mitigation measures related to the CEQA thresholds and
guidelines to assist with development projects in PDAs. The four regional agencies will be
coordinating other key regional planning issues including any adopted climate adaptation-related
policy recommendations or best practices suggested by BCDC,
Palo Alto Role in Developing and Implementing the Sustainable Communities Strategy
The City staff, Planning and Transportation Commission, and Council will be asked to respond
to several key questions over the coming year and beyond, such as (but not limited to):
I. How much housing and employment should/can the City accommodate to provide a
meaningful contribution to smart growth and sustainable development mandates of the
Bay Area and balance new growth opportunities with the existing character of the City of
Palo Alto?
2. Where does the City desire/expect to accommodate new housing and employment within
the next 25 years?
3. What are the key local sustainable development issues/strategies that might be advanced
through the SCS (e.g., type (clean tech) and extent of employment growth, affordable
housing, enhanced commercial revenues, etc.)?
4. What are the primary constraints to providing for sustainable development opportunities
in Palo Alto (e.g., enhanced school facilities, open space, transportation and transit
infrastructure, etc.)'1 What key investments would be needed?
5. How should Councilmembers, the Planning and Transportation Commission, and staff
participate in this process?
The SCS provides an opportunity for the City of Palo Alto to advance local goals as part of a
coordinated regional framework. The SCS may help comlect local concerns-such as new
housing, jobs, and traffic-to regional objectives and resources. As such, it may serve as a
platform for cities and counties to discuss and address a wide spectrum of challenges, including
high housing costs, economic development, affordable and accessible transportation, and public
health, and identify local, regional, and state policies to address them. The bottom line is that the
SCS is likely to reward those cities whose decisions advance not only local goals but also benefit
quality of life beyond their borders-whether to create more affordable housing, new jobs, or
reduce driving.
TIME LINE AND NEXT STEPS:
The Next Steps below outline and as shown in Attachment A outline the City of Palo Alto's
expected timeline for key participation and response in the coming year (2011). The City
Council, Planning and Transportation Commission, staff, and the Palo Alto community will be
actively engaged at several points in the SCS and RHNA process over the coming year:
CMR: 110:11 Page 7 of9
COURTESY COPIES:
Planning and Transportation Commission
Ezra Rapport, Executive Director, Association of Bay Area Governments
Ken Kirkey, Director of Planning, Association of Bay Area Governments
CMR: IIQ:II Page 9 of9
ASSOCIATION OF BAY AREA GOVERNMENTS
Representing City and County Governments of the San Francisco Bay Area
M E M O
Mailing Address: P.O. Box 2050 Oakland, California 94604-2050 (510)464-7900 Fax: (510) 464-7970 info@babag.ca.gov
Joseph P. Bort MetroCenter 101 Eighth Street Oakland, California 94607-4756
Date: January 20, 2011
To: Housing Methodology Committee
From: ABAG Staff
Re: RHNA Process Requirements (Agenda Item #3)
Summary
This memo takes excerpts from the San Francisco Bay Area Housing Needs Plan 2007-
2014 (ABAG, June 2008) to explain the objectives and requirements of the 2014-2022
Regional Housing Need Allocation (RHNA) process. In addition, it describes new
requirements from SB 375, the implementing legislation for the region’s Sustainable
Communities Strategy (SCS).
RHNA Objectives
The State is required to allocate the region’s share of the statewide housing need to
Councils of Governments (COG) based on the Department of Finance (DOF) population
projections and the regional population forecasts used in preparing regional
transportation plans. In the San Francisco Bay Area, the Association of Bay Area
Governments (ABAG) serves as the region’s COG.
Housing element law requires the COG (ABAG for the San Francisco Bay Area) to
develop a Regional Housing Need Plan (RHNP). The plan describes the region’s
allocation method and the actual allocation of housing need to the cities and counties
within the region. According to State law, RHNP is to promote the following objectives:
(1) Increase the housing supply and the mix of housing types, tenure, and
affordability in all cities and counties within the region in an equitable manner,
which shall result in each jurisdiction receiving an allocation of units for low and
very low income households.
(2) Promote infill development and socioeconomic equity, the protection of
environmental and agricultural resources, and the encouragement of efficient
development patterns.
(3) Promote an improved intraregional relationship between jobs and housing.
(4) Allocate a lower proportion of housing need for an income category when a
jurisdiction already has a disproportionately high share of households in that
income category, as compared to the countywide distribution of households in
that category from the most recent US Census data.
-2-
Housing Needs Determination
The regional housing need is determined by estimating both the existing need and the
projected need for housing. Existing need is the amount of housing needed to address
existing overcrowding or low vacancy rates. Projected need relates to providing
housing for the growing population. Using slightly different methods, both the State
(through DOF) and the region (via ABAG) estimate projected household growth. Since
these numbers may differ, the State consults with the region to arrive at an agreed upon
estimate of future population growth (in this case, the housing need for 2014 through
2022).
Housing Needs Allocation
The region’s total housing need is allocated to Bay Area jurisdictions through an
allocation method. The method contains two distinct components: mathematical
equations and rules.
RHNA law delineates the specific factors that must be considered for inclusion in the
housing needs allocation method. These factors are:
1. Water and sewer capacity
2. Land suitable for urban development or conversion to residential use
3. Protected open space – lands protected by State and Federal governments
4. County policies to protect prime agricultural land
5. Distribution of household growth
6. Market demand for housing
7. City-centered growth policies
8. Loss of affordable units contained in assisted housing
9. High housing cost burdens
10. Housing needs of farm workers
11. Impact of universities and colleges on housing needs in a community
12. Any other factors adopted by the council of governments
New Housing-related Requirements from SB 375
SB 375 requires the region to develop a Sustainable Communities Strategy (SCS). The
SCS and Regional Transportation Plan (RTP) for the Bay Area are on a four-year cycle.
The SCS and RTP will consider a planning period to the year 2040. In order to
coordinate these programs with RHNA, the law extends the RHNA cycle to every eight
years, but RHNA covers a shorter planning period (this time from 2014 to 2022).
Among the requirements for the SCS are that it must identify areas within the region
sufficient to house an eight-year projection of regional housing need for the region. In
other words, the SCS must plan for enough housing capacity to accommodate the
regional need.
-3-
Additionally, the law indicates that it is the intent of the Legislature that housing planning
be coordinated and integrated with the RTP. To achieve this goal, the allocation plan
must distribute housing units within the region consistent with the development pattern
included in the SCS. ABAG must eventually make a finding of consistency between the
RHNA plan and the development pattern in the SCS.
Several other important changes to housing law were made in SB 375, but they do not
directly affect the RHNA process.
Discussion
Staff is hoping for input from the Housing Methodology Committee:
(1) Is there is a need for additional factors in the allocation methodology beyond the
12 that are specified by law? Are there other housing goals we should consider?
(2) Are there any conflicts between the objectives and factors in RHNA law and the
requirements of the SCS?
(3) Are there other RHNA issues we need to discuss?
Resources
The Bay Area’s last RHNA plan
http://www.abag.ca.gov/planning/pdfs/SFHousingNeedsPlan.pdf
Basic RHNA statutes
www.leginfo.ca.gov/cgi-bin/calawquery?codesection=gov&codebody=65580-
65589.8&hits=20
Then choose Government Code Section 65580-65589.8
SB 375
http://www.leginfo.ca.gov/pub/07-08/bill/sen/sb_0351-
0400/sb_375_bill_20080930_chaptered.pdf
ASSOCIATION OF BAY AREA GOVERNMENTS
Representing City and County Governments of the San Francisco Bay Area
M E M O
Mailing Address: P.O. Box 2050 Oakland, California 94604-2050 (510)464-7900 Fax: (510) 464-7970 info@babag.ca.gov
Joseph P. Bort MetroCenter 101 Eighth Street Oakland, California 94607-4756
Date: January 20, 2011
To: Housing Methodology Committee
From: ABAG Staff
Re: Review of the Last RHNA Cycle (Agenda Item #4)
Summary
This memo takes excerpts from the San Francisco Bay Area Housing Needs Plan 2007-
2014 (ABAG, June 2008) to explain the allocation method used in the last round of the
Bay Area’s Regional Housing Need Allocation (RHNA) process.
State Requirements to Plan for Housing
State law requires each city and county to adopt a general plan. Housing elements
have been mandatory portions of general plans since 1969. This reflects the statutory
recognition that the availability of housing is a matter of statewide importance. The
limitation of the State’s housing supply through planning and zoning powers affects the
State’s ability to achieve its housing goal of “decent housing and a suitable living
environment for every California family.” A limited housing supply also impacts the
State’s ability to remain economically competitive.
In each RHNA cycle, the State Department of Housing and Community Development
(HCD) determines a Regional Housing Need. The need is the minimum number of
housing units that a region must plan for in the RHNA planning period. In this cycle, the
planning period is 2014 to 2022.
Housing element law requires the Council of Governments (COG), in our case ABAG, to
develop a Regional Housing Need Plan (RHNP). The plan describes the region’s
allocation method and the actual allocation of housing need to the cities and counties
within the region.
Housing Needs Allocation Method 2007-2014
The region’s total housing need is allocated to Bay Area jurisdictions through an
allocation method. In the last cycle, the method contained two distinct components:
mathematical equations and rules.
-2-
There were two mathematical equations in the allocation method. The first equation was
used to allocate total units among jurisdictions. This equation consisted of factors, each
weighted to indicate relative importance. The second equation was used to divide each
jurisdiction’s total need, based on the first formula, into the four income categories as
defined by State law.
The allocation method also contained a set of rules. These rules addressed how to
handle units in spheres of influence as well as voluntary transfers of units between
jurisdictions and subregions.
The final allocation method adopted by the ABAG Executive Board included factors
related to housing, employment and public transit.
Each factor was given priority relative to the others through “weighting” in the formula.
For example, if one of the factors, e.g., household growth, was determined to be more
important than another factor, e.g., transit, the methodology would give household
growth a higher weight than transit. If two or more factors were determined to be of
equal priority, they were equally weighted. State law also allows for “zero weighting” of
a required factor, if an appropriate rationale for the zero weight can be offered by the
COG.
For the Bay Area’s allocation formula, the selected factors and their respective weights
were:
• Household growth (45%)
• Existing employment (22.5%)
• Employment growth (22.5%)
• Household growth near existing transit (5%)
• Employment growth near existing transit (5%)
Household growth, existing employment and employment growth were each forecasted
in the region’s job, household and employment forecast using Projections 2007.
By applying these factors and weights in the allocation formula, housing would be
allocated to jurisdictions in a manner consistent with State RHNA objectives, statutory
requirements, local land use and regional policies. Jurisdictions would then be required
to plan for their allocated number of housing units within the housing elements of their
general plans.
Specifically, the selected factors resulted in:
• Housing units directed to areas where local governments were planning housing
growth.
• Housing and job growth being planned together and existing jobs-housing
imbalances being addressed.
-3-
Income Allocation Method
The method was based on the region-wide distribution of household income. It also
considered existing concentrations of poverty within the region.
Once a jurisdiction’s total need was calculated, using the formula listed in the previous
section, those total units were then divided using an income allocation method, based
on region-wide income distributions. To address concentrations of poverty, each
jurisdiction was given 175 percent of the difference between their 2000 household
income distribution and the 2000 region-wide household income distribution.
Allocation Rules
In the last round of the RHNA process, it was useful to include three sets of rules that
addressed spheres of influence, the transfer of units, and subregions.
Spheres of Influence
Every city in the Bay Area has a “sphere of influence” or SOI. The SOI boundary is
designated by the county’s Local Area Formation Commission (LAFCO). The LAFCO
influences how government responsibilities are divided among jurisdictions and service
districts within a county. A city’s SOI can be either contiguous with or go beyond the
city’s boundary. A city is responsible for planning for all areas within its SOI. The SOI
is considered the probable future city boundary. SOI must be considered in the regional
housing needs allocation process via a “rule” in the RHNA method if there is projected
growth within a city’s SOI. Most SOI areas within the Bay Area are anticipated to
experience growth.
The primary SOI rule for the RHNA method is that each local jurisdiction with land-use
permitting authority over its SOI should plan for all the housing needed to accommodate
housing growth, existing employment and employment growth within their SOI.
There are variations in the Bay Area in terms of whether a city or county has jurisdiction
over land use and development within unincorporated SOIs. In response to these
variations, the following SOI rules applied:
1. In Napa, Santa Clara, Solano, and Sonoma counties, the allocation of housing
need generated by the unincorporated SOI were assigned to the cities.
2. In Alameda and Contra Costa counties, the allocation of housing need generated
by the unincorporated SOI was assigned to the county.
3. In Marin County, 75 percent of the allocation of housing need generated by the
unincorporated SOI was assigned to the city; the remaining 25 percent was
assigned to the county.
-4-
Transfer of Units
After the initial allocation, each local jurisdiction could request that it be allowed to
transfer units with one or more willing partners. The transfer must take place in a way
that maintains the total need allocation amongst all transfer parties, maintains income
distribution of both retained and transferred units, and includes a package of incentives
to facilitate production of housing units.
The transfer rule allowed for the transfer of housing need between willing jurisdictions in
conjunction with financial and non-financial resources. It maintained the integrity of the
State’s RHNA objectives by preventing any jurisdiction from abdicating its responsibility
to plan for housing across all income categories.
Request for transfer of RHNA allocations between jurisdictions was required to adhere
to the following provisions:
1. Have at least two willing partners.
2. The total number of units within the group requesting the transfer cannot be
reduced.
3. Include units at all income levels in the same proportion as initially allocated.
4. All members of the transfer group must retain some allocation of very low and
low income units.
5. The proposed transfer must include a specifically defined package of incentives
and/or resources that will enable the jurisdiction(s) receiving an increased
allocation to provide more housing choices than would otherwise occur absent
the transfer and the accompanying incentives or resources.
6. If the transfer resulted in a greater concentration of very low or low income units
in the receiving jurisdiction, the effect must be offset by findings by the members
of the transfer group that address the RHNA objectives.
7. For the transfer of very low and low income units, there were restrictions that
ensured the long term affordability of the transferred units.
8. Transfers must comply with all other statutory constraints and be consistent with
the RHNA objectives.
Subregional Allocations
The County of San Mateo, in partnership with all twenty cities in the county, formed a
subregion. The formation of a subregion, for the purposes of conducting the RHNA, is
allowed by State law.
Upon the State’s determination of the total regional need, as required by law, ABAG
assigned a share of the regional need to the San Mateo subregion. According to the
law, the subregion’s share is to be “in a proportion consistent with the distribution of
households” from 2007-2014 in Projections 2007. San Mateo’s share of units was also
assigned by income category. The income distribution was determined by the regional
average distribution of income.
-5-
Members of a subregion can decide to leave the subregion and become part of the
remaining regional allocation. Rules were created so jurisdictions would know the effect
of such decisions. No jurisdictions left the San Mateo subregion in the last RHNA
period.
Discussion
Staff is asking for input and discussion:
1. Would the method used in the last round of the RHNA process be appropriate
again?
2. Would committee members like further discussion/examples of any parts of the
method?
3. Are there parts of the formulas or rules that you think we could simplify or
eliminate?
4. Do you think that subregions impact the allocations for the rest of the region? Is
it important to consider the relationship of the subregions and the remainder of
the region?
5. Do we need to have rules in case jurisdictions choose to leave a subregion?
Resources
The Bay Area’s last RHNA plan
http://www.abag.ca.gov/planning/pdfs/SFHousingNeedsPlan.pdf
1
Date: February 16, 2011
To: SCS Housing Methodology Committee
From: Regional Agency Staff
Subject: The Rationale for the Sustainable Communities Strategy and the Requirements for the
Regional Housing Need Allocation
This memo describes the rationale and principles of the Sustainable Communities Strategy (SCS) Initial
Vision Scenario, the Place Type framework, the SCS Performance Targets that are most relevant to
housing issues, and the Regional Housing Need Allocation (RHNA) Objectives and Factors and explores
the ways in which these sets of principles and objectives relate to one another. The purpose of this
memo is to frame the discussion on the relationship between the SCS and RHNA.
Initial Vision Scenario of the SCS
The Initial Vision Scenario (IVS) is a starting point for developing the Sustainable Communities Strategy.
The IVS identifies a land use pattern and related policies, strategies, and resources designed to meet the
Bay Area’s greenhouse gas reduction and housing targets. It assumes strong regional economic
performance and sufficient funding for affordable housing, transportation, and the planning and
infrastructure dollars needed to support transit‐oriented and infill development in the Bay Area. In
addition to meeting regionally adopted performance targets, the objectives that guide the Initial Vision
Scenario are to:
Strengthen the character of places through sustainable development
Accommodate future growth within urban boundaries
Locate future housing and jobs near transit, amenities, and services
Strengthen regional transit corridors that allow access to jobs and services
Align regional transportation funding with production of sustainable and affordable housing
Retain the open space and agricultural land in the region
Based on a forecast of housing need in the region in 2035, there will be approximately 3.6 million
households in 2035—approximately 920,000 more than in 2010. Relative to long‐term housing
distribution, the IVS will encompass both the Current Regional Plans forecast that distributes
approximately 650,000 households plus the additional 267,000 households needed to achieve the
regional housing target. Like its predecessor, Projections, the Current Regional Plans forecast assumes
some growth in every jurisdiction in the region with the distribution of growth being more infill and
transit‐oriented over time through 2035. The Initial Vision Scenario distributes the additional number of
households needed to achieve the region’s housing target exclusively in Priority Development Areas
(PDAs) or in New Opportunity Areas that were identified by local jurisdictions through the Initial Vision
Scenario local input process. Together, these areas are referred to as Sustainable Community
Development Areas (SCDAs). The regional agencies project that there will also be 4.4 million jobs in
2035—approximately 1.2 million more than in 2010. The Initial Vision Scenario assumes that the
region’s housing needs are met—providing the Bay Area with a more competitive regional economy and
an estimated 97,000 additional jobs compared to the Current Regional Plans forecast.
Rationale for the SCS and RHNA Requirements
February 16, 2011
Page 2
2
In developing the Initial Vision Scenario, local estimates of growth for SCDAs were used when possible.
However, many of these areas need to take on additional households for the region to reach the
housing target. In these situations, the Place Type selected by a local jurisdiction for one of its SCDAs
was used to help determine how much growth the area could accommodate. After evaluating a SCDA’s
location in the region, access to employment, proximity to major transit corridors, and its overall size
and development intensity, the proposed growth for the area was compared to the characteristics for its
Place Type and, when appropriate, adjusted to meet the targets for that Place Type.
Place Type Framework1
By showing the similarities of transit areas in the Bay Area, the Place Types offer a way for local
governments to identify their future vision for an area, based on characteristics related to the type of
transit, the mix of land uses, the intensity of development, retail characteristics, and major planning and
development challenges. These characteristics are then related to development guidelines for each
Place Type that outline a proposed mix of housing types, targets for total housing units and jobs, net
densities for new housing, and minimum Floor Area Ratios (FARs) for new employment development.
While the Place Types emphasize the specific context of a particular place, they also take into account
the role that the station area plays in relation to other transit‐served areas in the region. In this way, the
Place Types provide a common language for a regional policy framework, and for how those policies
relate to planning and implementation occurring at the local level.
1 The Place Type framework was developed by Reconnecting America as a companion to MTC’s Transit‐Oriented
Development (TOD) Policy and the FOCUS Priority Development Areas.
Rationale for the SCS and RHNA Requirements
February 16, 2011
Page 3
3
SCS Performance Targets Most Relevant to Housing
MTC and ABAG recently adopted ten Performance Targets that will be used to measure and evaluate the
land use scenarios that are created as the region moves toward defining the final preferred SCS. Of the
ten targets, the following ones are the most relevant to housing allocation issues:
CLIMATE
PROTECTION 1 Reduce per‐capita CO2 emissions from cars and light‐duty trucks by 15%
Statutory ‐ Source: California Air Resources Board, as required by SB 375
ADEQUATE
HOUSING 2
House 100% of the region’s projected 25‐year growth by income level
(very‐low, low, moderate, above‐moderate) without displacing current
low‐income residents
Statutory ‐ Source: ABAG adopted methodology, as required by SB 375
HEALTHY & SAFE
COMMUNITIES 5
Increase the average daily time walking or biking per person for
transportation by 60% (for an average of 15 minutes per person per day)
Source: Adapted from U.S. Surgeon General’s guidelines
OPEN SPACE AND
AGRICULTURAL
PRESERVATION
6
Direct all non‐agricultural development within the urban footprint (existing
urban development and urban growth boundaries)
Source: Adapted from SB 375
EQUITABLE
ACCESS 7
Decrease by 10% the share of low‐income and lower‐middle income
residents’ household income consumed by transportation and housing
Source: Adapted from Center for Housing Policy
ECONOMIC
VITALITY 8
Increase gross regional product (GRP) by 90% – an average annual growth
rate of approximately 2% (in current dollars)
Source: Bay Area Business Community
Statutory RHNA Objectives
According to state law, the regional housing needs plan adopted by the region must promote the
following objectives2:
Increase housing supply and mix of housing types, tenure, and affordability in all cities and
counties within the region in an equitable manner, which shall result in each jurisdiction
receiving an allocation of units for low‐ and very low income households.
Promote infill development and socioeconomic equity, the protection of environmental and
agricultural resources, and the encouragement of efficient development patterns.
Promote an improved intraregional relationship between jobs and housing.
Allocate a lower proportion of housing need to an income category when a jurisdiction already
has a disproportionately high share of households in that income category, as compared to the
countywide distribution of households in that category, as compared to the countywide
distribution of households in that category from the most recent decennial United States
census.
2 Government Code Section 65584(d).
Rationale for the SCS and RHNA Requirements
February 16, 2011
Page 4
4
Table 1 shows an initial assessment of how the SCS Performance Targets align with the RHNA Objectives.
Table 1: SCS Performance Targets Compared to RHNA Objectives
SCS Performance Measures RHNA Objectives
#1: Reduce per‐capita CO2 emissions from cars and
light‐duty trucks by 15%
Encourage efficient development patterns
Promote an improved intraregional relationship
between jobs and housing
#2: House 100% of the region’s projected 25‐year
growth by income level (very‐low, low, moderate,
above‐moderate) without displacing current low‐
income residents
Increase housing supply and mix of housing types,
tenure, and affordability in all cities and counties
within the region in an equitable manner, which
shall result in each jurisdiction receiving an
allocation of units for low‐ and very low income
households.
Promote socioeconomic equity
#5: Increase the average daily time walking or biking
per person for transportation by 60% (for an average
of 15 minutes per person per day)
#6: Direct all non‐agricultural development within the
urban footprint (existing urban development and
urban growth boundaries)
Promote infill development
Protect environmental and agricultural resources
#7: Decrease by 10% the share of low‐income and
lower‐middle income residents’ household income
consumed by transportation and housing
#8: Increase gross regional product (GRP) by 90% – an
average annual growth rate of approximately 2% (in
current dollars)
Allocate a lower proportion of housing need to an
income category when a jurisdiction already has a
disproportionately high share of households in that
income category, as compared to the countywide
distribution of households in that category
Statutory RHNA Factors
In addition to the overarching RHNA Objectives, state law requires that the methodology for allocating
units within the region consider the following specific factors3:
1. A jurisdiction’s existing and projected jobs and housing relationship
2. Water and sewer capacity
3. Land suitable for urban development or conversion to residential use
4. Protected open space ‐ lands protected by state and federal government
5. County policies to protect prime agricultural land
6. Distribution of household growth
7. Market demand for housing
8. City‐centered growth policies
9. Loss of affordable units contained in assisted housing
10. High housing cost burdens
11. Housing needs of farm workers
12. Impact of universities and colleges on housing needs in a community.
13. Any other factors adopted by the council of governments
3 Government Code Section 65584.04(d‐g).
Rationale for the SCS and RHNA Requirements
February 16, 2011
Page 5
5
Additional Factors Identified by the Housing Methodology Committee
At the last SCS Housing Methodology Committee (HMC) meeting, a number of additional factors were
identified for possible use in the RHNA methodology (see Appendix A for a full list). At the suggestion of
some of the committee members, staff has grouped the ideas to facilitate future discussion. The four
groups are:
Local Community Factors
Regional Factors
Transportation Related Factors
Environmental Factors
Local Community factors include local climate action plans, Priority Development Areas, evaluation of
the existing housing stock, and local school/educational issues and impacts. Regional factors include
issues related to seniors, equity issues, the types of housing we are planning for, unemployment, and
issues of regional sustainability. Transportation issues were numerous, and included relating housing to
transit and transportation assets, walkability, and access to jobs and schools. Environmental factors
included the designation of habitat and open space, and issues related to sea level rise and air quality.
The remaining ideas that were offered fall into the category of technical issues and questions.
As we begin to evaluate factors for the RHNA methodology, it is important to recognize that not all of
the suggestions need to be, or should be, included. A simple, understandable methodology based on
information that is consistently available across the region is certainly an option. This is an approach
that needs to be evaluated against explicitly including a variety of issues.
The Use of Factors in the Previous RHNA Methodology
For the Bay Area’s previous allocation formula, the selected factors and their respective weights were:
Household growth (45%)
Existing employment (22.5%)
Employment growth (22.5%)
Household growth near existing transit (5%)
Employment growth near existing transit (5%)
By applying these factors and weights in the allocation formula, housing was allocated to jurisdictions
and jurisdictions were required to plan for their allocated number of housing units within the housing
elements of their general plans. Specifically, the selected factors resulted in:
Housing units directed to communities where local governments were planning housing growth;
Housing and job growth being planned together and existing jobs‐housing imbalances being
addressed;
Housing development directed to communities with transit infrastructure; and
Fewer housing units directed to outlying areas; thereby reducing development pressures on
open space and agricultural lands.
More growth in existing urbanized communities translates into less development pressure on the
region’s environmental and agricultural resources. Growth in urban areas may facilitate development
efficiencies and more infill development at higher densities. Such development may support increased
transportation choices, e.g., walking and public transit, especially if development is planned near transit,
Rationale for the SCS and RHNA Requirements
February 16, 2011
Page 6
6
services and existing jobs. The previous allocation formula coalesced with the designation of many of
the region’s transit‐served neighborhoods as PDAs and expanded planning and capital infrastructure
support for the PDAs.
The inclusion of employment growth as a RHNA factor allocated the regional housing need to places
where job growth was anticipated to occur during the 2007‐2014 RHNA period. Cities or counties with
planned job growth were responsible for planning housing for the additional jobs added to their
communities. Placing a transit factor directly into the methodology gave extra weight to this state and
regional objective. This is because a transit‐based policy was already incorporated into ABAG’s policy‐
based Projections. Current regional policy places incrementally more growth along major transportation
corridors and at transit stations. Therefore, a housing need allocation that uses regional housing growth
and employment as factors would indirectly include “transit” as a policy issue in the allocation formula.
Items for Discussion
Given the requirement that the short‐term RHNA be consistent with the long‐term SCS housing
growth distribution, how might we use the above factors in an allocation formula or
methodology?
Can we combine factors or exclude some of the suggested factors?
Are there other parts of the RHNA process where these factors are included, such as the income
allocation?
Rationale for the SCS and RHNA Requirements
February 16, 2011
Page 7
7
Appendix A: List of Additional Factors from January 2011 Housing Methodology Committee Meeting
Local Community Factors
Climate Action Plans
Priority Development Areas (PDAs)
Existing Housing Stock
Schools/Education
Regional Factors
Housing Types
Senior Populations
Social Justice
Unemployment
Consider Basic Sustainability Issues
Quantitative vs. Qualitative Goals
Transportation Related Factors
Transit linked to its Capacity and Quality
Relationship to Transit
Transportation Corridors
Walking/Bicycling Accessibility
Access to Jobs/Schools
Balance Jobs and Housing
Environmental Factors
Sea Level Rise
Air Quality Regulations
Priority Conservation Areas (PCAs)
Habitat
Open Space
Technical Issues
Data for Income Levels
Existing Income
Vacancy Rates (households)
Cities Association of Santa Clara County
Sub Regional RHNA Process
February 10, 2011
Background
On January 12, 2011, the City Managers’ Association (CMA) expressed concerns about
staffing and available financial resources to develop a subregional Regional Housing
Needs Assessment (RHNA) methodology under the time constraints of State law (see
pros and cons on next page). On February 9, 2011, the CMA considered a
recommendation from the Santa Clara County Planning Officials (SCCAPO) that
suggests enhanced collaboration between the cities in the County and begins to foster
an appropriate structure that may be used in 8 years (the next housing cycle) to develop
a formal subregional RHNA.
Recommendation to the Cities Association of Santa Clara County
Santa Clara County’s 15 cities and the County should not at this time establish a formal
subregion in the current RHNA process, but instead should pursue an informal,
collaborative process that ensures many of the benefits of forming a subregion. This
cooperation and collaboration would:
• Utilize existing forums for communication and participation (e.g., Cities
Association, City Managers’ Association, SCCAPO, Housing Action Coalition, etc.)
• Pilot mechanisms for engagement and collaboration
• Provide an opportunity for a unified voice representing the South Bay at the
Housing Methodology Committee, ABAG Board meetings, and other forums
• Maintain the ability of contiguous jurisdictions to trade RHNA numbers
• Utilize the same methodology as ABAG (SCCAPO did not express a desire to
create its own methodology)
• Facilitate future collaboration sharing Housing Element consultants, analyses and
policies, and potentially resulting in shared review by the California Housing and
Community Development (HCD) Department
• Generate a White Paper for consideration by the Cities Association, outlining a
recommended structural arrangement to create a Santa Clara County subregion in
eight years, including identification of resources, mechanisms for decision-making,
etc.
To help guide the informal process, the Cities Association may decide to endorse the
following principles:
1. Ensure a fair share distribution of total housing growth and affordable housing within
the County.
2. Allocate housing growth strategically around major transportation corridors respecting
infrastructure constraints and the unique natural resources of Santa Clara County.
3. Foster collaboration between jurisdictions and provide a framework for resource /
housing allocation trade-offs.
4. Facilitate an open dialogue between jurisdictions, the general public, and interested
organizations.
5. Utilize existing forums for discussion (e.g., Cities Association, City Managers’
Association, SCCAPO, Housing Action Coalition, etc.).
2
Pros and Cons of a Formal RHNA Subregion for Santa Clara County
Pros Cons
• More local control/self-
determination
• Subregion is responsible and accountable for
allocation and distribution (can’t blame ABAG)
• Better placement of housing
and protection of community
character
• Time and staff resources needed to develop
new methodology
• Opportunity for the County to
show leadership
• Need to determine structure and process for
development of methodology, including
stakeholder involvement
• Opportunity to strengthen
Planning Officials organization
(SCCAPO) as policy advisory
body to City Managers’
Association and Cities
Association of SC County
• Funding and staffing is not currently available
to complete this work (estimated initial cost of
$250,000)
• More flexibility to negotiate
and trade units
• No money is available for trades
• Foster collaboration and
coordination
• Some of these items can be pursued without
a subregion (e.g., trades, purchasing sewer
capacity/water supply)
• HCD may offer consistent and
timely review of all of the
County’s Housing Elements
• Could stress relationships between cities in
the County
• Could lead to reduced costs if
cities later decide to use the
same consultant to prepare
housing elements, or share
resources/coordinate on
policies/etc.
.
• A lot of work and may still end up with same
ABAG methodology and/or allocation
• Can’t promise positive outcomes
• Some cities might not participate
• Could lead to grants for
affordable housing education
• Might fail
SUSTAINABLE COMMUNITIES STRATEGY (SB375)
GLOSSARY OF TERMS AND ACRONYMS
AB 32
Assembly Bill 32: The California Global Warming Solutions Act of 2006; state legislation
requiring a statewide reduction in greenhouse gas emissions to 1990 levels or lower by the year
2020.
ABAG
Association of Bay Area Governments: A voluntary association of counties and cities in the
nine-county San Francisco Bay Area. ABAG provides demographic, financial, administrative,
training and conference services to local governments and businesses. A member sits on MTC.
ABAG Regional Planning Committee
This committee studies and submits matters to the ABAG Executive Board regarding: Plan Bay
Area; environmental management, housing, and infrastructure planning; special plans and reports
from planning task forces or other regional agencies; comprehensive planning policies and
procedures; and such other matters as may be assigned by the Executive Board. Members
include a minimum of 18 elected officials, including at least one supervisor from each member
county and a city representative from each county,as well as not less than 10 citizens
representing business, minority, economic development, recreation/open space, environment,
public interest, housing, special districts and labor interests.
BAAQMD
Bay Area Air Quality Management District (Also known as the Air District, since the acronym
seems to take longer to say than the full name): Regulates industry and employers to keep air
pollution in check and sponsors programs to clean the air. The Air District also works with MTC,
ABAG and BCDC on issues that affect transportation, land use and air quality.
Bay Area Partnership
Often referred to simply as “The Partnership,” this is a confederation of the top staff of various
transportation agencies in the region, including MTC, public transit operators, county congestion
management agencies (CMAs), city and county public works departments, ports, Caltrans and
the U.S. Department of Transportation (DOT) as well as environmental protection agencies. The
Partnership works by consensus to improve the overall efficiency and operation of the Bay
Area’s transportation network, including developing strategies for financing transportation
improvements.
Bay Plan
The San Francisco Bay Plan guides policies for future uses of the Bay and its shoreline. The first
San Francisco Bay Plan was completed and adopted by the San Francisco Bay Conservation and
Development Commission in 1968, and it is periodically updated. The two main objectives are:
1) Protect the Bay as a great natural resource for the benefit of present and future generations,
and 2) Develop the Bay and its shoreline to their highest potential with a minimum of Bay
filling. BCDC will be releasing a revised recommendation on amendments to the Bay Plan to
Attachment F
Sustainable Communities: Glossary Page 2
prepare for inevitable sea-level rise and storm surges affecting areas on and near the Bay
shoreline due to climate change.
BCDC
San Francisco Bay Conservation and Development Commission: A state-established agency with
jurisdiction over dredging and filling of San Francisco Bay and limited jurisdiction over
development within 100 feet of the Bay.
Call for Projects
Regional agencies use this procedure to solicit competing bids from counties, cities, transit
agencies, community-based organizations and other stakeholders for projects to be funded as part
of long-range plans, such as Transportation 2035 or Plan Bay Area.
Caltrans
California Department of Transportation: The state agency that maintains and operates
California’s highway system.
Capital Funds
Moneys to cover one-time costs for construction of new projects —such as roads, bridges,
bicycle/pedestrian paths, transit lines and transit facilities —to expand the capacity of the
transportation system, or to cover the purchase of buses and rail cars.
CEQA
California Environmental Quality Act: This statute requires state and local agencies to identify
the significant environmental impacts of their actions and to avoid or mitigate those impacts, if
feasible.
CEQA Guidelines
The Air District’s CEQA Guidelines are developed to assist local jurisdictions and lead agencies
in complying with the requirements of CEQA regarding potentially adverse impacts to air
quality. The primary purpose is to provide a means to identify proposed local plans and
development projects that may have a significant adverse effect on air quality and public health.
The Air District’s CEQA Guidelines, updated in June 2010, recommend air quality significance
thresholds, analytical methodologies and mitigation measures for local agencies to use when
preparing air quality impact analyses under CEQA. The updated CEQA Guidelines seek to better
protect the health and well-being of Bay Area residents by addressing new health protective air
quality standards, exposure to toxic air contaminants, and adverse effects from global climate
change.
Clean Air Plan
At a public hearing on September 15, 2010, the Air District Board of Directors adopted the final
Bay Area 2010 Clean Air Plan (CAP), and certified the Final Environmental Impact Report on
the CAP. The 2010 CAP serves to update the Bay Area ozone plan in compliance with the
requirements of the Chapter 10 of the California Health & Safety Code. In addition, the 2010
Sustainable Communities: Glossary Page 3
CAP provides an integrated, multi-pollutant strategy to improve air quality, protect public health,
and protect the climate.
Climate Change
Climate change refers to changes in the Earth’s weather patterns, including the rise in the Earth’s
average temperature due to an increase in heat-trapping or “greenhouse gases” (GHGs) in the
atmosphere. Climate scientists agree that climate change is a man-made problem caused by the
burning of fossil fuels like petroleum and coal. Transportation accounts for about 40 percent of
the Bay Area’s GHG emissions. Climate change is expected to significantly affect the Bay
Area’s public health, air quality and transportation infrastructure through sea level rise and
extreme weather.
CMAs
Congestion Management Agencies: Countywide agencies responsible for preparing and
implementing a county’s Congestion Management Program. CMAs came into existence as a
result of state legislation and voter approval of Proposition 111 in 1990. Subsequent legislation
made them optional. Most Bay Area counties still have them. Many CMAs double as a county’s
sales tax authority.
CO2
Carbon dioxide: A gas that is emitted naturally through the carbon cycle or through human
activities. The largest source of CO2 globally is the combustion of fossil fuels (such as coal, oil
and gas) in power plants, automobiles, industrial facilities and other sources. In the Bay Area, the
single largest source of CO2 emissions, some 41 percent, comes from transportation sources.
Committed Revenues
Funds that are directed to a specific entity or for a specific purpose as mandated by statute or by
the administering agency.
Conformity
A process in which transportation plans and spending programs are reviewed to ensure they are
consistent with federal clean air requirements; transportation projects collectively must not
worsen air quality.
Congestion Pricing
A policy designed to allocate roadway space more efficiently by charging drivers a fee that
varies with the level of traffic on a congested roadway. (See also Value Pricing.)
CTC
California Transportation Commission: A state-level commission, consisting of nine members
appointed by the governor, which establishes priorities and allocates funds for highway,
passenger rail and transit investments throughout California. The CTC adopts the State
Transportation Improvement Program, or STIP,and implements state transportation policy.
Detailed Scenarios
Following development of the Initial Vision Scenario, detailed scenarios that account for
Sustainable Communities: Glossary Page 4
available revenues will be developed, analyzed and discussed as part of the Plan Bay Area
process. (See also Initial Vision Scenario and Preferred Scenario.)
EIR
Environmental Impact Report: State law requires that an EIR shall be prepared if there is
substantial evidence that a project may have a significant effect on the environment. A draft EIR
shall be included as part of the review and approval process whenever a public hearing is held on
the project. Following adoption of a final EIR by the lead agency makes a decision whether to
proceed with the project.
Environmental Justice
This term stems from a Presidential Executive Order to promote equity for disadvantaged
communities and promote the inclusion of racial and ethnic populations and low-income
communities in decision-making. Local and regional transportation agencies must ensure that
services and benefits, as well as burdens, are fairly distributed to avoid discrimination.
Equity Analysis
Consistent with federal requirements for environmental justice, MTC and ABAG will conduct an
equity analysis covering Plan Bay Area to determine how the benefits and burdens of the plan’s
investment strategy affect minority and low-income communities.
Equity Working Group
This Equity Working Group was set up to advise MTC and ABAG staff in developing of an
equity analysis related to low income and minority communities of concern for Plan Bay Area. It
consists of representatives from MTC’s Policy Advisory Council (PAC) and the Regional
Advisory Working Group (RAWG) The group is identifying some of the key issues and
challenges for the region to grow equitably to help meet the sustainability goals as Plan Bay Area
is developed. (See also Equity Analysis.)
Executive Working Group
The Executive Working Group —including city managers, congestion management agency
directors, regional agency executives, transit officials and others —was formed to provide a
forum for input on technical and policy issues surrounding development of Plan Bay Area. The
Executive Working Group met on June 7, 2010. Additional meeting times/locations as well as
meeting materials will be posted on the OneBayArea website.
FHWA
Federal Highway Administration: U.S. Department of Transportation agency responsible for
administering the federal highway aid program to individual states, and helping to plan, develop
and coordinate construction of federally funded highway projects. FHWA also governs the safety
of hazardous cargo on the nation’s highways.
Financial Constraint
A federal requirement that long-range transportation plans include only projects that have a
reasonable expectation of being funded, based upon anticipated revenues. In other words, long-
range transportation plans cannot be pie-in-the-sky wish lists of projects. They must reflect
Sustainable Communities: Glossary Page 5
realistic assumptions about revenues that will likely be available during the 25 years covered in
the plan.
Flexible Funding
Unlike funding that flows only to highways or only to transit by a rigid formula, this is money
that can be invested in a range of transportation projects. Examples of flexible funding categories
include the Surface Transportation Program (STP) and the Congestion Mitigation and Air
Quality Improvement (CMAQ) program.
FOCUS
A regional planning initiative spearheaded by ABAG in cooperation with MTC, and in
coordination with the Air District and BCDC. FOCUS seeks to protect open space and natural
resources while encouraging infill development in existing communities (See also PCA and
PDA).
FPI
Freeway Performance Initiative: MTC’s effort to improve the operations, safety and management
of the Bay Area’s freeway network via deploying system management strategies, completing the
HOV lane system, addressing regional freight issues and closing key freeway infrastructure gaps.
FTA
Federal Transit Administration: U.S. Department of Transportation agency that provides
financial and planning assistance to help plan, build and operate rail, bus and paratransit systems.
The agency also assists in the development of local and regional traffic reduction programs.
Global Warming
See Climate Change.
Greenhouse Gases
Any of the gases –including carbon dioxide, methane and ozone –whose absorption of solar
radiation is responsible for the greenhouse effect, in which the atmosphere allows incoming
sunlight to pass through but absorbs heat radiated back from the earth’s surface. Greenhouse
gases act like a heat-trapping blanket in the atmosphere, causing climate change.
HOV Lane
High-Occupancy-Vehicle Lane: The technical term for a carpool lane, commuter lane or
diamond lane.
Initial Vision Scenario
As part of Plan Bay Area, the Initial Vision Scenario articulates the Bay Area’s vision of future
land uses and assesses its performance relative to statutory greenhouse gas and housing targets as
well as other voluntary performance targets. The Initial Vision Scenario serves as a starting point
for the development, analysis and discussion of detailed scenario alternatives that will lead to a
preferred scenario by early 2012. Another reason the Initial Vision Scenario is just a starting
point is because it is unconstrained by available revenues. (See also Detailed Scenarios and
Preferred Scenario.)
Sustainable Communities: Glossary Page 6
JPC
Joint Policy Committee: This consortium coordinates the regional planning efforts of ABAG, the
Air District, BCDC and MTC.
Land Use Model
Used by researchers and planners to identify expected population, jobs and housing growth and
to understand the interactions between land use, transportation, and the economy. Models help
planners analyze and test various spatial distributions of jobs, population and land uses and
describe to policy-makers and the public about the relationship between land use and
transportation.
MPO
Metropolitan Planning Organization: A federally required planning body responsible for the
transportation planning and project selection in its region; the governor designates an MPO in
every urbanized area with a population of over 50,000. MTC is the Bay Area’s MPO.
MTC
Metropolitan Transportation Commission: The transportation planning, financing and
coordinating agency for the nine counties of the San Francisco Bay Area.
One Bay Area
One Bay Area is a new initiative meant to coordinate efforts of the Bay Area’s regional
government agencies —the Association of Bay Area Governments (ABAG), the Bay Area Air
Quality Management District (BAAQMD), the Bay Conservation and Development Commission
(BCDC) and the Metropolitan Transportation Commission (MTC) —in partnership with the
region’s 101 towns and cities to create a more sustainable future. One major effort now
underway is the development of Plan Bay Area, the region’s long-range plan for sustainable land
use, transportation and housing.
Paratransit
Door-to-door bus, van and taxi services used to transport elderly and disabled riders. Paratransit
is sometimes referred to as dial-a-ride service, since trips are made according to demand instead
of along a fixed route or according to a fixed schedule.
PM
Particulate Matter: A mixture of tiny solid and liquid particles –such as those from dust, dirt,
soot or smoke –that are found in the air. When inhaled, these particles can settle deep in the
lungs and cause serious health problems.
PCA
Priority Conservation Area: Regionally significant open spaces for which there exists a broad
consensus for long-term protection and for which public funds may be invested to promote their
protection. These areas must be identified through the FOCUS program.
PDA
Priority Development Area: Locations within existing communities that present infill
Sustainable Communities: Glossary Page 7
development opportunities, and are easily accessible to transit, jobs, shopping and services.
Local jurisdictions identified these locations voluntarily through the FOCUS program.
Performance Measures
Indicators of how well the transportation system or specific transportation projects will improve
transportation conditions.
Place Types
A place type groups neighborhoods or centers with similar sustainability characteristics and
physical and social qualities, such as the scale of housing buildings, frequency and type of
transit, quality of the streets, concentration of jobs, and range of services. For Plan Bay Area,
Place Types are a tool of local-regional exchange to identify places and policies for sustainable
development. Bay Area jurisdictions can select a place type to indicate their desired level of
growth in the Sustainable Communities Strategy.
Plan Bay Area
Plan Bay Area is one of our region’s most comprehensive planning efforts to date. It is a joint
effort led by ABAG and MTC in partnership with BAAQMD and BCDC. All four agencies are
collaborating at an unprecedented level to produce a more integrated land use-transportation
plan.
Planning Directors Forums
These are regularly scheduled meetings of local planning directors and staff in each county.
Local and countywide issues of concern are discussed, and the forums act as a platform for
information sharing. Other participants include congestion management agencies (CMAs) and
staff from local community and economic development and public works departments.
Potential New Revenues
Funds that may be available for transportation investment in the future if proposed new revenue
sources are approved. These potential revenues are not included in the financially constrained
portion of long-term transportation plans and Plan Bay Area.
Preferred Scenario
Consideration of the detailed scenario alternatives will lead to a preferred scenario by early 2012.
(See also Detailed Scenarios and Initial Vision Scenario.)
Program
(1) verb, to assign funds to a project that has been approved by MTC, the state or another
agency, and (2) noun, a system of funding for implementing transportation projects or policies.
Resolution 3434
MTC adopted Resolution 3434 in December 2001 to establish clear priorities for the investment
of transit expansion funds over the next decade. It focused on identifying high-priority rail and
express/rapid bus improvements to serve the Bay Area’s most congested corridors.
Sustainable Communities: Glossary Page 8
RAWG
Regional Advisory Working Group: An advisory group set up to advise staff of ABAG, MTC,
BAAQMD and BCDC on development of Plan Bay Area. Its membership includes staff
representatives of local jurisdictions (CMAs, planning directors, transit operators, public works
agencies) as well as representatives from the business, housing, environmental and social-justice
communities.
RHNA
Regional Housing Need Assessment: The Regional Housing Need Assessment process is a state
mandate regarding planning for housing in California. ABAG is responsible for allocating this
state-determined regional housing need among all of the Bay Area’s nine counties and 101 cities.
Factors used by ABAG in its allocation process include projected household growth, existing
employment and projected employment growth, and projected household and employment
growth near transit.
RTIP
Regional Transportation Improvement Program: A listing of highway, local road, transit and
bicycle projects that the region hopes to fund; compiled by MTC every two years from priority
lists submitted by local jurisdictions. The California Transportation Commission (CTC) must
either approve or reject the RTIP in its entirety. Once the CTC approves an RTIP, it is combined
with those from other regions to comprise 75 percent of the funds in the State Transportation
Improvement Program or STIP. (Also see “STIP.”)
RTP
Regional Transportation Plan: A master plan to guide the region’s transportation investments for
a 25-year period. Updated every three years, it is based on projections of growth in population
and jobs and the ensuing travel demand. Required by state and federal law, it includes programs
to better maintain, operate and expand transportation. The Bay Area’s most recent update of its
long-range transportation plan, is known as Transportation 2035. The next RTP will be included
as part of Plan Bay Area.
Sales Tax Authority
An agency that administers a voter-approved county transportation sales tax program; in most
Bay Area counties, the congestion management agency (CMA) also serves as the sales tax
authority.
SB 375
Senate Bill 375 (Steinberg): SB 375 became law in 2008. It includes two main statutory
requirements and a host of voluntary measures. It is designed to complement AB 32, which
requires the state to reduce its GHG emissions to 1990 levels by 2020. The first requirement is to
reduce per-capita carbon dioxide (CO2) emissions from cars and light duty trucks, primarily by
building more compact communities with better access to mass transit and other amenities, so
people have more transportation choices and do not have to drive as much. The second
requirement is to house 100 percent of the region’s projected 25-year population growth,
regardless of income level.
Sustainable Communities: Glossary Page 9
Smart Growth
A set of policies and programs designed to protect, preserve and economically stimulate
established communities, while protecting valuable natural and cultural resources and limiting
sprawl.
STIP
State Transportation Improvement Program: What the California Transportation Commission
(CTC) ends up with after combining various RTIPs, as well as a list of specific projects proposed
by Caltrans. Covering a five-year span and updated every two years, the STIP determines when
and if transportation projects will be funded by the state. Projects included in the STIP must be
consistent with the long-range transportation plan.
Sustainability
Sustainability means doing things and using resources in ways that protect them so they will be
available for current and future generations. The “Three E” goals of sustainability are Economy,
Environment and Equity. Sustainability is all about helping support a prosperous and globally
competitive economy, providing for a healthy and safe environment, and producing equitable
opportunities for all Bay Area residents.
Sustainable Communities Strategy
The Sustainable Communities Strategy (SCS) is an integrated land use and transportation plan
that all metropolitan regions in California must complete under Senate Bill 375. In the San
Francisco Bay Area this integration includes ABAG’s Projections and Regional Housing Needs
Allocation (RHNA) and MTC’s Regional Transportation Plan (RTP).
Title VI
Refers to Title VI of the Federal Civil Rights Act of 1964, and requires that transportation
planning and programming be nondiscriminatory on the basis of race, color and national origin.
Integral to Title VI is the concept of environmental justice.
TLC
Transportation for Livable Communities: Program created by MTC in 1998 to fund small-scale,
community-and transit-oriented projects that improve neighborhood vitality.
TOD
Transit-Oriented Development: A type of development that links land use and transit facilities to
support the transit system and help reduce sprawl, traffic congestion and air pollution. It includes
housing, along with complementary public uses (jobs, retail and services), located at a strategic
point along a regional transit system, such as a rail hub.
TOD Policy
To promote cost-effective transit, ease regional housing shortages, create vibrant communities
and preserve open space, MTC adopted a Transit-Oriented Development (TOD) Policy in 2005
that applies to transit extension projects in the Bay Area. Research shows that residents living
within half a mile of transit are much more likely to use it, and that large job centers within a
quarter mile of transit draw more workers on transit.
Sustainable Communities: Glossary Page 10
Travel Model
Used by researchers and planners for simulating current travel conditions and for forecasting
future travel patterns and conditions. Models help planners and policy-makers analyze the
effectiveness and efficiency of alternative transportation investments in terms of performance,
such as mobility, accessibility, environmental and equity impacts.
Value Pricing
The concept of assessing higher prices for using certain transportation facilities during the most
congested times of the day, in the same way that airlines offer off-peak discounts and hotel
rooms cost more during prime tourist seasons. Also known as congestion pricing and peak-
period pricing, examples of this concept include higher bridge tolls during peak periods or
charging single-occupant vehicles that want to use carpool lanes. (See also Congestion Pricing.)
VMT
One vehicle (whether a car carrying one passenger or a bus carrying 30 people) traveling one
mile constitutes a vehicle mile. VMT is one measure of the use of Bay Area freeways and roads.