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2014-02-24 City Council Agenda Packet
CITY OF PALO ALTO CITY COUNCIL Special Meeting Council Chambers February 24, 2014 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday preceding the meeting. 1 February 24, 2014 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. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council 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 required to give your name on the speaker card in order to speak to the Council, but it is very helpful. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. 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 up to three minutes for concluding remarks after other members of the public have spoken. Call to Order 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. OTHER AGENDA ITEMS: Public comments or testimony on agenda items other than Oral Communications shall be limited to a maximum of three minutes per speaker. City Manager Comments 6:00-6:10 PM Council Member Questions, Comments and Announcements 6:10-6:25 PM Members of the public may not speak to the item(s) Oral Communications 6:25-6:40 PM Members of the public may speak to any item not on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 6:40-6:45 PM January 13, 2014 2 February 24, 2014 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. Consent Calendar 6:45-6:50 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 1. Adoption of an Ordinance to Close FY 2013 Budget; Close Completed Capital Improvement Projects and Transfer Remaining Balances to Reserves; Approve the City's FY 2013 Comprehensive Annual Financial Report (CAFR) 2. Adoption of a Budget Amendment Ordinance and Approval of a Construction Contract with Redgwick Construction Company in The Amount of $7,143,031 for the California Avenue Streetscape Improvements Project, including Waterline Replacement 3. SECOND READING: Adoption of a Park Improvement Ordinance for the Palo Alto Municipal Golf Course Reconfiguration Project (First Reading: February 3, 2014 PASSED: 9-0) 4. Approval of Contract Amendment One to Contract No. C13149364 with 4Leaf To Increase Funds Not to Exceed $1,500,000 and Approval of Contract Amendment One to Contract No. C14139368 with Kutzmann To Increase Funds Not to Exceed $363,000 for On-call Development Services Consulting Services 5. Approval of Contract with Standard Parking Corporation in the Amount of $120,000 for Operation of the Lot R Parking Garage Attendant Program and Adoption of a Budget Amendment Ordinance Amending the Fiscal Year 2014 University Avenue Parking Permit Fund Operating Budget to Provide Additional Appropriations of $120,000 6. Policy and Services Committee Recommendation for the City Council to Approve the Revised Boards and Commission Applications 7. Approval of City Clerk Recommendation to Add to the Spring Board and Commission Recruitment the Vacancy on the Planning & Transportation Commission 8. Approval of an Agreement with Townsend Public Affairs for Up To 22 Months in an Amount not to Exceed $187,000 for State Legislative Advocacy Services 3 February 24, 2014 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. Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 6:50-8:20 PM 9. Transportation Demand Management (TDM) Recommendations. Staff Recommends City Council Authorize Staff to Take The Following Actions In Furtherance of a Coordinated TDM Program Aimed At Reducing Traffic Congestion And Parking Demand: a. Solicit Proposals to Establish A Non-Profit Transportation Management Authority (TMA); b. Solicit Proposals For An Expanded Palo Alto Shuttle Program; c. Solicit Proposals to Provide Car Share Services Within City-Owned Parking Lots; and d. Evaluate Rideshare Tools, Including a Trial of the Twogo Rideshare App, for Coordination and Marketing By The TMA. 8:20-9:20 PM 10. Direction to Staff on Lease Terms for the Renewal of the Cubberley Lease Between City of Palo Alto and Palo Alto Unified School District 9:20-9:50 PM 11. Colleagues Memo From Council Members Berman, Burt, Holman, and Klein Regarding Creation of a Palo Alto Business Registry 9:50-10:20 PM 12. City Council Authorization to Staff and the City Manager to Enter into an Agreement with the Peninsula Corridor Joint Powers Board to Introduce the Caltrain Go Pass into the Civic Center Transportation Demand Management Program 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. 4 February 24, 2014 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 City Council Meetings City Council Closed Session February 25, 2014 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report Downtown Monitoring Report 2012-2013 Public Letters to Council Set One Set Two City of Palo Alto (ID # 4416) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: Close Budget and Approve CAFR for FY 2013 Title: Adoption of an Ordinance to Close FY 2013 Budget; Close Completed Capital Improvement Projects and Transfer Remaining Balances to Reserves; Approve the City's FY 2013 Comprehensive Annual Financial Report (CAFR) From: City Manager Lead Department: Administrative Services Motion Council adopts the attached Ordinance (Attachment A) authorizing closing of the Budget for the Fiscal Year (FY) ending June 30, 2013 and authorizes reappropriation of 2013 funds into the 2014 Budget; Council closes the completed Capital Improvement Projects, as set forth in Attachment B (Exhibit 3, Attachment A of CMR #4192), and transfers remaining balances to the appropriate reserves including the transfer of General Fund surplus of $8.9 million to the Infrastructure Reserve in the Capital Projects Fund; Council approves the City’s 2013 Comprehensive Annual Financial Report (CAFR), Attachment B of CMR #4192. Recommendation The Finance Committee and Staff recommend that Council: Adopt the attached Ordinance (Attachment A) authorizing closing of the Budget for the Fiscal Year (FY) ending June 30, 2013 and reappropriating of 2013 funds into the 2014 Budget; Close completed Capital Improvement Projects as set forth in Attachment B (Exhibit 3, Attachment A of CMR #4192), and transfer remaining balances to the appropriate reserves including the transfer of General Fund surplus of $8.9 million to the Infrastructure Reserve in the Capital Projects Fund; City of Palo Alto Page 2 Approve the City’s 2013 Comprehensive Annual Financial Report (CAFR), Attachment B to CMR #4192. An electronic copy is available at: www.cityofpaloalto.org/gov/depts/asd/financialreporting, and hard copies are available at the Administrative Services Department upon request. Background As is customary, the City Council is required to close out the City’s financial results at the end of each fiscal year. At its November 19, 2013 meeting, the Finance Committee unanimously approved closing of the 2013 fiscal year (Attachment C). Financial Highlights for FY 2013 General Fund ended on a positive note, with a net surplus position of $8.9 million which was transferred to the Infrastructure Reserve. This reduced the Budget Stabilization Reserve in the General Fund to 19.0 percent of FY 2014 budgeted expenditures and operating transfers, which is in compliance with the City’s General Fund reserve policy. General Fund revenues from sales tax, transient occupancy tax and documentary transfer tax exceeded budget expectations and resulted in the transfer of surplus funds to the Infrastructure Reserve, in keeping with the Council’s priority of funding the City’s infrastructure needs. General Fund expenditures were kept in line with budget. Actual expenses for FY 2013, including encumbrances, totaled $144.7 million. This was $3.4 million, or 2.3 percent less than the Adjusted Budget. Savings were due to higher than expected vacancy savings across departments and reduced Police and Fire overtime due to operational efficiencies. On a combined basis for all departments, General Fund expenses of $144.7 million remained flat year over year. Enterprise Fund highlights include: o Water Fund implemented a rate increase of 15 percent effective July 1, 2012 which, in combination with the previous rate increase that took effect in October, 2011, resulted in increased revenues of $5.1 million; o Gas Fund revenues declined by $7.3 million, or 18 percent, as a result of rate decreases that were driven by a change in the gas procurement strategy. The City received a “clean” audit opinion for FY 2013 from the external audit firm, City of Palo Alto Page 3 Macias Gini & O’Connell LLP. The City also received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association for its FY 2012 CAFR. Details that were presented at the November 19, 2013 meeting are included in Attachment A and minutes from the meeting are included in Attachment C. Environmental Review The enactment of this ordinance is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. Attachments: Attachment A: Ordinance of the Council of the City of Palo Alto Authorizing Closing of the Budget for the fiscal Year Ending June 30, 2013 (DOCX) Attachment B: CMR #4192 (PDF) Attachment C: Excerpt minutes from the November 19, 2013 Finance Committe meeting (PDF) ATTACHMENT A Page of 6 1 ORDINANCE NO. XXXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AUTHORIZING CLOSING OF THE BUDGET FOR THE FISCAL YEAR ENDING JUNE 30, 2013 The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto and as set forth in Section 2.28.070 of the Palo Alto Municipal Code, the Council on June 18, 2012 did adopt a budget for fiscal year 2013; and B. Fiscal year 2013 has ended and the financial results, although subject to post-audit adjustment, are now available and are herewith reported in summarized financial Exhibits “1”, “2”, “3”, “4”, “5”, and “6” prepared by the Director, Administrative Services, which are attached hereto, and by reference made a part hereof. SECTION 2. Pursuant to Section 2.28.080 of the Palo Alto Municipal Code, the City Manager during fiscal year 2013 did amend the budgetary accounts of the City of Palo Alto to reflect: A. Additional appropriations authorized by ordinance of the City Council. B. Amendments to employee compensation plans adopted by the City Council. C. Transfers of appropriations from the contingent account as authorized by the City Manager. D. Redistribution of appropriations between divisions, cost centers, and objects within various departments as authorized by the City Manager. E. Fiscal Year 2013 appropriations which on July 1, 2012 were encumbered by properly executed, but uncompleted, purchase orders or contracts. ATTACHMENT A Page of 6 2 SECTION 3. The Council hereby approves adjustments to the fiscal year 2013 budget for Fund Balancing Entries as shown on attached Exhibit 1. SECTION 4. The Council hereby re-appropriates fiscal year 2013 appropriations in certain departments and categories, as shown on the attached Exhibit 2, which were not encumbered by purchase order or contract, at year end into the fiscal year 2014 budget. SECTION 5. The fiscal year 2013 encumbered balances for the departments and categories shown on Exhibit 4 shall be carried forward and re-appropriated to those same departments and categories in the fiscal year 2014 budget. SECTION 6. The City Manager is authorized and directed: A. To close the fiscal year 2013 budget accounts in all funds and departments and, as required by the Charter of the City of Palo Alto, to make such interdepartmental transfers in the 2013 budget as adopted or amended by ordinance of the Council; and B. To close and adjust various Capital Improvement Projects (CIP) as shown in Exhibit 3 and move all completed CIP to their respective reserve funds indicated in Exhibit 1; and C. To establish reserves as shown in Exhibits 5 and 6 for all Funds as necessary to provide for: (1) A reserve for encumbrances and re- appropriations in the various funds, the purpose of which is to carry forward into the fiscal year 2014 budget and continue, in effect, the unexpended balance of appropriations for fiscal year 2013 departmental expenditures as shown in Exhibits 5 and 6; and (2) Reserves for Advances to Other Funds, Stores Inventory, and other reserves in accordance with ordinance and policy guidelines as shown in Exhibit 5; and ATTACHMENT A Page of 6 3 (3) A reserve for general contingencies of such amount that the City Council has approved; and (4) Reserves for utilities plant replacement, rate stabilization, and other reserves in accordance with Charter and policy guidelines as shown Exhibit 6. D. To fund the Budget Stabilization Reserve in accordance with the General Fund Reserves Policy adopted by the City Council. SECTION 7. The General Fund Budget Stabilization Reserve is hereby decreased by the sum of Four Hundred Fifty Four Thousand Four Hundred Thirty Four Dollars ($454,434) as described in Exhibit 1. This transaction will change the General Fund Reserve amount to $30,355,000. SECTION 8. The Water Rate Stabilization Reserve is hereby decreased by the sum of Fifty Nine Thousand One Hundred Dollars Fifty Four ($59,154) as described in Exhibit 1. This transaction will change the Water Rate Stabilization Reserve to $17,272,000. SECTION 9. The Electric Distribution Rate Stabilization Reserve is hereby decreased by the sum of One Hundred Ninety One Thousand Eight Hundred Sixteen Dollars ($191,816) as described in Exhibit 1. This transaction will change the Electric Distribution Rate Stabilization Reserve to $3,705,000. SECTION 10. The Electric Supply Rate Stabilization Reserve is hereby decreased by the sum of Twenty Five Thousand Four Hundred Fifty Five Dollars ($25,455) as described in Exhibit 1. This transaction will change the Electric Supply Rate Stabilization Reserve to $65,324,000. SECTION 11. The Fiber Optics Rate Stabilization Reserve is hereby decreased by the sum of Nine Thousand Three Hundred Thirty Five Dollars ($9,335) as described in Exhibit 1. This transaction will change the Fiber Optics Rate Stabilization Reserve to $15,290,000. SECTION 12. The Gas Distribution Rate Stabilization Reserve is hereby decreased by the sum of Ninety Six ATTACHMENT A Page of 6 4 Thousand One Hundred Thirty Seven Dollars ($96,137) as described in Exhibit 1. This transaction will change the Gas Distribution Rate Stabilization Reserve to $5,025,000. SECTION 13. The Wastewater Collection Rate Stabilization Reserve is hereby decreased by Fifty Seven Thousand Three Hundred Fifty Three Dollars ($57,353) as described in Exhibit 1. This transaction will change the Wastewater Collection Rate Stabilization Reserve to $5,443,000. SECTION 14. The Wastewater Treatment Rate Stabilization Reserve is hereby decreased by the sum of One Hundred Twenty Nine Thousand Seven Hundred Eleven Dollars ($129,711) as described in Exhibit 1. This transaction will change the Wastewater Treatment Rate Stabilization Reserve to $6,622,000. SECTION 15. The Refuse Rate Stabilization Reserve is hereby decreased by the sum of Fifty One Thousand Six Hundred Sixty Six Dollars ($51,666) as described in Exhibit 1. This transaction will change the Refuse Rate Stabilization Reserve to ($2,766,000). SECTION 16. The Storm Drainage Rate Stabilization Reserve is hereby decreased by the sum of Twenty Thousand Six Hundred Eighty Nine Dollars ($20,689) as described in Exhibit 1. This transaction will change the Storm Drainage Rate Stabilization Reserve to $1,958,000. SECTION 17. The Community Development Block Grant Fund is hereby decreased by Eight Hundred Twenty Seven Dollars ($827) as described in Exhibit 1. This transaction will change the Community Development Block Grant Fund Balance to $3,371,000. SECTION 18. The Vehicle Replacement and Maintenance Fund is hereby decreased by Thirty Two Thousand Fifty Three Dollars ($32,053) as described in Exhibit 1. This transaction will change the Vehicle Replacement and Maintenance Fund Balance to $11,251,000. SECTION 19. The Technology Fund is hereby increased by Three Hundred Eighty Three Thousand Eight Hundred Thirty Nine Dollars ($383,839) as described in Exhibit 1. This transaction will change the Technology Fund Balance to $19,910,000. ATTACHMENT A Page of 6 5 SECTION 20. The Printing and Mailing Services Fund is hereby decreased by Four Thousand Eight Hundred Fifty Two Dollars ($4,852) as described in Exhibit 1. This transaction will change the Printing and Mailing Services Fund Balance to $0. SECTION 21. The Capital Projects Fund Reserve is hereby increased by Seven Hundred Eighty Two Thousand Two Hundred Ten Dollars ($782,210) as described in Exhibit 1. This transaction will change the Capital Projects Fund Balance to $77,954,000. SECTION 22. Upon completion of the independent audit, detailed financial statements reflecting the changes made by the Sections 7 through 18 of this ordinance shall be published as part of the annual financial report of the City as required by Article III, Section 16, of the Charter of the City of Palo Alto and in accordance with generally accepted accounting principles. SECTION 23. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 24. The Council of the City of Palo Alto hereby finds that the enactment of this ordinance is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. SECTION 25. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. ATTACHMENT A Page of 6 6 INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: ________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ________________________ ____________________________ City Attorney City Manager ____________________________ Director of Administrative Services City of Palo Alto (ID # 4192) Finance Committee Staff Report Report Type: Action Items Meeting Date: 11/19/2013 City of Palo Alto Page 1 Summary Title: Close FY2013 Budget and Approve FY2013 CAFR Title: Recommendation to Adopt Ordinance Authorizing Closing of FY2013 Budget, Including Reappropriation Requests, Closing Completed Capital Projects and Authorizing Transfers to Reserves; Approval of FY2013 Comprehensive Annual Financial Report (CAFR) From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Finance Committee review, provide input, and forward the attached ordinance (Attachment A) and associated exhibits to the City Council for its approval to: Close the Fiscal Year (FY) 2013 Budget; Authorize re-appropriation of FY 2013 funds into the FY 2014 Budget (Exhibit 2); Close completed capital improvement projects (Exhibit 3), and Transfer remaining balances to or drawing from the appropriate reserves (Table 1 for General Fund and Exhibits 5 and 6 for Enterprise Funds), including the transfer of the General Fund surplus of $8.9 million from the General Fund to the Infrastructure Reserve in the Capital Projects Fund. In addition, staff recommends the Finance Committee review and forward to the City Council for its approval the City’s FY 2013 Comprehensive Annual Financial Report (CAFR) (Attachment B). Financial Highlights for FY 2013 – General Fund Fiscal Year 2013 ended on a positive note, with a net surplus position of $8.9 million for the Budget Stabilization Reserve. The surplus was largely a result of a combination of revenue increases in sales tax, transient occupancy tax, and documentary transfer tax, all of which City of Palo Alto Page 2 exceeded mid-year budget expectations, as well as slight expenditure savings. The FY 2013 surplus allowed staff to make a recommendation to transfer $8.9 million from the General Fund to the Infrastructure Reserve in the Capital Projects Fund, in keeping with the Council’s priority of funding the City’s infrastructure needs. This reduced the Budget Stabilization Reserve to 19 percent of FY 2014 budgeted expenditures and operating transfers, which is in accordance with the City’s General Fund Reserve Policy. Labor negotiations of the past few years have resulted in significant compensation and benefit changes, including an increase in employee contributions to the CalPERS retirement plan and to health care premiums, as well as implementation of two-tier retirement plans. The annual savings resulting from these changes is estimated at almost $9 million City-wide on an annual basis, of which approximately $5.8 million is realized in the General Fund. Financial Highlights for FY 2013 – Enterprise Funds Water Fund implemented a rate increase of 15 percent effective July 1, 2012 which, in combination with the previous rate increase that took effect in October, 2011, resulted in increased revenues of $5.1 million over the prior year. Gas Fund revenues declined $7.3 million from the prior year, a decrease of 18 percent, due to rate decreases that were driven by a change in the gas procurement strategy. Gas supply costs decreased by only $2.8 million due to contracts which were still under fixed price purchase commitments. It should also be noted that the City received a “clean” audit opinion for FY 2013 from the external audit firm, Macias Gini & O’Connell LLP. Once again, the City was awarded the prestigious GFOA award for Excellence in Financial Reporting for FY 2012 – the 19th consecutive year. Background The City’s fiscal year closes on June 30, at which time its financial records are closed for the year and financial reports are prepared. The reports, along with the City’s financial data, are audited by Macias Gini & O’Connell LLP (MGO), Certified Public Accountants, a firm hired by the City Auditor. MGO issues an audit opinion on the financial position of the City’s activities and, together with the City’s financial statements and other information, this comprises the City’s Comprehensive Annual Financial Report. The attachments to this Staff Report provide the necessary documents for closing the FY 2013 Budget and reauthorizing FY 2013 funds to FY 2014. In addition, they provide detailed information on the City’s financial activities for FY 2013 and highlight key fiscal issues affecting the City of Palo Alto. The Management’s Discussion and Analysis (MD&A) section of the CAFR City of Palo Alto Page 3 (Attachment B) also provides a discussion and analysis of the City’s current fiscal health, and includes financial statements and analysis that is compared to the prior year, along with capital asset and debt administration data. Discussion Economy: Like jurisdictions throughout the country, the City was impacted by the Great Recession, but is now in a solid recovery mode. In the past year, there has been a rebound in economically sensitive revenue sources such as sales tax, which was driven by department store, electronics and auto sales. Increased business and real estate activities within the City resulted in higher transient occupancy tax and documentary transfer tax revenues. The City has been proactively taking steps the past few years to align expenses with revenues through employee compensation savings, service and program cuts, and revenue enhancements. The City Council adopted a General Fund budget of $160.6 million in revenue funding sources (including operating transfers in) for FY 2014, an increase of 5.0 percent from the prior year Adopted Budget. The primary drivers of increased expenditures for FY 2014 are rising pension and health care costs. Beginning in FY 2010, the City negotiated significant compensation and benefit changes with its labor units. These changes include an increase in employee contributions to the PERS retirement plan and to health care premiums, as well as implementation of two-tier retirement plans. Negotiations with labor groups such as management, SEIU, firefighters and police are expected to save the City almost $9 million City- wide on an ongoing annual basis. Despite these changes the City still faces a significant long-term liability for pension and retiree medical. The combined liability amounts to $300 million as reported in the FY2013 CAFR. Through the measures mentioned above the City is working to reduce the growth in this long- term liability over time. In addition to pension and medical liabilities, the City is facing a significant backlog in infrastructure investment. The Infrastructure Blue Ribbon commission (IBRC) has identified approximately $42 million in ongoing infrastructure needs, and $210 million in new facility needs such as a Public Safety building. Beginning in FY 2013, an additional $2.2 million has been committed to help fund the annual infrastructure maintenance or “keep up” needs as defined by the Infrastructure Blue Ribbon Commission (IBRC) report. A detailed discussion of financial results for FY 2013 is included in the CAFR MD&A. In addition, staff will present the 10 year Long Range Financial Forecast to the Finance Committee in City of Palo Alto Page 4 December 2013. Results by Fund: General Fund Reserves At the end of the current fiscal year, fund balance of the General Fund was $42.1 million, an increase of $0.1 million from the prior year. The $42.0 million balance is comprised of several reserves: the Budget Stabilization Reserve (BSR), encumbrances, notes and loans, inventory, prepaid items, unrealized gain on investments, and reappropriations. As described in the BSR reserve policy approved by Council, any reserve balance in excess of 18.5 percent of expenditures and transfers may be transferred to the Infrastructure Reserve in the Capital Projects Fund at the discretion of the City Manager. At the close of FY2013, there was an excess reserve balance of $8.9 million. Staff recommended the BSR be reduced to the target level of 18.5 percent of FY 2014 expenditures and operating transfers, plus $0.8 million for election and park maintenance expenses that were approved in July. The remaining $8.9 million was transferred to the Infrastructure Reserve in the Capital Projects Fund at the conclusion of FY 2013. The ending Fund Balance for FY 2013 is $42.1 million and the BSR portion of that Fund Balance is $30.4 million, which is 19.0 percent of FY 2014 budgeted expenditures and operating transfers. City of Palo Alto Page 5 The year over year change in the General Fund reserve balances is summarized in the following table: Table 1 Balance Net From Transfer to Balance 06/30/12 Operations Infrastructure 06/30/13 Budget Stabilization Reserve 28,122$ 11,135$ (8,900)$ 30,357$ Other Reserves: Encumbrances 3,369 1,660 5,029 Reappropriations 1,494 (938) 556 Notes and loans receivable 1,259 281 1,540 Prepaid items 932 (287)645 Inventories 3,816 (252)3,564 Unrealized gains on investments 3,031 (2,645)386 Total General Fund Reserves 42,023$ 8,954$ (8,900)$ 42,077$ GENERAL FUND RESERVE SUMMARY ($000s) FISCAL YEAR 2013 • City of Palo Alto Page 6 The following graph provides a snapshot of the General Fund BSR balance and percentage of budgeted expenditures for the past ten years: Infrastructure Reserve Including the $8.9 million going toward infrastructure in FY2013, the City has transferred a total of $16.5 million in year-end surplus funds from the General Fund to go towards infrastructure since 2012. The Infrastructure Reserve (IR) balance fluctuates due to timing differences in the receipt of grant funds and reimbursements and the timing of adjustments to close projects. As of June 30, 2013 the IR balance was $17.5 million. General Fund Revenues General Fund revenues for FY 2013 were $132.6 million, which is $7.0 million or 5.6 percent higher than the prior year. Year over year changes in each of the major tax revenue categories can be summarized as follows: City of Palo Alto Page 7 Category FY 2013 FY 2012 % Change Property tax $ 28,742 $ 26,494 8.3% Sales tax 25,606 22,132 15.8% Utility user tax 10,861 10,834 0.3% Transient occupancy tax 10,794 9,664 11.3% Documentary transfer tax 6,810 4,821 41.25% Property tax revenue increased by $2.2 million, or 8.3 percent. The City’s 2012/2013 assessment roll growth of 5.32 percent was supplemented by better than expected receipts from unsecured property taxes and motor vehicle in-lieu fees, as well as reduced county administrative fees. Sales tax revenue increased 15.8 percent over prior year, driven by strong retail sales in apparel stores, restaurants, service stations, electronics and auto sales. Transient occupancy tax increased $1.1 million, or 11.3 percent, due to increased business activity and improving occupancy and room rates. Documentary transfer tax increased by $2.0 million, or 41.25 percent, as a result of high dollar commercial transactions. City of Palo Alto Page 8 Following is a chart which presents a five year history of each of the major tax revenue categories and clearly demonstrates the sharp uptick in revenues this fiscal year: General Fund Tax Revenues Fiscal Years 2009 – 2013 ($ in thousands) General Fund Expenditures General Fund expenditures for FY 2013, including encumbrances, totaled $144.7 million, a decrease of $0.2 million from the prior year. The Original Budget of $138.0 million was increased to the Final Adopted Budget of $148.1 million, an increase of $10.1 million which was driven by increased retiree medical costs ($2.2 million), Public Safety labor concessions not achieved ($1.6 million), additional contract costs for Development Services due to increased activity ($1.4 million), and carry-forward of encumbrances from the prior year ($4.9 million). Actual expenditures were $3.4 million, or 2.3 percent less than the Adopted Budget primarily due to non-salary budget savings across General Fund departments and higher than expected vacancy savings. Notably, Fire and Police expenses combined were $2.7 million, or 4.2 percent, lower than the prior year. This resulted from increased contributions to pension and medical, and operational efficiencies which lowered overtime. City of Palo Alto Page 9 Following is a chart which compares departmental costs over a five year period: General Fund Department Expenditures Fiscal Years 2009 – 2013 ($ in thousands) The FY 2013 year-end Budget Amendment Ordinance (BAO) includes General Fund revenue adjustments of $3.3 million primarily due to higher than originally budgeted revenue for new construction building permits, plan checking fees, paramedic service fees, and street cut fees. In addition, the BAO includes General Fund expenditure adjustments of $3.8 million primarily due to higher than originally budgeted salaries and benefits in Public Safety, and additional contract services related to higher activity levels in Development Services. Also contained in the BAO are reallocations which distribute non-departmental offsetting expense for the achieved $1.5 million in salary and benefits savings as a result of concessions from the Palo Alto Police Officers’ Association (PAPOA) and from miscellaneous groups. Finally, $1.3 million in attrition savings are distributed from the non-departmental to General Fund departments. Details of year-end budget adjustments are shown in Attachment A, Exhibit 1. City of Palo Alto Page 10 The following table depicts a before and after view of these General Fund adjustments: Year-end Changes to General Fund Appropriations (in thousands) Budget Remaining Before Adj Change(1)After Adj Actual Budget City Attorney 3,041$ (13)$ 3,028$ 2,916$ 112$ City Auditor 1,019 9 1,028 995 33 City Clerk 1,608 (24) 1,584 1,291 293 City Council 509 13 522 523 (1) City Manager 3,073 (63) 3,010 2,666 344 Administrative Services 7,593 (68) 7,525 7,176 349 Community Services 22,569 (51) 22,518 22,279 239 Fire 28,332 552 28,884 28,754 130 Human Resources 3,085 (11) 3,074 2,977 97 Library 7,680 3 7,683 7,555 128 Planning 12,294 1,088 13,382 13,112 270 Police 32,428 186 32,614 32,468 146 Public Works 14,714 39 14,753 13,987 766 Non-Departmental 6,373 2,130 8,503 7,956 547 Transfers out 14,722 - 14,722 25,090 (10,368) Total 159,040$ 3,790$ 162,830$ 169,745$ (6,915)$ (1)Adjustments to appropriations are offset by revenue adjustments of $3,335,000 Capital Projects Fund For FY 2013, the Capital Projects Fund reported expenditures and transfers out of $30.0 million, a decrease of $2.6 million from the prior year. The Capital Projects Fund ended the year with a fund balance of $78.0 million, an increase of $24.2 million from the prior year. The increased fund balance is primarily a result of the additional General Obligation bond proceeds of $20.7 million. Enterprise Funds At June 30, 2013 the City’s Enterprise Funds reported total net position of $718.0 million, an increase of $20.5 million, or 2.9 percent compared with the prior year. The change in net position for each of the Enterprise Funds is detailed in the following table: City of Palo Alto Page 11 Enterprise Funds Change in Net Position for the Year Ended June 30 (in Millions) Increase/ Fund Name 2013 2012 (Decrease) Water 6.9$ 4.5$ 2.4$ Electric 1.9 9.0 (7.1) Fiber Optics 2.9 2.6 0.3 Gas 1.3 7.8 (6.5) Wastewater Collection 2.5 0.9 1.6 Wastewater Treatment 0.8 2.1 (1.3) Refuse 2.4 (0.5)2.9 Storm Drainage 2.3 3.0 (0.7) Airport (0.2)(0.1)(0.2) Total Change in Net Assets 20.8$ 29.3$ (8.6)$ The total Change in Net Assets of $20.8 million, a decrease of $8.6 million from the prior year, was due to the Electric Fund decline of $7.1 million which was due primarily to a decrease in investment earnings of $5.6 million, and the Gas Fund which declined $6.5 million due to lower rates as a result of a change in gas procurement strategy and the continued decline of natural gas prices. Other changes are discussed in the MD&A section of the CAFR. Enterprise Fund rate stabilization and other reserve balances are shown in detail in Exhibit 6 which is attached to this report. Environmental Review This is not a project for purposes of the California Environmental Quality Act. Attachments: Attachment A: BAO FY 2013 Year-End (DOCX) Attachment A, Exhibit 1: (PDF) Attachment A, Exhibit 2: Reappropriations (PDF) Attachment A, Exhibit 3: Year-end CIP Adjustments (PDF) Attachment A, Exhibit 4: General Fund Budget to Actual (PDF) City of Palo Alto Page 12 Attachment A, Exhibit 5: Enterprise Fund Activity (PDF) Attachment A, Exhibit 6: Enterprise Reserve Summary (PDF) Attachment B: The City’s FY 2013 Comprehensive Annual Financial Report (CAFR) (PDF) ATTACHMENT A Page of 6 1 ORDINANCE NO. XXXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AUTHORIZING CLOSING OF THE BUDGET FOR THE FISCAL YEAR ENDING JUNE 30, 2013 The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto and as set forth in Section 2.28.070 of the Palo Alto Municipal Code, the Council on June 18, 2012 did adopt a budget for fiscal year 2013; and B. Fiscal year 2013 has ended and the financial results are now available and are herewith reported in summarized financial Exhibits “1”, “2”, “3”, “4”, “5”, and “6” prepared by the Director, Administrative Services, which are attached hereto, and by reference made a part hereof. SECTION 2. Pursuant to Section 2.28.080 of the Palo Alto Municipal Code, the City Manager during fiscal year 2013 did amend the budgetary accounts of the City of Palo Alto to reflect: A. Additional appropriations authorized by ordinance of the City Council. B. Amendments to employee compensation plans adopted by the City Council. C. Transfers of appropriations from the contingent account as authorized by the City Manager. D. Redistribution of appropriations between divisions, cost centers, and objects within various departments as authorized by the City Manager. E. Fiscal Year 2013 appropriations which on July 1, 2012 were encumbered by properly executed, but uncompleted, purchase orders or contracts. ATTACHMENT A Page of 6 2 SECTION 3. The Council hereby approves adjustments to the fiscal year 2013 budget for Fund Balancing Entries as shown on attached Exhibit 1. SECTION 4. The Council hereby re-appropriates fiscal year 2013 appropriations in certain departments and categories, as shown on the attached Exhibit 2, which were not encumbered by purchase order or contract, at year end into the fiscal year 2014 budget. SECTION 5. The fiscal year 2013 encumbered balances for the departments and categories shown on Exhibit 4 shall be carried forward and re-appropriated to those same departments and categories in the fiscal year 2014 budget. SECTION 6. The City Manager is authorized and directed: A. To close the fiscal year 2013 budget accounts in all funds and departments and, as required by the Charter of the City of Palo Alto, to make such interdepartmental transfers in the 2013 budget as adopted or amended by ordinance of the Council; and B. To close and adjust various Capital Improvement Projects (CIP) as shown in Exhibit 3 and move all completed CIP to their respective reserve funds indicated in Exhibit 1; and C. To establish reserves as shown in Exhibits 5 and 6 for all Funds as necessary to provide for: (1) A reserve for encumbrances and re- appropriations in the various funds, the purpose of which is to carry forward into the fiscal year 2014 budget and continue, in effect, the unexpended balance of appropriations for fiscal year 2013 departmental expenditures as shown in Exhibits 5 and 6; and (2) Reserves for Advances to Other Funds, Stores Inventory, and other reserves in accordance with ordinance and policy guidelines as shown in Exhibit 5; and ATTACHMENT A Page of 6 3 (3) A reserve for general contingencies of such amount that the City Council has approved; and (4) Reserves for utilities plant replacement, rate stabilization, and other reserves in accordance with Charter and policy guidelines as shown Exhibit 6. D. To fund the Budget Stabilization Reserve in accordance with the General Fund Reserve Policies adopted by the City Council. SECTION 7. The General Fund Budget Stabilization Reserve is hereby decreased by the sum of Four Hundred Fifty Four Thousand Four Hundred Thirty Four Dollars ($454,434) as described in Exhibit 1. This transaction will change the General Fund Reserve amount to $30,355,000. SECTION 8. The Water Rate Stabilization Reserve is hereby decreased by the sum of Fifty Nine Thousand One Hundred Dollars Fifty Four ($59,154) as described in Exhibit 1. This transaction will change the Water Rate Stabilization Reserve to $17,272,000. SECTION 9. The Electric Distribution Rate Stabilization Reserve is hereby decreased by the sum of One Hundred Ninety One Thousand Eight Hundred Sixteen Dollars ($191,816) as described in Exhibit 1. This transaction will change the Electric Distribution Rate Stabilization Reserve to $3,705,000. SECTION 10. The Electric Supply Rate Stabilization Reserve is hereby decreased by the sum of Twenty Five Thousand Four Hundred Fifty Five Dollars ($25,455) as described in Exhibit 1. This transaction will change the Electric Supply Rate Stabilization Reserve to $65,324,000. SECTION 11. The Fiber Optics Rate Stabilization Reserve is hereby decreased by the sum of Nine Thousand Three Hundred Thirty Five Dollars ($9,335) as described in Exhibit 1. This transaction will change the Fiber Optics Rate Stabilization Reserve to $15,290,000. SECTION 12. The Gas Distribution Rate Stabilization Reserve is hereby decreased by the sum of Ninety Six ATTACHMENT A Page of 6 4 Thousand One Hundred Thirty Seven Dollars ($96,137) as described in Exhibit 1. This transaction will change the Gas Distribution Rate Stabilization Reserve to $5,025,000. SECTION 13. The Wastewater Collection Rate Stabilization Reserve is hereby decreased by Fifty Seven Thousand Three Hundred Fifty Three Dollars ($57,353) as described in Exhibit 1. This transaction will change the Wastewater Collection Rate Stabilization Reserve to $5,443,000. SECTION 14. The Wastewater Treatment Rate Stabilization Reserve is hereby decreased by the sum of One Hundred Twenty Nine Thousand Seven Hundred Eleven Dollars ($129,711) as described in Exhibit 1. This transaction will change the Wastewater Treatment Rate Stabilization Reserve to $6,622,000. SECTION 15. The Refuse Rate Stabilization Reserve is hereby decreased by the sum of Fifty One Thousand Six Hundred Sixty Six Dollars ($51,666) as described in Exhibit 1. This transaction will change the Refuse Rate Stabilization Reserve to ($2,766,000). SECTION 16. The Storm Drainage Rate Stabilization Reserve is hereby decreased by the sum of Twenty Thousand Six Hundred Eighty Nine Dollars ($20,689) as described in Exhibit 1. This transaction will change the Storm Drainage Rate Stabilization Reserve to $1,958,000. SECTION 17. The Community Development Block Grant Fund is hereby decreased by Eight Hundred Twenty Seven Dollars ($827) as described in Exhibit 1. This transaction will change the Community Development Block Grant Fund Balance to $3,371,000. SECTION 18. The Vehicle Replacement and Maintenance Fund is hereby decreased by Thirty Two Thousand Fifty Three Dollars ($32,053) as described in Exhibit 1. This transaction will change the Vehicle Replacement and Maintenance Fund Balance to $11,251,000. SECTION 19. The Technology Fund is hereby increased by Three Hundred Eighty Three Thousand Eight Hundred Thirty Nine Dollars ($383,839) as described in Exhibit 1. This transaction will change the Technology Fund Balance to $19,910,000. ATTACHMENT A Page of 6 5 SECTION 20. The Printing and Mailing Services Fund is hereby decreased by Four Thousand Eight Hundred Fifty Two Dollars ($4,852) as described in Exhibit 1. This transaction will change the Printing and Mailing Services Fund Balance to $0. SECTION 21. The Capital Projects Fund Reserve is hereby increased by Seven Hundred Eighty Two Thousand Two Hundred Ten Dollars ($782,210) as described in Exhibit 1. This transaction will change the Capital Projects Fund Balance to $77,954,000. SECTION 22. Detailed financial statements reflecting the changes made by the Sections 7 through 18 of this ordinance shall be published as part of the annual financial report of the City as required by Article III, Section 16, of the Charter of the City of Palo Alto and in accordance with generally accepted accounting principles. SECTION 23. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 24. The Council of the City of Palo Alto hereby finds that the enactment of this ordinance is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. SECTION 25. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. INTRODUCED AND PASSED: ATTACHMENT A Page of 6 6 AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: ________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ________________________ ____________________________ City Attorney City Manager ____________________________ Director of Administrative Services ATTACHMENT A, EXHIBIT 1 Category Amount Description GENERAL FUND Permits and Licenses (489,000) Allocate assumed fee increases to PCE Source Changes (489,000) Salary and Benefits 1,300,000 Allocate attrition savings to General Fund Departments Salary and Benefits 1,376,270 Allocate achieved PAPOA employee concessions to Police Department Salary and Benefits 126,000 Allocate achieved employee concessions for miscellaneous groups Salary and Benefits (672,000) Additional active employee medical cost assumed in adopted budget, allocate to General Fund Departments 2,130,270 (2,619,270) Salary and Benefits 80,708 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (150,668) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 1,964 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP (67,996) 67,996 Salary and Benefits 23,490 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (38,203) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 1,622 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP (13,091) 13,091 Salary and Benefits 8,415 Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 204 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP 8,619 (8,619) ADMINISTRATIVE SERVICES Use Changes Net Changes To (From) Reserves CITY ATTORNEY Use Changes Net Changes To (From) Reserves CITY AUDITOR CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET Net Changes To (From) Reserves Use Changes Net Changes To (From) Reserves Use Changes NON-DEPARTMENTAL 11/12/2013 General Fund 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET Salary and Benefits 9,496 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (34,768) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 344 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP (24,928) 24,928 CITY COUNCIL Salary and Benefits 13,350 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Liability Insurance 64 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP 13,414 (13,414) CITY MANAGER Salary and Benefits 19,153 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (94,747) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Retiree Medical 12,147 Increase Retiree Medical expense to match actuarial report Liability Insurance 513 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP (62,934) 62,934 COMMUNITY SERVICES Salary and Benefits 140,381 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (194,344) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 2,709 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP (51,254) 51,254 Net Changes To (From) Reserves Use Changes Net Changes To (From) Reserves Use Changes Net Changes To (From) Reserves Use Changes CITY CLERK Use Changes Net Changes To (From) Reserves 11/12/2013 General Fund 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET FIRE Parmedic Service Fee 535,000 To recognize higher than anticipated revenue collections for paramedic service fees Source Changes 535,000 Salary and Benefits 218,980 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salaries and Benefits 435,000 Additional appropriation to cover higher than originally budgeted salaries and benefits expense Salary and Benefits (106,219) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 3,920 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP 551,681 (16,681) LIBRARY Salary and Benefits 83,297 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (75,163) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Retiree Medical (6,000) Reduce Retiree Medical expense to match actuarial report Liability Insurance 1,056 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP 3,190 (3,190) OFFICE OF EMERGENCY SERVICES Non-salary (42,122) Reallocation of non-salary expense to fund transfer to the Vehicle Fund Operating Transfer 42,122 Transfer to the Vehicle Fund for the purchase of the vehicle for the Director of the Office of Emergency Services (OES); the OES Director is required to respond to scenes of emergencies or disasters, including directly from home - - Salary and Benefits 22,959 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (34,831) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 856 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP (11,016) 11,016 Net Changes To (From) Reserves PEOPLE STRATEGY AND OPERATIONS Use Changes Net Changes To (From) Reserves Use Changes Net Changes To (From) Reserves Use Changes Net Changes To (From) Reserves Use Changes 11/12/2013 General Fund 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET New Construction Building Permits 1,305,000 Additional new construction building permits Other Fees 135,000 Additional revenue from Other Fees Plan Checking Fee 850,000 Additional revenue from plan checking fees Permits and Licenses 489,000 Allocate assumed fee increases to PCE from Non-Departmental 2,779,000 Salary and Benefits 73,965 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (337,767) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Contract Services 1,350,000 Additional expenses related to higher activity levels in Development Services Liability Insurance 2,227 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP 1,088,425 1,690,575 Salary and Benefits 299,878 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits 1,550,000 Additional appropriation to cover higher than originally budgeted salaries and benefits expenseSalary and Benefits (1,376,270) Allocate achieved PAPOA employee concessions to Police Department from Non-Departmental Salary and Benefits (292,728) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Liability Insurance 5,637 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP 186,517 (186,517) Street Cut Fees 510,000 To recognize higher than originally budgeted revenue from street cut fees 510,000 Salary and Benefits 111,265 Additional active employee medical cost allocated to General Fund Departments from Non-Departmental Salary and Benefits (66,561) Allocate achieved attrition savings and miscellaneous employee concessions from Non-Departmental Retiree Medical (11,147) Reduce Retiree Medical expense to match actuarial report Liability Insurance 4,982 Reallocate Liability Insurance from CIP to General Fund; amount had been incorrectly included in CIP 38,539 471,461 Total General Fund Changes to BSR (454,434) Net Changes To (From) Reserves Use Changes PLANNING & COMMUNITY Source Changes Net Changes To (From) Reserves Use Changes POLICE PUBLIC WORKS Use Changes Net Changes To (From) Reserves Source Changes 11/12/2013 General Fund 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET Other revenue 77,850 To fund warranty costs for EKG monitors approved by Council on May 6, 2013 (staff report #3699); CIP FD-12000 Source Changes 77,850 Salary and Benefits 47,463 Additional active employee medical cost allocated to Other Funds Salary and Benefits 442,026 Actual salaries and benefits costs were higher than orginally budgeted due to the following reasons: 1) the actual allocation of benefits to the Capital Fund was higher than originally budgeted; 2) staff efforts to more accurately track actual time spent on capital projects resulted in higher actual amounts than originally budgeted; 3)additional temporary staff was needed to assist with supporting efforts to complete the Mitchell Park Library and Community Center and to provide inspection oversight to the expanded Street Improvement Program. Liability Insurance (23,313) Reallocate Liability Insurance from CIP to General Fund CIP 77,850 To fund warranty costs for EKG monitors approved by Council on May 6, 2013 (staff report #3699); CIP FD-12000 CIP (1,248,386) Completed and closed projects; see Attachment A, Exhibit 3 for details Use Changes (704,360) 782,210 Capital Fund Infrastructure Reserve GENERAL FUND CIP (CAPITAL PROJECTS FUND) Net Changes To (From) Reserves 11/12/2013 General Fund 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description ENTERPRISE FUNDS UTILITIES ADMIN Salary and Benefits 34,623 Additional active employee medical cost allocated to Enterprise Funds Use Changes 34,623 Net Changes To (From) Reserves (34,623) Fund Balancing Entries (34,623)Change in Fund Balance Total Utilities Administration Fund (34,623) WATER FUND 7 Salary and Benefits 59,154 Additional active employee medical cost allocated to Enterprise Funds Use Changes 59,154 Net Changes To (From) Reserves (59,154) Fund Balancing Entries (59,154)Change in Fund Balance Total Water Fund (59,154) ELECTRIC FUND Salary and Benefits 217,272 Additional active employee medical cost allocated to Enterprise Funds Use Changes 217,272 Net Changes To (From) Reserves (217,272) Fund Balancing Entries (25,455)Change in Electric Supply RSR (191,816)Change in Electric Distribtion RSR Total Electric Fund (217,271) CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET 11/9/2013 Enterprise Funds 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET FIBER OPTICS FUND Salary and Benefits 9,335 Additional active employee medical cost allocated to Enterprise Funds Use Changes 9,335 Net Changes To (From) Reserves (9,335) Fund Balancing Entries (9,335)Change in Fund Balance Total Fiber Optics Fund (9,335) GAS FUND 7 Salary and Benefits 96,137 Additional active employee medical cost allocated to Enterprise Funds Use Changes 96,137 Net Changes To (From) Reserves (96,137) Fund Balancing Entries (96,137)Change in Gas Distribution RSR Total Gas Fund (96,137) Salary and Benefits 57,353 Additional active employee medical cost allocated to Enterprise Funds Use Changes 57,353 Net Changes To (From) Reserves (57,353) Fund Balancing Entries (57,353)Change in Fund Balance Total Wastewater Collection Fund (57,353) Salary and Benefits 129,711 Additional active employee medical cost allocated to Enterprise Funds Use Changes 129,711 Net Changes To (From) Reserves (129,711) Fund Balancing Entries (129,711)Change in Fund Balance Total Wastewater Treatment Fund (129,711) WASTEWATER TREATMENT FUND WASTEWATER COLLECTION FUND 11/9/2013 Enterprise Funds 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET REFUSE FUND Salary and Benefits 51,666 Additional active employee medical cost allocated to Enterprise Funds Use Changes 51,666 Net Changes To (From) Reserves (51,666) Fund Balancing Entries (51,666)Change in Fund Balance Total Refuse Fund (51,666) STORM DRAINAGE FUND Salary and Benefits 20,689 Additional active employee medical cost allocated to Enterprise Funds Use Changes 20,689 Net Changes To (From) Reserves (20,689) Fund Balancing Entries (20,689)Change in Fund Balance Total Storm Drainage Fund (20,689) 11/9/2013 Enterprise Funds 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description Salary and Benefits 827 Additional active employee medical cost allocated to Other Funds Use Changes 827 (827) Operating Transfer 42,122 Transfer from OES operating budget in General Fund to fund the purchase of the vehicle for the Director of the Office of Emergency Services (OES); the OES Director is required to respond to scenes of emergencies or disasters, including directly from homeSource Changes 42,122 Salary and Benefits 32,053 Additional active employee medical cost allocated to Other Funds CIP 42,122 To fund the purchase of the vehicle for the Director of the Office of Emergency Services (OES); the OES Director is required to respond to scenes of emergencies or disasters, including directly from home Use Changes 74,175 (32,053) Technology Enhancement Fee (724,000) Eliminates the estimate for Technology Fee revenue (will be recognized as a transfer) Operating Transfer 724,000 Increases the Transfer from the General Fund to account for capital projects reimbursed by the General Fund Operating Transfer 1,047,413 Increases the Transfer from the General Fund to account for Technology Fee proceeds Source Changes 1,047,413 Operating Transfer 606,000 To reimburse the General Fund for past Technology Projects which benefited the entire organization Salary and Benefits 60,359 Additional active employee medical cost allocated to Other Funds Liability Insurance (2,785) To correct allocation of liability insurance to the Technology Fund Use Changes 663,574 383,839 Salary and Benefits 4,852 Additional active employee medical cost allocated to Other Funds Use Changes 4,852 (4,852) COMMUNITY DEVELOPMENT BLOCK GRANT Net Changes To (From) Reserves Net Changes To (From) Reserves VEHICLE REPLACEMENT FUND TECHNOLOGY FUND Net Changes To (From) Reserves INTERNAL SERVICE Net Changes To (From) Reserves PRINTING AND MAILING SERVICES FUND CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET SPECIAL REVENUE FUNDS 11/9/2013 Other Funds 2013 ATTACHMENT A, EXHIBIT 1 Category Amount Description CITY OF PALO ALTO YEAR END ADJUSTMENTS TO THE CITY MANAGER'S 2013 ADOPTED BUDGET Departmental Charges 1,251,549 Additional active employee medical cost allocated out citywide Source Changes 1,251,549 Salaries and Benefits 1,251,549 Additional active employee medical cost allocated out citywide Use Changes 1,251,549 - GENERAL BENEFITS FUND Net Changes To (From) Reserves 11/9/2013 Other Funds 2013 2013 Reappropriations General Fund Department Reappropriation Amount Reappropriation Justification Various 84,659 Unused Management and Professional Development funds Non-Departmental 100,000 Innovation Contingency: The Innovation Contingency is set annually at $100,000 and is available for unanticipated innovative, or technological enhancements which will enhance City operations. The 2014 Adopted Operating Budget assumed that the entire 2014 allocation would be utilized fund Library Virtual Branch project. This reappropriation of unused 2013 funds will allow for additional innovation efforts in FY 2014.Library 149,524 Mitchell Park Library collections: The City received a gift from the Palo Alto Library Foundation for this purpose, however usage is being delayed in order to provide customers with the most current publications and productions when the Library opens. Office of Emergency Services 60,000 Critical Protected Assets Inventory & GIS (HAZUS):In accordance with federal guidelines, this project will identify, catalogue, prioritize, and protect critical infrastructure and key resources to support local readiness, prevention, mitigation, and response efforts. This project will integrate infrastruture information and GIS technology in an accessible tool for emergency responders, enhance incident command capabilities, support the development of site-specific protective programs, and improve the ability to plan for and manage special events. The project was delayed in Fiscal Year 2013 due to staffing constraints and workload prioritization, however it is anticipated that it will completed in Fiscal Year 2014. Office of Emergency Services 40,000 Emergency Management Training Support: This project will improve the training level of employees designated as Emergency Operations Center staff necessary for compliance with the National Incident Management System. It will also train city employees to respond to an all- hazards threat matrix of risks that may occur within city facilities. Training efforts experienced delays in Fiscal Year 2013 due to staffing constraints and workload prioritization, however the training is now anticipated to be completed in Fiscal Year 2014. Planning and Community Environment 43,000 Development Blueprint Process: $70,000 was originally allocated in FY 2013 for organizational improvements, including coaching and training. Due to high level of change and workload, all of the planned training was not able to be accomplished in FY 2013, and is now anticipated to be completed in FY 2014. Police 78,799 Police Utilization Study: In FY 2013, $80k was allocated for the department to hire a consultant to conduct a utilization study of overall police operations, however the study was not completed due to competing workload demands. Staff anticipates the Request for Proposals for this project will be completed in FY 2014. Total General Fund Reappropriations 555,982$ Exhibit: 2 Exhibit 2, page 1 of 4 Attachment A, Exhibit 2 2013 Reappropriations Fund Reappropriation Amount Reappropriation Justification Capital Projects Fund 59,768 Security System Improvements CIP Project:This reappropriation is proposed to prevent a lapse in funding. This project will upgrade the camera system and card access system located at the Municipal Services Center. The project was delayed in Fiscal Year 2013 due to workload constraints, and the anticipated workload for Fiscal Year 2014 should allow for the completion of this project. Capital Projects Fund 50,000 Wilkie Way Bridge Tile Deck Improvement:This reappropriation is proposed to prevent a lapse in funding. The project will allow for the replacement of all the recycled plastic tiles in the Wilkie Way Bicycle/Pedestrian Bridge, including any necessary repairs to the wood decking underneath the tiles. The project was delayed due to difficulty in locating suitable replacement tiles, however staff has recently selected an acceptable replacement product which should allow for the completion of this project in Fiscal Year 2014. Capital Projects Fund 257,985 Downtown Tree Gates CIP Project:This reappropriation is proposed to prevent a lapse in funding. This ongoing project is used to purchase tree gates on an "as needed" basis when new or replaced sidewalks are constructed. Numerous workload issues have resulted in the project being placed on hold. The project is anticipated to commence again as needed and concurrent with sidewalk work in Fiscal Year 2014. Wastewater Treatment 161,673 System Flow Meters: This reappropriation is proposed to prevent a lapse in funding. This project provides funding to replace plant flow meters which are used for regulatory reporting and billing partner agencies. No plant flow meters were replaced in Fiscal Year 2013, and the reappropriation is proposed to ensure funds are in place should a flow meter fail in Fiscal Year 2014. Capital Projects Fund 364,472 Palo Alto Traffic Signal Central System: This reappropriation is proposed to prevent a lapse in funding. This grant-funded project includes replacement of traffic signal controllers at signalized intersections and upgrades to the City's traffic signal central system, and allows for controller upgrades at 35 of the City's 99 signals. The project has been delayed as Caltrans has not released an Authorization to Proceed for the project, which is necessary for the City to encumber the funds into a contract. It is anticipated that this will occur in Fiscal Year 2014. CIP Fund 100,000 Scott Park Improvements CIP Project: This reappropriation is proposed to prevent a lapse in funding. The project will provide upgrades and renovations for safety and accessibility improvements at Scott Park. The project was not completed in Fiscal Year 2013 due to public outreach and additional requests for amenities outside the original project scope. Staff will be taking a revised park design and Park Improvement Ordinance to the Parks and Recreation Commission and City Council in Fiscal Year 2014. Other Funds Exhibit 2, page 2 of 4 Attachment A, Exhibit 2 2013 Reappropriations Fund Reappropriation Amount Reappropriation Justification Capital Projects Fund 50,000 Stanford/Palo Alto Playing Fields Netting CIP Project:This reappropriation is proposed to prevent a lapse in funding. This project will install necessary netting to prevent soccer balls from going over the fence and damaging vehicles in the adjacent parking lot at the Palo Alto Golf Course. The project was deferred so that it could occur simultaneously with the upcoming synthetic turf replacement at the course. Heavy trucks will be required to install the netting and addressing both projects at once will avoid damage to the synthetic turf and reduce course closures due to repair. Capital Projects Fund 65,000 Sarah Wallis Park Improvements CIP Project:This reappropriation is proposed to prevent a lapse in funding. This project will provide upgrades and renovations for safety and accessibility improvements at Sarah Wallis Park. The project was not completed in FY 2013 due to staffing limitations, however a reduced number of projects planned in Fiscal Year 2014 will allow Parks staff to complete this project in the upcoming year.Gas Fund 520,764 Directional Boring Equipment CIP Project: This reappropriation is proposed to prevent a lapse in funding. This reappropriation will allow for the purchase two new directional boring machines for gas, water, and waste water crew to install services and mains. The project was not completed in Fiscal Year 2013 due to staffing shortages in the Public Works Department, and is anticipated to be completed in Fiscal Year 2014. Gas Fund 36,419 Polythylene Fusion Equipment CIP Project:This reappropriation is proposed to prevent a lapse in funding. This project will allow for the purchase of a new polythylene (PE) fusion machine. The new equipment will replace existing equipment that has reached the end of its useful life. The replacement did not occur in Fiscal Year 2013 as staff worked to utilize existing equipment as long as possible. Staff has determined that this replacement cannot be delayed again and must be replaced in Fiscal Year 2014. Electric Supply 300,000 Energy Efficiency Loan Program: The City Council previously approved a multi-year energy efficiency loan program to be funded from the Electric Special Projects reserve. This program was to be used for four years (2011 through 2014) to provide zero interest loans to commercial and residential customers in Palo Alto.Information Technology 100,000 Storage Area Network (SAN) Solution: The SAN solution will allow for future Cloud deployments, disaster recovery, back-up, and failover. Server equipment replacement was put on hold in FY 13 in order to develop a data center strategy, and essential equipment is failing. This project is now anticipated to be completed in Fiscal Year 2014. Other Funds Exhibit 2, page 3 of 4 Attachment A, Exhibit 2 2013 Reappropriations Fund Reappropriation Amount Reappropriation Amount Information Technology 95,694 SAP Continuous Improvement CIP Project: This reappropriation is proposed to prevent a lapse in funding. Staff received a number of SAP recommendations from an internal audit in December 2011. While a number of the audit recommendations have been addressed and completed, two remain. These remaining recommendations will be addressed in Fiscal Year 2014. Information Technology 75,000 Fire Mobile Data Computers (MDCs):This project will replace 15 of 27 fire mobile data computers in accordance with the City's replacement schedule and to ensure that up-to-date equipment is available for emergency response activities. The project experienced delays in Fiscal Year 2013 as the Fire Departement evaluated potential products. The project is anticipated to be completed in Fiscal Year 2014. Various 8,627 Unused Management and Professional Development funds:Utilities Administration: $5,000, Information Technology, $3,627 Storm Drainage- Operating 38,869 Innovative Storm Drain Fund: Funds were originally earmarked in the approved 2005 Storm Drainage Fee property owner ballot measure for Storm Drainage Improvements. The funds have been utilized since 2008 to fund a rebate program offering financial incentives to residents/businesses for the installation of measures that reduce stormwater runoff. As the program has not yet generated sufficient demand to spend all of the funds, remaining funds will be utilized for a storm drain improvement project in the Southgate neighborhood. Per the terms of the 2005 Storm Drainage Fee ballot measure approved by Palo Alto property owners, these funds must be carried over to be utilized for Innovative Storm Drainage Improvements. Total Other Funds Reappropriations 2,284,271$ Total- All Reappropriations 2,840,252$ Other Funds Exhibit 2, page 4 of 4 Attachment A, Exhibit 2 Attachment A, Exhibit 3 Project Funding Title Number Revenue Expense Source Comments ADDITIONAL APPROPRIATIONS Charleston/Arastradero Corridor Project PE-13011 $ 210,505 Transfer from PL-05002 To consolidate funding related to the Charleston/Arastradero Corridor into one project. ALS EKG Monitor Replacement FD-12000 $ 77,850 $ 77,850 Other revenue (sale of older monitors) To fund warranty costs for EKG monitors approved by Council on May 6, 2013 (staff report #3699) Salaries and Benefits- General Fund CIP Projects AS-10000 $ 442,026 Infrastructure Reserve Actual salaries and benefits costs were higher than orginally budgeted due to the following reasons: 1) the actual allocation of benefits to the Capital Fund was higher than originally budgeted; 2) staff efforts to more accurately track actual time spent on capital projects resulted in higher actual amounts than originally budgeted; 3)additional temporary staff was needed to assist with supporting efforts to complete the Mitchell Park Library and Community Center and to provide inspection oversight to the expanded Street Improvement Program. Salaries and Benefits- General Fund CIP Projects AS-10000 $ 47,463 Infrastructure Reserve Additional active employee medical cost allocated to Capital Projects Fund Salaries and Benefits- General Fund CIP Projects AS-10000 $ (23,313) Infrastructure Reserve Reallocate Liability Insurance from CIP to General Fund Total $ 77,850 $ 754,531 REDUCTION IN APPROPRIATIONS/TO CLOSE PROJECTS Charleston/Arastradero Corridor Plan PL-05002 $ (210,505) Transfer to PE-13011 To consolidate funding related to the Charleston/Arastradero Corridor into one project. Municipal Service Center Renovation PF-05002 $ (681,764) Infrastructure Reserve To return funding to reserves until a plan for the future use of the Municipal Services Center has been established College Terrace Library Improvements PE-05010 $ (208,562) Infrastructure Reserve To close project and return funding to reserves; project complete Greer Park Irrigation System Replacement PE-09002 $ (5,223) Infrastructure Reserve To close project and return funding to reserves; project complete El Camino Real/Stanford Ave Streetscape and Intersection Improvements PL-07002 $ (352,837) Infrastructure Reserve To close project and return funding to reserves; project complete Subtotal- Closed Projects $ (1,248,386) Total $ (1,458,891) TOTAL GENERAL FUND CIP YEAR-END ADJUSTMENTS $ 77,850 $ (704,360) FY 2013 CIP Year-end Adjustments CAPITAL PROJECT FUND 1 of 2 11/12/2013 Attachment A, Exhibit 3 Project Funding Title Number Revenue Expense Source Comments FY 2013 CIP Year-end Adjustments ADDITIONAL APPROPRIATIONS Gas System Improvements GS-11002 $ 1,099 Transfer from GS-09002 To transfer funds from GS-09002 (GMR- Project 19) to cover expenditures at year end. Total $ - $ 1,099 REDUCTION IN APPROPRIATIONS/TO CLOSE PROJECTS GMR - Project 19 GS-09002 $ (1,099) Transfer to GS-11002 To transfer funds to GS-11002 (Gas System Improvements) to cover expenditures at year end. Total $ - $ (1,099) TOTAL GAS FUND CIP YEAR-END ADJUSTMENTS $ - $ - ADDITIONAL APPROPRIATIONS Scheduled Vehicle and Equipment Replacements VR-13000 $ 42,122 $ 42,122 Transfer from OES operating budget in General Fund To fund the purchase of the vehicle for the Director of the Office of Emergency Services (OES); the OES Director is required to respond to scenes of emergencies or disasters, including directly from home TOTAL VEHICLE REPLACEMENT FUND CIP YEAR-END ADJUSTMENTS 42,122$ 42,122$ REDUCTION IN APPROPRIATIONS/TO CLOSE PROJECTS Citywide GIS Data, Infrastructure and Applications TE-02015 Technology Fund To close project; project complete TOTAL TECHNOLOGY FUND CIP YEAR-END ADJUSTMENTS -$ -$ GAS FUND VEHICLE REPLACEMENT FUND TECHNOLOGY FUND 2 of 2 11/12/2013 EXHIBIT 4 11/12/13 GENERAL FUND SUMMARY ($000s) FY 2013 FY 2013 FY 2013 FY 2013 FY 2013 FY 2013 FY 2013 Adopted Adjusted CAFR Basis Allocated Encum+Budgetary Variance Budget Budget Rev/Exp Charges Reapprop Rev/Exp Adj Budget Revenues Sales Taxes 22,545 23,364 25,606 n/a 25,606 2,242 Property Taxes 27,306 27,912 28,742 n/a 28,742 830 Transient Occupancy Tax 9,591 10,439 10,794 n/a 10,794 355 Documentary Tranfer Tax 5,078 6,800 6,810 n/a 6,810 10 Utility Users Tax 10,731 10,825 10,861 n/a 10,861 36 Other Taxes and Fines 2,058 2,058 2,152 n/a 2,152 94 Charges for Services 23,682 25,646 26,726 n/a 26,726 1,080 Permits and Licenses 6,614 7,998 7,713 n/a 7,713 (285) Return on Investment 959 774 (1,614) n/a (1,614) (2,388) Rental Income 12,640 12,640 12,879 n/a 12,879 239 From Other Agencies 157 170 63 n/a 63 (107) Charges to Other Funds 10,874 10,834 11,686 n/a 11,686 852 Other Revenues 1,188 1,489 2,038 - n/a 2,038 549 Total Revenues 133,423 140,949 132,770 11,686 n/a 144,456 3,508 Add: Operating Transfers In 18,995 19,187 19,758 n/a 19,758 571 Prior Year Encum & Reapprop 4,385 4,864 n/a 4,864 479 Total Source of Funds 152,418 164,521 152,528 16,550 n/a 169,078 4,558 Expenditures City Attorney 2,436 3,028 2,241 172 503 2,916 113 City Auditor 965 1,028 901 83 11 995 34 City Clerk 1,558 1,584 1,158 120 13 1,291 294 City Council 465 522 391 3 129 523 - City Manager 2,578 3,010 2,313 169 184 2,666 345 Administrative Services 7,156 7,525 6,426 617 133 7,176 350 Community Services 21,893 22,518 16,747 4,816 716 22,279 239 Fire 27,582 28,884 25,025 2,988 741 28,754 130 Human Resources 2,982 3,074 2,610 244 123 2,977 97 Library 6,996 7,683 6,064 838 653 7,555 128 Planning 11,111 13,382 10,882 1,159 1,071 13,112 270 Police 32,332 32,614 29,077 3,134 257 32,468 145 Public Works 13,947 14,753 9,921 3,189 877 13,987 766 Non-Departmental/School Site 6,025 8,503 7,770 12 174 7,956 547 Total Expenditures 138,026 148,108 121,526 17,544 5,585 144,655 3,458 Add: Operating Trans Out 14,782 14,722 25,090 - 25,090 (10,368) - - - - Total Use of Funds 152,808 162,830 146,616 17,544 5,585 169,745 (6,910) Net Surplus/(Deficit)(390) 1,691 5,912 (994) (5,585) (667) (2,352) CAFR Reconciliation:Current year encumbrance/reappropriations 5,585 Prior Year encumbrances/reappropriations (4,864) CAFR Net Income 54 FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Water sales 30,674 36,073 36,529 456 Other revenues 3,266 2,641 3,158 517 Bond Proceeds - - - - Bonded Reappropriations/Enc 28,727 14,703 14,703 - Restricted Bond Proceeds 1,264 - 8,565 8,565 Reappropriations / Enc 13,872 14,096 14,096 - TOTAL REVENUE 77,803 67,513 77,051 9,538 EXPENSES Purchases 14,889 15,940 16,605 (665) Other Expenses 14,163 17,870 15,511 2,359 TOTAL OPERATING EXPENSES 29,052 33,810 32,116 1,694 Capital Expenses 50,079 27,540 34,341 (6,801) Principal Payments 1,314 1,319 1,319 - TOTAL EXPENSES 80,445 62,669 67,776 (5,107) TO/(FROM) RESERVES (2,642) 4,844 9,275 4,431 FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Electric retail sales 107,343 116,827 108,331 (8,496) Electric wholesale sales - - - - Other revenues 15,736 18,731 12,273 (6,458) Bond Proceeds - - - - Reappropriations / Enc 15,584 19,168 19,168 - TOTAL REVENUE 138,663 154,726 139,772 (14,954) EXPENSES Purchases 58,724 66,308 61,314 4,994 NCPA & TANC Debt Svc 8,803 9,268 9,166 102 Other Expenses 47,428 50,807 47,735 3,072 TOTAL OPERATING EXPENSES 114,955 126,383 118,215 8,168 Capital Expenses 22,543 24,128 24,476 (348) Principal Payments 100 100 100 - TOTAL EXPENSES 137,598 150,611 142,791 7,820 TO/(FROM) RESERVES 1,065 4,115 (3,019) (7,134) FIBER OPTICS FUND EXHIBIT 5 ELECTRIC FUND WATER FUND ($000) EXHIBIT 5 WATER FUND ($000) FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Revenues 4,100 3,879 4,293 414 Reappropriations / Enc 810 782 782 - TOTAL REVENUE 4,910 4,661 5,075 414 EXPENSES Operating Expenses 1,416 1,484 1,269 215 TOTAL OPERATING EXPENSES 1,416 1,484 1,269 215 Capital Expenses 1,154 1,097 986 111 TOTAL EXPENSES 2,570 2,581 2,255 326 TO/(FROM) RESERVES 2,340 2,080 2,820 740 FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Gas retail sales 41,034 37,416 33,759 (3,657) Gas wholesale sales - - - - Other revenues 9,857 1,773 566 (1,207) Reappropriations / Enc 16,910 19,211 19,211 - TOTAL REVENUE 67,801 58,400 53,536 (4,864) EXPENSES Purchases 16,235 15,572 13,455 2,117 Other Expenses 28,988 21,297 20,760 537 TOTAL OPERATING EXPENSES 45,223 36,869 34,215 2,654 Capital Expenses 22,188 23,705 23,489 216 Principal Payments 586 512 506 6 TOTAL EXPENSES 67,997 61,086 58,210 2,876 TO/(FROM) RESERVES (196) (2,686) (4,674) (1,988) FIBER OPTICS FUND GAS FUND EXHIBIT 5 WATER FUND ($000) FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Revenues 15,841 16,498 16,998 500 Reappropriations / Enc 10,250 11,044 11,044 - TOTAL REVENUE 26,091 27,542 28,042 500 EXPENSES Sewer Treatment Exp.8,895 8,556 8,315 241 Operating Expenses 4,909 5,332 5,504 (172) TOTAL OPERATING EXPENSES 13,804 13,888 13,819 69 Capital Expenses 13,364 14,789 14,799 (10) Principal Payments 68 71 71 - TOTAL EXPENSES 27,236 28,748 28,689 59 TO/(FROM) RESERVES (1,145) (1,206) (647) 559 FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Operating Revenues 22,835 22,463 21,376 (1,087) Restricted Bond Proceeds - - - - Loan Proceeds - - - - Reappropriations / Enc 10,499 8,042 8,042 - Bonded Reappro/Encum - - - - TOTAL REVENUE 33,334 30,505 29,418 (1,087) EXPENSES Operating Expenses 20,595 20,448 18,952 1,496 TOTAL OPERATING EXPENSES 20,595 20,448 18,952 1,496 Capital Expenses 7,347 8,972 8,725 247 Principal Payments 769 1,190 1,190 - TOTAL EXPENSES 28,711 30,610 28,867 1,743 TO/(FROM) RESERVES 4,623 (105) 551 656 WASTEWATER TREATMENT FUND WASTEWATER COLLECTION FUND EXHIBIT 5 WATER FUND ($000) FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Revenues 31,560 30,587 31,136 549 Reappropriations / Enc 3,656 1,804 1,804 - TOTAL REVENUE 35,216 32,391 32,940 549 EXPENSES Payments to GreenWaste 12,882 13,262 13,362 (100) Other Expenses 19,657 16,864 16,545 319 TOTAL OPERATING EXPENSES 32,539 30,126 29,907 219 Capital Expenses 1,703 1,722 1,698 24 TOTAL EXPENSES 34,242 31,848 31,605 243 TO/(FROM) RESERVES 974 543 1,335 792 FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Revenues 6,130 5,905 5,998 93 Reappropriations / Enc 3,388 3,722 3,722 - TOTAL REVENUE 9,518 9,627 9,720 93 EXPENSES Operating Expenses 2,557 2,790 3,127 (337) TOTAL OPERATING EXPENSES 2,557 2,790 3,127 (337) Capital Expenses 5,420 7,326 6,881 445 Principal Payments 455 480 480 - TOTAL EXPENSES 8,432 10,596 10,488 108 TO/(FROM) RESERVES 1,086 (969) (768) 201 STORM DRAINAGE FUND REFUSE FUND EXHIBIT 5 WATER FUND ($000) FY 2012 FY 2013 FY 2013 $ Variance Actual/Enc Adjusted Actual/Enc Favorable Reapprop Budget Reapprop (Unfavor.) REVENUE Revenues 5 310 4 (306) Reappropriations / Enc 91 48 48 - TOTAL REVENUE 96 358 52 (306) EXPENSES Operating Expenses 201 349 349 - TOTAL OPERATING EXPENSES 201 349 349 - Capital Expenses -- - - Principal Payments -- - - TOTAL EXPENSES 201 349 349 - TO/(FROM) RESERVES (105) 9 (297) (306) AIRPORT FUND FISCAL YEAR 2013 Water Electric Fiber Optics Gas WWC WWT Refuse Storm Drain Airport Total Beginning Reserves $8,997 $128,134 $13,470 $16,992 $5,751 $9,949 ($3,410)$2,726 ($223)$182,386 To (From) Reserves 9,275 (3,019)2,820 (4,674)(647)551 1,335 (768)(297)4,576 Ending Reserves 18,272 125,115 16,290 12,318 5,104 10,500 (2,075)1,958 (520)186,962 Adj Budgeted Reserves 13,517 136,376 12,459 17,619 6,212 9,256 (3,834)2,715 (222)194,098 % of Budgeted Reserves 135%92%131%70%82%113%54%72%234%96% FISCAL YEAR 2013 Water Electric Fiber Optics Gas WWC WWT Refuse Storm Drain Airport Total Rate Stabilization General RSR $17,272 $15,290 $4,104 $7,961 ($2,766)$1,958 ($520)$43,299 Supply RSR 65,324 6,293 $71,617 Distribution RSR 3,705 5,025 $8,730 Total RSR 17,272 69,029 15,290 11,318 4,104 7,961 (2,766) 1,958 (520) $123,646 Emergency Plant Replace 1,000 1,000 1,000 1,000 1,000 1,980 $6,980 Electric Special Projects 51,838 $51,838 Underground Loan 738 $738 Notes and Loans 559 $559 Landfill Corrective Action 691 $691 Shasta rewind Loan $0 Central Valley Project 313 $313 Public Benefit Program 2,197 $2,197 Ending Reserves 18,272 125,115 16,290 12,318 5,104 10,500 (2,075) 1,958 (520) 186,962 FISCAL YEAR 2013 Water Electric Fiber Optics Gas WWC WWT Refuse Storm Drain Airport Total Beginning RSR $7,997 $74,609 $12,470 $15,992 $4,751 $7,461 ($4,089)$2,726 ($223)$121,694 To(from) RSR 9,275 (5,580) 2,820 (4,674) (647) 500 1,323 (768) (297) 1,952 Ending RSR 17,272 69,029 15,290 11,318 4,104 7,961 (2,766) 1,958 (520) 123,646 RSR Minimum 5,427 38,468 715 7,411 2,253 3,265 2,746 N/A N/A 60,285 RSR Maximum 10,854 76,936 1,788 14,821 4,506 6,531 5,491 N/A N/A 120,927 RSR % of Maximum 159%90%855%76%91%122%-50%N/A N/A 102% EXHIBIT 6 RATE STABILIZATION RESERVE RESERVE SUMMARY ($000) RESERVE DETAIL Page 1 of 1 11/9/2013 Fiscal Year Ended June 30, 2013 2012-2013 Comprehensive Annual Financial Report City of Palo Alto, California Fiscal Year Ended June 30, 2013 2012-2013 Comprehensive Annual Financial Report Prepared by: Administrative Services Department City of Palo Alto, California CITY OF PALO ALTO For the Year Ended June 30, 2013 Table of Contents Page INTRODUCTORY SECTION: Transmittal Letter .................................................................................................................................... i City Officials ............................................................................................................................................ v Organizational Structure ....................................................................................................................... vi Administrative Services Organization ................................................................................................... vii GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................. viii FINANCIAL SECTION: Independent Auditor’s Report .............................................................................................................. 1 Management’s Discussion and Analysis (Required Supplementary Information – Unaudited) ...................................................................... 5 Basic Financial Statements: Government‐wide Financial Statements: Statement of Net Position ....................................................................................................... 31 Statement of Activities ............................................................................................................ 33 Governmental Fund Financial Statements: Balance Sheet .......................................................................................................................... 35 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ‐ Governmental Activities ................................................. 36 Statement of Revenues, Expenditures and Changes in Fund Balances .................................. 37 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities – Governmental Activities ................................................................................................... 38 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund ................................................................................... 39 Proprietary Fund Financial Statements: Statement of Fund Net Position .............................................................................................. 40 Statement of Revenues, Expenses and Changes in Fund Net Position ................................... 42 Statement of Cash Flows ......................................................................................................... 44 Fiduciary Funds Financial Statement: Statement of Fiduciary Net Position ....................................................................................... 46 Index to the Notes to the Basic Financial Statements ................................................................. 47 Notes to the Basic Financial Statements ...................................................................................... 49 CITY OF PALO ALTO For the Year Ended June 30, 2013 Table of Contents (Continued) Page Supplementary Information: Non‐Major Governmental Funds: Combining Balance Sheet ...................................................................................................... 109 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................................................................................... 110 Non‐Major Special Revenue Funds: Combining Balance Sheet ...................................................................................................... 112 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................................................................................... 114 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ............................................................. 116 Non‐Major Debt Service Funds: Combining Balance Sheet ...................................................................................................... 122 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................................................................................... 123 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ............................................................. 124 Non‐Major Permanent Fund: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ............................................................. 126 Internal Service Funds: Combining Statement of Fund Net Position .......................................................................... 128 Combining Statement of Revenues, Expenses and Changes in Fund Net Position ......................................................................................... 129 Combining Statement of Cash Flows ..................................................................................... 130 Fiduciary Funds: Statement of Changes in Assets and Liabilities– All Agency Funds ....................................... 132 STATISTICAL SECTION: Financial Trends: Net Position by Component ......................................................................................................... 135 Changes in Net Position ............................................................................................................... 136 Fund Balances of Governmental Funds ....................................................................................... 138 Changes in Fund Balances of Governmental Funds ..................................................................... 140 CITY OF PALO ALTO For the Year Ended June 30, 2013 Table of Contents (Continued) Page Revenue Capacity: Electric Operating Revenue by Source ......................................................................................... 141 Supplemental Disclosure for Water Utilities ............................................................................... 142 Assessed Value of Taxable Property ............................................................................................ 143 Property Tax Rates, All Overlapping Governments ..................................................................... 144 Property Tax Levies and Collections ............................................................................................ 145 Principal Property Taxpayers ....................................................................................................... 146 Assessed Valuation and Parcels by Land Use .............................................................................. 147 Per Parcel Assessed Valuation of Single Family Residential ........................................................ 148 Debt Capacity: Ratio of Outstanding Debt by Type .............................................................................................. 149 Computation of Direct and Overlapping Debt ............................................................................. 150 Computation of Legal Bonded Debt Margin ................................................................................ 151 Revenue Bond Coverage .............................................................................................................. 152 Demographic and Economic Information: Taxable Transactions by Type of Business ................................................................................... 153 Demographic and Economic Statistics ......................................................................................... 154 Principal Employers...................................................................................................................... 155 Operating Information: Operating Indicators by Function/Program ................................................................................. 156 Capital Asset Statistics by Function/Program .............................................................................. 158 Full‐Time Equivalent City Government Employees by Function .................................................. 160 SINGLE AUDIT SECTION: Index to the Single Audit Report .................................................................................................. 161 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ......................................... 163 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A‐133 ................................... 165 Schedule of Expenditures of Federal Awards .............................................................................. 167 Notes to the Schedule of Expenditures of Federal Awards ......................................................... 168 Schedule of Findings and Questioned Costs ................................................................................ 169 Schedule of Prior Years Findings and Questioned Costs ............................................................. 172 This page left intentionally blank. Introduction …………………………………………………………………………. City of Palo Alto i Transmittal Letter…………………………………………………...… November 8, 2013 THE HONORABLE CITY COUNCIL Palo Alto, California Attention: Finance Committee COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2013 Members of the Council and Citizens of Palo Alto: The Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2013, is submitted for Council’s review in accordance with Article III, Section 16 and Article IV, Section 13 of the City of Palo Alto Charter, and is published as a matter of public record for interested citizens. Management takes sole responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control that it has established for this purpose. The objective of internal controls is to provide reasonable, rather than absolute, assurance that the CAFR information is accurate in all material respects. The City of Palo Alto’s financial statements have been audited by Macias Gini & O’Connell LLP, Certified Public Accountants. The goal of the audit is to obtain reasonable assurance that the financial statements are free of material misstatement and are fairly presented in conformity with generally accepted accounting principles (GAAP). Macias Gini & O’Connell issued an unqualified opinion for the fiscal year ended June 30, 2013. Their report is presented as the first component of the financial section of this report. In addition, Macias Gini & O’Connell conducted the federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing the Single Audit require the independent auditor to report on the fair presentation of the financial statements, government’s internal controls and compliance with legal requirements. These reports are included in the Single Audit section of the CAFR. An overview of the City’s financial activities for the fiscal year is discussed in detail in the Management’s Discussion and Analysis (MD&A) section of the CAFR. MD&A complements this transmittal letter and should be read in conjunction with it. City of Palo Alto Office of the City Manager Introduction …………………………………………………………………………. ii City of Palo Alto THE PALO ALTO GOVERNMENT As a charter city serving a population of 66,368, Palo Alto delivers a full range of municipal services and public utilities under the council‐manager form of government, and offers an outstanding quality of life for its residents. The City has dedicated almost 4,000 acres of open space to parks and wildlife preserves. Public facilities include five libraries, four community centers, a cultural arts center, an adult and childrens’ theater, a junior museum and zoo, and a golf course. The City provides a diverse array of human services for seniors and youth, an extensive continuing education program, concerts, exhibits, team sports and special events. The independent Palo Alto Unified School District (PAUSD) has achieved state and national recognition for the excellence of its programs. City Council: The Council consists of nine members elected at‐large for four year staggered terms. At the first meeting of each calendar year, the Council elects a Mayor and Vice‐Mayor from its membership, with the Mayor having the duty of presiding over Council meetings. Council is the appointing authority for the positions of City Manager and three other officials, the City Attorney, City Clerk, and City Auditor, all of whom report to the Council. Finance Committee: While retaining the authority to approve all actions, the City Council has established a subcommittee to review financial matters. Staff provides the Finance Committee and Council with reports such as the CAFR, quarterly budget‐versus‐actual results, and investment and performance measure reports, which are utilized in their evaluation of the City’s financial position. THE PALO ALTO ECONOMY Employment Trends: The City of Palo Alto is a largely built‐out community in the heart of Silicon Valley, in between the greater San Francisco and San Jose areas. The adjacent Stanford University, one of the premier institutions of higher education in the nation, has produced much of the talent that founded many successful high‐tech companies in Palo Alto and Silicon Valley. With varied and relatively stable employers such as Stanford University, Stanford Medical Center, Palo Alto Medical Foundation, Palo Alto Unified School District, Stanford Shopping Center and businesses such as Hewlett‐Packard Company, VMware, and Space Systems Loral, Palo Alto has enjoyed diverse employment and revenue bases. At the end of Fiscal Year (FY) 2013, the City’s unemployment rate had dropped to 3.6 percent from 4.7 percent the prior year, as compared to Santa Clara County’s unemployment rate of 6.8 percent, and the state’s unemployment rate of 8.5 percent. Real Estate Market: In its most recent annual report, the Santa Clara County Assessor’s Office noted that Santa Clara County’s 2013/2014 assessment roll increased 8.35 percent, from $309 billion to $335 billion ‐ “the highest roll growth since the record of 15.56 percent established in 2001.” The assessment roll growth was balanced throughout the County, with the highest growth rate in Campbell at 11.63 percent and the lowest in Morgan Hill at 6.40 percent. Palo Alto’s assessment roll growth rate was 7.76 percent. Factors contributing to the robust growth include increases in assessed value for properties that previously received a temporary reduction due to Proposition 8, an increase in the number of changes in ownership and new construction, and a solid increase in the assessed value of property owned by businesses. With its highly regarded school district, well‐educated and high‐income population, cultural amenities, and the presence of Stanford University, the City’s real estate values are typically shielded from major price swings. Palo Alto experienced 5.36 percent growth in assessed value of taxable property in 2013 compared to 2.42 percent growth in 2012. Introduction …………………………………………………………………………. City of Palo Alto iii Local Trends: Like jurisdictions throughout the country, the City was impacted by the Great Recession, but is now in a solid recovery phase as a result of an increasingly vigorous local and Bay Area economy, a healthy property market, and rising consumer confidence. In the past year, we have witnessed a steadily increasing trend in economically sensitive revenue sources such as sales tax and documentary transfer taxes. Increased business activities within the City are resulting in higher transient occupancy tax revenues and permit and license revenues. On the flip side, while these revenue sources are showing solid gains, FY 2014 equity transfer revenue will be declining by $0.73 million due to a decrease in the rate that is used to calculate the City’s formula for equity transfers from the Electric and Gas Funds. Also, FY 2014 golf course revenue is expected to decline by $1.3 million, or 45 percent, due to a major renovation of the golf course and the San Francisquito Creek project. Once the project is complete, the City course will be much improved and more attractive, and there will also be 10.5 acres dedicated to three new athletic fields. Overall, the anticipated increase in funding sources is expected to be sufficient to cover projected FY 2014 expenses, as forecasted in the City’s Adopted Budget. The City Council adopted a General Fund budget with expenses of $159.7 million for FY 2014, an increase of 4.5 percent from the prior year Adopted Budget. The primary drivers of the increase in budgeted expenses are rising pension and health care costs. Employer rates will increase substantially beginning in FY 2016 as a result of changes in the actuarial method for calculating pension rates that was recently adopted by the CalPERS Board of Administration. Currently, unfunded liabilities for pension and health care are approaching $300 million. The City has proactively taken steps over the past several years to mitigate increased costs by negotiating increased employee contributions to the PERS retirement plan and to health care premiums, as well as implementation of two‐tier retirement plans. Negotiations with labor groups such as management, SEIU, firefighters and police have resulted in savings estimated at $9 million annually, $5.8 million of which was expected to be realized in the General Fund. The City’s infrastructure needs have been quantified as a result of a major effort this past year by the Infrastructure Blue Ribbon Commission (IBRC). Currently the unfunded infrastructure backlog is estimated at $42 million and an additional $210 million in new facility needs has been identified. The City has taken steps to fund its infrastructure needs by increasing General Fund transfers by $2.2 million annually for “keep up” costs starting in FY 2013. In addition, General Fund surpluses of $7.6 million in FY 2012 and $8.9 million in FY 2013 were transferred to the Infrastructure Reserve. The magnitude of infrastructure needs may require a larger infusion of funds than the City can generate, and an Infrastructure Committee consisting of four Council members has been established to study what infrastructure work can be funded from existing resources and what will require new revenues. The City’s Enterprise Funds implemented modest rate changes in FY 2013. There were no changes in Electric Fund rates. Gas Fund rates decreased by 10 percent effective July 1, 2012, with a further decrease of 2 percent effective January 1, 2013. The decrease in rates was driven by a change in gas procurement strategy. Water Fund implemented a 15 percent rate increase effective July 1, 2012 due to increased wholesale water prices. Refuse Fund implemented a residential rate increase effective July 1, 2012 which generated $0.85 million of incremental revenue. Wastewater Collection and Storm Drain rates were increased 5 percent and 2.9 percent respectively, effective July 1, 2012. Introduction …………………………………………………………………………. iv City of Palo Alto Long Range Financial Forecast: The City of Palo Alto produces a 10 year Long Range Financial Forecast (LRFF) annually. This comprehensive report analyzes local, state, and federal economic conditions, short and long‐term revenue and expense trends, expense challenges such as funding retiree medical benefits, potential new revenue opportunities, and infrastructure needs. The forecast is designed to highlight finance issues which the City can address proactively. Moreover, it is a tool that allows policymakers an opportunity to prioritize funding needs over time. Delivered to Council in December or January, this forecast sets the tone and themes for the annual budget process that begins in January. The forecast is one of the many tools and reports the City uses for financial planning. The City is conscientious and proactive in its financial planning. During the last two economic downturns, the City has balanced its annual budget via expenditure reductions and revenue enhancements and has not materially drawn down reserves. Both Moody’s and Standard and Poor’s (S&P) awarded their highest credit rating of Triple A to the City’s general obligation debt. This rating has been awarded to only a few cities in California. Awards: During the past year, the City received an award for the prior fiscal year CAFR from the Government Finance Officers Association (GFOA) for “excellence in financial reporting.” The 2013 CAFR will be submitted to the GFOA award program to be considered for this distinguished financial reporting award. Acknowledgment: This CAFR reflects the hard work, talent and commitment of the staff members of the Administrative Services Department. This document could not have been accomplished without their efforts and each contributor deserves sincere appreciation. Management wishes to acknowledge the support of Laura Kuryk, Accounting Manager, and the Senior Accountants, Staff Accountants, Payroll Analysts and Accounting Specialists for the high level of professionalism and dedication they bring to the City of Palo Alto. Management would also like to express its appreciation to Macias Gini & O’Connell, the City’s independent external auditors, who assisted and contributed to the preparation of this Comprehensive Annual Financial Report. Special acknowledgment must be given to the City Council Finance Committee for its support and interest in directing the financial affairs of the City in a responsible, professional and progressive manner. Respectfully submitted, LALO PEREZ, JAMES KEENE, Administrative Services Director City Manager Introduction …………………………………………………………………………. City of Palo Alto v City of Palo Alto City Officials ………………………….………… Finance Committee Patrick Burt, Chair Marc Berman Nancy Shepherd Greg Schmid Policy and Services Committee Liz Kniss, Chair Karen Holman Larry Klein Gail A. Price Council‐Appointed Officers City Manager James Keene City Attorney Molly Stump City Clerk Donna Grider City Auditor Jim Pelletier Patrick Burt Marc Berman Karen Holman Larry Klein Gail A. Price Greg Schmid City Council Gregory Scharff, Mayor Nancy Shepherd, Vice‐Mayor Liz Kniss Introduction …………………………………………………………………………. vi City of Palo Alto Assistant City Manager Pam Antil City Attorney Molly Stump City Manager James Keene City Auditor Jim Pelletier City Clerk Donna Grider Community Services Department Greg Betts, Director Administrative Services Department Lalo Perez, Director Fire Department Eric Nickel, Chief People Strategy & Operations Department Kathryn Shen, Director Police Department Dennis Burns, Chief Planning & Community Environment Department Curtis Williams, Director Utilities Department Valerie Fong, Director Public Works Department Mike Sartor, Director Library Department Monique le Conge, Director City of Palo Alto Organization …………………………………… Palo Alto Residents City Council Information Technology Department Jonathan Reichental, Chief Information Officer Development Services Department Peter Pirnejad, Director Chief Communications Officer Claudia Keith Introduction …………………………………………………………………………. City of Palo Alto vii Administrative Services Organization ……… Administrative Division Treasury Division Accounting Division Budget Division Purchasing Division Real Estate Division Administrative Services Department Mission Statement To provide proactive administrative and technical support to City departments and decision makers, and to safeguard and facilitate the optimal use of City resources. Introduction …………………………………………………………………………. viii City of Palo Alto Government Finance Officers Association of the United States and Canada – Award …… 1 INDEPENDENT AUDITOR’S REPORT Honorable Mayor and the Members Of the City Council of City of Palo Alto, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Palo Alto, California (City), as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2013, and the respective changes in financial position, the budgetary comparison for the General Fund, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 2 Emphasis of Matter Change in Accounting Principles As discussed in Note 1(m) to the financial statements, as of July 1, 2012, the City adopted new accounting guidance, Governmental Accounting Standards Board (GASB) Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements; GASB Statement No. 61, The Financial Reporting Entity: Omnibus; GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements; and GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the GASB who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements and schedules. The introductory section, combining and individual nonmajor fund financial statements, statistical section and the schedule of expenditures of federal awards, as required by Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. 3 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 8, 2013 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Walnut Creek, California November 8, 2013 4 This page left intentionally blank. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 5 Management’s Discussion and Analysis Management’s Discussion and Analysis (MD&A) provides an overview of the City of Palo Alto’s financial performance for the fiscal year ended June 30, 2013. To obtain a complete understanding of the City’s financial condition, this document should be read in conjunction with the accompanying Transmittal Letter and Basic Financial Statements. Financial Highlights The assets of City of Palo Alto exceeded its liabilities at the close of Fiscal Year (FY) 2013 by $1,336.2 million. Of this amount, $435.7 million represents unrestricted net position, which may be used to meet the government’s ongoing obligations to citizens and creditors. The City’s total net position increased $71.3 million primarily due to increased capital assets and the receipt of $17.1 million under the terms of a Development Agreement with Stanford Hospital and Clinics, Lucile Salter Packard Children’s Hospital at Stanford and the Board of Trustees of the Leland Stanford Junior University (SUMC Parties). At the close of FY 2013, the City’s governmental funds reported combined fund balances of $210.9 million, an increase of $48.9 million from prior year. Approximately 14.7 percent of this amount, or $30.9 million, is unassigned fund balance and available for spending at the government’s discretion. At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned and unassigned components of fund balance) for the General Fund was $36.3 million, or 23.8 percent of total general fund expenditures, including transfers. The City’s total outstanding long‐term debt increased by $16.4 million during the current fiscal year due to the issuance of $20.7 million of 2013 Series A General Obligation Bonds to fund the Mitchell Park and Community Center construction project as well as substantial improvements to the Main and Downtown Libraries, partially offset by debt retirement of $5.3 million. The City has now issued the entire $76 million of General Obligation Bonds that was authorized by Palo Alto residents via Measure N, which was passed in 2008. OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR) The CAFR is presented in six sections: An introductory section that includes the Transmittal Letter and general information Management’s Discussion and Analysis The Basic Financial Statements that include the Government‐wide and Fund Financial Statements, along with the Notes to these statements Supplemental Information Statistical Information Single Audit Management’s Discussion and Analysis ……….…………………....………………………………………………… 6 City of Palo Alto Basic Financial Statements The Basic Financial Statements contain the Government‐wide Financial Statements, the Fund Financial Statements and the Notes to these financial statements. This report also includes supplementary information intended to furnish additional detail to support the Basic Financial Statements. For certain entities and funds, the City acts solely as a depository agent. For example, the City has several Assessment Districts for which it produces fiduciary statements detailing the cash balances and activities of these districts. These entities are independent, and their balances are excluded from the City’s financial statements. Government‐wide Financial Statements The Government‐wide Financial Statements provide a longer‐term view of the City’s activities as a whole. They include the Statement of Net Position and the Statement of Activities. The Statement of Net Position includes the City’s capital assets and long‐term liabilities on a full accrual basis of accounting similar to that used by private sector companies. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities provides information about the City’s revenues and expenses on a full accrual basis, with an emphasis on measuring net revenues or expenses for each of the City’s programs. The Statement of Activities explains in detail the change in net position for the year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. The amounts in the Statement of Net Position and the Statement of Activities are separated into Governmental and Business‐type Activities in order to provide a summary of each type of activity. Governmental Activities ‐ All of the City’s basic services are considered to be governmental activities. Included in basic services are the City Council, City Manager, City Attorney, City Clerk, City Auditor, Administrative Services, Human Resources, Public Works, Planning and Community Environment, Police, Fire, Community Services, and Library. These services are supported by general City revenues such as taxes, and by specific program revenues such as fees and grants. The City’s governmental activities also include the activities of the Palo Alto Public Improvement Corporation, which is a separate legal entity financially accountable to the City. Business‐type Activities ‐ All of the City’s enterprise activities are reported as business‐type activities, including Water, Electric, Fiber Optics, Gas, Wastewater Collection, Wastewater Treatment, Refuse, Storm Drainage and Airport. Unlike governmental services, these services are intended to recover all or a significant portion of their costs through user fees and charges, except for the Airport which is currently supported by a long‐term advance from the General Fund, as discussed in Note 4. The Government‐wide Financial Statements can be found on pages 31‐33 of this report. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 7 Fund Financial Statements The Fund Financial Statements provide detailed information about each of the City’s most significant funds, called major funds. The concept of major funds, and the determination of which are major funds, was established by Governmental Accounting Standards Board (GASB) Statement No. 34 and replaced the concept of combining like funds and presenting them in total. Therefore, each major fund is presented individually, with all non‐major funds combined in a single column on each fund statement. Subordinate schedules display these non‐major funds in more detail. Major funds present the major activities of the City for the year. The General Fund is always considered a major fund, but other funds may change from year to year as a result of changes in the pattern of City activities. The Fund Financial Statements display the City’s operations in more detail than the Government‐wide Financial Statements. Their focus is primarily on the short‐term activities of the City’s General Fund and other major funds such as Capital Projects, Water Services, Electric Services, Fiber Optics, Gas Services, Wastewater Collection Services, Wastewater Treatment Services, Refuse Services, Storm Drainage Services and Airport. Budget and actual financial comparison information is presented only for the General Fund and all major Special Revenue Funds. Fund Financial Statements include Governmental, Enterprise and Internal Service Funds. Governmental Funds Governmental Fund Financial Statements are prepared on the modified accrual basis of accounting, which means they measure only current financial resources and uses. Capital assets and other long‐lived assets, along with long‐term liabilities, are presented only in the Government‐wide Financial Statements. In FY 2013, the City had two major governmental funds, the General Fund and the Capital Projects Fund. Data from the other governmental funds are combined into a single aggregated presentation. Individual fund data for each of these non‐major governmental funds is provided in the Supplemental section of this report. Because the focus of governmental funds is narrower than that of the Government‐wide Financial Statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Government‐wide Financial Statements. By doing so, readers may better understand the long‐term impact of the government’s near‐term financing decisions. Both the Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Governmental Fund Financial Statements can be found on pages 35‐39 of this report. Proprietary Funds Enterprise and Internal Service Fund Financial Statements are prepared on the full accrual basis of accounting, similar to that used by private sector companies. These statements include all of their assets and liabilities, both current and long‐term. Since the City’s Internal Service Funds provide goods and services exclusively to the City’s governmental and business‐type activities, their activities are only reported in total at the fund level. Internal Service Funds, such as Technology and General Benefits, cannot be considered major funds because their revenues are derived from other City funds. Revenues between funds are eliminated in the Government‐wide Financial Management’s Discussion and Analysis ……….…………………....………………………………………………… 8 City of Palo Alto Statements, and any related profits or losses in Internal Service Funds are returned to the activities in which they were created, along with any residual net assets of the Internal Service Funds. The Proprietary Fund Financial Statements can be found on pages 40‐45 of this report. Fiduciary Funds The City is the fiduciary agent for certain assessment districts such as the University Avenue Area Off‐Street Parking Assessment District, and holds amounts collected from property owners that await transfer to the districts’ bond trustees. The City’s fiduciary activities are reported in the separate Statement of Fiduciary Assets and Liabilities and the supplemental Agency Funds Statement of Changes in Assets and Liabilities. These activities are excluded from the City’s other financial statements because the City cannot utilize these assets to finance its own operations. The Fiduciary Fund Financial Statements can be found on page 46 of this report. Notes to the Financial Statements The Notes provide additional information that is necessary to acquire a full understanding of the data provided in the Government‐wide and Fund Financial Statements. The Notes to the financial statements can be found on pages 49‐108 of this report. Other Information The combining statements referred to earlier in connection with non‐major Governmental Funds and Internal Service Funds, are presented immediately following the Notes to the financial statements. Combining statements and individual fund statements and schedules can be found on pages 109‐132 of this report. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 9 Financial Analysis of Government‐wide Financial Statements This section focuses on the City’s net position and changes in net position of its governmental and business‐ type activities for the fiscal year ending June 30, 2013. As noted earlier, the City’s total assets exceed total liabilities by $1,336.2 million at the end of the fiscal year, an improvement in net position of $71.3 million. STATEMENT OF NET POSITION As of June 30, 2013 (in millions) 2013 2012 2013 2012 2013 2012 Cash and investments 261.9$ 215.9$ 266.0$ 281.0$ 527.9$ 496.9$ Other assets 59.5 49.8 43.2 39.2 102.7 89.0 Capital assets 428.9 413.2 522.2 490.0 951.1 903.2 Total Assets 750.3 678.9 831.4 810.2 1,581.7 1,489.1 Long‐term debt 82.6 62.5 79.7 83.4 162.3 145.9 Other liabilities 52.1 51.3 31.1 27.0 83.2 78.3 Total Liabilities 134.7 113.8 110.8 110.4 245.5 224.2 Net Position Investment in capital assets 378.1 370.1 446.6 437.2 824.7 807.3 Restricted 71.7 52.9 4.1 ‐75.8 52.9 Unrestricted 165.8 142.1 269.9 262.6 435.7 404.7 Total Net Position 615.6$ 565.1$ 720.6$ 699.8$ 1,336.2$ 1,264.9$ Governmental Activities Business‐type Activities Government‐wide Totals The largest portion of the City’s net position (61.7 percent) is its investment in capital assets such as land, buildings, infrastructure and vehicles, less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to its citizens. Accordingly, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The restricted portion of the City’s net position (5.7 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $435.7 million, representing 32.6 percent of the City’s net position, is unrestricted and may be used to meet the government’s ongoing obligations to its citizens and creditors. Management’s Discussion and Analysis ……….…………………....………………………………………………… 10 City of Palo Alto At the end of the current fiscal year, the City is able to report positive balances in all reported categories of net position, both for the government as a whole, and for its separate governmental and business‐type activities. The same situation held true for the prior fiscal year. Reasons for the $71.3 million increase in total net position are discussed in the following sections for governmental activities and business‐type activities. Governmental Activities – Net Position The following analysis focuses on the net position and changes in net position of the City’s Governmental Activities, presented in the Government‐wide Statement of Net Position and Statement of Activities. GOVERNMENTAL ACTIVITIES Net Position at June 30 (in millions) Increase/ 2013 2012 (Decrease) Cash and investments 261.9$ 215.9$ 46.0$ Other assets 59.5 49.8 9.7 Capital assets 428.9 413.2 15.7 Total Assets 750.3 678.9 71.4 Long‐term debt 82.6 62.5 20.1 Other liabilities 52.1 51.3 0.8 Total Liabilities 134.7 113.8 20.9 Net Position Investment in capital assets 378.1 370.1 8.0 Restricted 71.7 31.0 40.7 Unrestricted 165.8 164.0 1.8 Total Net Position 615.6$ 565.1$ 50.5$ The City’s Governmental activities total net position increased $50.5 million to $615.6 million as of June 30, 2013. This increase was a result of the following: Cash and investments increased $46.0 million primarily due to the receipt of $17.1 million for the Development Agreement with SUMC Parties that was signed in June 2011 and $20.7 million in bond proceeds from the 2013 General Obligation bond issuance. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 11 Capital assets net of depreciation increased $15.7 million due to Art Center electrical and mechanical upgrades, continued construction of the Mitchell Park Library and Community Center, and additions to the City’s network of roadways and sidewalks. Long‐term debt increased $20.1 million due to receipt of remaining bond proceeds from the General Obligation bond which authorized a total of $76 million, and is now fully issued. Investment in capital assets increased $8.0 million to $378.1 million. Restricted net assets increased $40.7 million to $71.7 million. Unrestricted net assets increased $1.8 million to $165.8 million. Unrestricted net assets represent current net assets available to finance subsequent year operations and other expenditures approved by City Council. Governmental Activities – Revenues The table below shows that Governmental activities revenues totaled $170.3 million in FY 2013, an increase of $0.9 million over prior year revenues of $169.4 million. GOVERNMENTAL ACTIVITIES Revenues for the Year Ended June 30 (in millions) Increase/ Revenues by Source 2013 2012 (Decrease) Program Revenues: Charges for services 75.8$ 62.8$ 13.0$ Operating grants and contributions 5.0 3.4 1.6 Capital grants and contributions 0.5 1.1 (0.6) Total Program Revenues 81.3 67.3 14.0 General Revenues: Property tax 31.9 30.1 1.8 Sales tax 25.6 22.1 3.5 Utility user tax 10.9 10.8 0.1 Transient occupancy tax 10.8 9.7 1.1 Documentary transfer tax 6.8 4.8 2.0 Other tax 3.7 3.4 0.3 Investment earnings (1.2) 6.2 (7.4) Rents and miscellaneous 0.5 15.0 (14.5) Total General Revenues 89.0 102.1 (13.1) Total Revenues 170.3$ 169.4$ 0.9$ Management’s Discussion and Analysis ……….…………………....………………………………………………… 12 City of Palo Alto Total Program Revenues increased $14.0 million from the prior year, primarily due to increased charges for services. The majority of the increase is due to the following: $12.2 million of rental revenue is now reported as Program Revenues per the recommendation of Governmental Accounting, Auditing and Financial Reporting (GAAFR). FY 2012 rental revenue of $13.7 million was included in General Revenues; $5.9 million increase in developers’ impact fees; $3.7 million decrease in receipts from SUMC Parties Development Agreement; and $1.4 million decrease in donations from Palo Alto Library Foundation. Program revenues such as charges for services, operating grants and contributions, and capital grants and contributions are generated from or restricted to each activity. Program revenues include contributions from the University Avenue Area Off‐Street Parking Assessment District as well as other recurring sources. General revenues decreased $13.1 million, or 12.8 percent, over the prior year, mainly from the reclassification of rental revenue to program revenue in FY 2013 as discussed previously. Further analysis of general revenues can be found in the Financial Analysis of Governmental Funds section of the MD&A. Governmental Activities – Revenues by Source The chart below presents revenues by source for Governmental Activities. General revenues are composed of taxes and other revenues not specifically generated by, or restricted to, individual activities. All tax revenues and investment earnings are included in general revenues. Utility User Tax 6% Property Tax 19% Program Revenues 48% Other 2% Documentary Transfer Tax 4% Sales Tax 15% Transient Occupancy Tax 6% Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 13 Governmental Activities – Expenses The table below presents a comparison of FY 2013 and FY 2012 expenses by function, and interest on long‐ term debt. Encumbrances and reappropriations are not included. Total Governmental Activities functional expense was $139.2 million in FY 2013, an increase of $1.7 million, or 1.2 percent. GOVERNMENTAL ACTIVITIES Expenses and Change in Net Position for the Year Ended June 30 (in millions) Increase/ Activities 2013 2012 (Decrease) City Council 0.1$ 0.3$ (0.2)$ City Manager 1.2 1.9 (0.7) City Attorney 1.6 1.7 (0.1) City Clerk 0.3 0.9 (0.6) City Auditor 0.5 0.2 0.3 Administrative Services 7.6 10.1 (2.5) Human Resources 1.4 1.1 0.3 Public Works 20.8 14.6 6.2 Planning and Community Environment 13.6 12.1 1.5 Police 31.9 33.5 (1.6) Fire 27.6 29.3 (1.7) Community Services 22.7 21.9 0.8 Library 7.3 7.3 0.0 Interest on long‐term debt 2.6 2.6 0.0 Total Functional Expense 139.2 137.5 1.7 Increase/(Decrease) in Net Position before Transfers 31.2 31.8 (0.6) Transfers in 19.3 17.4 1.9 Change in Net Position 50.5 49.2 1.3 Net Position, Beginning 565.1 515.9 49.2 Net Position, Ending 615.6$ 565.1$ 50.5$ Changes in year‐over‐year balances are described at the fund level in the Financial Analysis of Governmental Funds section of the MD&A. Management’s Discussion and Analysis ……….…………………....………………………………………………… 14 City of Palo Alto Governmental Activities – Functional Expenses The functional expenses chart below includes only current year expenses. It does not include capital outlays, as those are added to the City’s capital assets. Functions which comprise 1 percent or less of total expenses are combined into the All Other category in the chart below. All Other includes City Council, City Manager, City Attorney, City Clerk, City Auditor and Human Resources. Interest on long‐term debt 2% Police 23% Fire 20% Library 5% All Other 4% Public Works 15% Administrative Services 5% Community Services 16% Planning and Community Environment 10% Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 15 Business‐type Activities – Net Position The following analysis focuses on the net position and changes in net position of the City’s Business‐type Activities presented in the Government‐wide Statement of Net Position and Statement of Activities. Increase/ 2013 2012 (Decrease) Cash and investments 265.9$ 281.0$ (15.1)$ Other assets 43.2 39.2 4.0 Capital assets 522.3 490.0 32.3 Total Assets 831.4 810.2 21.2 Long‐term debt 79.7 83.4 (3.7) Other liabilities 31.1 27.0 4.1 Total Liabilities 110.8 110.4 0.4 Net Position Investment in capital assets 446.6 437.2 9.4 Restricted 4.1 ‐ 4.1 Unrestricted 269.9 262.6 7.3 Total Net Position 720.6$ 699.8$ 20.8$ BUSINESS‐TYPE ACTIVITIES Net Position at June 30 (in millions) The City’s Business‐type activities total net position increased $20.8 million to $720.6 million as of June 30, 2013. Capital assets increased $32.3 million to $522.3 million in FY 2013 as a result of Water, Electric and Gas infrastructure improvements. Additions include $15.3 million of capital improvements in Water, $10.4 million of capital improvements in Electric, and $5.0 million of capital improvements in Gas. Other liabilities increased $4.1 million primarily due to Gas engineering and Wastewater Treatment services. Net assets invested in capital assets, net of related debt, increased $9.4 million to $446.6 million. Unrestricted net assets of $269.9 million, an increase of $7.3 million from the prior year, represent liquid assets available to finance day‐to‐day operations and other expenditures approved by the City Council. This amount includes Council‐designated reserves such as the rate stabilization reserves (RSR) of $123.6 million, the Electric special projects (Calaveras) reserve for stranded costs of $51.8 million, and the emergency plant replacement reserve of $7.0 million. Management’s Discussion and Analysis ……….…………………....………………………………………………… 16 City of Palo Alto Business‐type Activities – Revenues The table below presents the revenues for each of the City’s Business‐type Activities or Enterprise Funds. The City operates the Water, Electric, Fiber Optics, Gas, Wastewater Collection, Wastewater Treatment, Refuse, Storm Drainage and Airport Funds, which are major funds and are presented in the Basic Financial Statements. BUSINESS‐TYPE ACTIVITIES Revenues for the Year Ended June 30 (in millions) Increase/ Revenues by Source 2013 2012 (Decrease) Program Revenues: Charges for services 272.8$ 269.5$ 3.3$ Operating grants and contributions 0.6 0.6 0.0 Capital grants and contributions 2.2 1.5 0.7 Total Program Revenues 275.6 271.6 4.0 General Revenues: Investment earnings (loss)(2.8) 7.6 (10.4) Total General Revenues (2.8) 7.6 (10.4) Total Revenues 272.8$ 279.2$ (6.4)$ Business‐type Activities revenues totaled $272.8 million, a decrease of $6.4 million, or 2.3 percent, from the prior year. Revenues were affected by the following events: Charges for services increased by $3.3 million from the prior year due to an increase in Water Fund revenues of $6.3 million and Electric Fund of $2.9 million, offset by a decrease in Gas Fund revenues of $7.1 million. Capital grants and contributions increased by $.7 million from the prior year due to an increase in new construction activities. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 17 Business‐type Activities – Expenses The table below presents a comparison of the FY 2013 and FY 2012 expenses for the City’s Business‐type Activities. Encumbrances and reappropriations are not included. BUSINESS‐TYPE ACTIVITIES Expenses and Change in Net Position for the Year Ended June 30 (in millions) Increase/ Business‐type Activities 2013 2012 (Decrease) Water 30.7$ 29.1$ 1.6$ Electric 106.4 102.0 4.4 Fiber Optics 1.4 1.5 (0.1) Gas 26.8 28.9 (2.1) Wastewater Collection 14.3 14.8 (0.5) Wastewater Treatment 20.6 20.7 (0.1) Refuse 28.6 31.9 (3.3) Storm Drainage 3.7 3.1 0.6 Airport 0.2 0.2 0.0 Total Functional Expense 232.7 232.2 0.5 Increase/(Decrease) in Net Position before Transfers 40.0 47.0 (7.0) Transfers out 19.2 17.4 1.8 Change in Net Position 20.8 29.6 (8.8) Net Position, Beginning 699.8 670.2 29.6 Net Position, Ending 720.6$ 699.8$ 20.8$ Business‐type Activities expenses increased $0.5 million for a total of $232.7 million. Year over year expenses were significantly affected by the following events: Water Fund expenses increased $1.6 million from prior year primarily due to an increase in water supply costs. Further detail can be found in Note 16 to the financial statements. Electric Fund expenses increased $4.4 million primarily due to a $4.0 million increase in energy purchase costs. Gas Fund expenses decreased $2.1 million due to a decrease in the cost of gas supply purchases. Further detail can be found in Note 16 to the financial statements. Refuse Fund expenses decreased $3.3 million due to lower operations and maintenance expense as a result of the landfill closure. Management’s Discussion and Analysis ……….…………………....………………………………………………… 18 City of Palo Alto FUND FINANCIAL STATEMENTS Financial Analysis of Governmental Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance‐related legal requirements. Governmental Funds The focus of the City’s governmental funds is to provide information on near‐term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, the unassigned fund balance may serve as a useful measure of a government’s net resources available for discretionary use as they represent the portion of fund balance which has not yet been limited to use for a particular purpose by either an external party, the City itself, or a group or individual that has been delegated authority to assign resources for use for particular purposes by the City’s Council. As of June 30, 2013, the City’s Governmental Funds reported combined fund balances of $210.9 million, an increase of $48.9 million from the prior year. Approximately 14.7 percent, or $30.9 million, constitutes unassigned fund balance, which is available for spending at the government’s discretion. The remainder of the fund balance is either non‐spendable, restricted, committed, or assigned to indicate that it is 1) not in spendable form ($23.9 million), 2) restricted for particular purposes ($84.7 million), 3) committed for particular purposes ($20.4 million), or 4) assigned for particular purposes ($50.9 million). Governmental Fund revenues increased $3.4 million, or 2.0 percent, from prior year to $170.8 million. Revenues in the General Fund increased $7.1 million and Capital Projects Fund revenue increased $1.8 million. Other Governmental Funds revenue decreased by $5.6 million primarily due to $9.1 million less in receipts for Public Benefits and a $1.9 million decrease in investment earnings, offset by a $5.9 million increase in developers’ impact fees. Governmental Fund expenditures were $160.1 million, a decrease of $3.9 million from the prior year. General Fund expenditures decreased $1.0 million, Capital Projects Fund expenditures increased by $0.9 million, and Non‐major Fund expenditures decreased by $3.9 million. General Fund Balance Sheet The General Fund is the primary operating fund of the City. At the end of the current fiscal year, fund balance of the General Fund was $42.1 million, compared to $42.0 million in the prior year. The fund balance has been classified as $5.7 million nonspendable, $5.4 million assigned, and $30.9 million unassigned. Of the unassigned amount, $30.4 million is designated by the Council for budget stabilization. That amount represents 19.0 percent of the FY 2014 budgeted expenditures and operating transfers, and is the target balance intended to fund unbudgeted, unanticipated one‐time costs. Funds in excess of the target balance amounted to $8.9 million and were transferred to the Infrastructure Reserve in the Capital Projects Fund, as allowed by the General Fund Reserve Policy. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 19 Statement of Revenues, Expenditures and Changes in Fund Balance Revenues The City’s General Fund revenues totaled $132.6 million in FY 2013. This represents an increase of $7.0 million, or 5.6 percent, compared to the prior year. The year over year change in significant revenue sources is noted in the following table. GENERAL FUND Revenues for the Year Ended June 30 (in millions) Increase/ Revenues by Source 2013 2012 (Decrease) Property tax 28.7$ 26.5$ 2.2$ Sales tax 25.6 22.1 3.5 Utility user tax 10.9 10.8 0.1 Transient occupancy tax 10.8 9.7 1.1 Documentary transfer tax 6.8 4.8 2.0 Charges for services 26.7 24.9 1.8 Permits and licences 7.6 6.6 1.0 Rental income 12.9 14.3 (1.4) All other 2.6 5.9 (3.3) Total Revenues 132.6$ 125.6$ 7.0$ Property tax revenue increased by $2.2 million, or 8.3 percent, over FY 2012 for a total of $28.7 million. The City’s assessment roll growth of 5.32 percent was supplemented by better than expected receipts from unsecured property taxes and motor vehicle in‐lieu fees, as well as reduced county administrative fees. Sales tax revenue increased by $3.5 million, or 15.8 percent, over FY 2012 levels for a total of $25.6 million. The increase was driven by strong retail activity in auto, apparel store, restaurant, and service station sales, and county pool allocations. Utility user tax remained flat year over year. Lower utility‐generated revenues were offset by higher telephone‐generated revenues, which historically have been declining due to fewer land lines and changes in the billing practices of the providers. Transient occupancy tax continued to improve, and increased by $1.1 million, or 11.3 percent, due to increased business activity and improving occupancy and room rates. Both occupancy and room rates increased steadily through FY 2013. Documentary transfer tax increased $2.0 million to $6.8 million primarily due to a small number of high dollar commercial property transactions. Management’s Discussion and Analysis ……….…………………....………………………………………………… 20 City of Palo Alto Charges for services totaled $26.7 million in FY 2013, an increase of $1.8 million from the prior year. The increase was primarily due to an increase in volume of plan checking fees as a result of increased building activity within the City. Permits and licenses revenue increased over prior year by $1.0 million, most of which is attributed to an increase in new construction permits. Rental income decreased from prior year by $1.4 million primarily from decreased landfill rent related to the closure of the landfill. All other revenue declined from prior year by $3.3 million to $2.6 million. The decrease is primarily attributable to a $2.7 million decrease in unrealized gain in market value of investments. The change in market value of investments was driven by a rise in interest rates toward the end of the fiscal year resulting in a decrease in market value of the City’s bond portfolio from the prior year. Expenditures General Fund expenditures totaled $127.2 million for FY 2013 compared to $128.3 in the prior year. This amount excludes encumbrances and reappropriations. The year over year change for major functions is noted in the following table: GENERAL FUND Expenditures for the Year Ended June 30 (in millions) Increase/ Expenditures by Function 2013 2012 (Decrease) Administrative Services 3.1$ 3.3$ (0.2)$ Public Works 11.5 11.3 0.2 Planning and Community Environment 11.8 10.3 1.5 Police 31.8 33.2 (1.4) Fire 27.7 29.1 (1.4) Community Services 21.5 20.8 0.7 Library 6.9 7.1 (0.2) Non‐Departmental 7.4 6.6 0.8 All other 5.5 6.6 (1.1) Total Expenditures 127.2$ 128.3$ (1.1)$ The decrease from prior year of $1.1 million, or 0.9 percent, is a result of continued one‐time and ongoing expense reductions that were enacted in order to control expenses. Police and Fire expenses have decreased due to reduced overtime and increased employee contributions to pension and medical costs. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 21 Planning and Community Environment expenses for staffing and contract services have increased as a result of increased building and development activity. Transfers out for FY 2013 were $25.1 million compared to $22.1 million in the prior year. Of the $3.0 million increase, $1.3 million was an increase in the amount of funds transferred from the General Fund Budget Stabilization Reserve (BSR) to the Infrastructure Reserve in the Capital Projects Fund, and $1.8 million was for the transfer of technology enhancement fees to the Technology Fund. Technology enhancement fees were added to certain City fees effective for FY 2013. General Fund – Statement of Revenues, Expenditures and Changes in Fund Balance ‐ Budget and Actual Original budget compared to final budget: Revenues were originally budgeted at $133.4 million and were revised upward by $11.9 million, which included $4.4 million for the prior year encumbrance reserve. Significant items contributing to the difference between original budget amounts and final budget amounts for revenue categories were as follows: GENERAL FUND Budgeted Revenues for the Year Ended June 30 (in millions) Original Final Increase/ Budgeted Revenues Budget Budget (Decrease) Sales tax 22.5$ 23.4$ 0.9$ Transient occupancy tax 9.6 10.4 0.8 Documentary transfer tax 5.1 6.8 1.7 Charges for services 23.7 25.6 1.9 Permits and licences 6.6 8.0 1.4 All other 55.0 55.9 0.9 122.5 130.1 7.6 Charges to other funds 10.9 10.8 (0.1) Prior year encumbrances and appropriations ‐ 4.4 4.4 Total Budgeted Revenues 133.4$ 145.3$ 11.9$ Adjustments to the original budget were based on the following: Sales tax was increased by $0.9 million from the original budget due to robust performance, particularly in the electronic equipment, apparel stores, restaurants, and service station sectors. Transient occupancy tax budgeted amount of $9.6 million was increased by $0.8 million due to a surge in average occupancy and daily rates, and increased business and visitor activity. Documentary transfer tax budgeted amount was increased by $1.7 million based on increased receipts resulting from high value commercial property sales. Management’s Discussion and Analysis ……….…………………....………………………………………………… 22 City of Palo Alto Charges for services budget was increased by $1.9 million to $25.6 million due to an additional $1.6 million in plan check fee revenue and higher than expected paramedic service fee revenue. Permits and licenses budget was increased by $1.4 million due to increased development activity. Significant differences between final budgeted revenues of $145.3 million and actual revenues of $149.3 million, a difference of $4.0 million, are explained by the following: Sales and transient occupancy taxes were $2.6 million higher than the final budget due to strong retail sales and improved occupancy and room rates. Property tax revenue was higher due to a one‐time $0.7 million refund of prior year administrative fees. Charges for services actual revenue for the year was $26.7 million, or $1.1 million more than the final budgeted amount, as a result of increased building and zone plan check fees. Charges to other funds actual revenue was $11.7 million, or $0.9 million higher than the final budget amount, due to the true‐up of cost plan charges at the end of the year. Investment earnings were $2.4 million lower than the final budget due to an increase in interest rates toward the end of the fiscal year which negatively impacted the market value of the City’s bond portfolio. Expenditures were originally budgeted at $138.0 million and were revised upward by $10.1 million for a final budgeted amount of $148.1 million, as shown below. GENERAL FUND Budgeted Expenditures for the Year Ended June 30 (in millions) Original Final Increase/ Actuals, plus Budgeted Expenditures Budget Budget (Decrease) Encumbrances Administrative Services 7.2$ 7.5$ 0.3$ 7.2$ Community Services 21.9 22.5 0.6 22.3 Fire 27.6 28.9 1.3 28.8 Library 7.0 7.7 0.7 7.6 Planning and Community Environment 11.1 13.4 2.3 13.1 Police 32.3 32.6 0.3 32.5 Public Works 13.9 14.8 0.9 14.0 Non‐Departmental 6.0 8.5 2.5 8.0 All other 11.0 12.2 1.2 11.2 Total Budgeted Expenditures 138.0$ 148.1$ 10.1$ 144.7 Less: Charges to Other Funds (11.9) Less: Encumbrances (5.6) Net General Fund Expenditures 127.2$ Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 23 Adjustments of $10.1 million to the original budget were based on the following: $2.2 million for increased retiree medical costs; $1.6 million for Public Safety labor concessions which were not achieved; $1.4 million for expenses for additional contract costs for Development Services due to increased volume of development activity; and $4.9 million for carry‐forward of encumbrances from prior year. The final budgeted expenditure amount of $148.1 million compares to the actual expenditures plus encumbrances of $144.7 million, a difference of $3.4 million. The lower than budgeted expenditures were primarily due to non‐salary budget savings across General Fund departments and higher than expected vacancy savings. Transfers out were originally budgeted at $14.8 million, with the final budget number at $14.7 million, a decrease of $0.1 million. The actual transfers out for the year were $25.1 million, or $10.4 million greater than final budget due to the end of year transfer from the General Fund BSR to the Capital Projects Infrastructure Reserve of $8.9 million and a $1.8 million transfer to the Technology Fund for technology enhancement fees. Capital Projects Fund Capital Projects Fund expenditures and other uses were $30.5 million in FY 2013, which is a decrease of $2.1 million from the prior year. This level of expenditure is consistent with the City’s effort to rehabilitate and maintain its existing infrastructure. Non‐major Funds These funds are not presented separately in the Basic Financial Statements, but are individually presented as Supplemental Information. Management’s Discussion and Analysis ……….…………………....………………………………………………… 24 City of Palo Alto Financial Analysis of Enterprise Funds At June 30, 2013, the City’s Enterprise Funds reported total net position of $718.0 million, an increase of $20.5 million or 2.9 percent over the prior year. The increase was primarily from the Water, Fiber Optics, and Wastewater Collection Funds for $6.8 million, $2.8 million, and $2.5 million, respectively. Unrestricted net position for the Enterprise Funds totaled $267.3 million, a 2.7 percent increase from FY 2012. Following is a table which compares the year over year change in net position for each of the Enterprise Funds: ENTERPRISE FUNDS Change in Net Position for the Year Ended June 30 (in millions) Increase/ Fund Name 2013 2012 (Decrease) Water 6.8$ 4.5$ 2.3$ Electric 1.9 9.0 (7.1) Fiber Optics 2.8 2.6 0.2 Gas 1.3 7.8 (6.5) Wastewater Collection 2.5 0.9 1.6 Wastewater Treatment 0.8 2.1 (1.3) Refuse 2.3 (0.5) 2.8 Storm Drainage 2.3 3.0 (0.7) Airport (0.2) (0.1) (0.1) Total Change in Net Position 20.5$ 29.3$ (8.8)$ The most significant factors in the year over year change in net position for Enterprise Funds are as follows: Water change in net position for the year was $6.8 million, an increase of $2.3 million from the prior year. The increase is primarily due to a $6.3 million increase in operating revenues resulting from a 15 percent rate increase. The ending RSR balance is $17.3 million, an increase of $9.3 million from prior year. In addition to current year change in net position of $6.8 million, the RSR balance was also increased by reimbursement from bond proceeds of prior years’ expenditures. Electric change in net position for the year was $1.9 million, a decrease of $7.1 million from the prior year. The decrease was a combination of a $5.6 million decrease in investment earnings resulting from decreased market value of bond portfolio and a $3.9 million increase in operating expenses, offset by a $2.9 million increase in operating revenues. The ending RSR balance is $69.0 million, a decrease of $5.6 million from prior year. Gas ended the year with change in net position of $1.3 million, compared to $7.8 million in the prior year, a decrease of $6.5 million. The decrease is due to a $7.1 million decrease in operating revenues resulting from lower rates which were driven by a change in gas procurement strategy, Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 25 offset by a $2.1 million decrease in operating expenses. The ending RSR balance is $11.3 million, a decrease of $4.7 million from prior year. Wastewater Collection ended the year with change in net position of $2.5 million compared to $0.9 million in the prior year. The increased change in net position is primarily due to a $1.1 million increase in operating revenues resulting from a 5 percent rate increase. The ending RSR balance is $4.1 million, a decrease of $0.6 million from prior year. Refuse ended the year with a change in net position of $2.3 million, compared to a negative $0.5 million change in net position in FY 2012. The increase of $2.8 million is due to decreased operations and maintenance expense resulting from closure of the landfill. The ending RSR balance is negative $2.8 million, compared to a negative $4.1 million the prior year, an improvement of $1.3 million. Compliance requirements for the landfill closure and post‐closure maintenance plan are discussed in detail in Note 9. Management’s Discussion and Analysis ……….…………………....………………………………………………… 26 City of Palo Alto CAPITAL ASSETS GASB 34 requires that the City record all its capital assets, including infrastructure and intangible assets. Infrastructure includes roads, bridges, signals and similar assets used by the entire population. The table below shows capital assets and the amount of accumulated depreciation for these assets for Governmental and Business‐type Activities. Further detail can be found in Note 6 to the financial statements. Increase/ 2013 2012 (Decrease) Governmental Activities Capital Assets Land and improvements 79.0$ 78.6$ 0.4$ Street trees 15.4 15.4 ‐ Construction in progress 69.2 55.3 13.9 Buildings and improvements 133.7 132.9 0.8 Intangible assets ‐ Easement 3.8 3.8 ‐ Equipment 10.9 10.1 0.8 Roadway network 282.3 272.4 9.9 Recreation and open space network 24.9 23.1 1.8 Less accumulated depreciation (203.8) (194.2) (9.6) Internal Service Fund Assets Construction in progress 1.4 0.2 1.2 Equipment 50.9 51.5 (0.6) Less accumulated depreciation (38.8) (35.9) (2.9) Total Governmental 428.9$ 413.2$ 15.7$ Business‐type Activities Land 5.0$ 5.0$ ‐$ Construction in progress 118.2 99.3 18.9 Buildings and improvements 33.4 32.7 0.7 Transmission, distribution and treatment systems 642.1 616.0 26.1 Less accumulated depreciation (276.4) (263.0) (13.4) Total Business‐type 522.3$ 490.0$ 32.3$ CAPITAL ASSETS AT JUNE 30 (in millions) Governmental Activities’ capital assets net of depreciation increased by $15.7 million from the prior year. The increase was primarily due to improvements for the Art Center electrical and mechanical upgrades, construction of the Mitchell Park Library and Community Center, and street and sidewalk improvements. Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 27 In early 2010, the Palo Alto City Council established an Infrastructure Blue Ribbon Commission (IBRC) to review the City’s General Fund infrastructure needs and to recommend resources to fill any funding gaps identified. The Commission issued their report dated December 22, 2011 in which they identified a deferred maintenance backlog of $41.5 million for “keep up” needs, and major capital expenditures of $210.7 million for “new and replacement” needs, including replacement of the Public Safety Building and the Municipal Services Center. The City is funding “keep up” costs at the rate of $2.2 million per year, and excess reserves are being transferred from the General Fund to the Infrastructure Reserve. The newly established Council Infrastructure Committee will be making recommendations on what can be funded from existing resources and what will require new revenues. Major governmental activities’ capital projects that are currently in progress, and the remaining capital commitment of each, are as follows: Mitchell Park Library and Community Center ‐ $12.6 million Main Library ‐ $22.5 million City Hall First Floor Renovations ‐ $1.3 million Business‐type Activities’ capital assets net of depreciation increased by $32.3 million over FY 2012. The increase is due to Water, Electric and Gas infrastructure improvements. Major business‐type activities’ capital projects that are currently in progress, and the remaining capital commitment of each, are as follows: Emergency water supply improvement for Water Fund ‐ $7.1 million Gas main replacement project for Gas Fund ‐ $12.4 million Plant equipment replacement for Wastewater Treatment Fund ‐ $3.3 million Wastewater Collection Fund rehabilitation/augmentation project ‐ $3.1 million The City depreciates its capital assets over their estimated useful lives, as required by GASB 34. The purpose of depreciation is to spread the cost of a capital asset over the years of its useful life so that an allocable portion of the cost of the asset is borne by all users. Additional information on capital assets and depreciable lives are in Note 6. Management’s Discussion and Analysis ……….…………………....………………………………………………… 28 City of Palo Alto DEBT ADMINISTRATION Each of the City’s debt issues is discussed in detail in Note 7 to the financial statements. At June 30, 2013, the City’s debt was comprised of the following: LONG‐TERM DEBT AT JUNE 30 (in millions) Increase/ 2013 2012 (Decrease) Governmental Activities General Long‐Term Obligations Certificates of Participation 2002B Downtown Parking Improvements 1.6$ 1.7$ (0.1)$ General Obligation Bonds 2010 Series A 53.5 54.5 (1.0) 2013 Series A 20.7 ‐ 20.7 2011 Lease Purchase Agreement 2.4 2.8 (0.4) Add: unamortized premium 4.4 3.5 0.9 Total Governmental 82.6$ 62.5$ 20.1$ Business‐type Activities Enterprise Long‐Term Obligations Utility Revenue Bonds 1995 Series A3.8$ 4.2$ (0.4) 1999 Refunding 11.6 12.2 (0.6) 2009 Series A 32.5 33.4 (0.9) 2011 Series A 15.2 16.2 (1.0) Less: unamortized premium (discount) and loss on refunding 0.6 0.6 0.0 Energy Tax Credit Bonds 2007 Series A0.9 1.0 (0.1) Less: unamortized premium (discount)(0.1) (0.1)‐ State Water Resources Loan 2007 7.2 7.7 (0.5) 2009 7.9 8.2 (0.3) Total Business‐type 79.6$ 83.4$ (3.8)$ Management’s Discussion and Analysis ……….…………………………………………………………………… City of Palo Alto 29 On June 30, 2013, the City issued an additional $20.7 million in General Obligation Bonds to finance costs for construction of the new Mitchell Park Library and Community Center and to make substantial capital improvements to the Main and Downtown Libraries. The entire $76 million authorized by Palo Alto residents via Measure N has now been issued. The pledge of future net revenues ends upon repayment of the remaining debt service on the bonds and is scheduled to occur in 2044. As noted in the Statistical Section of the CAFR, the combined direct debt ratio to assessed valuation for the General Fund is a low 0.31 percent compared to the allowable legal debt margin of 15 percent. SPECIAL ASSESSMENT DISTRICT DEBT Special assessment districts throughout different parts of the City have also issued debt to finance infrastructure and facilities construction exclusively in their districts. As of June 30, 2013, the City had no special assessment district debt with City commitment outstanding. ECONOMIC OUTLOOK The economy of the City is discussed in the accompanying Transmittal Letter. CONTACTING THE CITY’S FINANCIAL MANAGEMENT The CAFR is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the City’s finances. Questions about this report should be directed to the Administrative Services Department, at 250 Hamilton Avenue, 4th Floor, Palo Alto, California. This report and other financial reports can be viewed on the City of Palo Alto website at: www.cityofpaloalto.org. On the home page, select Departments, select Administrative Services, and select Financial Reporting. Within Financial Reporting, there are links to reports by title and reporting date. 30 This page left intentionally blank. CITY OF PALO ALTO Statement of Net Position June 30, 2013 (Amounts in thousands) Governmental Business‐Type Activities Activities Total ASSETS: Cash and investments available for operations (Note 3)227,843$ 256,050$ 483,893$ Receivables, net: Accounts and intergovernmental 10,436 33,617 44,053 Interest receivable 1,310 1,545 2,855 Notes and loans receivable (Note 5)21,898 ‐ 21,898 Internal balances (Note 4)(1,977) 1,977 ‐ Net OPEB asset (Note 12)21,851 ‐ 21,851 Due from other government agencies ‐ 4,000 4,000 Inventory of materials and supplies and prepaids 4,801 68 4,869 Unamortized bond issuance costs 1,054 1,993 3,047 Restricted cash and investments with fiscal agents (Note 3)34,137 4,060 38,197 Restricted cash for post‐closure landfill (Note 3)‐ 5,820 5,820 Capital assets (Note 6): Nondepreciable 164,997 123,147 288,144 Depreciable, net of accumulated depreciation 263,945 399,106 663,051 Total assets 750,295 831,383 1,581,678 LIABILITIES: Accounts payable and accruals 10,255 18,049 28,304 Accrued salaries and benefits 2,740 1,255 3,995 Unearned revenue 955 645 1,600 Accrued compensated absences (Note 1): Due in one year 4,145 ‐ 4,145 Due in more than one year 6,286 ‐ 6,286 Claims payable (Note 14): Due in one year 6,663 ‐ 6,663 Due in more than one year 21,082 ‐ 21,082 Accrued landfill closure liability and post‐closure care (Note 9): Due in more than one year ‐ 11,195 11,195 Long‐term debt (Note 7): Due in one year 1,682 3,780 5,462 Due in more than one year 80,913 75,876 156,789 Total liabilities 134,721 110,800 245,521 NET POSITION (Note 10): Net Investment in capital assets 378,047 446,597 824,644 Restricted for: Special revenue programs 62,699 ‐ 62,699 Capital projects 1,156 ‐ 1,156 Debt service 6,444 4,060 10,504 Nonexpendable ‐ Eyerly Family 1,418 ‐ 1,418 Total restricted net position 71,717 4,060 75,777 Unrestricted 165,810 269,926 435,736 Total net position $ 615,574 $ 720,583 $ 1,336,157 See accompanying notes to the basic financial statements. 31 32 This page left intentionally blank. CITY OF PALO ALTO Statement of Activities For the Year Ended June 30, 2013 (Amounts in thousands) Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business‐Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: City Council 94$ ‐$ ‐$ ‐$ (94)$ ‐$ (94)$ City Manager 1,237 ‐ ‐ ‐ (1,237) ‐ (1,237) City Attorney 1,642 ‐ ‐ ‐ (1,642) ‐ (1,642) City Clerk 330 ‐ ‐ ‐ (330) ‐ (330) City Auditor 464 ‐ ‐ ‐ (464) ‐ (464) Administrative Services 7,614 4,637 ‐ 515 (2,462) ‐ (2,462) Human Resources 1,420 ‐ ‐ ‐ (1,420) ‐ (1,420) Public Works 20,816 1,314 1,817 ‐ (17,685) ‐ (17,685) Planning and Community Environment 13,549 28,768 2,901 ‐ 18,120 ‐ 18,120 Police 31,865 4,062 282 ‐ (27,521) ‐ (27,521) Fire 27,587 12,077 5 ‐ (15,505) ‐ (15,505) Community Services 22,705 24,800 25 ‐ 2,120 ‐ 2,120 Library 7,319 187 8 ‐ (7,124) ‐ (7,124) Interest on long‐term debt 2,562 ‐ ‐ ‐ (2,562) ‐ (2,562) Total Governmental Activities 139,204 75,845 5,038 515 (57,806) ‐ (57,806) Business‐Type Activities: Water 30,707 37,746 572 1,162 ‐ 8,773 8,773 Electric 106,438 121,805 ‐ ‐ ‐ 15,367 15,367 Fiber Optics 1,437 4,382 ‐ ‐ ‐ 2,945 2,945 Gas 26,749 34,633 ‐ ‐ ‐ 7,884 7,884 Wastewater Collection 14,313 16,077 ‐ 1,062 ‐ 2,826 2,826 Wastewater Treatment 20,635 21,528 ‐ ‐ ‐ 893 893 Refuse 28,542 30,583 ‐ ‐ ‐ 2,041 2,041 Storm Drainage 3,703 6,053 ‐ ‐ ‐ 2,350 2,350 Airport 246 ‐ ‐ ‐ ‐ (246) (246) Total Business‐Type Activities 232,770 272,807 572 2,224 ‐ 42,833 42,833 Total 371,974$ 348,652$ 5,610$ 2,739$ (57,806) 42,833 (14,973) General Revenues: Taxes: Property tax 31,929 ‐ 31,929 Sales tax 25,606 ‐ 25,606 Utility user tax 10,861 ‐ 10,861 Transient occupancy tax 10,794 ‐ 10,794 Documentary transfer tax 6,810 ‐ 6,810 Other taxes 3,694 ‐ 3,694 Investment earnings (1,228) (2,754) (3,982) Miscellaneous 518 ‐ 518 Transfers (Note 4)19,249 (19,249) ‐ Total general revenues and transfers 108,233 (22,003) 86,230 Change in net position 50,427 20,830 71,257 Net position, beginning of year 565,147 699,753 1,264,900 Net position, end of year 615,574$ 720,583$ 1,336,157$ See accompanying notes to the basic financial statements. 33 34 This page left intentionally blank. CITY OF PALO ALTO Governmental Funds Balance Sheet June 30, 2013 (Amounts in thousands) Capital Other Total General Projects Governmental Governmental Fund Fund Funds Funds ASSETS: Cash and investments available for operations (Note 3)34,443$ 45,789$ 69,789$ 150,021$ Receivables, net: Accounts and intergovernmental 8,055 859 581 9,495 Interest receivable 608 ‐ 315 923 Notes and loans receivable (Note 5)930 ‐ 20,968 21,898 Prepaid items 645 ‐ ‐ 645 Advance to other fund (Note 4)610 ‐ ‐ 610 Inventory of materials and supplies 3,564 ‐ ‐ 3,564 Restricted cash and investments with fiscal agents (Note 3)‐ 33,899 238 34,137 Total assets 48,855$ 80,547$ 91,891$ 221,293$ LIABILITIES AND FUND BALANCES: Liabilities: Accounts payable and accruals 3,333$ 2,501$ 1,051$ 6,885$ Accrued salaries and benefits 2,490 92 3 2,585 Unearned revenue 955 ‐ ‐ 955 Total liabilities 6,778 2,593 1,054 10,425 Fund balances (Note 10): Nonspendable: Notes and loans receivable 930 ‐ 16,771 17,701 Prepaid items 645 ‐ ‐ 645 Inventories 3,564 ‐ ‐ 3,564 Advance to other fund 610 ‐ ‐ 610 Eyerly family ‐ ‐ 1,418 1,418 Restricted for: Transportation mitigation ‐ ‐ 9,262 9,262 Federal revenue ‐ ‐ 4,480 4,480 Street improvement ‐ ‐ 581 581 Local law enforcement ‐ ‐ 254 254 Library bond project ‐ 32,554 ‐ 32,554 Public benefits ‐ ‐ 31,351 31,351 Debt service ‐ ‐ 6,206 6,206 Committed for: Developer's impact fees ‐ ‐ 9,726 9,726 Housing in‐lieu ‐ ‐ 9,455 9,455 Special districts ‐ ‐ 1,118 1,118 Downtown business ‐ ‐ 101 101 Assigned for: Unrealized gains on investments 386 ‐ 114 500 Infrastructure ‐ 17,462 ‐ 17,462 Capital projects ‐ 27,938 ‐ 27,938 Other general government purposes 5,029 ‐ ‐ 5,029 Unassigned for: Budget Stabilization 30,355 ‐ ‐ 30,355 Reappropriations 558 ‐ ‐ 558 Total fund balances 42,077 77,954 90,837 210,868 Total liabilities and fund balances 48,855$ 80,547$ 91,891$ 221,293$ See accompanying notes to the basic financial statements. 35 CITY OF PALO ALTO Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ‐ Governmental Activities June 30, 2013 Total fund balances reported on the governmental funds balance sheet 210,868$ Amounts reported for governmental activities in the statement of net position are different from those reported in the governmental funds balance sheet because of the following: Costs of issuance related to the bonds are capitalized and amortized 1,054 over the life of the bonds in the government‐wide financial statements Capital assets used in governmental activities are not current assets or financial resources and therefore are not reported in the governmental funds (Note 6)428,942 Internal service funds are used by management to charge the costs of activities such as insurance, equipment acquisition and maintenance, and certain employee benefits to individual funds. The assets and liabilities of the internal service funds are therefore included in governmental activities in the statement of net position (excludes capital assets reported above)58,390 Some liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the governmental funds: Interest payable (1,085) Long‐term debt (Note 7)(82,595) Net position of governmental activities 615,574$ (Amounts in thousands) See accompanying notes to the basic financial statements. 36 CITY OF PALO ALTO Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2013 (Amounts in thousands) Capital Other General Projects Governmental Fund Fund Funds Total REVENUES: Property tax 28,742$ ‐$ 3,188$ 31,930$ Special assessments ‐ ‐ 110 110 Sales tax 25,606 ‐ ‐ 25,606 Utility user tax 10,861 ‐ ‐ 10,861 Transient occupancy tax 10,794 ‐ ‐ 10,794 Documentary transfer tax 6,810 ‐ ‐ 6,810 Other taxes and fines 2,152 ‐ 1,524 3,676 Charges for services 26,727 ‐ 12,249 38,976 From other agencies 63 3,314 732 4,109 Permits and licenses 7,572 ‐ 646 8,218 Investment earnings (1,614) 1,115 (250) (749) Rental income 12,879 ‐ 6 12,885 Other revenue 2,033 327 15,210 17,570 Total revenues 132,625 4,756 33,415 170,796 EXPENDITURES: Current: City Council 105 ‐ ‐ 105 City Manager 1,200 ‐ ‐ 1,200 City Attorney 1,654 ‐ ‐ 1,654 City Clerk 331 ‐ ‐ 331 City Auditor 460 ‐ ‐ 460 Administrative Services 3,114 ‐ ‐ 3,114 Human Resources 1,427 ‐ ‐ 1,427 Public Works 11,489 ‐ ‐ 11,489 Planning and Community Environment 11,810 ‐ 1,664 13,474 Police 31,784 ‐ 70 31,854 Fire 27,683 ‐ ‐ 27,683 Community Services 21,500 ‐ 161 21,661 Library 6,902 ‐ ‐ 6,902 Non‐Departmental 7,353 ‐ (2,786) 4,567 Capital outlay ‐ 29,542 ‐ 29,542 Debt service: Principal 364 ‐ 1,125 1,489 Interest and fiscal charges 64 ‐ 2,595 2,659 Bond issuance costs ‐ 540 ‐ 540 Total expenditures 127,240 30,082 2,829 160,151 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 5,385 (25,326) 30,586 10,645 OTHER FINANCING SOURCES (USES): Issuance of debt ‐ 20,322 373 20,695 Original debt premium ‐ 993 18 1,011 Transfers in (Note 4)19,759 28,629 1,955 50,343 Transfers out (Note 4)(25,090) (462) (8,281) (33,833) Total other financing sources (uses)(5,331) 49,482 (5,935) 38,216 Change in fund balances 54 24,156 24,651 48,861 FUND BALANCES, BEGINNING OF YEAR 42,023 53,798 66,186 162,007 FUND BALANCES, END OF YEAR 42,077$ 77,954$ 90,837$ 210,868$ See accompanying notes to the basic financial statements. 37 CITY OF PALO ALTO Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ‐ Governmental Activities For the Year Ended June 30, 2013 Net change in fund balances ‐ total governmental funds 48,861$ Amounts reported for governmental activities in the statement of activities are different from those reported in the governmental funds because of the following: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of these assets are capitalized and allocated over their estimated useful lives and reported as depreciation expense. Therefore, the activities associated with capital assets are as follows: Capital outlay added back to fund balance for current year additions 30,413 Depreciation expense is deducted from fund balance (depreciation expense is net of internal service fund depreciation of $4,695 (Note 6), which has already been allocated through the internal service fund activities below (10,966) Disposal of capital assets (1,427) Principal payments on long‐term liabilities are reported as expenditures in governmental funds when paid. The governmental activities, however, report principal payments as a reduction of long‐term debt on the statement of net position. Interest accrued on long‐term debt and amortization of bond issuance costs and premiums do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Therefore, the activities associated with long‐term debt are as follows: Principal paid during the year 1,489 Proceeds from debt issuance (20,695) Original debt premium (1,011) Payment for bond issuance costs 540 Change in interest payable (9) Amortization of unamortized bond issuance costs (19) Amortization of bond premium 125 Internal service funds are used by management to charge the costs of activities, such as insurance, equipment acquisition and maintenance, and employees benefits to individual funds. The portion of the net revenue of these internal service funds arising out of their transactions with governmental funds is reported with governmental activities.3,126 Change in net position of governmental activities 50,427$ (Amounts in thousands) See accompanying notes to the basic financial statements. 38 Variance with Budgeted Amounts Final Budget Actual, plus Positive Original Final Encumbrances (Negative) 22,545$ 23,364$ 25,606$ 2,242$ 27,306 27,912 28,742 830 9,591 10,439 10,794 355 Documentary transfer tax 5,078 6,800 6,810 10 10,731 10,825 10,861 36 2,058 2,058 2,152 94 23,682 25,646 26,726 1,080 6,614 7,998 7,713 (285) 959 774 (1,614) (2,388) 12,640 12,640 12,879 239 157 170 63 (107) 1,188 1,489 2,038 549 122,549 130,115 132,770 2,655 10,874 10,834 11,686 852 ‐ 4,385 4,863 478 133,423 145,334 149,319 3,985 2,436 3,028 2,916 112 965 1,028 995 33 1,558 1,584 1,291 293 465 522 523 (1) 2,578 3,010 2,666 344 7,156 7,525 7,176 349 21,893 22,518 22,279 239 27,582 28,884 28,754 130 2,982 3,074 2,977 97 6,996 7,683 7,555 128 11,111 13,382 13,112 270 32,332 32,614 32,468 146 13,947 14,753 13,987 766 6,025 8,503 7,956 547 138,026 148,108 144,655 3,453 (4,603) (2,774) 4,664 7,438 18,995 19,187 19,759 572 (14,782) (14,722) (25,090) (10,368) 4,213 4,465 (5,331) (9,796) (390)$ 1,691$ (667) (2,358)$ 5,584 (4,863) 54 42,023 42,077$ REVENUES: CITY OF PALO ALTO General Fund Statement of Revenues, Expenditures and Changes in Fund Balance ‐ Budget and Actual For the Year Ended June 30, 2013 (Amounts in thousands) Charges to other funds Sales tax Property tax Transient occupancy tax Utility user tax Other taxes, fines and penalties Charges for services Permits and licenses Investment earnings Rental income From other agencies Other revenues Fire Prior year encumbrances and reappropriations Total revenues EXPENDITURES: Current: City Attorney City Auditor City Clerk City Council City Manager Administrative Services Community Services Total other financing sources (uses) Human Resources Library Planning and Community Environment Police Public Works Non‐Departmental Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers out FUND BALANCE AT BEGINNING OF YEAR, GAAP BASIS FUND BALANCE AT END OF YEAR, GAAP BASIS EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES, BUDGETARY BASIS Adjustment to Budgetary Basis: Current year encumbrances/reappropriations Prior year encumbrances/reappropriations CHANGE IN FUND BALANCE, GAAP BASIS See accompanying notes to the basic financial statements. 39 Fiber Water Electric Optics Gas ASSETS: Current assets: Cash and investments available for operations (Note 3) 34,062$ 131,018$ 15,847$ 33,470$ Accounts receivable, net 5,582 13,867 1,353 2,431 Interest receivable 187 783 86 210 Due from other government agencies ‐ ‐ ‐ ‐ Inventory of materials and supplies ‐ ‐ ‐ ‐ Restricted cash and investments with fiscal agents (Note 3)3,246 ‐ ‐ 814 Restricted cash for landfill closure (Note 3)‐ ‐ ‐ ‐ Total current assets 43,077 145,668 17,286 36,925 Noncurrent assets: Due from other government agencies ‐ ‐ ‐ ‐ Unamortized bond issuance costs 529 44 ‐ 105 Deposit ‐ 68 ‐ ‐ Capital assets (Note 6): Nondepreciable 45,190 20,048 1,163 16,089 Depreciable, net 61,412 152,736 6,148 74,798 Net OPEB asset (Note 12)‐ ‐ ‐ ‐ Total noncurrent assets 107,131 172,896 7,311 90,992 Total assets 150,208 318,564 24,597 127,917 LIABILITIES: Current liabilities: Accounts payable and accruals 5,987 2,050 240 4,023 Accrued salaries and benefits 171 401 31 201 Unearned revenue ‐ ‐ ‐ ‐ Accrued compensated absences (Note 1)‐ ‐ ‐ ‐ Current portion of revenue bonds (Note 7)1,360 100 ‐ 520 Accrued claims payable (Note 14)‐ ‐ ‐ ‐ Total current liabilities 7,518 2,551 271 4,744 Noncurrent liabilities: Accrued compensated absences (Note 1)‐ ‐ ‐ ‐ Accrued claims payable (Note 14)‐ ‐ ‐ ‐ Advance from other fund (Note 4)‐ ‐ ‐ ‐ Landfill closure and post‐closure care (Note 9)‐ ‐ ‐ ‐ Utility revenue bonds, net of unamortized discounts/premiums (Note 7)39,095 751 ‐ 8,272 Total noncurrent liabilities 39,095 751 ‐ 8,272 Total liabilities 46,613 3,302 271 13,016 NET POSITION (Note 10): Net Investment in capital assets 66,147 171,933 7,311 82,095 Restricted for debt service 3,246 ‐ ‐ 814 Unrestricted (deficit)34,202 143,329 17,015 31,992 Total net position 103,595$ 315,262$ 24,326$ 114,901$ Some amounts reported for Business‐type Activities in the statement of net position are different because certain Internal Service Fund net positions are included with Business‐type Activities Net position reported in Business‐type Activities Business‐Type Activities‐Enterprise Funds CITY OF PALO ALTO Proprietary Funds Statement of Net Position June 30, 2013 (Amounts in thousands) See accompanying notes to the basic financial statements. 40 Governmental Activities ‐ Wastewater Wastewater Storm Internal Service Collection Treatment Refuse Drainage Airport Totals Funds 14,936$ 16,186$ 3,794$ 6,512$ 225$ 256,050$ 77,822$ 2,021 4,288 3,413 662 ‐ 33,617 941 89 98 52 39 1 1,545 387 ‐ 250 ‐ ‐ ‐ 250 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 592 ‐ ‐ ‐ ‐ ‐ 4,060 ‐ ‐ ‐ 5,820 ‐ ‐ 5,820 ‐ 17,046 20,822 13,079 7,213 226 301,342 79,742 ‐ 3,750 ‐ ‐ ‐ 3,750 ‐ 18 1,185 ‐ 112 ‐ 1,993 ‐ ‐ ‐ ‐ ‐ ‐ 68 ‐ 16,416 13,117 4,213 6,911 ‐ 123,147 1,413 55,257 25,860 257 22,638 ‐ 399,106 12,137 ‐ ‐ ‐ ‐ ‐ ‐ 21,851 71,691 43,912 4,470 29,661 ‐ 528,064 35,401 88,737 64,734 17,549 36,874 226 829,406 115,143 606 2,640 2,019 456 28 18,049 2,285 108 232 72 34 5 1,255 155 ‐ ‐ ‐ 645 ‐ 645 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 4,145 74 1,216 ‐ 510 ‐ 3,780 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 6,663 788 4,088 2,091 1,645 33 23,729 13,248 ‐ ‐ ‐ ‐ ‐ ‐ 6,286 ‐ ‐ ‐ ‐ ‐ ‐ 21,082 ‐ ‐ ‐ ‐ 610 610 ‐ ‐ ‐ 11,195 ‐ ‐ 11,195 ‐ 977 19,740 ‐ 7,041 ‐ 75,876 ‐ 977 19,740 11,195 7,041 610 87,681 27,368 1,765 23,828 13,286 8,686 643 111,410 40,616 70,622 22,021 4,470 21,998 ‐ 446,597 13,550 ‐ ‐ ‐ ‐ ‐ 4,060 ‐ 16,350 18,885 (207) 6,190 (417) 267,339 60,977 86,972$ 40,906$ 4,263$ 28,188$ (417)$ 717,996 74,527$ 2,587 720,583$ Business‐Type Activities‐Enterprise Funds See accompanying notes to the basic financial statements. 41 Fiber Water Electric Optics Gas OPERATING REVENUES: Sales of utilities: Customers 34,179$ 106,091$ ‐$ 32,929$ City departments 1,883 3,265 841 830 Surplus energy ‐ 1,127 ‐ ‐ Service connection charges and miscellaneous 756 1,987 ‐ 731 Charges for services ‐ ‐ ‐ ‐ Other 928 9,335 3,541 143 Total operating revenues 37,746 121,805 4,382 34,633 OPERATING EXPENSES: Purchase of utilities: Retail 16,605 59,574 ‐ 13,455 Surplus energy ‐ 1,740 ‐ ‐ Administrative and general 4,008 6,406 354 4,198 Engineering (operating)339 1,278 ‐ 340 Resource management and energy efficiency 558 6,550 ‐ 1,136 Operations and maintenance 4,944 9,601 773 4,940 Rent 1,912 3,704 26 219 Depreciation and amortization 1,575 8,223 287 2,127 Claims payments and changes in estimated self‐insurance liability ‐ ‐ ‐ ‐ Refund of charges for services ‐ ‐ ‐ ‐ Compensated absences and other benefits ‐ ‐ ‐ ‐ Total operating expenses 29,941 97,076 1,440 26,415 Operating income (loss)7,805 24,729 2,942 8,218 NONOPERATING REVENUES (EXPENSES): Investment earnings (218) (1,497) (91) (426) Interest expense (816) (9,169) ‐ (296) Gain (loss) on disposal of capital assets (40) (395) ‐ (149) Other nonoperating revenues 572 ‐ ‐ ‐ Total nonoperating revenues (expenses)(502) (11,061) (91) (871) Income (loss) before transfers and capital contributions 7,303 13,668 2,851 7,347 Capital contributions 1,162 ‐ ‐ ‐ Transfers in (Note 4)412 296 1 117 Transfers out (Note 4)(2,055) (12,090) (2) (6,177) Change in net position 6,822 1,874 2,850 1,287 NET POSITION (DEFICIT), BEGINNING OF YEAR 96,773 313,388 21,476 113,614 NET POSITION (DEFICIT), END OF YEAR 103,595$ 315,262$ 24,326$ 114,901$ Some amounts reported for Business‐type Activities in the Statement of Activities are different because certain Internal Service Fund activities are included with Business‐type Activities Change in net position reported in Business‐type Activities Business‐Type Activities‐Enterprise Funds CITY OF PALO ALTO Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position For the Year Ended June 30, 2013 (Amounts in thousands) See accompanying notes to the basic financial statements. 42 Governmental Activities‐ Wastewater Wastewater Storm Internal Service Collection Treatment Refuse Drainage Airport Totals Funds 14,915$ 13,000$ 26,388$ 5,611$ ‐$ 233,113$ ‐$ 104 8,366 821 338 ‐ 16,448 ‐ ‐ ‐ ‐ ‐ ‐ 1,127 ‐ 547 ‐ ‐ ‐ ‐ 4,021 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 80,365 511 162 3,374 104 ‐ 18,098 500 16,077 21,528 30,583 6,053 ‐ 272,807 80,865 8,314 ‐ 13,362 ‐ ‐ 111,310 ‐ ‐ ‐ ‐ ‐ ‐ 1,740 ‐ 1,098 ‐ 2,147 583 246 19,040 10,631 271 1,868 172 333 ‐ 4,601 ‐ ‐ ‐ ‐ 290 ‐ 8,534 ‐ 2,617 15,427 9,526 1,092 ‐ 48,920 9,549 110 ‐ 2,694 ‐ ‐ 8,665 ‐ 1,882 2,650 4 914 ‐ 17,662 4,973 ‐ ‐ ‐ ‐ ‐ ‐ 4,648 ‐ ‐ ‐ ‐ ‐ ‐ 75 ‐ ‐ ‐ ‐ ‐ ‐ 49,993 14,292 19,945 27,905 3,212 246 220,472 79,869 1,785 1,583 2,678 2,841 (246) 52,335 996 (211) (153) (93) (69) 4 (2,754) (480) (58) (592) (607) (465) ‐ (12,003) ‐ ‐ ‐ ‐ ‐ ‐ (584) 94 ‐ ‐ ‐ ‐ ‐ 572 66 (269) (745) (700) (534) 4 (14,769) (320) 1,516 838 1,978 2,307 (242) 37,566 676 1,062 ‐ ‐ ‐ ‐ 2,224 ‐ 69 ‐ 644 13 ‐ 1,552 3,896 (147) (11) (306) (13) ‐ (20,801) (1,157) 2,500 827 2,316 2,307 (242) 20,541 3,415 84,472 40,079 1,947 25,881 (175) 71,112 86,972$ 40,906$ 4,263$ 28,188$ (417)$ 74,527$ 289 20,830$ Business‐Type Activities‐Enterprise Funds See accompanying notes to the basic financial statements. 43 Fiber Water Electric Optics Gas Cash flows from operating activities: Cash received from customers 34,598$ 108,486$ (818)$ 33,775$ Cash refunds to customers ‐ ‐ ‐ ‐ Cash payments to suppliers for goods and services (24,236) (82,698) (609) (18,704) Cash payments to employees (4,007) (6,434) (354) (4,193) Internal activity‐ receipts (payment) from (to) other funds 1,883 3,265 841 830 Other receipts 928 9,335 3,541 143 Net cash provided by (used in) operating activities 9,166 31,954 2,601 11,851 Cash flows from noncapital financing activities: Receipt of loans from other funds ‐ ‐ ‐ ‐ Interest subsidy received from Build America Bond 572 ‐ ‐ ‐ Transfers in 412 296 1 117 Transfers out (2,055) (12,090) (2) (6,177) Cash flows provided by (used in) noncapital financing activities (1,071) (11,794) (1) (6,060) Cash flows from capital and related financing activities: Acquisition and construction of capital assets (16,559) (14,438) (373) (7,376) Proceeds from sale of capital assets ‐ 15 ‐ ‐ Capital grants and contributions 1,162 ‐ ‐ ‐ Principal paid on long‐term debt (1,349) (91) ‐ (514) Interest paid on long‐term debt (787) (9,165) ‐ (288) Cash flows used in capital and related financing activities (17,533) (23,679) (373) (8,178) Cash flows from investing activities: Interest received (234) (1,409) (95) (409) Cash flows from investing activities (234) (1,409) (95) (409) Net change in cash and cash equivalents (9,672) (4,928) 2,132 (2,796) Cash and cash equivalents, beginning of year 46,980 135,946 13,715 37,080 Cash and cash equivalents, end of year $ 37,308 $ 131,018 $ 15,847 $ 34,284 Financial statement presentation: Cash and investments available for operations 34,062$ 131,018$ 15,847$ 33,470$ Cash and investments with fiscal agent 3,246 ‐ ‐ 814 Cash and cash equivalents, end of year 37,308$ 131,018$ 15,847$ 34,284$ Reconciliation of operating income (loss) to net cash provided by (used in) operating activities: Operating income (loss)7,805$ 24,729$ 2,942$ 8,218$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,575 8,223 287 2,127 Other ‐ ‐ ‐ ‐ Change in assets and liabilities: Accounts receivable (337) (719) (818) 115 Inventory of materials and supplies ‐ ‐ ‐ ‐ Deposit ‐ (41) ‐ ‐ Net OPEB asset ‐ ‐ ‐ ‐ Accounts payable and accruals 122 (210) 190 1,386 Accrued salaries and benefits 1 (28) ‐ 5 Accrued compensated absences ‐ ‐ ‐ ‐ Unearned revenue ‐ ‐ ‐ ‐ Landfill closure and post‐closure care ‐ ‐ ‐ ‐ Accrued claims payable ‐ ‐ ‐ ‐ Net cash provided by (used in) operating activities $ 9,166 $ 31,954 $ 2,601 $ 11,851 Business‐Type Activities‐Enterprise Funds CITY OF PALO ALTO Proprietary Funds Statement of Cash Flows For the Year Ended June 30, 2013 (Amounts in thousands) See accompanying notes to the basic financial statements. 44 Governmental Activities‐ Wastewater Wastewater Storm Internal Service Collection Treatment Refuse Drainage Airport Totals Funds 15,159$ 10,802$ 26,073$ 5,285$ ‐$ 233,360$ 80,178$ ‐ ‐ ‐ ‐ ‐ ‐ (75) (11,145) (15,322) (25,516) (1,354) ‐ (179,584) (10,187) (1,093) ‐ (2,171) (581) (227) (19,060) (59,190) 104 8,366 821 338 ‐ 16,448 (4,369) 511 162 3,572 104 ‐ 18,296 66 3,536 4,008 2,779 3,792 (227) 69,460 6,423 ‐ ‐ ‐ ‐ 310 310 ‐ ‐ ‐ ‐ ‐ ‐ 572 ‐ 69 ‐ 644 13 ‐ 1,552 3,896 (147) (11) (306) (13) ‐ (20,801) (1,157) (78) (11) 338 ‐ 310 (18,367) 2,739 (4,774) (2,876) (922) (3,110) ‐ (50,428) (2,811) ‐ ‐ ‐ ‐ ‐ 15 248 1,062 250 ‐ ‐ ‐ 2,474 ‐ (71) (1,161) ‐ (480) ‐ (3,666) ‐ (58) (573) (607) (466) ‐ (11,944) ‐ (3,841) (4,360) (1,529) (4,056) ‐ (63,549) (2,563) (194) (150) (89) (66) 4 (2,642) (498) (194) (150) (89) (66) 4 (2,642) (498) (577) (513) 1,499 (330) 87 (15,098) 6,101 15,513 16,699 8,115 6,842 138 281,028 71,721 $ 14,936 $ 16,186 $ 9,614 $ 6,512 $ 225 $ 265,930 $ 77,822 14,936$ 16,186$ 3,794$ 6,512$ 225$ 256,050$ 77,822$ ‐ ‐ 5,820 ‐ ‐ 9,880 ‐ 14,936$ 16,186$ 9,614$ 6,512$ 225$ 265,930$ 77,822$ 1,785$ 1,583$ 2,678$ 2,841$ (246)$ 52,335$ 996$ 1,882 2,650 4 914 ‐ 17,662 4,973 ‐ ‐ ‐ ‐ ‐ ‐ 66 (303) (2,198) (315) (39) ‐ (4,614) (687) ‐ ‐ ‐ ‐ ‐ ‐ 76 ‐ ‐ ‐ ‐ ‐ (41) ‐ ‐ ‐ ‐ ‐ ‐ ‐ (580) 167 1,956 238 361 14 4,224 (141) 5 17 (24) 2 5 (17) (29) ‐ ‐ ‐ ‐ ‐ ‐ 1,470 ‐ ‐ ‐ (287) ‐ (287) ‐ ‐ ‐ 198 ‐ ‐ 198 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 279 $ 3,536 $ 4,008 $ 2,779 $ 3,792 $ (227) $ 69,460 $ 6,423 Business‐Type Activities‐Enterprise Funds See accompanying notes to the basic financial statements. 45 Agency Funds ASSETS: Cash and investments available for operations (Note 3)3,073$ Restricted cash and investments with fiscal agents (Note 3)2,542 Account receivable 30 Interest receivable 16 Total assets 5,661$ LIABILITIES: Due to bondholders 4,787$ Due to other governments 874 Total liabilities 5,661$ CITY OF PALO ALTO Statement of Fiduciary Net Position June 30, 2013 (Amounts in thousands) See accompanying notes to the basic financial statements. 46 CITY OF PALO ALTO Index to the Notes to the Basic Financial Statements For the Year Ended June 30, 2013 47 Page 1. Summary of Significant Accounting Policies ........................................................................... 49 2. Budgets and Budgetary Accounting ........................................................................................ 58 3. Cash and Investments ............................................................................................................. 59 4. Interfund Transactions ............................................................................................................ 63 5. Notes and Loans Receivable .................................................................................................... 65 6. Capital Assets .......................................................................................................................... 72 7. General Long‐Term Obligations .............................................................................................. 77 8. Special Assessment Debt ......................................................................................................... 84 9. Landfill Closure and Post‐Closure Care ................................................................................... 85 10. Net Position and Fund Balances .............................................................................................. 86 11. Pension Plans ........................................................................................................................... 88 12. Retiree Health Benefits ........................................................................................................... 92 13. Deferred Compensation Plan .................................................................................................. 95 14. Risk Management .................................................................................................................... 96 15. Joint Ventures .......................................................................................................................... 97 16. Commitments and Contingencies ......................................................................................... 100 Notes are essential to present fairly the information contained in the overview level of the basic financial statements. Narrative explanations are intended to communicate information that is not readily apparent or cannot be included in the statements and schedules themselves, and to provide additional disclosures as required by the Governmental Accounting Standards Board. 48 This page left intentionally blank. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 49 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Palo Alto (the City) was incorporated in 1894 and operates as a charter city, having had its first charter granted by the State of California in 1909. The City operates under the Council‐Manager form of government and provides the following services: public safety (police and fire), public works, electric, fiber optics, water, gas, wastewater, storm drain, refuse, golf course, planning and zoning, general administration services, library, open space and science, recreational and human services. (a) Reporting Entity The City is governed by a nine‐member council, elected by City residents. The City is legally separate and fiscally independent, which means it can issue debt, set and modify budgets and fees, and sue or be sued. The accompanying basic financial statements present the financial activities of the City, which is the primary government presented, along with the financial activities of its component units, which are entities for which the City is financially accountable. Although separate legal entities, blended component units are, in substance, part of the City’s operations and are reported as an integral part of the City’s financial statements. The City’s component units, which are described below, are blended. The Palo Alto Public Improvement Corporation (the Corporation) provides financing of public capital improvements for the City through the issuance of Certificates of Participation (COPs), a form of debt that allows investors to participate in a stream of future lease payments. Proceeds from the COPs are used to construct projects that are leased to the City. The lease payments are sufficient in timing and amount to meet the debt service requirements of the COPs. The Board of Directors of the Corporation is composed of the same members as the City Council. The Corporation is controlled by the City, which performs all accounting and administrative functions for the Corporation. The financial activities of the Corporation are included in the Downtown Parking Improvement Debt Service Fund. Financial statements for the Corporation may be obtained from the City of Palo Alto, Administrative Services Department, 4th Floor, 250 Hamilton Avenue, Palo Alto, CA 94301. (b) Basis of Presentation The City’s basic financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States. These standards require that the financial statements described below be presented: Government‐wide Statements: The Statement of Net Position and the Statement of Activities display information about the primary government and its component unit. These statements include the financial activities of the overall City government, except for fiduciary activities. Eliminations have been made to minimize the double counting of internal activities. However, interfund goods and services transactions have not been eliminated in the consolidation process. These statements distinguish between the governmental and business‐type activities of the City. Governmental activities generally are financed through taxes, intergovernmental CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 50 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (b) Basis of Presentation (Continued) revenues, and other non‐exchange transactions. Business‐type activities are financed in whole or in part by fees charged to external parties. The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business‐type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include: (a) charges paid by the recipients for goods and services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular program, and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the City’s funds, including fiduciary funds and blended component units. Separate statements for each fund category – governmental, proprietary and fiduciary – are presented. The emphasis of fund financial statements is on major individual governmental and enterprise funds, each of which is displayed in a separate column. All remaining governmental and internal service funds are aggregated and reported as non‐major funds. Proprietary fund operating revenues, such as utilities sales and charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from non‐exchange transactions or ancillary activities. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All expenses not meeting this definition are reported as nonoperating expenses. (c) Major Funds and Other Funds The City’s major governmental and enterprise funds need to be identified and presented separately in the fund financial statements. All other funds, called non‐major funds, are combined and reported in a single column, regardless of their fund type. Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to at least 10 percent of their fund type total and at least 5 percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds on a qualitative basis. The City reported the following major governmental funds in the accompanying financial statements: CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 51 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (c) Major Funds (Continued) General Fund – This is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. Capital Projects Fund – This fund accounts for resources used for the acquisition and construction of capital facilities by the City, with the exception of those assets financed by proprietary funds. The City reported all of its enterprise funds as major funds in the accompanying financial statements. These funds are: Water Services Fund – This fund accounts for all financial transactions relating to the City’s water service. Services are on a user‐charge basis to residents and business owners located in the City. Electric Services Fund – This fund accounts for all financial transactions relating to the City’s electric service. Services are on a user‐charge basis to residents and business owners located in the City. Fiber Optics Fund – This fund accounts for all financial transactions relating to the City’s fiber optics service. Services are on a user‐charge basis to licensees located in the City. Gas Services Fund – This fund accounts for all financial transactions relating to the City’s gas service. Services are on a user‐charge basis to residents and business owners in the City. Wastewater Collection Services Fund – This fund accounts for all financial transactions relating to the City’s wastewater collection. Services are on a user‐charge basis to residents and business owners located in the City. Wastewater Treatment Services Fund – This fund accounts for all financial transactions relating to the City’s wastewater treatment. Services are on a user‐charge basis to residents and business owners located in the City. Refuse Services Fund – This fund accounts for all financial transactions relating to the City’s refuse service. Services are on a user‐charge basis to residents and business owners located in the City. Storm Drainage Services Fund – This fund accounts for all financial transactions relating to the City’s storm drain service. Services are on a user‐charge basis to residents and business owners located in the City. Airport Fund – This fund accounts for all financial transactions relating to the Palo Alto Airport. The City will be taking over operation of the airport from Santa Clara County no later than 2017. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 52 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (c) Major Funds (Continued) The City also reports the following funds: Internal Service Funds – These funds account for fleet replacement and maintenance, technology, central duplicating, printing and mailing services, administration of compensated absences and health benefits, and the City’s self‐insured workers’ compensation and general liability programs, all of which are provided to other departments on a cost‐reimbursement basis. Also included is the Retiree Health Benefits Internal Service Fund, which accounts for benefits to retirees. Vehicle Replacement and Maintenance – This fund accounts for the maintenance and replacement of vehicles and equipment used by all City departments. The source of revenue is from reimbursement of fleet replacement and maintenance costs allocated to each department by usage of vehicle. Technology – This fund accounts for replacement and upgrade of technology, and covers four primary areas used by all City departments: desktop, infrastructure, applications, and technology research and development. The source of revenue is from reimbursement of costs for support provided to other departments. Printing and Mailing Services – This fund accounts for central duplicating, printing and mailing services provided to all City departments. The source of revenue for this fund is from reimbursement of costs for services and supplies purchased by other departments. General Benefits – This fund accounts for the administration of compensated absences and health benefits. Workers’ Compensation Insurance Program – This fund accounts for the administration of the City’s self‐insured workers’ compensation program. General Liability Insurance Program – This fund accounts for the administration of the City’s self‐ insured general liability program. Retiree Health Benefits – This fund accounts for retiree health benefits. Fiduciary Funds – These funds account for assets held by the City, an agent for assessment districts, and members of the Cable Joint Powers Authority. These funds are custodial in nature and do not involve measurement of results of operations. The City maintains three agency funds. The financial activities of these funds are excluded from the government‐wide financial statements, but are presented in separate fiduciary fund financial statements. Agency funds apply the accrual basis of accounting but do not have a measurement focus. California Avenue Parking Assessment District – This fund accounts for the receipts and disbursements associated with the 1993 Parking District No. 92‐13 Assessment Bonds. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 53 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (c) Major Funds (Continued) Cable Joint Powers Authority – This fund accounts for the activities of the cable television system on behalf of the members. University Avenue Area Off‐Street Parking Assessment District – This fund accounts for the receipts and disbursements associated with the 2012 Limited Obligation Refunding Improvement Bonds. (d) Basis of Accounting The government‐wide and proprietary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers revenues susceptible to accrual reported in the governmental funds to be available if the revenues are collected within ninety days after year‐ end, except for property taxes, which are available if collected within sixty days after year‐end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long‐term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long‐term debt and acquisitions under capital leases are reported as other financing sources. Revenues susceptible to accrual include taxes, intergovernmental revenues, interest and charges for services. Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost‐reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary. Certain indirect costs are included in program expenses reported for individual functions and activities. Transactions representing the exchange of interfund goods and services have also been included. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 54 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (e) Cash and Cash Equivalents Restricted and unrestricted pooled cash and investments held in the City Treasury, and other unrestricted investments invested by the City Treasurer, are considered cash equivalents for purposes of the statement of cash flows because the City’s cash management pool and funds invested by the City Treasurer possess the characteristics of demand deposit accounts. Other restricted and unrestricted investments with maturities of less than three months at the time of purchase are considered cash equivalents for purposes of the statement of cash flows. (f) Deposits and Investments The City’s investments are carried at fair value, as required by GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. The City adjusts the carrying value of its investments to reflect their fair value at each fiscal year‐ end, and reports the effects of these adjustments in investment earnings for that fiscal year. (g) Inventory of Materials and Supplies Materials and supplies are held for consumption and are valued at average cost. The consumption method is used to account for inventories. Under the consumption method, inventories are recorded as expenditures at the time inventory items are used, rather than purchased. (h) Prepaid items Prepaid items are recorded at cost. Using the consumption method, prepaid items are recorded as expenditures over the period that service is provided. (i) Compensated Absences The liability for compensated absences includes the vested portion of vacation, sick leave, and overtime compensation pay. The City’s liability for accrued compensated absences is recorded in the General Benefits Internal Service Fund. The fund is reimbursed through payroll charges to all other funds. Earned but unpaid vacation and overtime compensation pay are recognized as an expense or expenditure in the proprietary and governmental fund types when earned because the City has provided financial resources for the full amount through its budgetary process. Vested accumulated sick pay is paid in the event of termination due to disability and, under certain conditions, specified in employment agreements. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 55 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (i) Compensated Absences (Continued) During the fiscal year ended June 30, 2013, changes to the compensated absences were as follows (in thousands): Beginning balance 8,962$ Additions 6,791 Payments (5,322) Ending balance 10,431$ Current portion 4,145$ (j) Property Tax Santa Clara County (the County) assesses properties and bills, collects, and distributes property taxes to the City. The County remits the entire amount levied and handles all delinquencies, retaining interest and penalties. The County assesses property values, levies bills and collects taxes as follows: Secured Unsecured Lien Dates January 01 January 01 Levy Dates October 01 July 01 Due Dates 50% on November 01 Upon receipt of billing 50% on February 01 Delinquent after December 10 (for November)August 31 April 10 (for February) The term “unsecured” refers to taxes on personal property other than real estate, land and buildings. These taxes are secured by liens on the property being taxed. Property tax revenues are recognized by the City in the fiscal year they are assessed, provided they become available as defined previously within 60 days after year‐end. (k) Deferred Outflows of Resources and Deferred Inflows of Resources GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. A deferred outflow of resources is the consumption of net position that is applicable to a future reporting period. A deferred inflow of resources is defined as an acquisition of net position applicable to a future reporting period. The term “net assets” was replaced with the term “net position.” There were no balances reported as deferred outflows of resources and deferred inflows of resources at June 30, 2013. (l) Rounding All amounts included in the basic financial statements and footnotes are presented to the nearest thousand. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 56 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (m) Effects of New Pronouncements As of July 1, 2012, the City implemented the following GASB Statements: GASB Statement No. 60 issued November 2010, Accounting and Financial Reporting for Service Concession Arrangements, addresses how to account for and report service concession arrangements (SCAs), a type of public‐private or public‐public partnership that state and local governments are increasingly entering into. The City does not have any agreements that meet the definition of service concession arrangements. GASB Statement No. 61 issued November 2010, The Financial Reporting Entity: Omnibus, is designed to improve financial reporting for governmental entities by amending the requirements of GASB Statement No. 14, The Financial Reporting Entity, and GASB Statement No. 34, Basic Financial Statements ‐ and Management’s Discussion and Analysis ‐ for State and Local Governments, to better meet the needs of users and address reporting entity issues that have come to light since these statements were issued in 1991 and 1999, respectively. GASB Statement No. 61 improves the information presented about the financial reporting entity, which is comprised of a primary government and related entities (component units) and amends the criteria for blending – that is, reporting component units as if they were part of the primary government – in certain circumstances. Governmental Accounting Standards Board (GASB) Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre‐November 30, 1989 FASB and AICPA Pronouncements, incorporates into the GASB’s authoritative literature certain accounting and financial reporting guidance that is included in Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the AICPA Committee on Accounting Procedures which does not conflict with or contradict other GASB pronouncements. GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, provides financial reporting guidance for deferred outflows of resources and deferred inflows of resources. See discussion in Note 1(k). The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB Statements: GASB Statement No. 65 issued March 2012, Items Previously Reported as Assets and Liabilities. This Statement amends the financial statement element classification of certain items previously reported as assets and liabilities to be consistent with the definitions in Concepts Statements No. 4, Elements of Financial Statements. It also provides other financial reporting guidance related to deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term deferred in financial statement presentations. The requirements of this Statement are effective for the City’s fiscal year ending June 30, 2014. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 57 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (m) Effects of New Pronouncements (Continued) GASB Statement No. 66 was issued in March 2012, Technical Corrections – 2012 – an amendment to GASB Statement No. 10 and No. 62, to resolve conflicting accounting and financial reporting guidance that could diminish the consistency of financial reporting. The requirements of this Statement are effective from the City’s fiscal year ending June 30, 2014. GASB Statement No. 68 issued June 2012, Accounting and Financial Reporting for Pensions, establishes accounting and financial reporting requirements for pension plans that are administered through trusts. Statement No. 68 requires governments participating in the single and agent multiple employer defined benefit plans to recognize a liability equal to the net pension liability. The net pension liability is required to be measured as of a date no later than the end of the employer’s prior fiscal year (the measurement date), consistently applied from period to period. The pension expense and deferred outflows of resources and deferred inflows of resources related to pensions that are required to be recognized by an employer primarily result from changes in the components of the net pension liability—that is, changes in the total pension liability and in the pension plan’s fiduciary net position. It requires that most changes in the net pension liability be included in pension expense in the period of the change. The effects of certain other changes in the net pension liability are required to be included in pension expense over the current and future periods. It also requires that notes to financial statements of single and agent employers include descriptive information, such as the types of benefits provided and the number and classes of employees covered by the benefit terms, sources of changes in the net pension liability for current year, significant assumptions and other inputs used in the valuations and the valuation date. The Statement also requires the government to present required supplementary information for each of the ten most recent fiscal years. The requirements of this Statement are effective for the City’s fiscal year ending June 30, 2015. During January 2013, GASB issued Statement No. 69, Government Combinations and Disposals of Government Operations. It establishes accounting related to government combinations and disposals of government operations. Government combinations include mergers, acquisitions, and transfers of operations. Statement No. 69 also establishes the required financial statement disclosure for government combinations and disposals of government operations. The requirements of this Statement are effective for financial statement periods beginning after December 15, 2013. During April 2013, GASB issued Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. Nonexchange financial guarantees are financial guarantees from a government for obligations of another entity. Statement No. 70 requires a government that extends a nonexchange financial guarantee to recognize a liability when qualitative factors and historical data indicate that it is more likely than not that the government will be required to make a payment on the guarantee. Statement No. 70 also specifies the information required to be disclosed by governments that extend nonexchange financial guarantees and also new disclosure requirements. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2013. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 58 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (n) Use of Estimates The accompanying basic financial statements have been prepared on the modified accrual and accrual basis of accounting in accordance with generally accepted accounting principles. This requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain public comments. 3. The Adopted Budget is legally enacted through passage of a budget ordinance for all funds except Agency Funds. 4. The City Manager is authorized to reallocate funds from a contingent account maintained in the General Fund in conformance with the adopted policies set by the City Council. Additional appropriations to departments in the General Fund, or to total appropriations for all other budgeted funds, or transfers of appropriations between funds, require approval by the City Council. These amendments are added to the Adopted Budget and the resulting totals are reflected as Adopted Budget amounts. 5. As defined in the municipal code, expenditures may not exceed budgeted appropriations at the department level for the General Fund, and at the fund level for Special Revenue, Debt Service and Permanent Funds. 6. Formal budgetary integration is employed as a management control device during the year in all funds except Agency Funds. 7. Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP) for all funds, except that General Fund encumbrances are treated as budgetary expenditures when incurred. 8. Expenditures for the Capital Projects Fund are budgeted and maintained on a project length basis. Budget to actual comparisons for these expenditures have been excluded from the accompanying financial statements. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 59 NOTE 3 – CASH AND INVESTMENTS The City pools cash from all sources and all funds, except restricted bond proceeds with fiscal agents, and invests its pooled idle cash according to State of California law and the City’s Investment Policy. The basic principles underlying the City’s investment philosophy are to ensure the safety of public funds, ensure that sufficient funds are available to meet current expenditures, and achieve a reasonable rate of return on investments. Policies The City invests in individual investments and in investment pools. Individual investments are evidenced by specific identifiable securities instruments, or by an electronic entry registering the owner in the records of the institution issuing the security, called the book entry system. In order to increase security, the City employs the trust department of a bank as the custodian of certain City managed investments. Classification Cash and investments are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of City debt instruments or agency agreements (in thousands): Governmental Business‐Type Fiduciary Activities Activities Funds Total Cash and investments: Available for operations 227,843$ 256,050$ 3,073$ 486,966$ Restricted for post‐closure landfill ‐ 5,820 ‐ 5,820 Held with fiscal agents 34,137 4,060 2,542 40,739 Total cash and investments 261,980$ 265,930$ 5,615$ 533,525$ Investments Authorized by the City’s Investment Policy and Debt Agreements The table below identifies the investment types that are authorized by the City’s Investment Policy. The table also identifies certain provisions of the City’s Investment Policy that address interest rate risk, credit risk and concentration of credit risk. The table addresses investments of debt proceeds held by bond trustees that are governed by the provisions of debt agreements of the City, rather than the general provisions of the City’s Investment Policy. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 60 NOTE 3 – CASH AND INVESTMENTS (Continued) The City must maintain required amounts of cash and investments with trustees under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the City fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with City ordinance, bond indentures or state statute. All these funds have been invested as permitted under the Code and the investment policy approved by the City Council. Maximum Maturity Minimum Credit Quality Maximum Percentage of Portfolio Maximum Investment in One Issuer U.S. Government Securities 10 years (*) N/A No Limit No Limit U.S. Federal Agency Securities (C) 10 years (*) N/A No Limit (A) No Limit Certificates of Deposit 10 years (*) N/A 20% 10% of the par value of portfolio Bankers Acceptances 180 days (D) N/A (D) 30% $5 million Commercial Paper 270 days AAA 15% $3 million (B) Local Agency Investment Fund N/A N/A No Limit $50 million per account Short‐Term Repurchase Agreements 1 year N/A No Limit No Limit City of Palo Alto Bonds N/A N/A No Limit No Limit Money Market Mutual Funds N/A N/A (E) No Limit No Limit Mutual Funds (F)N/A N/A 20%10% Negotiable Certificates of Deposit 10 years (*) N/A 10% $5 million Medium‐Term Corporate Notes 5 years AA 10% $5 million 10 years (*) AA/AA2 10% No Limit (A) (B) The lesser of $3 million or 10% of outstanding commercial paper of any one institution. Debt Agreements: (C) (D) (E) (F) (*) The maximum maturity is based on the Investment Policy that is approved by the City Council and is less retrictive than the California Government Code. Utility Revenue Bonds 2011 Series A and University Avenue Parking Bond 2012 are allowed to invest in the California Asset Management Program. Authorized Investment Type Bonds of State of California Municipal Agencies Callable and multi‐step securities are limited to no more than 25% of the par value of the portfolio, provided that: 1) the potential call dates are known at the time of purchase, 2) the interest rates at which they "step‐up" are known at the time of purchase, 3) the entire face value of the security is redeemable at the call date. Utility Revenue Bonds 2011 Series A and 1999 Series A allow general obligations of states with a minimum credit quality rating of A2/A by Moody's and Standard & Poor's. Utility Revenue Bonds 2011 Series A and 1999 Series A require a minimum credit quality rating of A‐1/P‐1 by Moody's and Standard & Poor's and maturing after no more than 360 days. Utility Revenue Bonds 1995 limit the maximum maturity to 365 days. Water Revenue Bonds 2009 Series A, Utility Revenue Bonds 2011 Series A and 1999 Series A require a minimum credit quality rating of AAAm or AAAm‐G by Standard & Poor's. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 61 NOTE 3 – CASH AND INVESTMENTS (Continued) Interest Rate Risk Interest rate risk is the risk that changes in market interest rates may adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity its fair value is to changes in market interest rates. Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustees) to market rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity or earliest call date (in thousands): Type of Investment Less Than One Year One to Three Years Three to Five Years Over Five Years Total U.S. Federal Agency Securities 60,828$ 99,913$ 162,258$ 129,730$ 452,729$ U.S. Treasury Notes 2,014 ‐ 1,964 ‐ 3,978 Local Government Bonds ‐ 3,224 6,410 8,686 18,320 Money Market Mutual Funds 4,386 ‐ ‐ ‐ 4,386 Negotiable Certificates of Deposit ‐ ‐ 2,879 239 3,118 California Asset Management Program 36,344 ‐ ‐ ‐ 36,344 Local Agency Investment Fund 12,990 ‐ ‐ ‐ 12,990 Total Investments 116,562$ 103,137$ 173,511$ 138,655$ 531,865 Cash in bank and on hand 1,660 Total Cash and Investments 533,525$ Maturities Local Agency Investment Fund The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. LAIF management calculates the fair value and cost of the entire LAIF pool. The City adjusts its cost basis invested in LAIF to fair value based on this ratio. The fair value of the City’s position in the pool is the same as the value of the pool share. The balance available for withdrawal on demand is based on accounting records maintained by LAIF, which are recorded on an amortized cost basis. At June 30, 2013, LAIF had a weighted average maturity of 278 days. California Asset Management Program The City is a voluntary participant in the California Asset Management Program (CAMP). CAMP is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the “Act”) for the purpose of exercising the common power of its participants to invest certain proceeds of debt issues and surplus funds. The Pool’s investments are limited to investments permitted by subdivisions (a) to (n), inclusive, of Section 53601 of the California Government Code. The City reports its investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the pool share. At June 30, 2013, the fair value approximated the City’s cost. CAMP had a weighted average maturity of 37 days. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 62 NOTE 3 – CASH AND INVESTMENTS (Continued) Money market mutual funds are available for withdrawal on demand and at June 30, 2013, had a weighted average maturity of 57 days. Investment with Fair Values Highly Sensitive to Interest Rate Fluctuations At June 30, 2013, the City’s investments (including investments held by bond trustees) include U.S. Federal Agency Callable Securities in the amount of $117.2 million that are highly sensitive to interest rate fluctuations (to a greater degree than already indicated in the information provided in the previous page). These securities are subject to early redemption at par in a period of declining interest rates. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as provided by Standard & Poor’s investment rating system as of June 30, 2013, for each investment type (in thousands): Type of Investment Rating Total U.S. Federal Agency Securities AA+452,729$ Local Government Bonds AAA/AAAm 18,320 Money Market Mutual Funds AAA/AAAm 4,386 California Asset Management Program AAA/AAAm 36,344 Total Investments 511,779 Not Applicable: U.S. Treasury Notes 3,978 Not Rated: Local Agency Investment Fund 12,990 Negotiable Certificates of Deposit 3,118 Cash in bank and on hand 1,660 Total Cash and Investments 533,525$ Concentration of Credit Risk Investments in any one issuer, other than U.S. Treasury securities, mutual funds, and external investment pools, that represent 5 percent or more of total City portfolio investments are as follows at June 30, 2013 (in thousands): Investments Reporting Type Fair Value at Year‐End Federal Home Loan Bank U.S. Federal Agency Securities 172,333$ Federal Farm Credit Bank U.S. Federal Agency Securities 84,291 Federal National Mortgage Corporation U.S. Federal Agency Securities 75,732 Federal Agricultural Mortgage Corporation U.S. Federal Agency Securities 67,211 Federal Home Loan Mortgage Corporation U.S. Federal Agency Securities 53,160 CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 63 NOTE 3 – CASH AND INVESTMENTS (Continued) Custodial Credit Risk California law requires banks and savings and loan institutions to pledge government securities with a market value of 110 percent of the City’s cash on deposit or first trust deed mortgage notes with a value of 150 percent of the deposit as collateral for these deposits. Under California Law, this collateral is considered held in the City’s name and places the City ahead of general creditors of the institution. The City has waived collateral requirements for the portion of deposits covered by federal deposit insurance. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to a transaction, the City will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City’s Investment Policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City be conducted on a delivery‐ versus‐payment basis. Securities are to be held by a third‐party custodian. NOTE 4 – INTERFUND TRANSACTIONS Transfers Between Funds With Council approval, resources may be transferred from one City fund to another. The purpose of the majority of transfers is to subsidize a fund. Less often, a transfer may be made to open or close a fund. Transfers between City funds during FY 2013 were as follows (in thousands): Fund Making Transfer Amount Transferred General Fund Nonmajor Governmental Funds 1,251$ A Electric Services Fund 11,768 A Gas Services Fund 5,971 A Capital Projects Fund 162 A Internal Service Funds 607 A Capital Projects Fund General Fund 22,258 B Nonmajor Governmental Funds 4,729 B Water Services Fund 1,642 B Nonmajor Governmental Funds General Fund 235 A Nonmajor Governmental Funds 1,720 A Subtotal 50,343 Fund Receiving Transfer CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 64 NOTE 4 – INTERFUND TRANSACTIONS (Continued) Fund Making Transfer Amount Transferred Water Services Fund Gas Services Fund 108 B Electric Services Fund 75 B Wastewater Collection Fund 109 B General Fund 56 B Internal Service Funds 64 C Electric Services Fund General Fund 33 D Internal Service Funds 263 C Refuse Services Fund Internal Service Funds 63 C Nonmajor Governmental Funds 581 D Wastewater Collection Fund General Fund 35 D Internal Service Funds 34 C Storm Drainage Services Fund Internal Service Funds 13 C Gas Fund General Fund 5 D Internal Service Funds 112 C Fiber Optics Fund Internal Service Funds 1 C Internal Service Funds General Fund 2,468 E Capital Projects Fund 300 B Water Services Fund 413 B Electric Services Fund 247 B Gas Services Fund 98 B Wastewater Collection Fund 38 B Wastewater Treatment Fund 11 B Refuse Services Fund 306 B Storm Drainage Services Fund 13 B Fiber Optics Fund 2 B Subtotal 5,448 Total 55,791$ The reasons for these transfers are set forth below: (A) Transfer to reimburse the Governmental Fund for costs incurred for the benefit of funds making the transfer. (B) Allocation of funds to construct capital assets. (C) Transfer to refund replacement charges. (D) Transfer to reimburse the Utility Funds for costs incurred for the benefit of funds making the transfer. (E) Transfer to reimburse Internal Service Funds for costs incurred for the benefit of the fund making the transfer. Fund Receiving Transfer CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 65 NOTE 4 – INTERFUND TRANSACTIONS (Continued) Long‐Term Interfund Advance On December 6, 2010, the City Council accepted an Airport Business Plan of the Palo Alto Airport (PAO) and approved creation of a new Airport Enterprise Fund to facilitate the transition of PAO control from Santa Clara County to the City. The Council approved the General Fund to loan the new Airport Enterprise Fund $300,000 for environmental analysis, legal and personnel costs related to the transition. According to the agreement, the Airport Fund will repay the $300,000, with interest equal to the average return yield on the City’s investment portfolio, after 6 years. On July 1, 2012, the City Council approved an additional short‐term loan in the amount of $310,000 from the General Fund for transition costs. The interest and repayment terms remain the same. As of June 30, 2013, the total outstanding amount is $610,000. Internal Balances Internal balances represent the net interfund receivables and payables remaining after the elimination of all such balances within governmental and business‐type activities. NOTE 5 – NOTES AND LOANS RECEIVABLE At June 30, 2013, the City’s notes and loans receivable totaled (in thousands): Palo Alto Housing Corporation: Oak Manor Townhouse 462$ Tree House Apartments 5,343 Emerson Street Project 375 Alma Single Room Occupancy Development 2,222 Barker Hotel 2,111 Sheridan Apartments 2,248 Oak Court Apartments, L.P.7,835 Maybell Apartments 3,220 Mid‐Peninsula Housing Coalition: Palo Alto Gardens Apartments 100 Community Working Group, Inc.1,280 Opportunity Center Associates, L.P.750 Home Rehabilitation Loans 66 Executive Relocation Assistance Loans 930 Below Market Rate Assessment Loans 53 Stevenson Housing Fire Alarm 48 Oak Manor Townhouse Water System 114 Lytton Gardens Assisted Living 101 Emergency Housing Consortium 75 Alma Gardens Apartments 1,150 2811‐2825 Alma Street Acquisition 1,290 Palo Alto Family Housing, 801 Alma Street 6,810 Total Notes and Loans 36,583 Less: Valuation Allowance (14,685) Total Notes and Loans, Net 21,898$ CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 66 NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued) Housing Loans The City engages in programs designed to encourage construction or improvement in low‐to‐moderate income housing or other projects. Under these programs, grants or loans are provided under favorable terms to homeowners or developers who agree to spend these funds in accordance with the City’s terms. These loans have been offset by nonspendable, restricted or committed fund balances, as they are not expected to be repaid immediately. Some of these loans contain forgiveness clauses that provide for the amount loaned to be forgiven if the third party maintains compliance with the terms of the loan and associated regulatory agreements. Since some of these loans are secured by trust deeds, that are subordinated to other debt on the associated projects or are only repayable from residual cash receipts on the projects, collectability of some of the outstanding balances may not be realized. As a result of the forgiveness clauses and nature of these housing projects and associated cash flows, a portion of the outstanding balances of the loans has been offset by a valuation allowance. Oak Manor Townhouse On January 7, 1991, the City loaned $2.1 million to assist in the acquisition of an apartment complex to be used to provide rental housing for low and very low income households. This loan bears interest at 3 percent, is due in annual installments until 2017 and is collateralized by a subordinated deed of trust. Under the terms of the loan agreement, loan payments are forgiven if the Corporation meets the objective of this project. During the year ended June 30, 2013, the objective was met. The annual loan payment was forgiven for the calendar year ended December 31, 2012. Tree House Apartments In March 2009, the City agreed to loan $2.8 million to the Tree House Apartments, L.P. for the purchase of the real property located at 488 West Charleston Road. On March 23, 2010, the City wired the full loan amount to an escrow account. The loan consisted of $1.8 million funded by Community Development Block Grant funds; the remaining $1 million was funded by residential funds. An additional development loan in the amount of $2.5 million was approved by the City on October 18, 2010. As of June 30, 2013, the outstanding balance for the Tree House Apartments in aggregate is $5.3 million. Principal and interest payments will be deferred for 55 years. However, if the borrower has earned extra income, and if acceptable to the other entities providing final permanent sources of funds, payment of interest and principal based on the City’s proportionate share of the project’s residual receipts from net operating income shall be made by the borrower. In no event shall full payment be made by the borrower later than concurrently with the expiration or earlier termination of the loan agreement, which is March 23, 2064. Emerson Street Project On November 8, 1994, the City loaned $375,000 for expenses necessary to acquire an apartment complex for the preservation of rental housing for low and very low income households in the City. This loan is collateralized by a second deed of trust. The loan bears interest at 3 percent after 2010. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 67 NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued) Alma Single Room Occupancy Development On December 13, 1996, the City loaned $2.2 million to the Alma Place Associates, L.P. for the development of a 107‐unit single room occupancy development. This loan bears interest at 3 percent and is collateralized by a subordinated deed of trust. Loan payments are deferred until 2014. The principal balance is due in 2041. Barker Hotel On April 12, 1994, the City loaned a total of $2.1 million for the preservation, rehabilitation and expansion of a low‐income, single occupancy hotel. This loan was funded by three sources: $400,000 from the Housing In‐Lieu Fund, $1 million from HOME Investment Partnership Program Funds, and $670,000 from Community Development Block Grant funds. All three notes bear no interest and are collateralized by a deed of trust, which is subordinated to private financing. Loan repayments are deferred until 2035. In July 2004, the City agreed to loan up to $41,000 to the Palo Alto Housing Corporation to rehabilitate the interior of the Barker Hotel. The loan is funded entirely by Community Development Block Grant funds and is collateralized by a deed of trust on the property. Annual loan payments are deferred until certain criteria defined in the loan agreement are reached. The loan shall be forgiven if the borrower satisfactorily complies with all the terms and conditions of the loan agreement. Sheridan Apartments On December 8, 1998, the City loaned $2.5 million to the Palo Alto Housing Corporation for the purchase and rehabilitation of a 57‐unit apartment complex to be used for senior and low‐income housing. The loan is funded by $1.6 million in Community Development Block Grant funds, and $825,000 in Housing In‐Lieu funds. The note bears interest at 9 percent when available surplus cash from the project equals or exceeds 25 percent of interest calculated using 9 percent. When available surplus cash falls below this level, the note bears interest at 3 percent. The note is collateralized by a second deed of trust and an affordability reserve account held by the Palo Alto Housing Corporation. Annual loan payments were deferred until the Palo Alto Housing Corporation accumulated $1 million in an affordability reserve account. Two principal payments totaling $202,438 have been made, and interest has also been paid. The remaining principal balance is due in 2033. Oak Court Apartments On August 18, 2003, in connection with the loan to Oak Court Apartments, L.P. discussed on the next page, the City loaned $5.9 million to the Palo Alto Housing Corporation for the purchase of land on which Oak Court Apartments, L.P. constructed a 53‐unit rental apartment complex for low and very low income households with children. The note bears interest of 5 percent and is secured by a deed of trust. Note payments are due annually after 55 years, or beginning in 2058, unless the Palo Alto Housing Corporation elects to extend the note until 2102, as defined in the regulatory agreement. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 68 NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued) Oak Court Apartments, L.P. On August 18, 2003, the City loaned $1.9 million to Oak Court Apartments, L.P. for the construction of a 53‐unit rental apartment complex for low and very low‐income households with children, which was completed in April 2005. The note bears no interest until certain criteria defined in the note are satisfied, at which time the note will bear an interest rate not to exceed 3 percent. The note is secured by a subordinate deed of trust. The principal balance is due in 2060. Maybell Apartments On November 28, 2012, the City agreed to loan to Palo Alto Housing Corporation $3.2 million for the purpose of acquisition and development of an affordable rental housing project at 567‐595 Maybell Ave, Palo Alto, California. The loan bears simple interest at the rate of 3 percent per annum commencing with the date of the permanent closing. As of June 30, 2013, the outstanding amount for the Maybell Apartments loan is $3.2 million. Palo Alto Gardens Apartments On April 22, 1999, the City loaned $1 million to the Mid‐Peninsula Housing Coalition (the Coalition) for the purchase and rehabilitation of a 155‐unit complex for the continuation of low‐income housing. This loan is funded by $659,000 in Community Development Block Grant funds and $341,000 in Housing In‐ Lieu funds. The two notes bear interest at 3 percent and are secured by second deeds of trust and a City Affordability Reserve Account held by the Coalition. Annual loan payments are deferred until certain criteria defined in the notes are reached. Principal and interest payments began in FY 2008. The principal balance of $100,000 is due in 2039. Community Working Group, Inc. On May 13, 2002, the City loaned $1.3 million to the Community Working Group, Inc. for predevelopment, relocation and acquisition of land for development of an 89‐unit complex and homeless service center for very low income households. The loan is funded by $1.3 million of Community Development Block Grant funds. The note bears no interest and is secured by a first deed of trust. No repayment of the $1.3 million will be required, provided that compliance with the City’s agreement is maintained. After 89 years of compliance with the regulatory agreement, the City’s loan would convert to a grant and its deed of trust would be re‐conveyed. Opportunity Center Associates, L.P. On July 19, 2004, the City loaned $750,000 for a 55‐year term to the Opportunity Center Associates, L.P. for construction of 89 units of rental housing for extremely low‐income and very low‐income households. The loan is funded by $750,000 of residential housing funds. The note bears 3 percent interest and is secured by a deed of trust. The loan remains outstanding and becomes due at the end of the 55‐year term. Home Rehabilitation Loans The City administers a closed housing rehabilitation loan program initially funded with Community Development Block Grant funds. Under this program, individuals with incomes below a certain level are eligible to receive low interest loans for rehabilitation work on their homes. These loans are secured by deeds of trust, which may be subordinated to subsequent encumbrances upon said real property with the prior written consent of the City. The loan repayments may be amortized over the life of the loans, deferred, or a combination of both. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 69 NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued) Executive Relocation Assistance Loans The City Council may authorize a mortgage loan as part of a relocation assistance package to executive staff. The loans are secured by first deeds of trust, and interest is adjusted annually based on the rate of return of the invested funds of the City for the year ended June 30 plus one‐quarter of 1 percent. Principal and interest payments are due bi‐weekly. Employees must pay off any outstanding balance of their loans within a certain period after ending employment with the City. As of June 30, 2013, the City had two outstanding home loans, one from the previous City Manager and one from the current City Manager. The original purchase cost for the previous City Manager’s home was $1.4 million and the City holds a 60 percent equity share. The loan balance owed as of June 30, 2013 was approximately $372,000. The previous City Manager can remain in the home until December 2017, or until his children have left Palo Alto public schools, whichever occurs first. The original purchase cost for the current City Manager’s home was $1.9 million and the City holds a 75 percent equity share. The loan balance owed as of June 30, 2013 is approximately $439,000. During FY 2011, the Council authorized a capital improvement loan of $125,000. Loans for capital improvements are made on a dollar for dollar matching basis, with an equal equity contribution made by the City Manager. The loan balance owed as of June 30, 2013 was approximately $120,000. Below Market Rate Assessment Loans In December 2002, the City loaned $53,000 to below market rate homeowners with low incomes and/or very limited assets for capital repairs, special assessments and improvements of their properties. The loans bear interest at 3 percent and are secured by a deed of trust on each property. Loan payments are deferred until 2032. In 2013, the City did not receive interest payments. Stevenson Housing Fire Alarm In December 2006, the City agreed to loan up to $48,000 to the Palo Alto Senior Housing Project, Inc. to repair and upgrade the existing fire alarm system at the Stevenson House Senior Housing facility. The loan is funded entirely by Community Development Block Grant funds and bears simple interest of 6 percent. Principal and interest payments are deferred until July 1, 2013, as long as the borrower continues to comply with all terms and conditions of the agreement. Oak Manor Townhouse Water System On May 12, 2003, the City Council approved an allocation of $113,672 to Palo Alto Housing Corporation Housing Apartments, Inc (PAHCA, Inc) to replace the water pipes with an intention to provide a permanent solution to Oak Manor’s plumbing needs. Repayment of the loan will not be required unless the property is sold, the program is terminated or purpose of the program is changed without City’s approval prior to July 1, 2033. The loan for this project is subordinated to the existing City loan with PAHCA, Inc dated January 7, 1991 for the acquisition of the project site, which is discussed earlier in this section. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 70 NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued) Lytton Gardens Assisted Living In June 2005, the City agreed to loan up to $109,000 to Community Housing, Inc. to upgrade and modernize the existing kitchens at the senior residential facility known as Lytton Gardens Assisted Living. The loan is funded entirely by Community Development Block Grant funds, and bears simple interest of 3 percent. Principal and interest payments are deferred until July 1, 2035, as long as the borrower continues to comply with all terms and conditions of the agreement. Emergency Housing Consortium In November 2005, the City agreed to loan up to $75,000 to the Emergency Housing Consortium to cover architectural expenses that will be incurred in rehabilitating and expanding the property. The loan is funded entirely by Community Development Block Grant funds, and bears simple interest of 3 percent. Principal and interest payments are deferred until July 1, 2035, as long as the borrower continues to comply with all terms and conditions of the agreement. Alma Garden Apartments In March 2006, the City agreed to loan up to $1.2 million to Community Working Group, Inc. to acquire a 10‐unit multi‐family housing complex known as the Alma Garden Apartments. The loan is funded entirely by Community Development Block Grant funds. Principal and interest payments are deferred until July 1, 2061, as long as the borrower continues to comply with all terms and conditions of the agreement. 2811‐2825 Alma Street Acquisition On October 9, 2011, the City agreed to loan $1.3 million to PAHC Properties Corporation (PAHC) to acquire the properties on Alma Street for the purpose of developing an affordable rental housing project. The loan bears simple interest of 3 percent, with an option to forgive the loan at maturity as long as PAHC maintains the affordability restrictions. Provided PAHC is not in default of the agreement, no principal payments shall be due and interest shall not begin to accrue until the closing of the project’s permanent funding. Principal and interest payments are payable during the term of the agreement on a “residual receipt” basis as described in the agreement. Palo Alto Family Housing, 801 Alma Street On February 14, 2011, the City agreed to loan Palo Alto Family, LP up to $9.3 million for the purposes of predevelopment expenses and acquiring certain real property for the Alma Street Affordable Multi‐ Family Rental Housing Project. The loan bears simple interest of 3 percent. Principal and interest are due and payable during the term of the agreement on a “residual receipt” basis as described in the agreement. Except in the case of a default, all remaining principal and interest shall be payable on the Restriction Termination Date as defined in the agreement. As of June 30, 2013, the outstanding amount is $6.8 million. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 71 NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued) Palo Alto Senior Housing Project In July 2003, the City agreed to loan up to $45,000 to the Palo Alto Senior Housing Project for home improvements in the independent living facility for low‐income seniors. The loan is funded entirely by Community Development Block Grant funds, bears interest at 6 percent and is secured by a deed of trust on the property. Principal and interest on the loan shall be forgiven if the borrower satisfactorily complies with all the terms set forth in the July 2003 agreement. As of June 30, 2013, the loan has been forgiven and written off. Clara‐Mateo Alliance In July 2003, the City agreed to loan up to $200,000 to Clara‐Mateo Alliance for rehabilitation of the kitchen and the Elsa Segovia Center to provide services for the homeless. The loan is funded entirely by Community Development Block Grant funds, bears interest at 6 percent and is secured by a deed of trust on the property. Repayment of the loan will not be required unless the property is sold or the program terminated. Principal and interest on the loan shall be forgiven if the borrower satisfactorily complies with all the terms and conditions set forth in the July 2003 agreement. As of June 30, 2013, the loan has been forgiven and written off. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 72 NOTE 6 – CAPITAL ASSETS Valuation All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair value on the date contributed. The City’s policy is to capitalize all assets when costs are equal to or exceed $5,000 and the useful life exceeds one year. Infrastructure assets are capitalized when costs are equal to or exceed $100,000. Proprietary fund capital assets are recorded at cost including significant interest costs incurred under restricted tax‐exempt borrowings, which finance the construction of capital assets. These interest costs, net of interest earned on investment of proceeds of such borrowings, are capitalized and added to the cost of capital assets during the construction period. Maintenance and repairs are expensed as incurred. The City has recorded all its public domain capital assets, consisting of roadway and recreation and open space, in its government‐wide financial statements. GASB Statement No. 34 requires that all capital assets with limited useful lives be depreciated over their estimated useful lives. Alternatively, the “modified approach” may be used for certain capital assets. Depreciation is not provided under this approach, but all expenditures on these assets are expensed unless they are additions or improvements. The City has elected to use the depreciation method for its capital assets. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of those assets. The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of capital assets. Depreciation of all capital assets is charged as an expense against operations each year and the total amount of depreciation taken over the years, called accumulated depreciation, is reported on the statement of net position as a reduction in the book value of capital assets. Depreciation is calculated using the straight line method, which means the cost of the asset is divided by its expected useful life in years, and the result is charged to expense each year until the asset is fully depreciated. The City has assigned the useful lives listed below to capital assets. Governmental Activities Years Buildings and structures 20 ‐ 30 Equipment: Computer equipment 3 ‐ 5 Office machinery and equipment 5 Machinery and equipment 5 ‐ 30 Roadway network: 5 ‐ 40 Recreation and open space network: 25 ‐ 40 Business‐type Activities Buildings and structures 25 ‐ 60 Vehicles and heavy equipment 3 ‐ 10 Machinery and equipment 10 ‐ 50 Transmission, distribution and treatment systems 10 ‐ 100 Includes pavement, striping and legends, curbs, gutters and sidewalks, parking lots, traffic signage, and bridges Includes major park facilities, park trails, bike paths and medians CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 73 NOTE 6 – CAPITAL ASSETS (Continued) General Capital Assets Changes in the City’s general capital assets during the year ended June 30, 2013 were (in thousands): Balance Balance July 1, 2012 Additions Retirements Transfers June 30, 2013 Governmental activities Nondepreciable capital assets: Land and improvements 78,647$ ‐$ ‐$ 400$ 79,047$ Street trees 15,405 ‐ (86) ‐ 15,319 Construction in progress 55,273 30,222 (1,293) (14,984) 69,218 Total nondepreciable capital assets 149,325 30,222 (1,379) (14,584) 163,584 Depreciable capital assets: Buildings and structures 132,953 101 (1,084) 1,741 133,711 Intangible assets ‐ Easement 3,800 11 ‐ 35 3,846 Equipment 10,068 68 (333) 1,109 10,912 Roadway network 272,419 ‐ ‐ 9,879 282,298 Recreation and open space network 23,057 ‐ ‐ 1,831 24,888 Total depreciable capital assets 442,297 180 (1,417) 14,595 455,655 Less accumulated depreciation: Buildings and structures (66,135) (3,140) 1,084 ‐ (68,191) Intangible assets ‐ Easement (16) (60) ‐ ‐ (76) Equipment (6,918) (475) 285 ‐ (7,108) Roadway network (113,861) (6,522) ‐ ‐ (120,383) Recreation and open space network (7,320) (769) ‐ ‐ (8,089) Total accumulated depreciation (194,250) (10,966) 1,369 ‐ (203,847) Depreciable capital assets, net 248,047 (10,786) (48) 14,595 251,808 Internal service fund capital assets Construction in progress 204 2,665 ‐ (1,456) 1,413 Equipment 51,577 146 (2,260) 1,456 50,919 Less accumulated depreciation (35,915) (4,973) 2,106 ‐ (38,782) Net internal service fund capital assets 15,866 (2,162) (154) ‐ 13,550 Governmental activities capital assets, net 413,238$ 17,274$ (1,581)$ 11$ 428,942$ CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 74 NOTE 6 – CAPITAL ASSETS (Continued) Business‐type Capital Assets Changes in the City’s enterprise fund capital assets during the year ended June 30, 2013 were (in thousands): Balance Balance July 1, 2012 Additions Retirements Transfers June 30, 2013 Business‐type activities Nondepreciable capital assets: Land and improvements 4,971$ ‐$ ‐$ ‐$ 4,971$ Construction in progress 99,333 49,148 ‐ (30,305) 118,176 Total nondepreciable capital assets 104,304 49,148 ‐ (30,305) 123,147 Depreciable capital assets: Buildings and structures 32,709 ‐ ‐ 671 33,380 Transmission, distribution and treatment systems 615,972 1,280 (4,726) 29,623 642,149 Total depreciable capital assets 648,681 1,280 (4,726) 30,294 675,529 Less accumulated depreciation: Buildings and structures (8,576) (623) ‐ ‐ (9,199) Transmission, distribution and treatment systems (254,365) (16,986) 4,127 ‐ (267,224) Total accumulated depreciation (262,941) (17,609) 4,127 ‐ (276,423) Depreciable capital assets, net 385,740 (16,329) (599) 30,294 399,106 Business‐type activities capital assets, net 490,044$ 32,819$ (599)$ (11)$ 522,253$ Capital Asset Contributions Some capital assets may be acquired using federal and state grant funds, or they may be contributed by developers or other governments. Generally accepted accounting principles require that these contributions be accounted for as revenues at the time the capital assets are contributed. Depreciation Allocation Depreciation expense was charged to functions and programs based on their usage of the related assets. The amounts allocated to each function or program are as follows (in thousands): Governmental Activities Business‐type Activities City Manager 42$ Water 1,571$ Community Services 1,136 Electric 8,212 Fire 188 Fiber Optics 287 Police 191 Gas 2,151 Public Works 8,936 Wastewater Collection 1,881 Planning 92 Wastewater Treatment 2,620 Library 381 Refuse 4 Internal Service Funds 4,973 Storm Drainage 883 15,939$ 17,609$ CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 75 NOTE 6 – CAPITAL ASSETS (Continued) Construction In Progress Construction in progress as of June 30, 2013 is comprised of the following (in thousands): Governmental Activities Expended to June 30, 2013 Mitchell Park Library & Community Center 37,074$ Art Center Electrical & Mech Upgrades 8,010 Civic Center Infrastructure Improvements 6,178 Main Library Construction & Improvements 2,675 San Antonio Road Median Improvements 2,456 ECR/Stanford Intersection 1,557 Telephone Infrastructure and Network 1,234 Furniture/Technology for Library Bond Project 738 Library & Comm Center Temp Facilities 660 Traffic Signal Upgrades 630 Highway 101 Pedestrian/Bicycle Overpass 609 Temporary Main Library 526 Lot J Cowper/Webster Structural Repairs 520 Safe Routes To School 433 Golf Reconfig and Baylands Athletic Center 407 Park Restroom Installation 400 Transportation and Parking Improvements 384 Interior Finishes Construction 340 Ventura Community Center & Park 322 Park Trails 304 Newell Road Bridge/SFC Bridge Replacement 303 Curb & Gutter Repairs 289 Roofing Replacement 284 Benches/Signage/Fencing/Walkways 274 Bicycle Boulevards Implementation Project 272 Rinconada Park Master Plan and Design 240 Magical Bridge Playground 222 Public Safety Building Project 206 Dinah SummerHill Pedestrian/Bicycle Path 191 Tree Wells ‐ University Ave. Irrigation 182 University Ave Ped/Bicycle Underpass 179 Vehicle Replacement Fund 179 Roth Building Maintenance 166 Sign Reflectivity Upgrade 157 City Hall First Floor Renovation 155 Cogswell Plaza Improvements 146 Art In Public Places 142 Street Lights Improvements 142 Other Construction In Progress 1,445 Total Governmental Activities Construction In Progress 70,631$ CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 76 NOTE 6 – CAPITAL ASSETS (Continued) Construction In Progress Business‐type Activites Expended to June 30, 2013 Water system extension replacements and improvements 35,257$ Water quality control plant equipment replacement and lab facilities 9,150 Sewer system rehabilitation and extensions 5,172 Electric distribution system improvements 2,917 Storm drainage structural and water quality improvements 2,141 Gas system extension replacements and improvements 1,529 Other electrical improvements projects 916 Other construction in progress 61,094 Total Business‐type Activities Construction In Progress 118,176$ Allocations of business‐type activity administration and general expenses of $11.6 million have been capitalized and included in amounts expended through June 30, 2013. Major governmental capital projects that are currently in progress, and the remaining capital commitment of each, are as follows: City Hall First Floor Renovations ‐ $1.3 million Main Library ‐ $22.5 million Mitchell Park Library and Community Center ‐ $12.6 million Major business‐type capital projects that are currently in progress, and the remaining capital commitment of each, are as follows: Emergency water supply improvement for Water Fund ‐ $7.1 million Gas main replacement project for Gas Fund ‐ $12.4 million Plant equipment replacement for Wastewater Treatment Fund ‐ $3.3 million Wastewater Collection Fund rehabilitation/augmentation project ‐ $3.1 million CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 77 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS Long‐Term Obligations Bond premiums and discounts of long‐term debt issues are amortized over the life of the related debt. Gains or losses between the net book value of debt and funds placed in escrow to defease that debt are amortized over the remaining life of either the refunded debt or the refunding debt, whichever is shorter. The City’s long‐term debt issues and transactions, other than special assessment debt discussed in Note 8, were as follows (in thousands): Original Balance Balance Current Issue Amount July 1, 2012 Additions Retirements June 30, 2013 Portion Governmental Activities Debt: General Long‐Term Obligcations: 200B Downtown Parking Improvements, Certificates of Participation, 2.00 ‐ 4.00%, due 03/01/2022 3,555$ 1,685$ ‐$ 125$ 1,560$ 130$ General Obligation Bonds 2010 Series A, 2.00 ‐ 5.00%, due 08/01/2040 55,305 54,540 ‐ 1,000 53,540 1,020 2011 Lease‐Purchase Agreement 3,222 2,764 ‐ 364 2,400 374 General Obligation Bonds 2013 Series A, 2.00 ‐ 5.00%, due 08/01/2043 20,695 ‐ 20,695 ‐ 20,695 ‐ Less: Unamortized Premium ‐ 3,514 1,011 125 4,400 158 Total Governmental Activities Debt 82,777$ 62,503$ 21,706$ 1,614$ 82,595$ 1,682$ CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 78 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued) Original Balance Balance Current Issue Amount July 1, 2012 Additions Retirements June 30, 2013 Portion Business‐type Activities Debt: Enterprise Long‐Term Obligations: Utility Revenue Bonds 1995 Series A, 5.00‐6.25%, due 06/01/2020 8,640$ 4,199$ ‐$ 420$ 3,779$ 445$ 1999 Refunding, 3.25‐5.25%, due 06/01/2024 17,735 12,165 ‐ 580 11,585 605 2009 Series A, 1.80‐5.95%, due 06/01/2035 35,015 33,355 ‐ 855 32,500 885 2011 Series A, 1.80‐5.95%, due 06/01/2035 17,225 16,160 ‐ 920 15,240 945 Less: Unamortized Premium (Discount)1,050 ‐ 70 980 ‐ Less: Loss on refunding (417) ‐ (29) (388) ‐ Energy Tax Credit Bonds 2007 Series A, 0%, Due 12/15/2021 1,500 1,000 ‐ 100 900 100 Less: Unamortized Premium (Discount)(53) ‐ (4) (49) ‐ State Water Resources Loans 2007, 0%, due 06/30/2029 9,000 7,650 ‐ 450 7,200 450 2009, 2.6%, due 11/30/2030 8,500 8,250 ‐ 341 7,909 350 Total Business‐type Activities Debt 97,615$ 83,359$ ‐$ 3,703$ 79,656$ 3,780$ Description of Long‐Term Debt Issues 2002B Downtown Parking Improvement Project Certificates Of Participation (COPs) – On January 16, 2002, the City issued $3.6 million of COPs to finance the construction of certain improvements to the non‐parking area contained in the City’s Bryant/Florence Garage complex. Principal payments are due annually on March 1 and interest payments semi‐annually on March 1 and September 1, and are payable from lease revenues received by the Corporation from the City’s available funds. 2010 General Obligation Bonds (GO bonds) – On June 30, 2010, the City issued $55.3 million of GO bonds to finance costs for constructing a new Mitchell Park Library and Community Center, as well as substantial improvements to the Main Library and the Downtown Library. Principal payments are due annually on August 1 and interest payments semi‐annually on February 1 and August 1 from 2 percent to 5 percent, and are payable from property tax revenues. The pledge of future Net Revenues for the above funds ends upon repayment of the $53.5 million principal and $43.0 million interest as the remaining debt service on the GO bonds, which is scheduled to occur in FY 2041. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 79 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued) 2013 General Obligation Bonds – On June 30, 2013, the City issued $20.7 million of GO bonds to finance costs for constructing a new Mitchell Park Library and Community Center, as well as substantial improvements to the Main Library and the Downtown Library. Principal payments are due annually on August 1 and interest payments semi‐annually on February 1 and August 1 from 2 percent to 5 percent, and are payable from property tax revenues. The pledge of future Net Revenues for the above funds ends upon repayment of the $20.7 million principal and $15.7 million interest as the remaining debt service on the GO bonds, which is scheduled to occur in FY 2044. 2011 Lease‐Purchase Agreement – On August 2, 2011, the City entered into a master lease‐purchase agreement with JP Morgan Chase Bank, N.A. to finance redemption of the 1998 Golf Course COPs. The lease is secured by a first priority security interest in twenty‐one Fire Department emergency vehicles. Lease proceeds were $3.2 million. Principal payments are due annually on September 1 and interest payments are due semi‐annually on September 1 and March 1 at a rate of 2.49 percent, payable from General Fund revenues. 1995 Utility Revenue Bonds, Series A – The City issued $8.6 million of Utility Revenue Bonds on February 1, 1995 to finance certain extensions and improvements to the City’s Storm Drainage and Surface Water System. The Bonds are special obligations of the City payable solely from and secured by a pledge of and lien upon the revenues derived by the City from the funds, services and facilities of all Enterprise Funds except the Refuse Services Fund and Fiber Optics Fund. Principal payments are payable annually on June 1 and interest payments semi‐annually on June 1 and December 1. A $2.9 million 6.3 percent term bond is due June 1, 2020. As required by the Indenture, the City established a debt service reserve fund for the Bonds (the “Reserve Account”), with a minimum funding level requirement in the Reserve Account (the “Reserve Requirement”). At the time it issued the Bonds, the City satisfied the Reserve Requirement with a deposit into the Reserve Account of a surety bond (the “Surety Bond”) in the amount of $685,340 issued by Ambac Indemnity Corporation (renamed to Ambac Assurance Corporation in 1997). On November 9, 2010, Ambac Financial Group Inc. (Ambac Financial) filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Ambac Financial is a holding company whose affiliates provide financial guarantees and financial services to its customers. Ambac Indemnity Corporation, now known as Ambac Assurance Corporation, is a subsidiary of Ambac Financial. Ambac Assurance Corporation has issued a reserve fund surety bond of $685,340 that expires on June 1, 2020 and is on deposit in the Reserve Fund account securing the Bonds. According to the Trust Agreement for these bonds, in the event that such surety bond for any reason terminates or expires, and the remaining amount on deposit in the Reserve Fund account is less than the required reserve, the City is to address such shortfall by delivering to the trustee a surety bond or a letter of credit meeting the criteria of a Qualified Reserve Facility under the Trust Agreement, or depositing cash to the General Account in up to twelve equal monthly installments. Information about Ambac Financial is available on Form 10‐K and Form 10‐Q filed by Ambac Financial; the City refers to this information for reference only, and does not intend to incorporate any such information herein. The City is not certain about the effect of the bankruptcy proceedings, if any, on the Surety Bond. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 80 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued) The pledge of future Net Revenues for the above funds ends upon repayment of the $3.8 million principal and $1.0 million interest as the remaining debt service on the bonds, which is scheduled to occur in FY 2020. For FY 2013, Net Revenues, including operating revenues and non‐operating interest earnings, amounted to $237.8 million; operating costs, including operating expenses but not interest, depreciation or amortization, amounted to $173.5 million. Net Revenues available for debt service amounted to $64.3 million, which represented coverage of 94.2 times over the $0.7 million in debt service. 1999 Utility Revenue and Refunding Bonds, Series A – The City issued $17.7 million of Utility Revenue Bonds on June 1, 1999, to refund the 1990 Utility Revenue Refunding Bonds, Series A and the 1992 Utility Revenue Bonds, Series A, and to finance rehabilitation of the two Wastewater Treatment sludge incinerators. The 1990 Utility Revenue Refunding Bonds, Series A and the 1992 Utility Revenue Bonds, Series A, were subsequently retired. The 1999 Bonds are special obligations of the City payable solely from and secured by a pledge of and lien upon certain net revenues derived by the City’s sewer system and its storm and surface water system (the “Storm Drain System”). As of June 30, 2001, the 1999 Bonds had been allocated to and were repayable from net revenues of the following enterprise funds: Wastewater Collection (10.2 percent), Wastewater Treatment (64.6 percent) and Storm Drainage (25.2 percent). Principal payments are payable annually on June 1 and interest payments semi‐annually on June 1 and December 1. A $3.1 million 5.3 percent term bond, and a $5.1 million 5.3 percent term bond are due June 1, 2021 and 2024, respectively. As required by the Indenture, the City established a debt service reserve fund for the Bonds (the “Reserve Account”), with a minimum funding level requirement in the Reserve Account (the “Reserve Requirement”). At the time it issued the Bonds, the City satisfied the Reserve Requirement with a deposit into the Reserve Account of a surety bond (the “Surety Bond”) in the amount of $1,647,300 issued by Ambac Indemnity Corporation (renamed to Ambac Assurance Corporation in 1997). On November 9, 2010, Ambac Financial Group Inc. (Ambac Financial) filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Ambac Financial is a holding company whose affiliates provide financial guarantees and financial services to its customers. Ambac Indemnity Corporation, now known as Ambac Assurance Corporation, is a subsidiary of Ambac Financial. Ambac has issued a reserve fund surety bond of $1,647,300 that expires on June 1, 2024 and is on deposit in the Reserve Fund account securing the Bonds. According to the Trust Agreement for these bonds, in the event that such surety bond for any reason terminates or expires, and the remaining amount on deposit in the Reserve Fund account is less than the required reserve, the City is to address such shortfall by delivering to the trustee a surety bond or a letter of credit meeting the criteria of a Qualified Reserve Facility under the Trust Agreement, or depositing cash to the General Account in up to twelve equal monthly installments. Information about Ambac Financial is available on Form 10‐K and Form 10‐Q filed by Ambac Financial; the City refers to this information for reference only, and does not intend to incorporate any such information herein. The City is not certain about the effect of the bankruptcy proceedings, if any, on the Surety Bond. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 81 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued) The pledge of future Net Revenues for the above funds ends upon repayment of the $11.6 million principal and $4.45 million interest as the remaining debt service on the bonds, which is scheduled to occur in FY 2024. For FY 2013, Net Revenues, including operating revenues and non‐operating interest earnings, amounted to $43.7 million; operating costs, including operating expenses but not interest, depreciation or amortization, amounted to $32.0 million. Net Revenues available for debt service amounted to $11.7 million, which represents coverage of 9.62 times over the $1.2 million in debt service. 2007 Electric System Clean Renewable Energy Tax Credit Bonds, Series A – In October 2007, the City issued $1.5 million of Electric Utility Clean Renewable Energy Tax Credit Bonds (CREBs), 2007 Series A, to finance the City’s photovoltaic solar panel project. The Bonds do not bear interest. In lieu of receiving periodic interest payments, bondholders are allowed annual federal income tax credits in an amount equal to a credit rate for such CREBs multiplied by the outstanding principal amount of the CREBs owned by the bondholders. The Bonds are payable solely from and secured solely by a pledge of the Net Revenues of the Electric system and the other funds pledged under the Indenture. The pledge of future Electric Fund Net Revenues ends upon repayment of the $0.9 million remaining debt service on the bonds, which is scheduled to occur in FY 2022. For FY 2013, Net Revenues, including operating revenues and non‐operating interest earnings, amounted to $121.8 million; operating costs, including operating expenses but not interest, depreciation or amortization, amounted to $88.9 million. Net Revenues available for debt service amounted to $32.9 million, which represented coverage of 329 times over the $0.1 million in debt service. 2009 Water Revenue Bonds, Series A – On October 6, 2009, the City issued $35.0 million of Water Revenue Bonds to finance certain improvements to the City’s water utility system. Principal payments are due annually on June 1, and interest payments are due semi‐annually on June 1 and December 1 from 1.80 percent to 5.95 percent. The 2009 Revenue Bonds are secured by net revenues generated by the Water Services Fund. The 2009 Bonds were issued as bonds designated as “Direct Payment Build America Bonds” under the provisions of the American Recovery and Reinvestment Act of 2009 (“Build America Bonds”). The City expects to receive a cash subsidy payment from the United States Treasury equal to 35 percent of the interest payable on the 2009 Bonds. The lien of the 1995 Bonds on the Net Revenues is senior to the lien on Net Revenues securing the 2009 Bonds and the 2011 Bonds. The City received subsidy payments amounting to $572 thousand, which represents 33.5 percent of the two interest payments due on December 1, 2012 and June 1, 2013. The pledge of future Net Revenues for the above funds ends upon repayment of the $32.5 million principal and $23.9 million interest as the remaining debt service on the bonds, which is scheduled to occur in FY 2035. For FY 2013, Net Revenues, including operating revenues and non‐operating interest earnings, amounted to $37.7 million; operating costs, including operating expenses but not interest, depreciation or amortization, amounted to $28.4 million. Net Revenues available for debt service amounted to $9.3 million, which represented coverage of 3.66 times over the $2.6 million in debt service. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 82 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued) 2011 Utility Revenue Refunding Bonds – On September 8, 2011, the City issued $17.2 million in Lease Revenue Bonds (2011 Bonds) to refund the outstanding 2002 Series A Utility Revenue Bonds (2002 Bonds) on a current basis. The 2002 Bonds were issued to finance improvement to the City’s municipal water utility system and the natural gas utility system. Principal of the 2011 Bonds is payable annually on June 1, and interest on the 2011 Bonds is payable semi‐annually on June 1 and December 1. The 2011 Bonds are secured by net revenues generated by the Water Services and Gas Services Funds. The pledge of future Net Revenues of the above funds ends upon repayment of the $15.2 million principal and $3.7 million interest as remaining debt service on the bonds, which is scheduled to occur in FY 2035. For FY 2013, Net Revenues, including operating revenues and non‐operating interest earnings, amounted to $72.4 million; operating costs, including operating expenses but not interest, depreciation or amortization, amounted to $52.7 million. Net Revenues available for debt service amounted to $19.7 million, which represented coverage of 13.5 times over the $1.5 million in debt service. 2007 State Water Resources Loan – In October 2007, the City approved a $9 million loan agreement with State Water Resources Control Board (SWRCB) to finance the City’s Mountain View/Moffett Area reclaimed water pipeline project. Under the terms of the contract, the City has agreed to repay $9 million to the State in exchange for receiving $7.5 million in proceeds to be used to fund the Project. The difference between the repayment obligation and proceeds amounts to $1.5 million and represents in‐ substance interest on the outstanding balance. Loan proceeds are drawn down as the project progresses, and debt service payments commenced on June 30, 2010. Concurrently with the loan, the City entered into various other agreements including a cost sharing arrangement with the City of Mountain View. Pursuant to that agreement, City of Mountain View agreed to finance a portion of the project with a $5 million loan repayable to the City. This loan has been recorded as “Due from other government agencies” in the accompanying financial statements. 2009 State Water Resources Loan – In October 2009, the City approved an $8.5 million loan agreement with SWRCB to finance the City’s Ultraviolet Disinfection project. As of June 30, 2011, the full loan in the amount of $8.5 million was drawn down and became outstanding. Interest in the amount of $96,000 was accrued and added to the outstanding loan balance. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 83 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued) Debt Service Requirements (in thousands): Debt service requirements are shown below for all long‐term debt. For the Year Ending June 30 Principal Interest Total Principal Interest Total 2014 1,524$ 3,114$ 4,638$ 3,780$ 3,236$ 7,016$ 2015 1,948 3,402 5,350 3,909 3,109 7,018 2016 1,995 3,337 5,332 4,049 2,972 7,021 2017 2,066 3,260 5,326 4,198 2,818 7,016 2018 2,156 3,170 5,326 4,363 2,656 7,019 2019‐2023 10,171 14,494 24,665 24,432 10,556 34,988 2024‐2028 11,085 12,161 23,246 17,994 6,117 24,111 2029‐2033 14,000 9,202 23,202 11,684 3,254 14,938 2034‐2038 17,365 5,759 23,124 4,704 424 5,128 2039‐2043 14,715 1,500 16,215 ‐ ‐ ‐ 2044 1,170 23 1,193 ‐ ‐ ‐ Total 78,195$ 59,422$ 137,617$ 79,113$ 35,142$ 114,255$ Governmental Activities Business‐Type Activities Debt Call Provisions Long‐term debt as of June 30, 2013 is callable on the following terms and conditions: Initial Call Date Governmental Activities Long‐Term Debt 2002B Certificates of Participation 03/01/11 (2) 2010A General Obligation Bonds $6.595 million due 08/01/2032 08/01/31 (3) $4.890 million due 08/01/2034 08/01/33 (3) $17.725 million due 08/01/2040 08/01/35 (3) Business‐Type Activities Long‐Term Debt Utility Revenue Bonds 1999 Refunding 06/01/09 (1) 2011 Series A06/01/21(1) (1) Callable in inverse numerical order of maturity at par plus a premium of 2 percent beginning on the initial call date. The call price declines subsequent to the initial date. (2) Callable in any order specified by the City at par plus a premium of 1 percent beginning on the initial call date. The call price declines subsequent to the initial date. (3) Callable in any order specified by the City at par value plus any accrued interest beginning on the initial call date. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 84 NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued) Leasing Arrangements COPs and Capital Leases are issued for the purpose of financing the construction or acquisition of projects defined in each leasing arrangement. Projects are leased to the City for lease payments which, together with unspent proceeds of the leasing arrangement, will be sufficient to meet the debt service obligations of the leasing arrangement. At the termination of the leasing arrangement, title to the project will pass to the City. Leasing arrangements are similar to debt in that they allow investors to participate in a share of guaranteed payments, which are made by the City. Because they are similar to debt, the present value of the total of the payments to be made by the City is recorded as long‐term debt. The City’s leasing arrangements are included in long‐term obligations discussed above. Conduit Financing On December 15, 1996, the City acted as a financial intermediary in order to assist Lytton Gardens Health Care Center in issuing Insured Revenue Refunding Bonds. The Bonds are payable solely from revenues collected by Lytton Gardens Health Care Center. The City has not included these bonds in its basic financial statements since it is not legally or morally obligated for the repayment of the bonds. At June 30, 2013, the amount of bonds outstanding was $4.2 million. Long‐term Debt without City Commitment On July 23, 2007, the City approved the issuance of two variable rate demand Tax‐Exempt Revenue Bonds by the Association of Bay Area Governments (ABAG) Finance Authority in the amounts of $160 million and $180 million for the construction of the Albert L. Schultz Jewish Community Center and a new continuing care retirement community, respectively. The debt is payable by the borrowers, Albert L. Schultz Jewish Community Center and 899 Charleston, LLC. The City has no legal or moral liability with respect to the payment of these debts. NOTE 8 – SPECIAL ASSESSMENT DEBT Special Assessment Debt with no City Commitment The California Avenue Parking Assessment District No. 92‐13 issued Assessment Bonds of 1993, but the City has no legal or moral liability with respect to the payment of this debt, which is secured only by assessments on the properties in this District. Therefore, this debt is not included in Governmental Activities long‐term debt of the City. At June 30, 2013, the District’s outstanding debt amounted to $480 thousand. On February 29, 2012, the University Avenue Area Off‐Street Parking Assessment District issued Limited Obligation Refunding Improvement Bonds (2012 Bonds), but the City has no legal or moral liability with respect to the payment of this debt, which is secured only by assessments on the properties in this District. Therefore, this debt is not included in Governmental Activities long‐term debt of the City. At June 30, 2013, the District’s outstanding debt amounted to $30.69 million. The proceeds from the 2012 Bonds, combined with available Assessment Funds, were used to redeem the outstanding University Avenue Area Off‐Street Parking Assessment District Series 2001‐A and Series 2002‐A Bonds. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 85 NOTE 9 – LANDFILL CLOSURE AND POST‐CLOSURE CARE State and federal laws and regulations require the City to properly close the Palo Alto Refuse Disposal Site (Palo Alto Landfill) after it stops accepting waste by constructing a final cover on top of the approximately 126 acre landfill to cap the wastes, and by performing certain maintenance and monitoring activities at the site for a minimum of thirty years after closure. The first section of the landfill closed in 1991 was a 29‐acre section designated “Phase I” costing $1.6 million. Phase I was subsequently converted to a pastoral park (Byxbee Park) and opened to the public. The remaining sections of the landfill are designated as Phase IIA (22.5 acres closed in 1992 at a cost of $0.9 million), Phase IIB (23.2 acres closed in 2000 at a cost of $1.2 million) and Phase IIC, a 51.2 acre active area that is currently filled to capacity and ceased accepting waste after July 28, 2011. Phase IIC is currently scheduled for closure in 2014. The 30 years of post‐closure maintenance costs will be paid after the state certifies the Phase IIC closure. In accordance with state regulations, a final closure and post‐closure maintenance plan was produced by a consultant and submitted to state and local regulatory agencies in 2009. As part of this plan, the City’s consultant updated cost forecasts for both the remaining Phase IIC closure and for the 30 year post‐ closure maintenance activities. Landfill closure and post‐closure liabilities for FY 2013 and FY 2012 were $11.2 million and $11.0 million, respectively. Changes in the liability for landfill closure and post‐closure costs are the result of an annual inflation factor that is applied to the estimated costs. The City is required by state and federal laws and regulations to make annual funding contributions to finance closure and post‐closure care. In FY 2013, for the $5.4 million post‐closure maintenance, the City changed its financial assurance mechanism from an enterprise fund mechanism to a pledge of revenue agreement with the California Integrated Waste Management Board. The $5.8 million closure liability remains under the enterprise fund mechanism. The City is in compliance with these requirements for the year ended June 30, 2013. The landfill closure balance as of June 30, 2013 comprised the following (in thousands): Funding Mechanism Closure 5,820$ Cash on hand Post‐closure care 5,375 Future revenues Balance 11,195$ CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 86 NOTE 10 – NET POSITION AND FUND BALANCES Net Position Net Position is the excess of all the City’s assets over all its liabilities. Net position is divided into three categories that are described below: Net Investment in Capital Assets describes the portion of net position, which is represented by the current net book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these assets. Restricted describes the portion of net position that is reduced by liabilities related to restricted assets. Generally a liability relates to restricted assets if the asset results from a resource flow that also results in the recognition of a liability or if the liability will be liquidated with the restricted assets reported. Unrestricted describes the portion of net position which is not restricted as to use. Fund Balances As prescribed by GASB Statement No. 54, governmental funds report fund balances in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. Fund balances for governmental funds are made up of the following: Nonspendable – This fund is comprised of amounts that are: (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to cash, for example: prepaid items, land held for redevelopment and long‐term notes receivable. The corpus of the permanent fund is contractually required to be maintained intact. Restricted – This fund is comprised of amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers. Committed – This fund is comprised of amounts that can only be used for the specific purposes determined by the action that constitutes the most binding constraint (i.e. ordinance) of the City’s highest level of decision‐making authority, the City Council. Commitments may be changed or lifted only by the City taking the same formal action that imposed the constraint originally. Assigned – This fund is comprised of amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by the City Council or the City Manager, to whom the City Council has delegated the authority to assign amounts to be used for specific purposes. Unassigned –This fund is the residual classification for the General Fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. Other governmental funds may only report negative unassigned fund balance, which occurs when a fund has a residual deficit after allocation of fund balance to the nonspendable, restricted or committed categories. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 87 NOTE 10 – NET POSITION AND FUND BALANCES (Continued) The fund balances of all governmental funds are presented by the above mentioned categories on the face of the financial statements. In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance categories, fund balance is depleted in the order of restricted, committed, assigned, and unassigned. The General Fund Budget Stabilization Reserve (BSR) is established by authority of the General Fund Reserve Policy, which is approved by the City Council and included in the City’s annual adopted budget. The BSR is maintained in the range of 15 to 20 percent of General Fund operating expenditures, with a target of 18.5 percent. Any reserve level below 15 percent requires City Council approval. At the discretion of the City Manager, a reserve balance above 18.5 percent may be transferred to the Infrastructure Reserve within the Capital Projects Fund. The purpose of the General Fund BSR is to fund unbudgeted, unanticipated one‐time costs. The BSR is not meant to fund ongoing, recurring General Fund operating expenditures. As of June 30, 2013 total outstanding encumbrances related to governmental activities were $5.0 million for the General Fund, $36.7 million for the Capital Projects Fund, and $0.4 million for the Special Revenue Funds. General Fund encumbrances are reserved for the following governmental activities: Planning & Community Environment $1.0 million, Public Works $0.8 million, Community Services $0.7 million, Fire $0.6 million, Library $0.5 million, and Administrative Departments $1.4 million. Enterprise Funds At June 30, 2013, Enterprise Fund unrestricted net position (in thousands) were as follows: Water Electric Fiber Optics Gas Wastewater Collection Wastewater Treatment Refuse Storm Drainage Airport Total Unrestricted Rate stabilization Supply ‐$ 65,324$ ‐$ 6,293$ ‐$ ‐$ ‐$ ‐$ ‐$ 71,617$ Distribution ‐ 3,705 ‐ 5,025 ‐ ‐ ‐ ‐ ‐ 8,730 Operations 17,272 ‐ 15,290 ‐ 4,104 7,961 (2,766) 1,958 (520) 43,299 17,272 69,029 15,290 11,318 4,104 7,961 (2,766) 1,958 (520) 123,646 Emergency plant replacement 1,000 1,000 1,000 1,000 1,000 1,980 ‐ ‐ ‐ 6,980 Electric special projects ‐ 51,838 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 51,838 Reappropriations 10,423 12,541 663 4,981 8,443 3,693 125 3,852 ‐ 44,721 Commitments 4,978 5,629 62 14,588 2,785 3,507 1,475 268 103 33,395 Underground loan ‐ 738 ‐ ‐ ‐ ‐ 268 ‐ ‐ 1,006 Notes and loans ‐ ‐ ‐ ‐ ‐ 559 ‐ ‐ ‐ 559 Landfill corrective action ‐ ‐ ‐ ‐ ‐ ‐ 691 ‐ ‐ 691 Public benefit program ‐ 2,197 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2,197 Central Valley Project 313 313 Unamortized bond issuance cost 529 44 ‐ 105 18 1,185 ‐ 112 ‐ 1,993 Total 34,202$ 143,329$ 17,015$ 31,992$ 16,350$ 18,885$ (207)$ 6,190$ (417)$ 267,339$ The City Council has set aside unrestricted net position for general contingencies, future capital and debt service expenditures including operating and capital contingencies for unusual or emergency expenditures. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 88 NOTE 10 – NET POSITION AND FUND BALANCES (Continued) Internal Service Funds At June 30, 2013, Internal Service Funds unrestricted net position (in thousands): Vehicle Replacement and Maintenance Technology Printing and Mailing Services General Benefits Workers' Compensation Insurance Program General Liabilities Insurance Program Retiree Health Benefits Total Unrestricted net position: Commitments 1,848$ 2,743$ 159$ 300$ 68$ ‐$ ‐$ 5,118$ Future catastrophic losses ‐ ‐ ‐ ‐ 133 871 ‐ 1,004 Retiree health care ‐ ‐ ‐ ‐ ‐ ‐ 27,233 27,233 Software and hardware replacement ‐ 184 ‐ ‐ ‐ ‐ ‐ 184 Capital Projects 2,728 8,973 ‐ ‐ ‐ ‐ ‐ 11,701 Available 6,675 8,010 (159) 1,211 ‐ ‐ ‐ 15,737 Total 11,251$ 19,910$ ‐$ 1,511$ 201$ 871$ 27,233$ 60,977$ Commitments represent the portion of net position set aside for open purchase orders. Future catastrophic losses represent the portion of net position to be used for unforeseen future losses. Retiree health care represents the portion of net position set aside to defer future costs of retiree health care coverage. Capital projects represent the portion of net position set aside for adopted capital projects. NOTE 11 – PENSION PLANS CalPERS Safety and Miscellaneous Employees’ Plans Substantially all permanent City employees are eligible to participate in pension plans offered by the California Public Employees’ Retirement System (CalPERS), an agent for multiple employer defined benefit pension plans, which acts as a common investment and administrative agent for its participating member employers. CalPERS provides retirement and disability benefits, annual cost of living adjustments and death benefits to Plan members, who must be public employees and beneficiaries. The City’s employees participate in the Safety (police and fire) and Miscellaneous (all other) Employee Plans. Benefit provisions under both Plans are established by State statute and City resolution. Benefits are based on years of credited service, equal to one year of full‐time employment. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 89 NOTE 11 – PENSION PLANS (Continued) The Plans’ provisions and benefits in effect at June 30, 2013, as determined by the valuation dated June 30, 2010, are summarized as follows: Safety Plan Safety Plan Fire Fighters, Fire Chiefs Association, Fire Fighters Police Officers, Police Management Hire Date Before 6/8/12 Hire Date on or After 6/8/12 Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life Full retirement age 50 551 Monthly benefits, as a % of annual salary 3% 3% Required employee contribution rates 9% 9% Required employer contribution rates 31.05% 31.05% 1 Employees can retire at age 50 with reduced benefits of 2.4% ‐ 2.88%. Miscellaneous Plan Miscellaneous Plan Hire Date Before 7/17/10 Hire Date on or After 7/17/10 Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life Full retirement age2 55 60 Monthly benefits, as a % of annual salary2 2.7%2.0% ‐ 2.418% Required employee contribution rates 8%7% Required employer contribution rates 22.97%22.97% 2 Employees can retire at age 50 with reduced benefits of 2.0% ‐ 2.56% if hired before 7/17/10, or 1.092% ‐ 1.874% if hired on or after 7/17/10. Contributions are collected through payroll deductions and the City remits those contributions to CalPERS. CalPERS determines contribution requirements using a modification of the Entry Age Normal Method. Under this method, the City’s total normal benefit cost for each employee from date of hire to date of retirement is expressed as a level percentage of the related total payroll cost. Normal benefit cost under this method is the level amount the employer must pay annually to fund an employee’s projected retirement benefit. This level percentage of payroll method is used to amortize any unfunded actuarial liabilities. The actuarial assumptions used to compute contribution requirements are also used to compute the actuarial accrued liability. The City does not have a net pension obligation since it pays these actuarially required contributions monthly. Actuarially determined employer and employee contributions for all plans for fiscal years 2013, 2012 and 2011 were $28.6, $27.7 and $24.0 million, respectively. The City made these contributions as required, together with certain immaterial amounts required as the result of the payment of overtime and other additional employee compensation. The City uses the actuarially determined percentages of payroll to calculate and pay contributions to CalPERS. This results in no net pension obligations or unpaid contributions. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 90 NOTE 11 – PENSION PLANS (Continued) Annual Pension Costs representing the payment of annual required contributions determined by CalPERS for the last three fiscal years were as follows (in thousands): Fiscal Year Ended Annual Pension Cost (APC) Percent of APC Contributed Net Pension Obligation Safety Plan June 30, 2011 6,029$ 100%‐$ June 30, 2012 7,324 100%‐ June 30, 2013 7,871 100%‐ Miscellaneous Plan June 30, 2011 12,354$ 100%‐ June 30, 2012 15,687 100%‐ June 30, 2013 15,801 100%‐ CalPERS uses the 15 year smoothed market method of valuing the Plan assets. An investment rate of return of 7.50 percent is assumed, including inflation at 2.75 percent. Annual salary increases are assumed to vary by duration of service. Changes in liability due to plan amendments, changes in actuarial assumptions, or changes in actuarial methods are amortized as a level percentage of payroll on a closed basis over twenty years. Investment gains and losses are tracked and amortized over a 30 year rolling period, except for special gains and losses in fiscal years 2009 through 2011 which are being amortized over fixed and declining 30 year periods. The Schedule of Funding Progress presents multi‐year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The actuarial value (which differs from market value) and funding progress of the Plans over the most recently available three years is set forth below at their actuarial valuation date of June 30 (in thousands): Safety Plan: Valuation Date June 30, Entry Age Accrued Liability Value of Assets Unfunded Liability Funded Ratio Annual Covered Payroll Unfunded Liability as a % of Payroll 2009 280,293$ 236,274$ 44,019$ 84.3% 22,087$ 199.3% 2010 293,895 244,413 49,482 83.2% 23,030 214.9% 2011 313,184 254,305 58,879 81.2% 22,774 258.5% Miscellaneous Plan: Valuation Date June 30, Entry Age Accrued Liability Value of Assets Unfunded Liability Funded Ratio Annual Covered Payroll Unfunded Liability as a % of Payroll 2009 499,200$ 398,765$ 100,435$ 79.9% 65,602$ 153.1% 2010 521,269 416,810 104,459 80.0% 62,496 167.1% 2011 552,716 434,985 117,731 78.7% 60,298 195.2% Actuarial Actuarial CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 91 NOTE 11 – PENSION PLANS (Continued) The significant actuarial assumptions adopted by CalPERS’ Board of Administration that were used to prepare the City’s actuarial valuations for both the Safety and Miscellaneous Plans are as follows: Safety Plan Valuation Date 6/30/2011* 6/30/2010** Actuarial Cost Method Entry Age Normal Cost Method Entry Age Normal Cost Method Amortization Method Level percent of payroll Level percent of payroll Average Remaining Period 30 Years as of the Valuation Date 29 Years as of the Valuation Date Asset Valuation Method 15 Year Smoothed Market 15 Year Smoothed Market Actuarial Assumptions: Investment Rate of Return 7.50% (net of administrative expenses) 7.75% (net of administrative expenses) Projected Salary Increases 3.30% to 14.20% depending on age, service, and type of employment 3.55% to 13.15% depending on age, service, and type of employment Inflation 2.75%3.00% Payroll Growth 3.00%3.25% Individual Salary Growth A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 2.75% and an annual production growth of 0.25%. A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 3.00% and an annual production growth of 0.25%. Miscellaneous Plan Valuation Date 6/30/2011* 6/30/2010** Actuarial Cost Method Entry Age Normal Cost Method Entry Age Normal Cost Method Amortization Method Level percent of payroll Level percent of payroll Average Remaining Period 21 Years as of the Valuation Date 20 Years as of the Valuation Date Asset Valuation Method 15 Year Smoothed Market 15 Year Smoothed Market Actuarial Assumptions: Investment Rate of Return 7.50% (net of administrative expenses) 7.75% (net of administrative expenses) Projected Salary Increases 3.30% to 14.20% depending on age, service, and type of employment 3.55% to 14.45% depending on age, service, and type of employment Inflation 2.75%3.00% Payroll Growth 3.00%3.25% Individual Salary Growth A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 2.75% and an annual production growth of 0.25%. A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 3.00% and an annual production growth of 0.25%. * The June 30, 2011 valuations, which are the most recent valuations, were used to disclose the funded status. ** The June 30, 2010 valuations were used to determine the contribution requirements for FY 2013. Audited annual financial statements and six‐year trend information are available from CalPERS at P.O. Box 942703, Sacramento, CA 94229‐2709. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 92 NOTE 12 – RETIREE HEALTH BENEFITS In addition to providing pension benefits, the City participates in the California Public Employees’ Medical and Health Care Act program to provide certain health care benefits for retired employees. Employees who retire directly from the City are eligible for retiree health benefits if they retire on or after age 50 with 5 years of service and are receiving a monthly pension from CalPERS. Details of benefits provided to retirees are noted in the following tables: Unit Hired Before Retiree Coverage1 Dependent Coverage Retired on or After Retiree Contribution Management & Professional2 1/1/2004 100% 100% 5/1/2011 10% Police Management2 1/1/2004 100% 100% 5/1/2011 10% Fire Fighters2 1/1/2004 100% 100% 12/1/2011 10% Fire Chiefs Association2 1/1/2004 100% 100% 1/1/2013 10% SEIU3 1/1/2005 100% 100% 5/1/2011 10% Police Officers4 1/1/2006 100% 100% N/A 0% Utilities Managers & Professional2 1/1/2004 100% 100% 5/1/2011 10% 2 Effective 1/1/2004 plan capped at the second highest CalPERS Bay Area Basic plan premium. 3 Effective 1/1/2005 plan capped at the second highest CalPERS Bay Area Basic plan premium. 4 Effective 1/1/2006 plan capped at the second highest CalPERS Bay Area Basic plan premium. Retiree contributions for units with the following hire dates are determined by Government Code Section 22893, 20 year graduated schedule: Unit Hired on or After Retiree Coverage1 Dependent Coverage2 Management & Professional 1/1/2004 50%‐100% Max. 90% Police Management 1/1/2004 50%‐100% Max. 90% Fire Fighters 1/1/2004 50%‐100% Max. 90% Fire Chiefs Association 1/1/2004 50%‐100% Max. 90% SEIU 1/1/2005 50%‐100% Max. 90% Police Officers 1/1/2006 50%‐100% Max. 90% specified employer contribution, with the City portion increasing by 5% for each additional year of service credit. 2 Maximun of 90% once employee completes 20 years of service. 1 100% of benefits if the employee has five years CalPERS service credit and the employee retired from the City of Palo Alto. 1 Employees with ten years of CalPERS service, at least five of which are at the City of Palo Alto, receive 50% of the CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 93 NOTE 12 – RETIREE HEALTH BENEFITS (Continued) During FY 2008, the City implemented the provisions of Governmental Accounting Standards Board Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. This Statement establishes uniform financial reporting standards for employers providing other postemployment benefits (OPEB). As part of the implementation, the City elected to participate in an irrevocable trust to provide a funding mechanism for the OPEB and to apply the provisions of the statement on a prospective basis. The Trust, California Employers’ Retirees Benefit Trust (CERBT), is administrated by CalPERS and managed by a separately appointed board, which is not under control of the City Council. This Trust is not considered a component unit of the City. Funding Policy and Actuarial Assumptions The City’s policy is to prefund these benefits by accumulating assets in the Trust Fund discussed above pursuant to City Council Resolution. The annual required contribution (ARC) was determined as part of a June 30, 2011, actuarial valuation using the entry age normal actuarial cost method. This is a projected benefit cost method, which takes into account those benefits that are expected to be earned in the future as well as those already accrued. The actuarial assumptions include: (a) 7.75 percent investment rate of return, (b) 3.25 percent projected annual salary increase, (c) actuarial value of assets, (d) inflation rate of 3 percent, and (e) health care cost trend data as noted in the following table: Year Non‐Medicare Medicare 2013 9.0% 9.4% 2014 8.5% 8.9% 2015 8.0% 8.0% 2016 7.5% 7.8% 2017 7.0% 7.2% 2018 6.5% 6.7% 2019 6.0% 6.1% 2020 5.5% 5.6% 2021+ 5.0% 5.0% The funded status of the plan was determined as part of the June 30, 2011 actuarial valuation. The actuarial assumptions used for the June 30, 2011 actuarial valuation were the same as the actuarial assumptions used for the January 1, 2011 actuarial valuation, except for the investment rate of return, which is 7.61 percent instead of 7.75 percent. The actuarial methods and assumptions used include techniques that smooth the effects of short‐term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long‐term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. The calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing costs between the City and Plan members to that point. Actuarially determined amounts are subject to revision at least biannually as results are compared to past expectations and new estimates are made about the future. The City’s OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a 30 year open amortization period. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 94 NOTE 12 – RETIREE HEALTH BENEFITS (Continued) Generally accepted accounting principles permit assets to be treated as OPEB assets and deducted from the Actuarial Accrued Liability when such assets are placed in an irrevocable trust or equivalent arrangement. During the year ended June 30, 2013, the City made contributions and amortized the Net OPEB asset to fund the current year ARC. As a result, the City has calculated and recorded the Net OPEB Asset, representing the difference between the ARC, amortization and contributions, as presented below (in thousands): Annual required contribution 12,756$ Amortization on the Net OPEB Asset 2,057 Interest on the Net OPEB Asset (1,619) Annual OPEB Cost 13,194 Contributions made: Contributions to OPEB Trust 5,008 Contributions to Retirees 6,774 City portion of current year premiums paid*1,992 Total contributions made 13,774 Change in Net OPEB Asset 580 Net OPEB Asset, beginning of year 21,271 Net OPEB Asset, end of year 21,851$ * FY 2013 premiums for 904 retirees. Shortly after year‐end, the City contributed an additional $3.95 million to the Trust, which included $1.3 million from prior years’ State reimbursements for Medicare. The Plan’s annual OPEB cost and actual contributions for the past three years ended June 30 are set forth below (in thousands): Fiscal Year Annual OPEB Cost Actual Contribution Percentage of OPEB Cost Net OPEB Obligation (Asset) June 30, 2011 10,265$ 10,029$ 98% (23,006)$ June 30, 2012 13,058 11,323 87% (21,271) June 30, 2013 13,194 13,774 104% (21,851) CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 95 NOTE 12 – RETIREE HEALTH BENEFITS (Continued) The Schedule of Funding Progress presents multi‐year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Trend data from the actuarial studies is presented below (in thousands): Valuation Date Entry Age Accrued Liability Value of Assets Unfunded Liability Funded Ratio Annual Covered Payroll Unfunded Liability as a % of Payroll January 1, 2007 102,237$ ‐$ 102,237$ 0.0% 97,600$ 104.8% January 1, 2009 129,661 24,616 105,045 19.0% 98,940 106.2% January 1, 2011 165,660 40,213 125,447 24.3% 80,664 155.5% June 30, 2011 * 168,053 44,774 123,279 26.6% 83,285 148.0% * In accordance with GASB Statement No. 57, the CERBT required all trust participants to use a common valuation date. Therefore, the City is required to conduct its biennial valuation on June 30, rather than January 1, effective for 2011. The retiree activities in the City’s Retiree Health Benefit Internal Service Fund consist of the following for the year ended June 30 (in thousands): Retiree Health Benefits 2013 2012 Net assets, beginning of year 26,265$ 26,285$ Interest earnings 78 81 Unrealized gain (loss) on investments (142) 74 Interdepartmental charges 12,986 12,238 Compensated benefits (11,954) (12,413) Net assets, end of year 27,233$ 26,265$ NOTE 13 – DEFERRED COMPENSATION PLAN City employees may defer a portion of their compensation under City sponsored Deferred Compensation Plans created in accordance with Internal Revenue Code Section 457. Under these Plans, participants are not taxed on the deferred portion of their compensation until distributed to them. Distributions may be made only at termination, retirement, death or in an emergency as defined by the Plans. The laws governing deferred compensation plan assets require plan assets to be held by a Trust for the exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans are not the City’s property and are not subject to City control, they have been excluded from these financial statements. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 96 NOTE 14 – RISK MANAGEMENT Coverage The City provides dental coverage to employees through a City plan, which is administered by a third party service agent. The City is self‐insured for the dental claims. The City has a workers’ compensation insurance policy with coverage up to the statutory limit set by the State of California. The City retains the risk for the first $500,000 in losses for each accident and employee under this policy. The City also has public employee dishonesty insurance with a $5,000 deductible and coverage up to $1 million per loss. The City’s property, boiler, and machinery insurance policy has various deductibles and various coverage based on the type of property. The City is a member of the Authority for California Cities Excess Liability (ACCEL), which provides excess general liability, including auto liability, insurance coverage up to $100 million per occurrence. The City retains the risk for the first $1 million in losses for each occurrence under this policy. ACCEL was established for the purpose of creating a risk management pool for central California municipalities. ACCEL is governed by a Board of Directors consisting of representatives of its member cities. The board controls the operations of ACCEL, including selection of claims management, general administration and approval of the annual budget. The City’s deposits with ACCEL equal the ratio of the City’s payroll to the total payrolls of all entities. Actual surpluses or losses are shared according to a formula developed from overall loss costs and spread to member entities on a percentage basis after a retrospective rating. During the year ended June 30, 2013, the City paid $0.9 million to ACCEL for current year coverage. Audited financial statements are available from ACCEL at 100 Pine Street, 11th Floor, San Francisco, California 94110. Claims Liability The City provides for the uninsured portion of claims and judgments in the General Benefits and Insurance Internal Service Funds. Claims and judgments, including a provision for claims incurred but not reported, and claim adjustment expenses are recorded when a loss is deemed probable of assertion and the amount of the loss is reasonably determinable. As discussed above, the City has coverage for such claims, but it has retained the risk for the deductible or uninsured portion of these claims. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 97 NOTE 14 – RISK MANAGEMENT (Continued) The City’s liability for uninsured claims is limited to dental, general liability, and workers’ compensation claims, as discussed above. Dental liability is based on a percentage of current year actual expense. General and workers’ compensation liabilities are based on the results of actuarial studies, and include amounts for claims incurred but not reported as follows as of June 30 (in thousands): 2013 2012 Beginning balance 27,466$ 23,903$ Liability for current and prior fiscal years claims and claims incurred but not reported (IBNR) 3,531 7,603 Claims paid (3,252) (4,040) Ending balance 27,745$ 27,466$ Current portion 6,663$ 7,043$ Year Ended June 30 The City has not incurred a claim that has exceeded its insurance coverage limits in any of the last three years, nor have there been any significant reductions in insurance coverage. NOTE 15 – JOINT VENTURES General The City participates in joint ventures through Joint Powers Authorities (JPAs) established under the Joint Exercise of Powers Act of the State of California. As separate legal entities, these JPAs exercise full powers and authorities within the scope of the related Joint Powers Agreement, including the preparation of annual budgets, accountability for all funds, the power to make and execute contracts and the right to sue and be sued. Obligations and liabilities of the JPAs are not those of the City. Each JPA is governed by a board consisting of representatives from each member agency. Each board controls the operations of its respective JPA, including selection of management and approval of operating budgets, independent of any influence by member agencies beyond their representation on the Board. Northern California Power Agency The City is a member of Northern California Power Agency (NCPA), a joint powers agency which operates under a joint powers agreement among fifteen public agencies. The purpose of NCPA is to use the combined strength of its members to purchase, generate, sell and interchange electric energy and capacity through the acquisition and use of electrical generation and transmission facilities. Each agency member has agreed to fund a pro rata share of certain assessments by NCPA and enter into take‐or‐pay power supply contracts with NCPA. While NCPA is governed by its members, none of its obligations are those of its members unless expressly assumed by them. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 98 NOTE 15 – JOINT VENTURES (Continued) During the year ended June 30, 2013, the City incurred expenses totaling $64.6 million for purchased power and assessments earned by NCPA. The City’s interest in NCPA projects and reserves, as computed by NCPA, was $7.9 million at June 30, 2013. This amount represents the City’s portion of funds, which resulted from the settlement with third parties of issues with financial consequences and reconciliations of several prior years’ budgets for programs. It is recognized that all the funds credited to the City are linked to the collection of revenue from the City’s ratepayers, or to the settlement of disputes relating to electric power supply and that the money was collected from the City’s ratepayers to pay power bills. Additionally, the NCPA Commission identified and approved the funding of specific reserves for working capital, accumulated employees’ post‐retirement medical benefits, and billed property taxes for the geothermal project. The Commission also identified a number of contingent liabilities that may or may not be realized, the cost of which in most cases is difficult to estimate at this time. One such contingent liability is the steam field depletion, which will require funding to cover debt service and operational costs in excess of the expected value of the electric power. The General Operating Reserve is intended to minimize the number and amount of individual reserves needed for each project, protect NCPA’s financial condition and maintain its credit worthiness. These funds are available on demand, but the City has left them with NCPA as a reserve against these contingencies identified by NCPA. Members of NCPA may participate in an individual project of NCPA without obligation for any other project. Member assessments collected for one project may not be used to finance other projects of NCPA without the member’s permission. Geothermal Projects A purchased power agreement with NCPA obligated the City for 6.2 percent and 6.2 percent, respectively, of the operating costs and debt service of the two NCPA 110‐megawatt geothermal steampowered generating plants, Project Number 2 and Project Number 3. The City’s participation in the Geothermal Project was sold to Turlock Irrigation District in October 1984. Accordingly, the City is liable for payment of outstanding geothermal related debt only in the event that Turlock fails to make specified payments. Total outstanding debt of the NCPA Geothermal Project at June 30, 2013 is $94.2 million. The City’s participation in this project was 6.2 percent, or $5.8million. NCPA’s Geothermal Project has experienced a greater than originally anticipated decline in steam production from geothermal wells on its leasehold property. Results of the continuing well analysis program indicate that the potential productive capacity of the geothermal steam reservoir is less than originally estimated. Therefore, NCPA has modified the operations of the Geothermal Project to reduce the average annual output from past levels. As a result, the per unit cost of energy generated by the projects will be higher than anticipated. NCPA will continue to monitor the wells while pursuing alternatives for improving and extending reservoir performance, including supplemental water re‐injection, plant equipment modifications, and changes in operating methodology. NCPA, along with other steam field operators, has observed a substantial increase in steam production in the vicinity of re‐injection wells and is attempting to increase water re‐injection at strategic locations. NCPA, other steam developers, and the Lake County Sanitation CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 99 NOTE 15 – JOINT VENTURES (Continued) District are constructing a wastewater pipeline project that will greatly increase the amount of water available for re‐injection. Calaveras Hydroelectric Project In July 1981, NCPA agreed with Calaveras County Water District to purchase the output of the North Fork Stanislaus River Hydroelectric Development Project and to finance its construction. Debt service payments to NCPA began in February 1990 when the project was declared substantially complete and power was delivered to the participants. Under its power purchase agreement with NCPA, the City is obligated to pay 22.9 percent of this Project’s debt service and operating costs. At June 30, 2013, the book value of this Project’s plant, equipment and other assets was $412.8 million, while its long‐term debt totaled $345.1 million and other liabilities totaled $60.3 million. The City’s share of the Project’s long‐term debt amounted to $79.0 million at that date. Geothermal Public Power Line In 1983, NCPA, the Sacramento Municipal Utility District, the City of Santa Clara and the Modesto Irrigation District (Joint Owners) initiated studies for a Geothermal Public Power Line (GPPL), which would carry power generated at several existing and planned geothermal plants in The Geysers area to a location where the Joint Owners could receive it for transmission to their load centers. NCPA has an 18.5 percent share of this Project and the City has an 11.1 percent participation in NCPA’s share. In 1989, the development of the proposed Geothermal Public Power Line was discontinued because NCPA was able to contract for sufficient transmission capacity to meet its needs in The Geysers. However, because the project financing provided funding for an ownership interest in a Pacific Gas & Electric (PG&E) transmission line, a central dispatch facility and a performance bond pursuant to the Interconnection Agreement with PG&E, as well as an ownership interest in the proposed GPPL, NCPA issued $16 million in long‐term, fixed‐rate revenue bonds in November 1989 to defease the remaining variable rate refunding bonds used to refinance this project. The City is obligated to pay its 11.1 percent share of the related debt service, but debt service costs are covered through NCPA billing mechanisms that allocate the costs to members based on use of the facilities and services. At June 30, 2013, the book value of this Project’s plant, equipment and other assets was zero, and its long‐term debt totaled zero. NCPA Financial Information NCPA’s financial statements can be obtained from NCPA, 180 Cirby Way, Roseville, CA 95678. Transmission Agency of Northern California (TANC) The City is a member of a joint powers agreement with 14 other entities in the Transmission Agency of Northern California (TANC). TANC’s purpose is to provide electrical transmission or other facilities for the use of its members. While governed by its members, none of TANC’s obligations are those of its members unless expressly assumed by them. The City was obligated to pay 4 percent of TANC’s debt‐ service and operating costs. However, a Resolution was approved authorizing the execution of a Long‐ Term Layoff Agreement (LTLA) between the Cities of Palo Alto and Roseville. These two agencies desired to “layoff” their entitlement rights to the California‐Oregon Transmission Project (COTP) (and Roseville’s South of Tesla entitlement rights) for a period of 15 years to those acquiring Members (Sacramento CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 100 NOTE 15 – JOINT VENTURES (Continued) Municipal Utility District, Turlock Irrigation District, and Modesto Irrigation District). The effective date of this Agreement was February 1, 2009. As a result, the City is obligated to pay zero percent of TANC’s debt‐service and operating costs starting February 1, 2009, for a period of fifteen years. According to the 1985 Project Agreement with TANC for the development of the COTP and subsequent related project agreements, the City is obligated to pay its share of the project’s costs, including debt service, and is entitled to the use of a percentage of the project’s transmission or transfer capacity. TANC has issued four series of Revenue Bonds and Commercial Paper Notes totaling $421.4 million as of June 30, 2013. The City’s share of this debt is zero due to the LTLA mentioned above. Construction of the COTP was complete as of June 30, 1993. The transmission line was energized March 24, 1993. Because funding of certain participants’ shares in the project was needed pending approval of their applications for participation, TANC issued $93.8 million of Commercial Paper debt backed by a Letter of Credit. The City’s share of the Commercial Paper was zero at June 30, 2013 due to the LTLA mentioned above. TANC Financial Information TANC’s financial statements can be obtained from TANC, P.O. Box 15129, Sacramento, CA 95851. NOTE 16 – COMMITMENTS AND CONTINGENCIES Palo Alto Unified School District – The City leases a portion of the former Cubberley School site and twelve extended day care sites from the Palo Alto Unified School District (PAUSD). The lease is part of a larger agreement, which includes a covenant not to develop certain properties owned by the PAUSD. The lease term expired on December 31, 2004, upon which the City exercised its first option to extend for 10 years, for a new expiration date of 12/31/2014. The lease provides for two more five‐year options to extend, 1/1/2015 to 12/31/2019, and 1/1/2020 to 12/31/2024. The City’s rent for the facilities is $7.1 million per year plus insurance, repairs and maintenance. The rent may vary from year to year depending on the actual number of days used. Should any new law or regulation require the expenditure of work in excess of $250,000, per the terms of the lease, the City and PAUSD may renegotiate the lease. This lease is cancelable upon 90 days’ written notice in the event funds are not appropriated by the City. In addition, the lease is contingent upon authorization by the Palo Alto electorate if it exceeds the City’s Proposition 4 (Gann) appropriations limitation in any fiscal year. Lease expenditures for the year ended June 30, 2013, amounted to $7.1 million. Future minimum annual lease and covenant payments are as follows (in thousands): Year ending June 30 Payments 2014 7,320$ 2015 3,752 11,072$ CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 101 NOTE 16 – COMMITMENTS AND CONTINGENCIES (Continued) GreenWaste of Palo Alto – GreenWaste of Palo Alto continues as the City’s contractor for waste collection, transportation, and processing services. The agreement has a term of eight years, expiring June 30, 2017, with an option to extend the contract to 2021. The base compensation for GreenWaste is adjusted annually based on CPI indicators stipulated in the contract. In FY 2013 payments to GreenWaste were $10.6 million. City of Palo Alto Regional Water Quality Control Plant – The cities of Palo Alto, Mountain View and Los Altos (the Partners) participate jointly in the cost of maintaining and operating the City of Palo Alto Regional Water Quality Control Plant and related system (the Plant). The City is the owner and administrator of the Plant, which provides the transmission, treatment and disposal of sewage for the Partners. The cities of Mountain View and Los Altos are entitled to use a portion of the capacity of the Plant for a specified period of time. Each partner has the right to rent unused capacity from/to the other partners. The expenses of operations and maintenance are paid quarterly by each partner based on its pro rata share of treatment costs. Additionally, joint system revenues are shared by the partners in the same ratio as expenses are paid. The amended agreement has a term of fifty years beginning from the original signing in October 1968, but may be terminated by any partner upon ten years’ notice to the other partners. All sewage treatment property, plant and equipment are included in the Wastewater Treatment Enterprise Fund’s capital assets balance at June 30, 2013. If the City initiates the termination of the contracts, it is required to pay the other partners their unamortized contribution towards the capital assets. Solid Waste Materials Recovery and Transfer Station (SMaRT Station) – On June 9, 1992, the City, along with the City of Mountain View, signed a Memorandum of Understanding (MOU) with the City of Sunnyvale (Sunnyvale) to participate in the construction and operation of the SMaRT station, which recovers recyclable materials from the municipal solid waste delivered from participating cities. Per the MOU, the City has a capacity share of 21.3 percent of this facility and reimburses its proportionate capacity share of design, construction and operation costs to Sunnyvale. On December 1, 1992, the Sunnyvale Financing Authority issued $24.6 million in revenue bonds to finance the design and construction costs of the SMaRT Station. During the fiscal year ended June 30, 2003, the 1992 bonds were refunded by issuing the 2003 Solid Waste Revenue Bonds in the amount of $20.6 million. Even though these bonds are payable from and secured by the net revenues of Sunnyvale’s Utilities Enterprise, the City is obligated to reimburse Sunnyvale 21.3 percent of total debt service payments related to these bonds. The City’s portion of remaining principal balance for SMaRT revenue bonds as of June 30, 2013, is $1.8 million. During the year ended June 30, 2013, the City paid $0.4 million as its portion of current debt service. In FY 2008, the members agreed to finance an Equipment Replacement Project from existing reserves and proceeds from the Solid Waste Revenue Bond, Series 2007. The City has committed to repay 27.8 percent of the remaining debt service on the Bonds. The City’s portion of the Bonds amounts to $1.6 million as of June 30, 2013. During the year ended June 30, 2013, the City paid $0.1 million as its portion of current debt service. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 102 NOTE 16 – COMMITMENTS AND CONTINGENCIES (Continued) UTILITIES ENERGY RESOURCE MANAGEMENT Energy Markets in the United States and California U.S. and California electric and gas prices continued to be volatile during the year. The City purchased electricity in FY 2013 in conformance with the Council‐approved Long‐term Electric Acquisition Plan (LEAP) established in 2001 and last modified in April 2012 and the Council approved Energy Risk Management Policy. In April 2012, Council updated the Gas Utility Long‐Term Plan (GULP) and changed the natural gas purchasing strategy so no new fixed‐priced purchases will be made and all gas will be purchased on the spot market. Prior to that, natural gas purchases were made on a 3‐year forward basis in a laddered fashion and forward purchases for delivery through October 2013 exist. Due to the forward purchases done prior to April 2012 and since the price of natural gas has declined since those purchases were made, the City’s gas utility had a higher average cost of gas for its pool customers in FY 2013 compared to the average market price during the year. The City’s average natural gas commodity cost for the gas pool customers was $4.04/MMBtu compared to a spot market price of $3.50/MMBtu. The primary reason the City’s natural gas costs were higher than market was due to a dramatic drop in spot market prices after gas had been purchased and costs were locked in. The City’s average purchase cost for bilateral forward market purchases for electricity during FY 2013 was approximately 3.7¢/kWh while the average spot market prices were approximately 3.6¢/kWh. Hydroelectric supplies were below average in FY 2013, which resulted in more energy purchased from the market. Hydroelectric production accounted for 44 percent of the City’s electric supply in FY 2013 instead of 50 percent in a normal hydrologic year. These hydroelectric supplies derive from two sources – from contract with the Western Area Power Administration and from the City’s partial ownership of the Calaveras Hydroelectric Project. Wind and landfill gas resources accounted for 19 percent of the electric supply in FY 2013, with the balance purchased from the wholesale electric market. The City transacts with qualified suppliers for the market purchases, and the Northern California Power Agency (NCPA), which provides scheduling services for the City, buys and sells electricity within the month as needed to meet the City’s demands. Incidental sales of surplus energy resulted in revenues of $1.1 million during the year. The expense associated with the surplus energy sold from the overall electric supply portfolio was calculated at $1.7 million for the year, and is shown separately on the Statement of Revenues, Expenses and Changes in Fund Net Position. During FY 2009, the City executed a 15‐year assignment of its full share of ownership and obligations in the California Oregon Transmission Project (COTP). The assignment resulted in lower cost to serve the City’s electric rate payers starting in FY 2010 and is projected to continue saving the City throughout the term of the assignment. The City has executed Electric and Gas Master Agreements with suppliers to procure wholesale electricity and natural gas supplies. The table below outlines the electric and natural gas commodity supply commitments made by the City with these suppliers as of June 30, 2013. Monthly payments are made to suppliers upon delivery of supplies for the month. The City’s procurement plans conform to the Council‐approved Energy Risk Management Policy. These include a formal oversight role (Middle Office) CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 103 NOTE 16 – COMMITMENTS AND CONTINGENCIES (Continued) within the Administrative Services Department. A quarterly energy risk management report is provided to the Council as part of this oversight role. Forward Electricity Commodity Supply Commitments as of June 30, 2013 Supplier FY 2014 FY 2015 Total BP 351,000$ ‐$ 351,000$ Powerex 4,415,036 ‐ 4,415,036 SENA 2,518,236 5,202,770 7,721,006 7,284,272 5,202,770 12,487,042 Average Cost ($/MWh)40.97 45.96 42.92 Forward Natural Gas Commodity Supply Commitments as of June 30, 2013 Supplier FY 2014 FY 2015 Total BP ‐$ ‐$ ‐$ Powerex 611,310 ‐ 611,310 SENA ‐ ‐ ‐ 611,310 ‐ 611,310 Average Cost ($/MMBtu)4.97 ‐ 4.97 The City’s natural gas transportation contract with the Pacific Gas and Electric Company (PG&E) went into effect starting January 1, 2011, and will be in place until the end of 2014. This contract, commonly known as Gas Accord V, between PG&E and its gas transportation customers provides the City’s retail customers stable transportation costs. Palo Alto retains access to transmission capacity on par with PG&E’s core customers although rates increased for all shippers. Palo Alto’s backbone transmission rate increased by approximately 40 percent or $150,000 per year. This is due to a shifting of costs from the pipeline in the south to the northern pipeline. Despite this projected cost increase, the City will continue to benefit from its transportation contract with PG&E. Future Outlook Electric The market price for fossil fuel based electricity is projected to be relatively low for the next 12 months – at 3 to 5¢/kWh – but in the longer term it is expected to return to a higher level of 5 to 7¢/kWh. In the short term, the price commanded by renewable energy projects remains somewhat higher than “brown” market power. Costs for renewable energy are expected to remain relatively high in the foreseeable future resulting in higher costs to meet the City’s renewable energy supply targets. However, recently the price of solar photovoltaic projects has declined dramatically, resulting in lower projected renewable energy costs than in past years. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 104 NOTE 16 – COMMITMENTS AND CONTINGENCIES (continued) The Council‐approved Renewable Portfolio Standard (RPS), last updated in April 2012, is to meet at least 33 percent of the City’s retail electric sales with renewable resource supplies by 2015. On April 12, 2011 California adopted legislation (SB X12) requiring an RPS for all load serving entities including public owned utilities. The law requires utilities to procure renewable energy supplies to meet 20 percent of their retail sales by December 31, 2013, 25 percent of their retail sales by December 31, 2016 and 33 percent of their retail sales by December 31, 2020. For calendar year 2012, renewable supplies accounted for approximately 21.3 percent of retail sales. Going forward, the City continues to be on track to meet the City’s RPS target as well as the state mandated RPS. Based on existing and committed renewable supplies – which are detailed in the table below – the City expects to have a renewable energy supply level as a percentage of retail sales of 21.5 percent in calendar year 2013, 30.2 percent in calendar year 2016, and 47.9 percent in calendar year 2020. In order to help procure the remaining renewable energy to achieve RPS level of 33 percent of retail sales by 2015, Council adopted a feed‐in‐ tariff program (Palo Alto CLEAN) to buy energy from projects developed in Palo Alto. The City also plans to pursue additional long‐term renewable energy purchase contracts from projects located throughout the western United States through competitive solicitation. Long‐term Renewable Energy Contracts: Project Name Technology Nameplate Capacity (MW) Nominal Generation (MWh/yr) Currently Online Actual or Expected Contract Start Date Location (state) Contracting Date Contract Term (years) Shiloh Wind 25 75,300 Yes 2006 California 2005 15 High Winds Wind 20 51,800 Yes 2004 California 2004 23.5 Santa Cruz Landfill LFG 1.6 9,900 Yes 2006 California 2004 20 Ox Mountain Landfill LFG 5.7 43,900 Yes 2009 California 2005 20 Keller Canyon Landfill LFG 2 14,900 Yes 2009 California 2005 20 Johnson Canyon Landfill LFG 1.4 10,400 Yes 2013 California 2009 20 San Joaquin Landfill LFG 4.1 30,300 No 2013 California 2010 20 Brannon Solar Solar 20 50,700 No 2014 California 2012 25 Elevation Solar C Solar 40 80,000 No 2016 California 2013 30 Western Antelope Blue Sky Ranch B Solar 20 50,000 No 2016 California 2013 30 Frontier Solar Solar 20 52,500 No 2016 California 2013 30 Carbon Neutral Electric Supply Portfolio In March 2013, Council adopted a plan for all electric supply purchases to be carbon neutral starting in calendar year 2013 at a cost not to exceed 0.15 cents per kilowatt‐hour. This plan will be accomplished by relying on the City’s large hydroelectric resources and the energy from the long‐term renewable contracts. In addition, Renewable Energy Certificates (RECs) will be purchased to neutralize the carbon emissions from the market purchases made to meet the City’s load. Energy Efficiency Energy efficiency is the most cost‐effective electric resource available to the City. It is considered a primary resource for both the electric and gas utility. Reducing the need for energy and renewable energy supplies are two of the main methods the City employs to achieve the greenhouse gas reduction CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 105 NOTE 16 – COMMITMENTS AND CONTINGENCIES (continued) targets established in the City’s Climate Protection Plan. The City’s 10‐year Electric and Gas Energy Efficiency Plan, last updated by the Council at the end of 2012, has a goal of reducing the City’s electric and gas needs by 4.8 percent and 2.9 percent between 2014 and 2023, respectively, by employing energy efficiency measures. Electric efficiency savings achieved since 2006 reduced the FY 2012 electric load by 4.4 percent, with avoided greenhouse gas emissions equivalent to taking 2,200 cars off the road. Gas efficiency savings achieved since 2006 reduced the FY 2012 gas load by 2.1 percent, with avoided greenhouse gas emissions equivalent to taking 650 cars off the road. PaloAltoGreen, the City’s volunteer green power program, currently accounts for an additional 8 percent of the City’s energy needs from renewable resources. As of January 2013, the program purchases all the Renewable Energy Credits (RECs) for the program from solar energy projects. Prior to 2013, the program was supplied with RECs from wind for 97.5 percent and solar for 2.5 percent of the needs. Since the City has a carbon neutral electric supply starting in 2013, changes to the PaloAltoGreen program are being developed. Council is scheduled to consider those changes in the Fall of 2014. The City also has several programs to encourage renewable distributed generation and small scale ultra‐ clean co‐generation within the City. The California Independent System Operator (CAISO) implemented its Market Redesign and Technology Update (MRTU) in April 2009. An underlying component of MRTU is the use of location‐specific prices for the scheduling of energy transactions. These locational prices are determined hourly and reflect the marginal costs of meeting demand and resolving congestion on the transmission grid, which adds more uncertainty and volatility to the cost of transmission services for the City. The City continues to follow the development of laws and associated regulations related to implementation of AB 32 (California Global Warming Solutions Act of 2006, Chaptered 9/27/2006). In December 2008, the California Air Resources Board (CARB) approved the Scoping Plan, which is the primary guidance document for shaping how California will reduce its greenhouse gas (GHG) emissions to 1990 levels by 2020 as called for by AB 32. The scoping plan has a range of GHG reduction actions, which include direct regulations, alternative compliance mechanisms, monetary and non‐monetary incentives, voluntary actions, market‐based mechanisms such as a cap‐and‐trade system, and an AB 32 cost of implementation fee regulation to fund the program. In October 2011, CARB adopted the California Cap‐and‐Trade Regulation which created an aggregate GHG emission limit on the sources responsible for 85 percent of California’s GHG emissions. The GHG cap declines 2‐3 percent a year resulting in a 15 percent reduction in 2020. CARB has distributed allowances (defined as the authorization to emit up to one metric ton of carbon dioxide equivalent per allowance) equal to the emissions allowed under the cap. These allowances are tradable permits. The City’s electric utility operations fell under the cap starting in 2013. As an electric distribution company, the City allocated GHG emission allowances through 2020, with an estimated value of $4.5 million per year. The regulation requires that the City utilize the value of these allocated allowances “exclusively for the benefit of retail (electric) ratepayers”, consistent with the State’s GHG reduction goals. The first auction of allowances took place in November 2012 and the cap‐and‐trade system went into full effect in 2013. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 106 NOTE 16 – COMMITMENTS AND CONTINGENCIES (continued) Natural Gas Long‐term market prices for natural gas have remained relatively depressed since the market price peak in July 2008. Increasing U.S. and international demand resulting from economic recovery and potential clean energy legislation may put pressure on gas prices in the long term, however low to moderate gas prices are forecasted for the next year or two. The gas laddering strategy that was used since 2002 to hedge gas portfolio costs was changed by Council in April 2012 when a new strategy to purchase gas on the short‐term (spot) market was adopted. In June 2012, Council adopted a change in gas retail rates so that the spot market gas price is passed on to customers on a monthly basis. The City also employs asset management strategies to lower overall commodity costs. In March 2011, the Council approved a plan to implement a voluntary customer program similar to PaloAltoGreen if reasonably priced non‐fossil gas supplies could be found. While the City continues to search for potential supplies that are priced in a reasonable range for program marketability, such supplies have not yet been found. Staff is currently examining the feasibility and acceptability of using environmental offsets for a PaloAltoGreen Gas program, which could be introduced as early as July 2014. Starting in 2015, the City’s natural gas utility will also fall under the mandate to participate in the AB 32 cap‐and‐trade program, but the impact of the program on the gas utility, including any CARB proposal for allocation of GHG allowances to gas utilities, is not known at this time. Water The City’s water use during FY 2013 did not change from the prior year. Usage is highly dependent on weather conditions, but has remained essentially flat for the past 10 years. Current water usage is only 65 percent of what it was in 1975. Water supply costs for FY 2013 increased by 11 percent from FY 2012, primarily due to an 11 percent increase in the San Francisco Public Utilities Commission (SFPUC) wholesale water rate in FY 2013. The increase was related to extensive capital improvements on the Hetch Hetchy Water System. Water supply costs are expected to continue to trend upward as the SFPUC implements its upgrade to the regional water system facilities, the Water System Improvement Program (WSIP). Costs for the WSIP are expected to be about $4.6 billion. Estimates for these increased costs have been factored into the City’s long‐term water supply cost projections. Palo Alto is a member of Bay Area Water Supply & Conservation Agency (BAWSCA), which represents all the agencies that buy water on a wholesale basis from the City and County of San Francisco (San Francisco) pursuant to a Water Supply Agreement (WSA). The relationship between each of the BAWSCA agencies and San Francisco is specified in a 25‐year water service contract, which expires on June 30, 2034. The contract contains the same mechanism for cost allocation as in the prior contract and the contract has other improvements regarding water quality and fair treatment in water supply emergencies. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 107 NOTE 16 – COMMITMENTS AND CONTINGENCIES (continued) Pursuant to the WSA, the BAWSCA members agreed to pay SFPUC for capital improvements undertaken by San Francisco prior to their entering into the current WSA (“the Capital Debt”). The Capital Debt was to be repaid over a 25 year period at a fixed interest rate of 5.13 percent. Approximately $356.1 million of the Capital Debt was outstanding. Each BAWSCA member pays for the Capital Debt in the form of a capital cost recovery charge to San Francisco. With historically low interest rates, BAWSCA, on behalf of its 26 members, issued a combination of taxable and tax‐exempt bonds to finance its members Capital Debt in January 2013. Through aggressive marketing and favorable market conditions, the financing savings was twice what was expected. BAWSCA members realized net present value (NPV) savings of $62.3 million or 17.5 percent of outstanding debt with a blended interest rate of 3.14 percent (3.03 percent on tax‐exempt bonds and 3.46 percent on taxable bonds). The City’s average annual savings is $289 thousand, and accumulates to a NPV savings of $4.9 million over 21.5 years. During FY 2009, the City completed a Recycled Water Facility Plan, which provides more detailed design information on the project to expand the recycled water distribution. After circulating a Draft Mitigated Negative Declaration document for comments, it was determined that additional study would be required to address the water quality of the recycled water, particularly the salinity levels, which would negatively impact plant materials. The City embarked on a single‐issue Environmental Impact Report in FY 2010 to address this issue. The environmental documents, which are necessary to compete for grant funding opportunities, are expected to be completed in FY 2014. Contingent Liabilities Many of the uncertainties faced by the Utilities Department as an aftermath of the 2000‐2001 energy crisis have been resolved. The Ninth Circuit Court determined that the Federal Energy Regulatory Commission (FERC) lacked authority under the Federal Power Act to grant refund relief against governmental agencies, and the United States Supreme Court declined to review that decision. Nonetheless a number of entities (“the California Parties”) filed suit against the NCPA and other municipal utilities seeking refunds for sales made to the CAISO and Power Exchange during the energy crisis. The suit was filed in the Superior Court in Los Angeles in April 2007. In March 2010, the issue was resolved in a settlement agreement and the City made a payment to the California Parties and no further claims are expected. On April 29, 2010, FERC issued an order approving the settlement between NCPA and the California Parties. Another dispute between the Western Area Power Administration and PG&E, regarding PG&E’s claim to recover certain CAISO related costs has not been resolved. Litigation The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney, there is no pending litigation, claims or assessments that are likely to have a materially adverse effect on the City’s financial condition. CITY OF PALO ALTO Notes to the Basic Financial Statements For the Year Ended June 30, 2013 108 NOTE 16 – COMMITMENTS AND CONTINGENCIES (continued) Grant Programs The City participates in Federal and State grant programs. These programs have been audited by the City’s independent auditors in accordance with the provisions of the Federal Single Audit Act amendments of 1996 and applicable State requirements. No costs were questioned as a result of these audits; however, these programs are still subject to further examination by the grantors and the amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time. The City expects such amounts, if any, to be immaterial. Special Debt Revenue Service Permanent Funds Funds Fund Total ASSETS: Cash and investments: Available for operations 62,408$ 5,968$ 1,413$ 69,789$ Cash and investments with fiscal agents ‐ 238 ‐ 238 Receivables, net: Accounts 581 ‐ ‐ 581 Interest 307 ‐ 8 315 Notes 20,968 ‐ ‐ 20,968 Total assets 84,264$ 6,206$ 1,421$ 91,891$ Liabilities: Accounts payable and accruals 1,048$ ‐$ 3$ 1,051$ Accrued salaries and benefits 3 ‐ ‐ 3 Total liabilities 1,051 ‐ 3 1,054 Fund balances: Nonspendable Notes and loans receivable 16,771 ‐ ‐ 16,771 Eyerly family ‐ ‐ 1,418 1,418 Restricted Transportation mitigation 9,262 ‐ ‐ 9,262 Federal revenue 4,480 ‐ ‐ 4,480 Street improvement 581 ‐ ‐ 581 Local law enforcement 254 ‐ ‐ 254 Debt service ‐ 6,206 ‐ 6,206 Public benefits 31,351 ‐ ‐ 31,351 Committed Developer's impact fee 9,726 ‐ ‐ 9,726 Housing In‐Lieu 9,455 ‐ ‐ 9,455 Special districts 1,118 ‐ ‐ 1,118 Downtown business 101 ‐ ‐ 101 Assigned Unrealized gain on investment 114 ‐ ‐ 114 Total fund balances 83,213 6,206 1,418 90,837 Total liabilities and fund balances 84,264$ 6,206$ 1,421$ 91,891$ LIABILITIES AND FUND BALANCES: CITY OF PALO ALTO Non‐major Governmental Funds Combining Balance Sheet June 30, 2013 (Amounts in thousands) 109 Special Debt Revenue Service Permanent Funds Funds Fund Total REVENUES: Property tax ‐$ 3,188$ ‐$ 3,188$ Special assessments 110 ‐ ‐ 110 Other taxes and fines 1,524 ‐ ‐ 1,524 Charges for services 12,249 ‐ ‐ 12,249 From other agencies: Community Development Block Grants 665 ‐ ‐ 665 State of California 67 ‐ ‐ 67 Permits and licenses 646 ‐ ‐ 646 Investment earnings (116) (117) (17) (250) Rental income 6 ‐ ‐ 6 Other: Housing In‐Lieu ‐ residential 4,023 ‐ ‐ 4,023 University Avenue Parking 1,109 ‐ ‐ 1,109 California Avenue Parking 102 ‐ ‐ 102 Other fees 9,976 ‐ ‐ 9,976 Total revenues 30,361 3,071 (17) 33,415 EXPENDITURES: Current: Planning and Community Environment 1,664 ‐ ‐ 1,664 Public safety ‐ Police 70 ‐ ‐ 70 Community Services 161 ‐ ‐ 161 Non‐Departmental (2,798) ‐ 12 (2,786) Debt service: Principal retirement ‐ 1,125 ‐ 1,125 Interest and fiscal charges ‐ 2,595 ‐ 2,595 Total expenditures (903) 3,720 12 2,829 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 31,264 (649) (29) 30,586 OTHER FINANCING SOURCES (USES): Issuance of debt ‐ 373 ‐ 373 Original debt premium ‐ 18 ‐ 18 Transfers in 1,720 235 ‐ 1,955 Transfers out (8,281) ‐ ‐ (8,281) Total other financing sources (uses)(6,561) 626 ‐ (5,935) Change in fund balances 24,703 (23) (29) 24,651 FUND BALANCES, BEGINNING OF YEAR 58,510 6,229 1,447 66,186 FUND BALANCES, END OF YEAR 83,213$ 6,206$ 1,418$ 90,837$ CITY OF PALO ALTO Non‐major Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2013 (Amounts in thousands) 110 111 NON‐MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Street Improvement This fund accounts for revenues received from state gas tax. Allocations must be spent on the construction and maintenance of the road network system of the City. Federal Revenue This fund accounts for grant funds received under the Community Development Act of 1974 and HOME Investment Grant Programs, for activities approved and subject to federal regulations. Housing In‐Lieu This fund accounts for revenues from commercial and residential developers to provide housing under the City’s Below Market Rate program. Special Districts This fund accounts for revenues from parking permits and for maintenance of various parking lots within the City’s parking districts. Transportation Mitigation This fund accounts for revenues from fees or contributions required for transportation mitigation issues encountered as a result of City development. Local Law Enforcement This fund accounts for revenues received in support of City’s law enforcement program. Assets Seizure This fund accounts for seized property and funds associated with drug trafficking. Under California Assembly Bill No. 4162, the monies are released to the City for specific expenditures related to law enforcement activities. Developer’s Impact Fee This fund accounts for fees imposed on new developments to be used for parks, community centers and libraries. Downtown Business Development District The Downtown Business Development District Fund was established to account for the activities of the Palo Alto Downtown Business Development District, which was established to enhance the viability of the downtown business district. Public Benefits This fund accounts for the activities of the SUMC Parties Development Agreement (DA) whereby SUMC will enhance and expand their facilities and the City will grant SUMC the right to develop the facilities in accordance with the DA. Street Federal Housing Special Improvement Revenue In‐Lieu Districts ASSETS: Cash and investments: Available for operations 450$ 277$ 10,283$ 1,116$ Receivables: Accounts 130 187 29 ‐ Interest 4 ‐ 52 6 Notes ‐ 4,197 16,771 ‐ Total assets 584$ 4,661$ 27,135$ 1,122$ Liabilities: Accounts payable and accruals ‐$ 178$ 870$ ‐$ Accrued salaries and benefits ‐ 3 ‐ ‐ Total liabilities ‐ 181 870 ‐ Fund balances: Nonspendable Notes and loans receivables ‐ ‐ 16,771 ‐ Restricted Transportation mitigation ‐ ‐ ‐ ‐ Federal revenue ‐ 4,480 ‐ ‐ Street improvement 581 ‐ ‐ ‐ Local law enforcement ‐ ‐ ‐ ‐ Public benefits ‐ ‐ ‐ ‐ Committed Developer's impact fee ‐ ‐ ‐ ‐ Housing In‐Lieu ‐ ‐ 9,455 ‐ Special districts ‐ ‐ ‐ 1,118 Downtown business ‐ ‐ ‐ ‐ Assigned Unrealized gain on investment 3 ‐ 39 4 Total fund balances 584 4,480 26,265 1,122 Total liabilities and fund balances 584$ 4,661$ 27,135$ 1,122$ CITY OF PALO ALTO LIABILITIES AND FUND BALANCES: Non‐major Special Revenue Funds Combining Balance Sheet June 30, 2013 (Amounts in thousands) 112 Downtown Business Transportation Local Law Assets Developer's Development Public Mitigation Enforcement Seizure Impact Fee District Benefits Total 9,174$ 252$ 2$ 9,559$ 97$ 31,198$ 62,408$ 77 ‐ ‐ 155 3 ‐ 581 44 1 ‐ 46 1 153 307 ‐ ‐ ‐ ‐ ‐ ‐ 20,968 9,295$ 253$ 2$ 9,760$ 101$ 31,351$ 84,264$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ 1,048$ ‐ ‐ ‐ ‐ ‐ ‐ 3 ‐ ‐ ‐ ‐ ‐ ‐ 1,051 ‐ ‐ ‐ ‐ ‐ ‐ 16,771 9,262 ‐ ‐ ‐ ‐ ‐ 9,262 ‐ ‐ ‐ ‐ ‐ ‐ 4,480 ‐ ‐ ‐ ‐ ‐ ‐ 581 ‐ 252 2 ‐ ‐ ‐ 254 ‐ ‐ ‐ ‐ ‐ 31,351 31,351 ‐ ‐ ‐ 9,726 ‐ ‐ 9,726 ‐ ‐ ‐ ‐ ‐ ‐ 9,455 ‐ ‐ ‐ ‐ ‐ ‐ 1,118 ‐ ‐ ‐ ‐ 101 ‐ 101 33 1 ‐ 34 ‐ ‐ 114 9,295 253 2 9,760 101 31,351 83,213 9,295$ 253$ 2$ 9,760$ 101$ 31,351$ 84,264$ 113 Street Federal Housing Special Transportation Improvement Revenue In‐Lieu Districts Mitigation REVENUES: Special assessments ‐$ ‐$ ‐$ ‐$ ‐$ Other taxes and fines 1,494 ‐ ‐ 30 ‐ Charges for services ‐ ‐ ‐ ‐ 516 From other agencies: Community Development Block Grants ‐ 665 ‐ ‐ ‐ State of California ‐ ‐ ‐ ‐ ‐ Permits and licenses ‐ ‐ ‐ 646 ‐ Investment earnings (29) (5) 21 (15) 46 Rental income ‐ ‐ 6 ‐ ‐ Other Housing In‐Lieu ‐ residential ‐ ‐ 4,023 ‐ ‐ University Avenue Parking ‐ ‐ ‐ 1,109 ‐ California Avenue Parking ‐ ‐ ‐ 102 ‐ Other fees ‐ 223 706 ‐ 2,681 Total revenues 1,465 883 4,756 1,872 3,243 EXPENDITURES: Current: Planning and Community Environment ‐ 922 409 53 ‐ Public safety ‐ Police ‐ ‐ ‐ ‐ ‐ Community Services ‐ ‐ ‐ ‐ ‐ Non‐Departmental ‐ ‐ (2,931) 27 ‐ Total expenditures ‐ 922 (2,522) 80 ‐ EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,465 (39) 7,278 1,792 3,243 OTHER FINANCING SOURCES (USES): Transfers in ‐ ‐ 1,720 ‐ ‐ Transfers out (1,942) ‐ ‐ (1,646) (250) Total other financing sources (uses)(1,942) ‐ 1,720 (1,646) (250) Change in fund balances (477) (39) 8,998 146 2,993 FUND BALANCES, BEGINNING OF YEAR 1,061 4,519 17,267 976 6,302 FUND BALANCES, END OF YEAR 584$ 4,480$ 26,265$ 1,122$ 9,295$ CITY OF PALO ALTO Non‐major Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2013 (Amounts in thousands) 114 Downtown Business Local Law Assets Developer's Development Public Enforcement Seizure Impact Fee District Benefits Total ‐$ ‐$ ‐$ 110$ ‐$ 110$ ‐ ‐ ‐ ‐ ‐ 1,524 ‐ ‐ ‐ ‐ 11,733 12,249 ‐ ‐ ‐ ‐ ‐ 665 67 ‐ ‐ ‐ ‐ 67 ‐ ‐ ‐ ‐ ‐ 646 (1) ‐ (47) ‐ (86) (116) ‐ ‐ ‐ ‐ ‐ 6 ‐ ‐ ‐ ‐ ‐ 4,023 ‐ ‐ ‐ ‐ ‐ 1,109 ‐ ‐ ‐ ‐ ‐ 102 ‐ ‐ 6,366 ‐ ‐ 9,976 66 ‐ 6,319 110 11,647 30,361 ‐ ‐ ‐ ‐ 280 1,664 70 ‐ ‐ ‐ ‐ 70 ‐ ‐ ‐ ‐ 161 161 ‐ ‐ ‐ 106 ‐ (2,798) 70 ‐ ‐ 106 441 (903) (4) ‐ 6,319 4 11,206 31,264 ‐ ‐ ‐ ‐ ‐ 1,720 ‐ ‐ (2,723) ‐ (1,720) (8,281) ‐ ‐ (2,723) ‐ (1,720) (6,561) (4) ‐ 3,596 4 9,486 24,703 257 2 6,164 97 21,865 58,510 253$ 2$ 9,760$ 101$ 31,351$ 83,213$ 115 Street Improvement Federal Revenue Variance Variance Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) REVENUES: Special assessments ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Other taxes and fines 1,764 1,494 (270) ‐ ‐ ‐ Charges for services ‐ ‐ ‐ ‐ ‐ ‐ From other agencies: Community Development Block Grants ‐ ‐ ‐ 512 665 153 State of California ‐ ‐ ‐ ‐ ‐ ‐ Other revenue from other agencies ‐ ‐ ‐ 208 ‐ (208) Permits and licenses ‐ ‐ ‐ ‐ ‐ ‐ Investment earnings 28 (29) (57) ‐ (5) (5) Rental income ‐ ‐ ‐ ‐ ‐ ‐ Other: Housing In‐Lieu ‐ residential ‐ ‐ ‐ ‐ ‐ ‐ University Avenue Parking ‐ ‐ ‐ ‐ ‐ ‐ California Avenue Parking ‐ ‐ ‐ ‐ ‐ ‐ Other fees ‐ ‐ ‐ 7 223 216 Total revenues 1,792 1,465 (327) 727 883 156 EXPENDITURES: Current: Planning and Community Environment ‐ ‐ ‐ 1,228 922 306 Public safety ‐ Police ‐ ‐ ‐ ‐ ‐ ‐ Community Services ‐ ‐ ‐ ‐ ‐ ‐ Non‐Departmental ‐ ‐ ‐ ‐ ‐ ‐ Total expenditures ‐ ‐ ‐ 1,228 922 306 Excess (deficiency) of revenues over (under) expenditures 1,792 1,465 (327) (501) (39) 462 OTHER FINANCING SOURCES (USES): Transfers in ‐ ‐ ‐ 5 ‐ (5) Transfers out (1,942) (1,942) ‐ (5) ‐ 5 Total other financing sources (uses)(1,942) (1,942) ‐ ‐ ‐ ‐ Change in fund balances (150)$ (477) (327)$ (501)$ (39) 462$ FUND BALANCES, BEGINNING OF YEAR 1,061 4,519 FUND BALANCES, END OF YEAR 584$ 4,480$ (Amounts in thousands) CITY OF PALO ALTO Non‐major Special Revenue Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances ‐ Budget and Actual For the Year Ended June 30, 2013 116 Housing In‐Lieu Special Districts Transportation Mitigation Variance Variance Variance Actual, plus Positive Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) Budget Encumbrances (Negative) ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐ ‐ ‐ 43 30 (13) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 282 516 234 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 386 646 260 ‐ ‐ ‐ 118 21 (97) 28 (15) (43) 113 46 (67) 9 6 (3) ‐ ‐ ‐ ‐ ‐ ‐ 3,500 4,023 523 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 985 1,109 124 ‐ ‐ ‐ ‐ ‐ ‐ 125 102 (23) ‐ ‐ ‐ 222 706 484 ‐ ‐ ‐ 280 2,681 2,401 3,849 4,756 907 1,567 1,872 305 675 3,243 2,568 9,137 409 8,728 113 53 60 23 ‐ 23 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2,061 (2,931) 4,992 55 27 28 ‐ ‐ ‐ 11,198 (2,522) 13,720 168 80 88 23 ‐ 23 (7,349) 7,278 14,627 1,399 1,792 393 652 3,243 2,591 4,320 1,720 (2,600) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ (1,643) (1,646) (3) (250) (250) ‐ 4,320 1,720 (2,600) (1,643) (1,646) (3) (250) (250) ‐ (3,029)$ 8,998 12,027$ (244)$ 146 390$ 402$ 2,993 2,591$ 17,267 976 6,302 26,265$ 1,122$ 9,295$ 117 Local Law Enforcement Asset Seizure Developer's Impact Fee Variance Variance Variance Actual, plus Positive Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) Budget Encumbrances (Negative) Revenues: Special assessments ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ ‐$ Other taxes and fines ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Charges for services ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ From other agencies: Community Development Block Grants ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ State of California ‐ 67 67 ‐ ‐ ‐ ‐ ‐ ‐ Other revenue from other agencies ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Permits and licenses ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Return on investments 6 (1) (7) ‐ ‐ ‐ 145 (47) (192) Rental income ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Other: Housing In‐Lieu ‐ residential ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ University Avenue Parking ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ California Avenue Parking ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Other fees ‐ ‐ ‐ ‐ ‐ ‐ 553 6,366 5,813 Total revenues 6 66 60 ‐ ‐ ‐ 698 6,319 5,621 Expenditures: Current: Planning and Community Environment ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Public safety ‐ Police 14 70 (56) ‐ ‐ ‐ ‐ ‐ ‐ Community Services ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Non‐Departmental ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Total expenditures 14 70 (56) ‐ ‐ ‐ ‐ ‐ ‐ Excess (deficiency) of revenues over (under) expenditures (8) (4) 4 ‐ ‐ ‐ 698 6,319 5,621 Other financing sources (uses): Transfers in ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Transfers out ‐ ‐ ‐ ‐ ‐ (2,723) (2,723) ‐ Total other financing sources (uses)‐ ‐ ‐ ‐ ‐ ‐ (2,723) (2,723) ‐ Change in fund balances (8)$ (4) 4$ ‐$ ‐ ‐$ (2,025)$ 3,596 5,621$ Fund balances, beginning of year 257 2 6,164 Fund balances, end of year 253$ 2$ 9,760$ CITY OF PALO ALTO Non‐major Special Revenue Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances ‐ Budget and Actual For the Year Ended June 30, 2013 (Amounts in Thousands) 118 Downtown Business Improvement District Public Benefits Total Non‐major Special Revenue Funds Variance Variance Variance Actual, plus Positive Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) Budget Encumbrances (Negative) 160$ 110$ (50)$ ‐$ ‐$ ‐$ 160$ 110$ (50)$ ‐ ‐ ‐ ‐ ‐ ‐ 1,807 1,524 (283) ‐ ‐ ‐ ‐ 11,733 11,733 282 12,249 11,967 ‐ ‐ ‐ ‐ ‐ ‐ 512 665 153 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 67 67 ‐ ‐ ‐ ‐ ‐ ‐ 208 ‐ (208) ‐ ‐ ‐ ‐ ‐ ‐ 386 646 260 2 ‐ (2) ‐ (86) (86) 440 (116) (556) ‐ ‐ ‐ ‐ ‐ ‐ 9 6 (3) ‐ ‐ ‐ ‐ ‐ ‐ 3,500 4,023 523 ‐ ‐ ‐ ‐ ‐ ‐ 985 1,109 124 ‐ ‐ ‐ ‐ ‐ ‐ 125 102 (23) ‐ ‐ ‐ ‐ ‐ ‐ 1,062 9,976 8,914 162 110 (52) ‐ 11,647 11,647 9,476 30,361 20,885 ‐ ‐ ‐ ‐ 280 (280) 10,501 1,664 8,837 ‐ ‐ ‐ ‐ ‐ ‐ 14 70 (56) ‐ ‐ ‐ 602 161 441 602 161 441 227 106 121 ‐ ‐ ‐ 2,343 (2,798) 5,141 227 106 121 602 441 161 13,460 (903) 14,363 (65) 4 69 (602) 11,206 11,808 (3,984) 31,264 35,248 ‐ ‐ ‐ ‐ ‐ ‐ 4,325 1,720 (2,605) ‐ ‐ ‐ (4,320) (1,720) 2,600 (10,883) (8,281) 2,602 ‐ ‐ ‐ (4,320) (1,720) 2,600 (6,558) (6,561) (3) (65)$ 4 69$ (4,922)$ 9,486 14,408$ (10,542)$ 24,703 35,245$ 97 21,865 58,510 101$ 31,351$ 83,213$ 119 120 This page left intentionally blank. 121 NON‐MAJOR GOVERNMENTAL FUNDS DEBT SERVICE FUNDS Downtown Parking Improvement This fund accounts for revenues received from the General Fund to provide payment of principal and interest associated with the 2002B Downtown Parking Improvement Certificate of Participation as they become due. Library Project This fund accounts for revenues received from property taxes to provide payment of principal and interest associated with the 2010 and 2013 General Obligation Bonds as they become due. CITY OF PALO ALTO Non‐major Debt Service Funds Combining Balance Sheet June 30, 2013 (Amounts in thousands) Downtown Parking Library Improvement Projects Total ASSETS: Cash and investments: Available for operations 13$ 5,955$ 5,968$ Cash and investments with fiscal agents 238 ‐ 238 Total assets 251$ 5,955$ 6,206$ FUND BALANCES: Restricted: Debt service 251$ 5,955$ 6,206$ 122 CITY OF PALO ALTO Non‐major Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2013 (Amounts in thousands) Downtown Parking Library Improvement Project Total REVENUES: Property tax ‐$ 3,188$ 3,188$ Investment earnings ‐ (117) (117) Total revenues ‐ 3,071 3,071 EXPENDITURES: Debt service: Principal retirement 125 1,000 1,125 Interest and fiscal charges 110 2,485 2,595 Total expenditures 235 3,485 3,720 (DEFICIENCY) OF REVENUES (UNDER) EXPENDITURES (235) (414) (649) OTHER FINANCING SOURCES (USES): Issuance of debt ‐ 373 373 Original debt premium ‐ 18 18 Transfers in 235 ‐ 235 Total other financing sources (uses)235 391 626 Change in fund balances ‐ (23) (23) FUND BALANCES, BEGINNING OF YEAR 251 5,978 6,229 FUND BALANCES, END OF YEAR 251$ 5,955$ 6,206$ 123 Downtown Parking Improvement Library Project Total Non‐major Debt Service Funds Variance Variance Variance Actual, plus Positive Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) Budget Encumbrances (Negative) REVENUES: Special assessments ‐$ ‐$ ‐$ 3,500$ 3,188$ (312)$ 3,500$ 3,188$ (312)$ Investment earnings ‐ ‐ ‐ ‐ (117) (117) ‐ (117) (117) Total revenues ‐ ‐ ‐ 3,500 3,071 (429) 3,500 3,071 (429) EXPENDITURES: Debt service: Principal retirement 125 125 ‐ 1,000 1,000 ‐ 1,125 1,125 ‐ Interest and fiscal charges 110 110 ‐ 2,485 2,485 ‐ 2,595 2,595 ‐ Total expenditures 235 235 ‐ 3,485 3,485 ‐ 3,720 3,720 ‐ Excess (deficiency) of revenues over (under) expenditures (235) (235) ‐ 15 (414) (429) (220) (649) (429) OTHER FINANCING SOURCES (USES): Issuance of debt ‐ ‐ ‐ 15 373 358 15 373 358 Original debt premium ‐ ‐ ‐ ‐ 18 18 ‐ 18 18 Transfers in 235 235 ‐ ‐ ‐ ‐ 235 235 ‐ Total other financing sources (uses)235 235 ‐ 15 391 376 250 626 376 Change in fund balances ‐$ ‐ ‐$ 30$ (23) (53)$ 30$ (23) (53)$ FUND BALANCES, BEGINNING OF YEAR 251 5,978 6,229 FUND BALANCES, END OF YEAR 251$ 5,955$ 6,206$ (Amounts in thousands) CITY OF PALO ALTO Non‐major Debt Service Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances ‐ Budget and Actual For the Year Ended June 30, 2013 124 125 NON‐MAJOR GOVERNMENTAL FUNDS PERMANENT FUND Eyerly Family This fund accounts for the revenues received from assets donated by Mr. and Mrs. Fred Eyerly for the City and or its citizenry. Eyerly Permanent Fund Variance Actual, plus Positive Budget Encumbrances (Negative) REVENUES: Investment earnings 38$ (17)$ (55)$ EXPENDITURES: Current: Non‐Departmental ‐ 12 (12) Excess (deficiency) of revenues over (under) expenditures 38 (29) (67) Change in fund balance 38$ (29) (67)$ FUND BALANCE, BEGINNING OF YEAR 1,447 FUND BALANCE, END OF YEAR 1,418$ (Amounts in thousands) CITY OF PALO ALTO Non‐major Permanent Fund Schedule of Revenues, Expenditures and Changes in Fund Balances ‐ Budget and Actual For the Year Ended June 30, 2013 126 127 INTERNAL SERVICE FUNDS INTRODUCTION Internal Service Funds are used to finance and account for special activities and services performed by a designated department for other departments in the City on a cost reimbursement basis. Vehicle Replacement and Maintenance This fund accounts for the maintenance and replacement of vehicles and equipment used by all City departments. The source of revenue is on reimbursement of fleet replacement and maintenance costs allocated to each department by usage of vehicle. Technology This fund accounts for replacement and upgrade of technology, and covers four primary areas used by all City departments: desktop, infrastructure, applications, and technology research and development. The source of revenue is on reimbursement of costs for support provided to other departments. Printing and Mailing Services This fund accounts for central duplicating, printing and mailing services provided to all City departments. Source of revenue for this fund is on reimbursement of costs for services and supplies purchased by other departments. General Benefits This fund accounts for the administration of compensated absences and health benefits. Workers’ Compensation Insurance Program This fund accounts for the administration of the City’s self‐insured workers’ compensation programs. General Liabilities Insurance Program This fund accounts for the administration of the City’s self‐insured general liability programs. Retiree Health Benefits This fund accounts for the retiree health benefits. Vehicle Printing Workers' General Replacement and Compensation Liabilities Retiree and Mailing General Insurance Insurance Health Maintenance Technology Services Benefits Program Program Benefits Total ASSETS: Current Assets: Cash and investments: Available for operations 10,407$ 20,736$ 27$ 12,884$ 20,438$ 7,637$ 5,693$ 77,822$ Cash and investments with fiscal agents ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Accounts receivable, net 185 ‐ ‐ 26 ‐ 500 230 941 Interest receivable 56 109 ‐ 59 103 33 27 387 Inventory of materials and supplies 669 (77) ‐ ‐ ‐ ‐ ‐ 592 Total current assets 11,317 20,768 27 12,969 20,541 8,170 5,950 79,742 Noncurrent Assets: Capital assets: Nondepreciable 179 1,234 ‐ ‐ ‐ ‐ ‐ 1,413 Depreciable, net 11,836 295 6 ‐ ‐ ‐ ‐ 12,137 Net OPEB asset ‐ ‐ ‐ ‐ ‐ ‐ 21,851 21,851 Total noncurrent assets 12,015 1,529 6 ‐ ‐ ‐ 21,851 35,401 Total assets 23,332 22,297 33 12,969 20,541 8,170 27,801 115,143 LIABILITIES: Current Liabilities: Accounts payable and accruals 29 723 23 905 37 ‐ 568 2,285 Accrued salaries and benefits 34 117 4 ‐ ‐ ‐ ‐ 155 Accrued compensated absences 3 18 ‐ 4,124 ‐ ‐ ‐ 4,145 Accrued claims payable ‐ current ‐ ‐ ‐ 143 3,841 2,679 ‐ 6,663 Total current liabilities 66 858 27 5,172 3,878 2,679 568 13,248 Noncurrent liabilities: Accrued compensated absences ‐ ‐ ‐ 6,286 ‐ ‐ ‐ 6,286 Accrued claims payable ‐ ‐ ‐ ‐ 16,462 4,620 ‐ 21,082 Total noncurrent liabilities ‐ ‐ ‐ 6,286 16,462 4,620 ‐ 27,368 Total liabilities 66 858 27 11,458 20,340 7,299 568 40,616 NET POSITION: Net Investment in capital assets 12,015 1,529 6 ‐ ‐ ‐ ‐ 13,550 Unrestricted 11,251 19,910 ‐ 1,511 201 871 27,233 60,977 Total net position 23,266$ 21,439$ 6$ 1,511$ 201$ 871$ 27,233$ 74,527$ CITY OF PALO ALTO Internal Service Funds Combining Statement of Fund Net Position June 30, 2013 (Amounts in thousands) 128 Vehicle Printing Workers' General Replacement and Compensation Liabilities Retiree and Mailing General Insurance Insurance Health Maintenance Technology Services Benefits Program Program Benefits Total OPERATING REVENUES: Charges for services 7,059$ 13,558$ 1,069$ 40,433$ 2,838$ 2,422$ 12,986$ 80,365$ Other ‐ ‐ ‐ ‐ ‐ 500 ‐ 500 Total operating revenues 7,059 13,558 1,069 40,433 2,838 2,922 12,986 80,865 OPERATING EXPENSES: Administrative and general 880 6,064 1,016 282 698 1,195 496 10,631 Operations and maintenance 3,502 5,930 52 65 ‐ ‐ ‐ 9,549 Depreciation and amortization 2,103 2,867 3 ‐ ‐ ‐ ‐ 4,973 Claim payments and change in estimated self‐insured liability ‐ ‐ ‐ 1,414 2,028 1,206 ‐ 4,648 Refund of charges for services 64 11 ‐ ‐ ‐ ‐ ‐ 75 Compensated absences and other benefits ‐ ‐ ‐ 38,535 ‐ ‐ 11,458 49,993 Total operating expenses 6,549 14,872 1,071 40,296 2,726 2,401 11,954 79,869 Operating income (loss)510 (1,314) (2) 137 112 521 1,032 996 NONOPERATING REVENUES (EXPENSES): Investment earnings (43) (108) 4 (138) (111) (20) (64) (480) Gain on disposal of capital assets 94 ‐ ‐ ‐ ‐ ‐ ‐ 94 Other nonoperating revenues 56 10 ‐ ‐ ‐ ‐ ‐ 66 Total nonoperating revenues (expenses)107 (98) 4 (138) (111) (20) (64) (320) Income (loss) before transfers 617 (1,412) 2 (1) 1 501 968 676 Transfers in 398 3,498 ‐ ‐ ‐ ‐ ‐ 3,896 Transfers out ‐ (1,157) ‐ ‐ ‐ ‐ ‐ (1,157) Change in net position 1,015 929 2 (1) 1 501 968 3,415 NET POSITION, BEGINNING OF YEAR 22,251 20,510 4 1,512 200 370 26,265 71,112 NET POSITION, END OF YEAR 23,266$ 21,439$ 6$ 1,511$ 201$ 871$ 27,233$ 74,527$ CITY OF PALO ALTO Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Position For the Year Ended June 30, 2013 (Amounts in thousands) 129 Vehicle Printing Workers' General Replacement and Compensation Liabilities Retiree and Mailing General Insurance Insurance Health Maintenance Technology Services Benefits Program Program Benefits Total Cash flows from operating activities: Cash received from customers 7,104$ 13,558$ 1,069$ 40,431$ 2,838$ 2,422$ 12,756$ 80,178$ Cash refunds to customers (64) (11) ‐ ‐ ‐ ‐ ‐ (75) Cash payments to suppliers for goods and services (3,500) (5,389) (33) (1,265) ‐ ‐ ‐ (10,187) Cash payments to employees (887) (6,065) (1,013) (37,365) (691) (1,201) (11,968) (59,190) Cash payments for judgments and claims ‐ ‐ ‐ (1,620) (1,469) (1,280) ‐ (4,369) Other cash receipts 56 10 ‐ ‐ ‐ ‐ ‐ 66 Cash flows provided by (used in) operating activities 2,709 2,103 23 181 678 (59) 788 6,423 Cash flows from noncapital financing activities: Transfers in 398 3,498 ‐ ‐ ‐ ‐ ‐ 3,896 Transfers out ‐ (1,157) ‐ ‐ ‐ ‐ ‐ (1,157) Cash flows provided by noncapital financing activities 398 2,341 ‐ ‐ ‐ ‐ ‐ 2,739 Cash flows from capital and related financing activities: Acquisition of capital assets (1,431) (1,380) ‐ ‐ ‐ ‐ ‐ (2,811) Proceeds from sale of capital assets 248 ‐ ‐ ‐ ‐ ‐ ‐ 248 Cash flows (used in) capital and related financing activities (1,183) (1,380) ‐ ‐ ‐ ‐ ‐ (2,563) Cash flows from investing activities: Interest received(paid)(47) (114) 4 (134) (117) (26) (64) (498) Net change in cash and cash equivalents 1,877 2,950 27 47 561 (85) 724 6,101 Cash and cash equivalents, beginning of year 8,530 17,786 ‐ 12,837 19,877 7,722 4,969 71,721 Cash and cash equivalents, end of year $ 10,407 $ 20,736 $ 27 $ 12,884 $ 20,438 $ 7,637 $ 5,693 $ 77,822 Reconciliation of operating income (loss) to net cash flows provided by (used in) operating activities: Operating income (loss)510$ (1,314)$ (2)$ 137$ 112$ 521$ 1,032$ 996$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 2,103 2,867 3 ‐ ‐ ‐ ‐ 4,973 Other 56 10 ‐ ‐ ‐ ‐ ‐ 66 Change in assets and liabilities: Accounts receivable 45 ‐ ‐ (2) ‐ (500) (230) (687) Inventory of materials and supplies (1) 77 ‐ ‐ ‐ ‐ ‐ 76 Net OPEB asset ‐ ‐ ‐ ‐ ‐ ‐ (580) (580) Accounts payable and accruals 3 464 19 (1,200) 7 ‐ 566 (141) Accrued salaries and benefits (7) (14) 3 (5) ‐ (6) ‐ (29) Accrued compensated absences ‐ 13 ‐ 1,457 ‐ ‐ ‐ 1,470 Accrued claims payable ‐ ‐ ‐ (206) 559 (74) ‐ 279 Cash flows provided by (used in) operating activities 2,709$ 2,103$ 23$ 181$ 678$ (59)$ 788$ 6,423$ CITY OF PALO ALTO Internal Service Funds Combining Statement of Cash Flows For the Year Ended June 30, 2013 (Amounts in thousands) 130 131 FIDUCIARY FUNDS INTRODUCTION Fiduciary Funds are used to account for assets held by the City acting in a fiduciary capacity for other entities and individuals. The funds are operated to carry out the specific actions required by the trust agreements, ordinances and other governing regulations. Fiduciary Funds are presented separately from the Citywide and Fund financial statements. Agency Funds are custodial in nature and do not involve measurement of results of operations. The City maintains three agency funds, as follows: California Avenue Parking Assessment District This fund accounts for receipts and disbursements associated with the 1993 Parking District No. 92‐13 Assessment Bonds. Cable Joint Powers Authority The fund was established to account for the activities of the cable television system on behalf of the members. University Avenue Area Off‐Street Parking Assessment District The fund accounts for the receipts and disbursements associated with the Series 2012 Limited Obligation Refunding Improvement Bonds. CITY OF PALO ALTO All Agency Funds Statement of Changes in Assets and Liabilities For the Year Ended June 30, 2013 Balance Balance California Avenue Parking Assessment District June 30, 2012 Additions Deletions June 30, 2013 ASSETS: Cash and investments available for operations 198$ ‐$ 9$ 189$ LIABILITIES: Due to bondholders 198$ ‐$ 9$ 189$ Cable Joint Powers Authority ASSETS: Cash and investments available for operations 910$ ‐$ 41$ 869$ Interest receivable 6 ‐ 1 5 Total assets 916$ ‐$ 42$ 874$ LIABILITIES: Due to other governments 916$ ‐$ 42$ 874$ ASSETS: Cash and investments available for operations 1,708$ 307$ ‐$ 2,015$ Cash and investments with fiscal agents 2,538 4 ‐ 2,542 Accounts receivable ‐ 30 ‐ 30 Interest receivable 12 ‐ 1 11 Total assets 4,258$ 341$ 1$ 4,598$ LIABILITIES: Due to bondholders 4,258$ 340$ ‐$ 4,598$ Total Agency Funds ASSETS: Cash and investments available for operations 2,816$ 307$ 50$ 3,073$ Cash and investments with fiscal agents 2,538 4 ‐ 2,542 Accounts receivable ‐ 30 ‐ 30 Interest receivable 18 ‐ 2 16 Total assets 5,372$ 341$ 52$ 5,661$ LIABILITIES: Due to bondholders 4,456$ 340$ 9$ 4,787$ Due to other governments 916 ‐ 42 874 Total liabilities 5,372$ 340$ 51$ 5,661$ (Amounts in thousands) University Avenue Area Off‐Street Parking Assessment District 132 133 STATISTICAL SECTION The statistical section contains comprehensive statistical data, which relates to physical, economic, social and political characteristics of the City. It is intended to provide users with a broader and more complete understanding of the City and its financial affairs than is possible from the financial statements and supporting schedules included in the financial section. In this section, readers will find comparative information related to the City’s revenue sources, expenditures, property tax valuations, levies and collections, general obligation bonded debt, utility revenue debt service, and demographics. Where available, the comparative information is presented for the last ten fiscal years. In addition, this section presents information related to the City’s legal debt margin computation, principal taxpayers, notary and security bond coverages, and other miscellaneous statistics pertaining to services provided by the City. In contrast to the financial section, the statistical section information is not usually subject to independent audit. Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well‐being have changed over time: Net Position by Component Changes in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Revenue Capacity These schedules contain information to help the reader assess the City’s most significant local revenue sources, property tax and electric charges: Electric Operating Revenue by Source Supplemental Disclosure for Water Utilities Assessed Value of Taxable Property Property Tax Rates, All Overlapping Governments Property Tax Levies and Collections Principal Property Taxpayers Assessed Valuation and Parcels by Land Use Per Parcel Assessed Valuation of Single Family Residential Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future: Ratio of Outstanding Debt by Type Computation of Direct and Overlapping Debt Computation of Legal Bonded Debt Margin Revenue Bond Coverage 134 STATISTICAL SECTION Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place: Taxable Transactions by Type of Business Demographic and Economic Statistics Principal Employers Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs: Operating Indicators by Function/Program Capital Asset Statistics by Function/Program Full‐Time Equivalent City Government Employees by Function Sources Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual Financial Reports for the relevant year. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Governmental Activities Investment in capital assets 297,125$ 305,225$ 311,335$ 326,411$ 343,537$ 356,657$ 369,499$ 364,747$ 370,111$ 378,047$ Restricted 30,417 27,273 29,885 32,576 27,428 36,632 34,323 16,437 52,934 71,717 Unrestricted 123,762 117,301 123,823 127,190 130,460 118,133 102,199 134,722 142,102 165,810 Total Governmental Activities Net Position 451,304$ 449,799$ 465,043$ 486,177$ 501,425$ 511,422$ 506,021$ 515,906$ 565,147$ 615,574$ Business‐type Activities Investment in capital assets 294,197$ 303,473$ 318,738$ 342,922$ 370,303$ 384,313$ 399,317$ 416,418$ 437,151$ 446,597$ Restricted 1,798 1,750 1,732 1,732 1,732 1,732 4,300 ‐ ‐ 4,060 Unrestricted 226,278 215,128 228,032 230,912 226,539 208,025 232,420 253,740 262,602 269,926 Total Business‐type Activities Net Position 522,273$ 520,351$ 548,502$ 575,566$ 598,574$ 594,070$ 636,037$ 670,158$ 699,753$ 720,583$ Primary Government Investment in capital assets 591,322$ 608,698$ 630,073$ 669,333$ 713,840$ 740,970$ 768,816$ 781,165$ 807,262$ 824,644$ Restricted 32,215 29,023 31,617 34,308 29,160 38,364 38,623 16,437 52,934 75,777 Unrestricted 350,040 332,429 351,855 358,102 356,999 326,158 334,619 388,462 404,705 435,736 Total Primary Government Net Position 973,577$ 970,150$ 1,013,545$ 1,061,743$ 1,099,999$ 1,105,492$ 1,142,058$ 1,186,064$ 1,264,901$ 1,336,157$ Source: Annual Financial Statements, Statement of Net Position Year Ended June 30 CITY OF PALO ALTO Net Position by Component Last Ten Fiscal Years (Amounts in thousands) (Accrual basis of accounting) $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Primary Government Investment in capital assets Restricted Unrestricted 135 PROGRAM REVENUES 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Governmental Activities Charges for services City Attorney 64$ 22$ 22$ 13$ 16$ 12$ 53$ ‐$ ‐$ ‐$ City Clerk 1 ‐ 2 ‐ ‐ ‐ ‐ ‐ ‐ ‐ City Auditor ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Administrative Services 815 480 627 835 870 726 984 2,889 1,647 15,629 Human Resources ‐ ‐ ‐ 11 ‐ ‐ ‐ ‐ ‐ ‐ Public Works 260 573 805 968 1,310 1,169 1,258 2,419 1,008 1,314 Planning & Community Environment 3,074 4,090 5,509 6,267 5,498 4,704 4,813 7,237 31,491 28,768 Police 4,415 3,801 4,178 4,179 4,274 3,947 4,093 3,237 2,160 4,062 Fire 7,565 8,555 9,078 9,610 9,418 10,723 10,244 12,037 13,498 12,077 Community Services 7,846 7,592 10,803 9,128 10,314 8,522 8,729 7,724 11,365 13,808 Library ‐ 133 129 146 176 177 199 480 1,600 187 Operating grants and contributions 4,213 3,677 3,976 5,642 4,029 3,599 4,829 2,884 3,441 5,038 Capital grants and contributions 1,990 804 3,156 1,756 1,930 3,810 1,280 1,903 1,064 515 Total Governmental Activities Program Revenues 30,243 29,727 38,285 38,555 37,835 37,389 36,482 40,810 67,274 81,398 Business‐type Activities Charges for services Water 21,993 21,041 21,108 23,495 26,510 27,120 26,259 26,624 31,467 37,746 Electric 92,617 88,737 119,418 102,549 103,833 119,320 121,900 122,109 118,886 121,805 Fiber Optics1 ‐ ‐ ‐ ‐ ‐ 3,336 3,105 3,322 3,662 4,382 Gas 24,839 31,206 36,977 42,221 49,021 47,838 44,450 43,584 41,774 34,633 Wastewater Collection 12,647 12,041 13,801 14,848 15,102 14,486 15,136 15,094 14,942 16,077 Wastewater Treatment 14,744 15,982 18,778 16,957 22,889 28,425 16,915 18,830 22,200 21,528 Refuse 21,923 23,387 24,795 25,532 28,805 29,101 28,568 30,469 30,645 30,583 Storm Drainage 2,170 2,484 5,174 5,181 5,450 5,505 5,647 5,796 5,892 6,053 External Services 585 766 854 789 112 ‐ ‐ ‐ ‐ ‐ Operating grants and contributions ‐ ‐ ‐ ‐ ‐ ‐ 361 610 605 572 Capital grants and contributions ‐ ‐ ‐ 756 1,594 639 475 3,004 1,526 2,224 Total Business‐type Activities Program Revenues 191,518 195,644 240,905 232,328 253,316 275,770 262,816 269,442 271,599 275,603 Total Primary Government Program Revenues 221,761$ 225,371$ 279,190$ 270,883$ 291,151$ 313,159$ 299,298$ 310,252$ 338,873$ 357,001$ EXPENSES Governmental Activities City Council 269$ 130$ 141$ 180$ 323$ 394$ 455$ 15$ 345$ 94$ City Manager 1,663 1,725 1,563 1,760 2,273 2,085 2,399 1,842 1,960 1,237 City Attorney 2,300 2,653 2,598 2,390 2,653 2,575 2,621 953 1,656 1,642 City Clerk 808 770 945 900 1,241 1,098 1,369 803 908 330 City Auditor 668 764 843 838 1,379 2,053 2,601 138 235 464 Administrative Services2 6,271 6,982 6,972 6,419 15,477 17,784 17,893 9,888 10,100 7,614 Human Resources 2,078 2,410 2,546 2,472 2,806 3,448 3,707 1,346 1,071 1,420 Public Works 14,460 16,400 17,596 16,645 18,565 21,270 18,658 19,357 14,568 20,816 Planning & Community Environment 8,898 10,162 9,931 12,929 16,388 12,940 12,114 15,031 12,074 13,549 Police 20,414 22,416 23,411 23,861 27,740 29,288 29,351 30,465 33,533 31,865 Fire 17,308 18,127 18,747 19,530 22,386 23,199 26,448 28,531 29,284 27,587 Community Services 20,864 17,240 17,296 15,729 17,736 19,862 17,171 22,845 21,915 22,705 Library ‐ 4,835 5,323 5,347 6,321 6,244 6,143 6,920 7,323 7,319 Non‐departmental2 7,618 12,474 10,400 12,133 ‐ ‐ ‐ ‐ ‐ ‐ Interest on long term debt 635 693 512 477 438 404 370 2,742 2,575 2,562 Total Governmental Activities Expenses 104,254 117,781 118,824 121,610 135,726 142,644 141,300 140,876 137,547 139,204 Business‐type Activities Water 16,047 14,969 15,881 16,794 18,842 20,271 21,037 24,268 29,093 30,707 Electric 73,545 73,051 91,570 99,294 108,032 122,268 107,910 100,130 102,030 106,438 Fiber Optics1 ‐ ‐ ‐ ‐ ‐ 1,284 1,407 1,561 1,489 1,437 Gas 22,994 26,656 29,107 30,690 37,211 34,603 32,498 32,051 28,878 26,749 Wastewater Collection 9,203 8,907 11,005 10,085 12,023 14,875 10,696 12,275 14,825 14,313 Wastewater Treatment 14,868 17,457 16,747 15,901 18,902 36,896 13,466 19,731 20,712 20,635 Refuse 24,282 24,959 26,989 25,372 28,827 37,217 28,119 30,684 31,900 28,542 Storm Drainage 2,975 3,336 2,673 2,517 3,202 2,943 2,491 3,229 3,103 3,703 Airport ‐ ‐ ‐ ‐ ‐ ‐ ‐ 31 153 246 External Services 688 760 868 767 984 ‐ ‐ ‐ ‐ ‐ Total Business‐type Activities Expenses 164,602 170,095 194,840 201,420 228,023 270,357 217,624 223,960 232,183 232,770 Total Primary Government Expenses 268,856$ 287,876$ 313,664$ 323,030$ 363,749$ 413,001$ 358,924$ 364,836$ 369,730$ 371,974$ CITY OF PALO ALTO Changes in Net Position Last Ten Fiscal Years (Accrual basis of accounting) (Amounts in thousands) Year Ended June 30 136 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 NET (EXPENSE)/REVENUE Governmental Activities (74,011)$ (88,054)$ (80,539)$ (83,055)$ (97,891)$ (105,255)$ (104,818)$ (100,066)$ (70,273)$ (57,806)$ Business‐type Activities 26,916 25,549 46,065 30,908 25,293 5,413 45,192 45,482 39,416 42,833 Total Primary Government Net (Expense)/Revenue (47,095)$ (62,505)$ (34,474)$ (52,147)$ (72,598)$ (99,842)$ (59,626)$ (54,584)$ (30,857)$ (14,973)$ GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental Activities Taxes Property tax 13,707$ 16,657$ 18,731$ 21,466$ 23,084$ 25,432$ 25,981$ 29,156$ 30,104$ 31,929$ Sales tax 18,151 19,308 20,315 22,194 22,623 20,089 17,991 20,746 22,132 25,606 Utility user tax 7,152 7,269 8,759 9,356 10,285 11,030 11,295 10,851 10,834 10,861 Transient occupancy tax 5,489 5,686 6,393 6,709 7,976 7,111 6,858 8,082 9,664 10,794 Other taxes 8,493 5,580 7,033 6,293 6,261 3,364 4,055 8,156 8,173 10,504 Investment earnings 326 4,988 2,567 8,747 12,313 8,525 6,514 3,500 6,238 (1,228) Rents and miscellaneous 10,165 12,997 10,440 13,670 11,896 15,682 12,729 12,377 14,943 518 Transfers 14,951 14,064 21,545 15,754 18,701 24,020 13,994 17,083 17,426 19,249 Total Governmental Activities 78,434 86,549 95,783 104,189 113,139 115,253 99,417 109,951 119,514 108,233 Business‐type Activities Investment earnings 387 8,093 3,631 11,910 16,416 14,103 10,769 5,722 7,605 (2,754) Special item ‐ (21,500) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ Transfers (14,951) (14,064) (21,545) (15,754) (18,701) (24,020) (13,994) (17,083) (17,426) (19,249) Total Business‐type Activities (14,564) (27,471) (17,914) (3,844) (2,285) (9,917) (3,225) (11,361) (9,821) (22,003) Total Primary Government 63,870$ 59,078$ 77,869$ 100,345$ 110,854$ 105,336$ 96,192$ 98,590$ 109,693$ 86,230$ CHANGE IN NET POSITION Governmental Activities 4,423$ (1,505)$ 15,244$ 21,134$ 15,248$ 9,998$ (5,401)$ 9,885$ 49,241$ 50,427$ Business‐type Activities 12,352 (1,922) 28,151 27,064 23,008 (4,504) 41,967 34,121 29,595 20,830 Total Primary Government Change in Net Position 16,775$ (3,427)$ 43,395$ 48,198$ 38,256$ 5,494$ 36,566$ 44,006$ 78,836$ 71,257$ Notes:1Prior to 2009, Fiber Optics was included in Electric. 2Beginning in 2008, includes Non‐departmental expenses. Source: Annual Financial Statements, Statement of Activities Year Ended June 30 137 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 General Fund Nonspendable 3,762$ 3,931$ 4,052$ 5,002$ 7,286$ 6,476$ 6,581$ 6,085$ 6,007$ 5,749$ Assigned 2,973 3,401 3,914 6,855 4,851 6,100 7,295 6,235 6,400 5,415 Unassigned 60,087 24,498 26,251 27,551 30,278 30,648 27,581 31,859 29,616 30,913 Total General Fund 66,822$ 31,830$ 34,217$ 39,408$ 42,415$ 43,224$ 41,457$ 44,179$ 42,023$ 42,077$ Source: Annual Financial Statements, Balance Sheet Year Ended June 30 CITY OF PALO ALTO Fund Balances of Governmental Funds (General Fund) Last Ten Fiscal Years (Modified accrual basis of accounting) (Amounts in thousands) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ Th o u s a n d s Nonspendable Assigned Unassigned 138 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 All Other Governmental Funds Nonspendable ‐$ ‐$ ‐$ ‐$ 731$ 1,308$ 1,402$ 1,422$ 11,112$ 18,189$ Restricted 2,761 1,522 1,822 1,540 1,406 1,412 55,400 50,646 61,324 84,688 Committed 4,206 7,521 18,430 22,883 15,207 22,043 16,962 24,775 14,284 20,400 Assigned 36,117 57,336 46,723 41,684 44,116 36,629 38,538 20,114 33,264 45,514 Total All Other Governmental Funds 43,084$ 66,379$ 66,975$ 66,107$ 61,460$ 61,392$ 112,302$ 96,957$ 119,984$ 168,791$ Source: Annual Financial Statements, Balance Sheet Year Ended June 30 CITY OF PALO ALTO Fund Balances of Governmental Funds (All Other Governmental Funds) Last Ten Fiscal Years (Modified accrual basis of accounting) (Amounts in thousands) $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ Th o u s a n d s Nonspendable Restricted Committed Assigned 139 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenues Property tax 13,707$ 16,657$ 18,731$ 21,466$ 23,084$ 25,432$ 25,981$ 29,248$ 30,216$ 32,040$ Sales tax 18,151 19,308 20,315 22,194 22,623 20,089 17,991 20,746 22,132 25,606 Other taxes and fines 25,311 22,037 25,840 26,215 27,385 24,843 25,063 27,890 29,231 32,141 Charges for services 16,018 17,159 18,672 19,929 19,610 19,837 19,775 22,311 46,273 38,976 From other agencies 4,661 2,757 5,931 3,448 4,300 5,984 3,035 1,614 1,116 4,109 Permits and licenses 2,563 3,183 4,305 4,711 4,761 4,033 4,408 5,433 7,136 8,218 Interest and rentals 11,480 14,968 13,776 17,750 20,507 19,183 19,045 16,553 18,583 12,136 Other revenue 1,681 4,269 4,058 7,503 4,713 6,223 4,724 8,624 12,739 17,570 Total Revenues 93,572 100,338 111,628 123,216 126,983 125,624 120,022 132,419 167,426 170,796 Expenditures Administration1 13,862 14,509 14,299 14,399 16,250 16,002 17,353 8,351 9,412 8,291 Public Works 8,031 9,060 9,036 9,256 10,072 10,064 9,787 11,317 11,304 11,489 Planning and Community Environment 8,793 9,692 9,292 11,874 9,861 10,462 9,480 10,309 11,966 13,474 Police 19,962 21,117 22,279 23,305 27,006 27,053 26,728 30,519 33,310 31,854 Fire 16,891 17,615 18,114 19,146 21,644 21,904 24,294 28,355 29,108 27,683 Community Services2 19,934 16,298 19,740 16,533 17,138 17,451 16,451 20,029 20,860 21,661 Library2 ‐ 4,800 5,170 5,260 6,219 5,985 5,900 6,509 7,072 6,902 Non‐departmental 7,598 9,028 10,389 12,122 14,089 10,765 10,149 7,352 6,819 4,567 Special revenue and capital projects 22,289 21,317 13,243 17,478 21,626 21,485 22,006 35,486 29,154 29,542 Debt service ‐ principal payments 780 785 810 850 885 800 840 870 1,743 1,489 Debt service ‐interest and fiscal fees 639 583 523 489 451 416 382 1,815 2,757 2,659 Payment to bond refunding escrow ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 586 540 Total Expenditures 118,779 124,804 122,895 130,712 145,241 142,387 143,370 160,912 164,091 160,151 Excess (Deficiency) of Revenues Over (Under) Expenditures (25,207) (24,466) (11,267) (7,496) (18,258) (16,763) (23,348) (28,493) 3,335 10,645 Other Financing Sources (Uses) Transfers in 28,632 60,429 26,640 27,701 33,437 39,903 34,835 30,323 47,200 50,343 Transfers out (19,133) (46,622) (12,390) (15,882) (16,819) (22,399) (21,415) (14,352) (29,782) (33,833) Other ‐ ‐ ‐ ‐ ‐ ‐ ‐ (101) ‐ ‐ Proceeds from long term debt ‐ ‐ ‐ ‐ ‐ ‐ 59,071 ‐ 3,222 21,706 Payments to refund bond escrow ‐ (1,038) ‐ ‐ ‐ ‐ ‐ ‐ (3,104) ‐ Total Other Financing Sources (Uses)9,499 12,769 14,250 11,819 16,618 17,504 72,491 15,870 17,536 38,216 Net Change in Fund Balances (15,708)$ (11,697)$ 2,983$ 4,323$ (1,640)$ 741$ 49,143$ (12,623)$ 20,871$ 48,861$ Debt Service as a Percentage of Non‐Capital Expenditures 1.5% 1.3% 1.2% 1.2% 1.1% 1.0% 1.0% 2.2% 3.5% 3.2% Notes: 2Prior to 2005, Library was included in Community Services. Debt Service as a Percentage of Non‐Capital Expenditures was restated due to correction of data. Source: Annual Financial Statements, Governmental Funds, Statement of Revenues, Expenditures and Changes in Fund Balances 1Comprised of the following departments: City Council, City Manager, City Attorney, City Clerk, City Auditor, Administrative Services and Human Resources. CITY OF PALO ALTO Change in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) (Amounts in thousands) Year Ended June 30 140 Commercial and Fiscal Year Residential Industrial City of Palo Alto Total 2004 12,245$ 54,881$ 2,113$ 69,239$ 2005 13,009 56,683 2,289 71,981 2006 14,973 67,389 2,492 84,854 2007 15,150 68,214 2,466 85,830 2008 16,109 72,632 2,571 91,312 2009 17,939 83,710 2,823 104,472 2010 19,898 89,315 2,890 112,103 2011 19,848 88,076 2,991 110,915 2012 20,328 85,895 3,352 109,575 2013 19,951 86,998 3,265 110,214 529 Bryant Street LLC Technology City of Palo Alto Municipal Communications & Power Industries (CPI) Research Hewlett‐Packard Company Computer Space Systems/Loral Satellite & Satellite Systems Stanford Property Management Stanford Hospital & Clinics Hospital Varian Medical Systems, Inc.Manufacturing Veterans Admin Hospital Hospital VMware, Inc.Computer Number Kilowatt‐hour of Customers Sales (kWh)Revenue Residential 26,642 186,997,194 19,951$ Commercial 2,482 448,922,276 62,671 Industrial 131 227,431,491 24,327 CPA/Other 219 83,490,472 3,265 Total 29,474 946,841,433 110,214$ City of Palo Alto Power Purchase Western Area Power Administration 37% Forward Market Purchases 34% Wind Energy contracts with PPM Energy, Inc.12% Landfill Gas Energy 7% Northern California Power Agency 6% Short‐Term Market 4% Note: Source: City of Palo Alto, Utilities and Accounting Departments *The top ten customers accounted for approximately 39.38% of total kWh consumption (372,870,446 kWh) and 35.37% of revenue ($40,571,890). The largest customer accounted for 8.2% of total kWh consumption and 7.23% of revenue. The smallest customer accounted for 1.81% of total kWh consumption and 1.55% of revenue. Revenue includes all utilities (metered and non‐metered), revenue adjustments, and Primary Voltage discount. Revenue does not include CEC surcharge, UUT, Solar and Rap discounts and deposits. Parts of this schedule are provided as required by the Continuing Disclosure Agreement for the City's Utility Revenue Bond and are not required by Governmental Accounting Standards Board (GASB). CITY OF PALO ALTO Electric Operating Revenue by Source Last Ten Fiscal Years (Amounts in thousands) Top Ten Electric Customers by Revenue* Customer (alphabetical order)Type of Business 141 The top ten customers total consumption is 872,150 CCF with revenue of $6,173,072. This amount accounts for approximately 17.11% of total consumption and 16.25% of revenue. The largest customer (other than the City of Palo Alto) accounted for 2.43% of consumption and 2.18% of revenue. The smallest customer accounted for 1% of consumption and 1% of revenue. Note: Source: City of Palo Alto, Utilities Department Hewlett‐Packard Company VMware Inc. This schedule is provided as required by the Continuing Disclosure Agreement for the City's Utility Revenue Bond and is not required by Governmental Accounting Standards Board (GASB). Palo Alto Hills Golf & Country Club Palo Alto Unified School District Oak Creek Apartments Stanford Hospital & Clinics Stanford West Management Veterans Admin Hospital Space Systems/Loral, Inc. CITY OF PALO ALTO Supplemental Disclosure for Water Utilities Fiscal Year 2013 Top Ten Largest Water Utility Customers (alphabetical order) City of Palo Alto 142 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Net Local Secured Roll Land 6,588,474$ 7,075,300$ 7,941,482$ 8,725,485$ 9,497,746$ 10,420,139$ 11,007,650$ 11,011,160$ 11,352,993$ 12,255,515$ Improvements 6,996,106 7,722,660 8,364,668 8,915,623 9,453,436 10,527,617 10,752,671 10,962,928 11,703,597 12,381,306 Personal property 195,859 220,585 174,666 213,154 228,875 303,688 288,148 241,280 257,436 287,296 13,780,439 15,018,545 16,480,816 17,854,262 19,180,057 21,251,444 22,048,469 22,215,368 23,314,026 24,924,117 Less: Exemptions net of state aid (1,196,546) (1,402,039) (1,595,871) (1,639,856) (1,797,327) (1,871,292) (1,809,119) (1,757,241) (2,346,728) (2,589,653) Total Net Local Secured Roll 12,583,893 13,616,506 14,884,945 16,214,406 17,382,730 19,380,152 20,239,350 20,458,127 20,967,298 22,334,464 Public utilities 3,956 4,150 4,084 3,923 3,174 2,573 2,573 2,573 2,573 2,573 Unsecured property 1,582,368 1,354,310 1,361,117 1,391,284 1,536,584 1,702,884 1,638,436 1,495,574 1,516,837 1,355,970 Total Assessed Value 14,170,217$ 14,974,966$ 16,250,146$ 17,609,613$ 18,922,488$ 21,085,609$ 21,880,359$ 21,956,274$ 22,486,708$ 23,693,007$ Total Direct Tax Rate 1%1%1%1%1%1%1%1%1%1% Note: The State Constitution requires property to be assessed at 100% of the most recent purchase price, plus an increment of no more than 2% annually, plus any local over‐rides. These values are considered to be full market values. Source: County of Santa Clara Assessor's Office CITY OF PALO ALTO Assessed Value of Taxable Property Last Ten Fiscal Years (Amounts in thousands) Year Ended June 30 $13,000,000 $15,000,000 $17,000,000 $19,000,000 $21,000,000 $23,000,000 $25,000,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ Th o u s a n d s Total Assessed Value 143 Basic County Total County County Hospital City Library Santa Clara Direct and Fiscal Wide Retirement G.O. Bond G.O. Bond Valley Water School Community Overlapping Year Levy Levy (Measure A)1 (Measure N)2 District District College Rates 2004 1.00 0.0388 ‐ ‐ 0.0087 0.0666 0.0110 1.13 2005 1.00 0.0388 ‐ ‐ 0.0092 0.0680 0.0129 1.13 2006 1.00 0.0388 ‐ ‐ 0.0078 0.0526 0.0119 1.11 2007 1.00 0.0388 ‐ ‐ 0.0072 0.0720 0.0346 1.15 2008 1.00 0.0388 ‐ ‐ 0.0071 0.0702 0.0113 1.13 2009 1.00 0.0388 ‐ ‐ 0.0061 0.0674 0.0123 1.12 2010 1.00 0.0388 0.0122 ‐ 0.0074 0.0686 0.0322 1.16 2011 1.00 0.0388 0.0095 0.0171 0.0072 0.0751 0.0326 1.18 2012 1.00 0.0388 0.0047 0.0155 0.0064 0.0742 0.0297 1.17 2013 1.00 0.0388 0.0051 0.0129 0.0069 0.0718 0.0287 1.16 Notes:1The County General Obligation Bond (Measure A) was passed in 2008 to fund the seismic upgrade of the Santa Clara Valley Medical Center. Rates were first levied for the 2009‐10 fiscal year. 2The City of Palo Alto General Obligation Bond (Measure N) was passed in 2008 to fund the construction and renovation of three of the City's libraries. Rates were first levied for the 2010‐11 fiscal year. Source: County of Santa Clara, Tax Rates and Information CITY OF PALO ALTO Property Tax Rates All Overlapping Governments Last Ten Fiscal Years $1.10 $1.12 $1.14 $1.16 $1.18 $1.20 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Rate per $100 of Assessed Value 144 Fiscal Year Total Tax Percentage Collections in Percentage of Ended June 30 Levy1 for FY Amount of Levy Subsequent Years2 Amount Levy 2004 13,707$ 13,707$ 100%‐ 13,707$ 100% 2005 16,657 16,657 100%‐ 16,657 100% 2006 18,731 18,731 100%‐ 18,731 100% 2007 21,466 21,466 100%‐ 21,466 100% 2008 23,084 23,084 100%‐ 23,084 100% 2009 25,432 25,432 100%‐ 25,432 100% 2010 25,981 25,981 100%‐ 25,981 100% 2011 25,688 25,688 100%‐ 25,688 100% 2012 26,494 26,494 100%‐ 26,494 100% 2013 28,742 28,742 100%‐ 28,742 100% Notes: Source:Annual Financial Statements, Government Funds, Statement of Revenues, Expenditures and Changes in Fund Balances. 1During fiscal year 1995, the County of Santa Clara began providing the City 100% of its tax levy under an agreement which allows the county to keep all interest and delinquency charges collected. 2Effective fiscal year 1994, the City is on the Teeter Plan, under which the County of Santa Clara pays the full tax levy due. All prior delinquent taxes were also received in that fiscal year. CITY OF PALO ALTO Property Tax Levies and Collections Last Ten Fiscal Years (Amounts in thousands) Collected within the Fiscal Year of the Levy Total Collections to Date 145 Taxable Assessed Value Rank Percentage of Total Taxable Assessed Value Taxable Assessed Value Rank Percentage of Total Taxable Assessed Value Leland Stanford Jr. University 3,645,323$ 1 15.4%1,948,912$ 1 13.0% Space Systems/Loral, Inc.250,324 2 1.1%178,725 2 1.2% Arden Realty Limited Partnership 114,722 3 0.5% Whisman Ventures, LLC 107,168 4 0.5% SRP Valley LLC 60,872 5 0.3% Ronald & Ann Williams Charitable Foundation 59,980 6 0.3% PPC Forest Towers LLC 54,272 7 0.2% Blackhawk Parent, LLC 51,200 8 0.2% 529 Bryant St. LLC 43,488 9 0.2% Park Village Peninsula LLC 38,283 10 0.2% Harbor Investment Partners 60,370 3 0.4% Cowper‐Hamilton Associates 41,991 4 0.3% Embarcadero Place Associates 36,000 5 0.2% California Pacific Commercial Corp.33,926 6 0.2% Campus for Jewish Life 32,640 7 0.2% Thoits Bros Inc.27,515 8 0.2% Hyatt Equities LLC 25,469 9 0.2% Seabiscuit LLC 24,919 10 0.2% Total 4,425,632$ 18.9%2,410,467$ 16.1% Total City Taxable Assessed Value: FY 2013 23,693,007$ FY 2004 14,974,966$ Source: California Municipal Statistics, Inc. Fiscal Year 2013 Fiscal Year 2004 Taxpayer CITY OF PALO ALTO Principal Property Taxpayers Current Year and Nine Years Ago (Amounts in thousands) 146 2012‐2013 No. of Assessed % of No. of % of Taxable % of Valuation1 Total Parcels Total Parcels Total Non‐Residential: Agricultural/forest 34,814,558$ 0.16 % 48 0.24 % 32 0.16 % Commercial 1,144,034,827 5.12 466 2.29 461 2.29 Professional/office 2,647,123,031 11.85 507 2.49 485 2.41 Industrial/research & development 1,954,049,136 8.75 5 0.02 189 0.94 Recreational 46,762,470 0.21 16 0.08 13 0.06 Government/social/institutional 62,606,092 0.28 105 0.52 40 0.20 Miscellaneous 9,846,862 0.04 18 0.09 17 0.08 Subtotal Non‐Residential 5,899,236,976$ 26.41 % 1,165 5.73 % 1,237 6.14 % Residential: Single family residence 12,974,042,711$ 58.09 % 14,918 73.38 % 14,870 73.84 % Condominium/townhouse 1,716,046,590 7.68 2,995 14.73 2,989 14.84 2‐4 Residential units 345,642,993 1.55 513 2.52 513 2.55 5+ Residential units 1,264,534,176 5.66 333 1.64 308 1.53 Subtotal Residential 16,300,266,470$ 72.98 % 18,759 92.28 % 18,680 92.76 % Vacant Parcels 134,960,699$ 0.60 % 405 1.99 % 221 1.10 % Total 22,334,464,145$ 100 % 20,329 100 % 20,138 100 % Notes: This schedule is provided as required by the Continuing Disclosure Agreement for the City's Series 2010A General Obligation Bond and is not required by Governmental Accounting Standards Board (GASB). Therefore, ten years of comparison data is not presented. 1Local secured assessed valuation, excluding tax‐exempt property. Source: California Municipal Statistics, Inc. CITY OF PALO ALTO Assessed Valuation and Parcels by Land Use As of June 30, 2013 147 No. of Taxable Average Parcels1 Assessed Valuation Single Family Residential 14,870 $872,498 No. of % of Cumulative % of Cumulative Taxable Total % of Total Total Total % of Total Parcels1 Parcels Parcels Valuation Valuation Valuation 1,719 11.56 11.56 133,245,071$ 1.03 1.03 1,952 13.13 24.69 267,951,878 2.07 3.09 951 6.40 31.08 237,455,035 1.83 4.92 788 5.30 36.38 274,869,785 2.12 7.04 805 5.41 41.80 363,316,163 2.80 9.84 815 5.48 47.28 447,604,628 3.45 13.29 710 4.77 52.05 461,026,908 3.55 16.84 650 4.37 56.42 486,717,325 3.75 20.60 739 4.97 61.39 629,372,213 4.85 25.45 706 4.75 66.14 670,819,782 5.17 30.62 648 4.36 70.50 679,741,352 5.24 35.86 544 3.66 74.16 624,153,570 4.81 40.67 569 3.83 77.98 709,285,340 5.47 46.13 498 3.35 81.33 670,599,984 5.17 51.30 424 2.85 84.18 614,353,307 4.74 56.04 293 1.97 86.15 453,227,422 3.49 59.53 250 1.68 87.83 412,235,173 3.18 62.71 217 1.46 89.29 379,788,024 2.93 65.64 165 1.11 90.40 304,876,011 2.35 67.99 180 1.21 91.61 350,451,706 2.70 70.69 1,247 8.39 100.00 3,802,952,034 29.31 100.00 14,870 100.00 12,974,042,711$ 100.00 Notes: Source: California Municipal Statistics, Inc. Assessed Valuation Assessed Valuation CITY OF PALO ALTO Per Parcel Assessed Valuation of Single Family Residential As of June 30, 2013 2012‐2013 Median $600,000‐699,999 $12,974,042,711 $654,003 2012‐2013 Assessed Valuation $0‐99,999 $100,000‐199,999 $200,000‐299,999 $300,000‐399,999 $400,000‐499,999 $500,000‐599,999 $1,800,000‐1,899,999 $700,000‐799,999 $800,000‐899,999 $900,000‐999,999 $1,000,000‐1,099,999 $1,100,000‐1,199,999 $1,200,000‐1,299,999 $1,300,000‐1,399,999 $1,400,000‐1,499,999 $1,500,000‐1,599,999 $1,600,000‐1,699,999 $1,700,000‐1,799,999 This schedule is provided as required by the Continuing Disclosure Agreement for the City's Series 2010A General Obligation Bond and is not required by Governmental Accounting Standards Board (GASB). Therefore, ten years of comparison data is not presented. 1Improved single family residential parcels. Excludes condominiums and parcels with multiple family units. $1,900,000‐1,999,999 $2,000,000 and greater Total 148 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 12,215$ 10,625$ 9,915$ 9,175$ 8,405$ 7,605$ 6,765$ 5,895$ 1,685$ 1,560$ ‐ ‐ ‐ ‐ ‐ ‐ 55,305 55,305 54,540 74,235 420 325 225 115 ‐ ‐ ‐ ‐ ‐ ‐ 25 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2011 Lease‐Purchase Agreement ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 2,764 2,400 Add: unamortized premium ‐ ‐ ‐ ‐ 3,766 3,640 3,514 4,400 ‐ ‐ ‐ ‐ ‐ ‐ (571) ‐ ‐ ‐ 12,660 10,950 10,140 9,290 8,405 7,605 65,265 64,840 62,503 82,595 46,100 44,735 43,325 41,859 40,334 38,744 72,104 69,551 65,879 63,104 Energy Tax Credits 1,400 1,300 1,200 1,100 1,000 900 State Water Resources Loan 5,629 9,000 13,080 16,696 15,900 15,109 (1,238) (1,137) (1,037) (972) (1,053) (2,479) (2,737) (229) 580 543 44,862 43,598 42,288 40,887 46,310 46,565 83,647 87,118 83,359 79,656 Outstanding Debt 57,522$ 54,548$ 52,428$ 50,177$ 54,715$ 54,170$ 148,912$151,958$ 145,862$162,251$ 2.11% 1.89% 1.69% 1.51% 1.53% 1.50% 4.30% 3.90% 3.37% 3.50% Population 60,246 61,674 62,148 62,615 63,367 64,484 65,408 64,417 65,544 66,368 0.95$ 0.88$ 0.84$ 0.80$ 0.86$ 0.84$ 2.28$ 2.36$ 2.23$ 2.44$ Notes: Sources: State of California, Department of Finance (population) California Department of Transportation Long‐Term Socio‐Economic Forecasts (personal income) Annual Financial Statements, Note 7 General Long‐Term Obligations and Note 8 Special Assessment Debt Governmental Activities CITY OF PALO ALTO Ratio of Outstanding Debt by Type Last Ten Fiscal Years (Amounts in thousands) Fiscal Year Ended June 30 Percentage of Personal Income1 Certificates of Participation General Obligation Bonds Special Assessment Debt Capital Lease Obligations Less: unamortized discount/ issuance costs Total Governmental Activities Business‐type Activities Utility Revenue Bonds Less: unamortized discount/premium and loss on refunding Total Business‐type Activities Total Primary Government Debt Per Capita 1See the schedule of Demographic and Economic Statistics for personal income data. Per capita personal income is only available for Santa Clara County, therefore personal income is the product of the countywide per capita amount and the City's population. County of Santa Clara (assessed valuation) $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ Th o u s a n d s Total Governmental Activities Total Business‐type Activities 149 2012‐2013 Assessed Valuation 23,693,006,568$ Percentage Amount Applicable Applicable Total Debt to City of to City of Outstanding Palo Alto1 Palo Alto Santa Clara County 805,800,000$ 7.68%61,861,266$ Foothill‐DeAnza Community College District 621,564,288 22.68% 140,989,427 Palo Alto Unified School District 289,574,249 89.19% 258,285,751 Fremont Union High School District 299,550,108 0.02%68,897 Los Gatos Joint Union High School District 46,905,000 0.01%4,691 Mountain View‐Los Altos Union High School District 68,522,058 0.90%613,958 Cupertino Union School District 164,416,973 0.04%62,478 Los Altos School District 78,515,560 1.03%807,140 Mountain View‐Whisman School District 50,000,000 0.77%384,500 Saratoga Union School District 42,987,102 0.02%9,457 Whisman School District 16,788,710 1.91%320,832 City of Palo Alto 74,235,000 100% 74,235,000 El Camino Hospital District 141,310,000 0.09% 130,005 City of Palo Alto Special Assessment Bonds 31,170,000 100% 31,170,000 Santa Clara Valley Water District Benefit Assessment District 123,100,000 7.68% 9,450,387 Total Direct and Overlapping Tax and Assessment Debt 578,393,789 819,956,840 7.68% 62,948,087 378,994,822 7.68% 29,095,432 10,400,000 7.68% 798,408 17,225,000 22.68% 3,907,147 8,420,000 0.01% 842 4,605,000 0.90% 41,261 5,540,000 0.02% 1,219 City of Palo Alto Certificates of Participation 1,560,000 100% 1,560,000 City of Palo Alto 2011 Lease Purchase Agreement 2,400,000 100% 2,400,000 3,455,000 7.68% 265,240 Midpeninsula Regional Open Space Park District General Fund Obligations 135,649,717 13.24% 17,955,953 118,973,589 $ 697,367,378 Ratio to Assessed Valuation Total Direct Debt 0.33%78,195,000$ Total Overlapping Debt 2.61%619,172,378 Total Direct and Overlapping Debt 2.94%697,367,378$ 2 Notes: 1Percentage of overlapping agency's assessed valuation located within boundaries of the city 2Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non‐bonded capital lease obligations. Source: California Municipal Statistics, Inc. Overlapping debt is the financial obligations of one political jurisdiction that also falls partly on a nearby jurisdiction. The amount of debt of each unit applicable to the reporting unit is arrived at by 1) determining what percentage of the total assessed value of the overlapping jurisdiction lies within the limits of the reporting unit, and 2) applying this percentage to the total debt of the overlapping jurisdiction. Santa Clara County General Fund Obligations CITY OF PALO ALTO Computation of Direct and Overlapping Debt As of June 30, 2013 Direct and Overlapping Tax and Assessment Debt Direct and Overlapping General Fund Debt Santa Clara County Vector Control District Certificates of Participation Total Direct and Overlapping General Fund Debt Total Combined Debt Santa Clara County Pension Obligations Santa Clara County Board of Education Certificates of Participation Foothill‐DeAnza Community College District Certificates of Participation Los Gatos‐Saratoga Joint Union High School District Certificates of Participation Mountain View‐Los Altos Union High School District Certificates of Participation Saratoga Union High School District Certificates of Participation 150 Assessed Valuation: Secured property assessed value, net of exempt real property 23,693,007$ Bonded Debt Limit (3.75% of Assessed Value) 1 888,488 Direct Debt: Certificates of Participation 1,560 Lease Purchase Agreement 2,400 General Obligation bonds 74,235 Total Direct Debt 78,195 Less: Amount of Debt Not Subject to Limit 2 3,960 Total Net Debt Applicable to Limit 74,235 Legal Bonded Debt Margin 814,253$ Total Bonded Total Net Debt Legal Total Net Debt Ratio of Net General Fiscal Assessed Debt Limit Applicable to Bonded Debt Applicable to the Debt to Bonded Debt Year Value (AV)(3.75% of AV)Limit Margin Population Debt as a %Assessed Value Per Capita 2004 14,170,218$ 531,383$ ‐$ 531,383$ 60,246 0.00%‐ 0.00 2005 14,974,966 561,561 ‐ 561,561 61,674 0.00%‐ 0.00 2006 16,250,144 609,380 ‐ 609,380 62,148 0.00%‐ 0.00 2007 17,609,613 660,360 ‐ 660,360 62,615 0.00%‐ 0.00 2008 18,922,488 709,593 ‐ 709,593 63,367 0.00%‐ 0.00 2009 21,085,609 790,710 ‐ 790,710 64,484 0.00%‐ 0.00 2010 21,880,359 820,513 55,305 765,208 65,408 6.74%0.0025 0.85 2011 21,956,274 823,360 55,305 768,055 64,417 6.72%0.0025 0.86 2012 22,486,708 843,252 54,540 788,712 65,544 6.47%0.0024 0.83 2013 23,693,007 888,488 74,235 814,253 66,368 8.36%0.0031 1.12 Notes: Source: CITY OF PALO ALTO Computation of Legal Bonded Debt Margin As of June 30, 2013 (Amounts in thousands) 1California Government Code, Section 43605 sets the debt limit at 15% of the assessed value of all real and personal property of the City. Because this Code section was enacted when assessed value was 25% of market value, the limit is calculated at one‐fourth, or 3.75%. This legal debt margin applies to General Obligation debt. Prior year limits have been adjusted to conform to the current year methodology. 2In accordance with California Government Code Section 43605, only the City's General Obligation bonds are subject to the legal debt limit of 15%. Enterprise Fund debt is not subject to legal debt margin. Annual Financial Statements, Assessed Value of Taxable Property and Note 7 General Long‐Term Obligations Total Assessed Value for FY 2004 and 2005 was restated due to correction of data. 151 Less: Net Revenue Fiscal Gross Direct Operating Available for Year Revenue Expenses2 Debt Service Principal Interest3 Total Coverage Ratio 2004 169,045$ 121,988$ 47,057$ 1,310$ 2,307$ 3,617$ 13.01 2005 171,493 147,123 24,370 1,365 2,257 3,622 6.73 2006 213,337 143,703 69,634 1,410 2,203 3,613 19.27 2007 203,146 151,196 51,950 1,465 2,147 3,612 14.38 2008 219,801 173,620 46,181 1,525 2,088 3,613 12.78 2009 242,693 180,880 61,813 1,590 2,024 3,614 17.10 2010 230,308 171,320 58,988 1,755 1,954 3,709 15.90 2011 234,278 151,641 82,637 2,655 3,261 5,916 13.97 2012 235,160 169,777 65,383 2,945 2,959 5,904 11.07 2013 237,842 173,510 64,332 2,875 3,167 6,042 10.65 Notes:1Airport, Refuse and Fiber Optics funds have no debt and are therefore excluded from this schedule. 2Excludes depreciation and amortization expense. 3Excludes federal interest subsidy. Source: City of Palo Alto, Accounting Department Gross Revenue and Direct Operating Expenses were restated due to correction of data thereby changing the Net Revenue Available for Debt Service and the Coverage Ratio. Debt Service CITY OF PALO ALTO Revenue Bond Coverage Business‐type Activities1 Last Ten Fiscal Years (Amounts in thousands) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ Th o u s a n d s Net Revenue Available for Debt Service Total Debt Service 152 Fiscal Year 2004 2,425$ 2,168$ 1,479$ 1,186$ 351$ 437$ 168$ 3,698$ 5,955$ 17,867$ 2005 2,621 2,206 1,176 1,310 356 533 317 3,590 7,105 19,214 2006 2,664 2,306 1,168 1,346 370 595 392 4,244 7,104 20,189 2007 2,751 2,486 1,109 1,485 374 602 203 5,075 7,139 21,224 2008 2,685 2,566 1,685 1,497 349 622 405 4,682 6,797 21,288 2009 2,251 2,443 1,431 1,258 315 493 214 4,284 6,635 19,324 2010 2,215 2,418 1,402 1,254 343 549 219 4,458 5,556 18,414 2011 2,374 2,621 1,564 1,292 381 630 242 4,873 6,322 20,299 2012 2,445 2,937 1,590 1,492 387 722 257 5,049 7,034 21,913 2013 2,478 3,160 1,465 1,656 424 765 259 4,056 13,729 27,992 Source: California State Board of Equalization, compiled by MuniServices LLC Sales Tax Rates for the Fiscal Year ended June 30, 2013 State Rate:6.00% Local (County/City) Rates: Palo Alto (State‐City or County Operations)0.75% State/Palo Alto (Fiscal Recovery Fund to pay off Economic Recovery Bonds 2004)0.25% Sate (Local Public Safety Fund to support local criminal justice activities 1993)0.50% Special District Tax Rates: Santa Clara County Transit District (SCCT)0.50% Santa Clara County Valley Transportation Authority (SCVT)0.50% Santa Clara VTA BART Operating and Maintenance Transactions and Use Tax (SVTB)0.125% Santa Clara Retail Transactions and Use Tax (SCCR)0.125% Total Sales and Use Tax Rate:8.750% Source: California State Board of Equalization CITY OF PALO ALTO Taxable Transactions by Type of Business Last Ten Fiscal Years (Amounts in thousands) Total ECONOMIC SEGMENT Department Stores Restaurants Furniture/ Appliance Food Markets Service Stations Drug Stores Other Retail All Other Apparel Stores Department Stores 9%Restaurants 11% Furniture/ Appliance 5% Apparel Stores 6% Food Markets 2% Service Stations 3% Drug Stores 1% Other Retail 14% All Other 49% Fiscal Year 2013 153 Santa Clara Santa Clara City of Palo Alto City of Palo Alto Santa Clara City Population County Total County Per Capita Fiscal City of Palo Alto Unemployment School County as a Percentage of Personal Income Personal Income Year Population Rate Enrollment Population County Population (in thousands)(in thousands) 2004 60,246 3.2%10,341 1,731,422 3.48% 78,500,000$ 45,338$ 2005 61,674 2.8%10,527 1,759,585 3.51% 82,300,000 46,772 2006 62,148 2.5%10,607 1,773,258 3.50% 88,300,000 49,795 2007 62,615 2.6%11,056 1,808,056 3.46% 96,100,000 53,151 2008 63,367 3.5%11,329 1,837,075 3.45% 103,500,000 56,340 2009 64,484 6.5%11,329 1,857,621 3.47% 103,700,000 55,824 2010 65,408 6.2%11,565 1,880,876 3.48% 99,500,000 52,901 2011 64,417 5.3%12,024 1,781,427 3.62% 107,800,000 60,513 2012 65,544 4.7%12,286 1,816,486 3.61% 119,900,000 66,007 2013 66,368 3.6%12,396 1,842,254 3.60% 128,800,000 *69,914 * Note: Data on personal income and per capita personal income is only available for Santa Clara County. Source: California State Department of Finance (population) State Employment Development Office (unemployment rate) Palo Alto Unified School District (school enrollment) * California Department of Transportation Long‐Term Socio‐Economic Forecasts (personal income). Forecasts from prior years are updated annually. CITY OF PALO ALTO Demographic and Economic Statistics Last Ten Fiscal Years 60,000 61,000 62,000 63,000 64,000 65,000 66,000 67,000 City Population 10,000 10,500 11,000 11,500 12,000 12,500 School Enrollment 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%City Unemployment Rate 154 Number of Employees Rank Percentage of Total City Employment Number of Employees Rank Percentage of Total City Employment Stanford University 10,979 1 8.9%9,821 1 7.0% Stanford University Medical Center/Hospital 5,545 2 4.5%5,025 2 3.6% Lucile Packard Children's Hospital 4,750 3 3.9%3,326 4 2.4% Veteran's Affairs Palo Alto Health Care System 3,850 4 3.1%3,500 3 2.5% VMware Inc.3,509 5 2.5% Hewlett‐Packard Company 2,500 6 2.0%2,001 5 1.4% Palo Alto Medical Foundation 2,200 7 1.8%2,000 6 1.4% SAP 2,200 8 1.6% Space Systems/Loral 3,020 9 2.5%1,700 7 1.2% Wilson Sonsini Goodrich & Rosati 1,650 10 1.3%1,500 8 1.1% Palo Alto Unified School District 1,304 9 0.9% City of Palo Alto 1,074 10 0.8% Total 40,203 32.1%31,251 22.3% Estimated Total City Day Population: FY 2013 123,000 FY 2008 140,000 Notes: Source: 1Comparable data was not available until FY 2008. AtoZdatabases, http://facts.stanford.edu/governance.html, http://facts.stanford.edu/hospital.html, www.lpch.org/aboutus/, Palo Alto Unified School District 2011‐12 Budget, The City of Palo Alto, A Report to Our Citizens, Business Journal Annual Book of Lists. CITY OF PALO ALTO Principal Employers Current Year and Five Years Ago FY 2013 FY 20081 Employer 155 2003 2004 2005 2006 Governmental activities Community Services Number of theater performances 173 175 172 183 Total hours of athletic field usage2 ‐ ‐ 65,748 65,791 Number of rounds of golf 87,892 83,728 78,410 76,000 Enrollment in recreation classes (includes summer camps) 16,281 16,435 15,127 14,768 Planning and Community Environment Planning applications completed 324 409 327 390 Building permits issued 3,151 3,236 3,081 3,081 Green Building permit applications processed3 ‐ ‐ ‐ ‐ Caltrain average weekday boarding 2,906 2,825 3,264 3,882 Police Calls for service 53,143 52,489 52,233 57,017 Total arrests 2,851 2,577 2,134 2,530 Parking citations issued 52,422 47,860 52,235 56,502 Animal Services Number of service calls 3,545 3,575 4,994 2,861 Number of sheltered animals 3,849 3,780 3,514 3,839 Fire Calls for service 6,636 6,675 6,414 6,897 Number of fire incidents 260 248 224 211 Number of fire inspections 1,349 793 1,488 899 Library Total number of cardholders 49,448 50,171 52,001 55,909 Total number of items in collection 267,356 267,693 264,511 260,468 Total checkouts 1,240,099 1,314,790 1,282,888 1,280,547 Public Works Street resurfacing (lane miles)17 17 20 20 Number of potholes repaired 2,943 2,907 3,221 2,311 Sq. ft. of sidewalk replaced or permanently repaired 101,410 115,352 132,430 126,574 Number of trees planted 322 242 164 263 Total tons of waste landfilled 65,170 61,266 60,777 59,276 Tons of materials recycled 48,062 49,268 50,311 56,013 Business‐type activities Electric Number of customer accounts 28,408 28,482 28,556 28,653 Residential MWH consumed 153,783 158,099 161,440 161,202 Gas Number of customer accounts 23,169 23,216 23,301 23,353 Residential therms consumed 11,875,753 11,700,335 12,299,158 11,745,883 Water Number of customer accounts 19,487 19,557 19,605 19,645 Residential water consumption (CCF)2,844,916 3,000,645 2,686,507 2,647,758 Wastewater collection Number of customer accounts 21,819 21,830 21,763 21,784 Millions of gallons processed 8,704 8,238 8,497 8,972 Notes: 2Some data not available. Source: City of Palo Alto Service Efforts and Accomplishments Report 1Ten most recent years available. 3In FY 2009, a new Green Building Program was established under the City's Green Building Ordinance to build a new generation of efficient buildings in Palo Alto that are environmentally responsible and healthy places in which to live and work. FY12 data not available. CITY OF PALO ALTO Operating Indicators by Function/Program Last Ten Fiscal Years1 Year Ended June 30 FUNCTIONS/PROGRAMS 156 2007 2008 2009 2010 2011 2012 171 166 159 174 175 175 70,769 63,212 45,762 41,705 42,687 44,226 76,241 74,630 72,170 69,791 67,381 65,653 14,460 13,851 13,091 12,880 12,310 11,703 299 257 273 226 238 204 3,136 3,046 2,543 2,847 3,559 3,320 ‐ ‐ 341 556 961 ‐ 4,132 4,589 4,863 4,796 5,501 5,730 60,079 58,742 53,275 55,860 52,159 51,086 3,059 3,253 2,612 2,451 2,288 2,212 57,222 50,706 49,996 42,591 40,426 41,875 2,990 3,059 2,873 2,692 2,804 3,051 3,578 3,532 3,422 3,147 3,323 3,379 7,236 7,723 7,549 7,468 7,555 7,796 221 192 239 182 165 186 1,021 1,277 1,028 1,526 1,807 1,654 53,099 53,740 54,878 51,969 53,246 60,283 270,755 279,403 293,735 298,667 314,154 306,361 1,414,509 1,542,116 1,633,955 1,624,785 1,476,648 1,559,932 32 27 23 32 29 40 1,188 1,977 3,727 3,149 2,986 3,047 94,620 83,827 56,909 54,602 71,174 72,787 164 188 250 201 150 143 59,938 61,866 68,228 48,955 38,524 43,947 56,837 52,196 49,911 48,811 56,586 51,725 28,684 29,024 28,527 29,430 29,708 29,545 162,405 162,680 159,899 163,098 160,318 160,604 23,357 23,502 23,090 23,724 23,816 23,915 11,759,842 11,969,151 11,003,088 11,394,712 11,476,609 11,522,999 19,726 19,942 19,442 20,134 20,248 20,317 2,807,477 2,746,980 2,566,962 2,415,467 2,442,415 2,513,595 21,789 21,970 21,210 22,231 22,320 22,421 8,853 8,510 7,958 8,184 8,652 8,130 Year Ended June 30 157 2004 2005 2006 2007 FUNCTION/PROGRAM Public Safety Fire: Fire Stations 8 8 8 8 Fire Apparatus 23 25 25 25 Police: Police Stations 1 1 1 1 Police Patrol Vehicles 30 30 30 30 Community Services Acres ‐ Downtown/Urban Parks 170 170 170 157 Acres ‐ Open Space 3,731 3,731 3,731 3,744 Parks and Preserves 34 35 35 36 Golf Course 1 1 1 1 Tennis Courts 52 52 52 51 Athletic Center 1 1 1 4 Community Centers 4 4 4 4 Theaters 3 3 3 3 Cultural Center/Art Center 1 1 1 1 Junior Museum and Zoo 1 1 1 1 Swimming Pools 1 1 1 1 Nature Center 2 2 2 3 Libraries Libraries 5 5 5 5 Public Works: Number of Trees Maintained 35,440 35,096 34,841 34,556 Electric Utility1 Miles of Overhead Lines 227 225 217 194 Miles of Underground Lines 186 188 210 252 Water Utility Miles of Water Mains 226 226 217 217 Gas Utility Miles of Gas Mains 207 207 207 207 Waste Water Miles of Sanitary Sewer Lines 202 202 202 202 Note:1The City of Palo Alto Utilities Department recently completed the conversion of its electric system maps to a GIS mapping system database. Therefore, the distances reported starting in FY 11/12 are more accurate than the distances reported in previous years. CITY OF PALO ALTO Capital Asset Statistics by Function/Program Last Ten Fiscal Years Year Ended June 30 158 2008 2009 2010 2011 2012 2013 8 8 8 8 7 7 23 28 28 27 29 28 1 1 1 1 1 1 30 30 30 30 30 30 157 157 157 157 157 157 3,744 3,744 3,744 3,744 3,744 3744 36 36 36 36 36 36 1 1 1 1 1 1 51 51 51 51 51 51 4 4 4 4 4 4 4 4 4 4 4 4 3 3 3 3 3 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3 3 3 3 5 5 5 5 5 5 35,058 34,991 35,025 34,977 34,874 34,907 193 193 193 193 223 222 253 253 253 253 245 246 217 214 214 214 234 233 207 207 205 205 210 210 202 207 207 207 217 217 Year Ended June 30 159 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Governmental Funds General Fund: Administrative 101 96 97 99 98 98 89 83 83 85 Community Services 145 98 99 97 96 97 94 74 74 74 Fire 129 126 127 127 127 127 123 121 122 119 Library1 ‐ 44 44 44 44 44 42 41 41 41 Planning and Community Environment 55 53 53 53 53 53 49 44 43 48 Police 171 165 164 163 163 164 161 157 157 154 Public Works2 76 68 68 68 68 69 64 59 56 57 Subtotal General Fund 676 650 652 651 649 652 622 579 576 578 All Other Funds: Capital Projects Fund 13 20 20 20 20 21 24 24 24 26 Special Revenue Fund 1 1 1 1 1 1 1 2 2 2 Total Governmental Funds 690 671 673 672 670 674 647 605 602 606 Enterprise Funds Public Works3 111 113 113 113 113 113 115 115 115 104 Utilities4 234 234 236 235 235 238 242 251 251 254 External Services5 6 6 6 6 6 ‐ ‐ ‐ ‐ ‐ Total Enterprise Funds 351 353 355 354 354 351 357 366 366 358 Internal Service Funds Printing and Mailing 4 4 5 4 4 4 4 2 2 2 Technology 33 30 30 30 30 31 31 30 30 31 Vehicle Replacement 16 16 16 16 16 16 16 16 16 17 Total Internal Service Funds 53 50 51 50 50 51 51 48 48 50 Total 1,094 1,074 1,079 1,076 1,074 1,076 1,055 1,019 1,016 1,014 Note:1Library became its own entity effective 2005. Prior to 2005, Library was part of Community Services. 2Fleet and Facilities Management 3Refuse, Storm Drainage, Wastewater Treatment Numbers corrected for rounding purposes. Source: City of Palo Alto ‐ Fiscal Year 2013 Adopted Operating Budget 5 Effective in 2009, External Services was dissolved. 5 FTEs were eliminated and 1 FTE was transferred to the Technology Fund. CITY OF PALO ALTO Full‐Time Equivalent City Government Employees by Function Last Ten Fiscal Years Full Time Equivalent Employees as of June 30 4Electric, Gas, Wastewater Collection, Water 0 200 400 600 800 1,000 1,200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Fu l l Tim e Eq u i v a l e n t s Governmental Funds Enterprise Funds Internal Service Funds 160 CITY OF PALO ALTO Index to the Single Audit Report For the Year Ended June 30, 2013 161 Page Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ....................................... 163 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A‐133 ............................................................................... 165 Schedule of Expenditures of Federal Awards ........................................................................................... 167 Notes to the Schedule of Expenditures of Federal Awards ...................................................................... 168 Schedule of Findings and Questioned Costs ............................................................................................. 169 Schedule of Prior Years Findings and Questioned Costs ........................................................................... 172 162 This page intentionally left blank. 163 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Honorable Mayor and the Members of the City Council of the City of Palo Alto Palo Alto, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Palo Alto, California (City), as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated November 8, 2013. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weakness may exist that have not been identified. 164 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Walnut Creek, California November 8, 2013 165 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by OMB Circular A-133 Honorable Mayor and the Members of the City Council of the City of Palo Alto Palo Alto, California Report on Compliance for Each Major Federal Program We have audited the City of Palo Alto’s, California (City) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2013. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor’s Responsibility Our reasonability is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2013. 166 Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified a certain deficiency in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as item 2013-01, that we consider to be a significant deficiency. The City’s response to the internal control over compliance finding identified in our audit is described in the accompanying schedule of findings and questioned costs. The City’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Walnut Creek, California November 8, 2013 Grantor Federal Identifying CFDA Subrecipients Grantor/Pass‐Through Grantor/Program Title Number Number Expenditures Expenditures U.S Department of Housing and Urban Development Direct CDBG ‐ Entitlement Grants Cluster Community Development Block Grants/Entitlement Grants B‐10‐MC‐06‐0020 14.218 870,477$ 790,224$ ARRA ‐ Community Development Block Grant ARRA Entitlement Grants (CDBG‐R)14.253 17,718 ‐ CDBG ‐ Entitlement Grants Cluster 888,195 790,224 U.S. Department of Transportation Pass‐through from State of California Department of Transportation Highway Planning and Construction HSIPL‐5100(015)20.205 734,605 ‐ Highway Planning and Construction HSIPL‐5100(014)20.205 1,506 ‐ Highway Planning and Construction STPL‐5100(019)20.205 3,899 ‐ Highway Planning and Construction BRLS‐5100(017)20.205 216,044 ‐ Total Highway Planning and Construction 956,054 ‐ Highway Planning and Construction TRI32‐10‐33 20.205 206,675 ‐ Pass‐through from Santa Clara Valley Transportation Authority Highway Planning and Construction CML‐5100(018)20.205 144,081 ‐ Highway Planning and Construction 1,306,810 ‐ Institute of Museum and Library Services Pass‐through from California State Library Grants to States LS‐00‐11‐0005‐11 45.310 7,524 ‐ U.S. Department of Homeland Security Pass‐through from City and County of San Francisco Homeland Security Grant Program None 97.067 68,800 ‐ Pass‐through from County of Santa Clara Emergency Management Performance Grants None 97.042 18,935 ‐ Total U.S. Department of Homeland Security 87,735 ‐ TOTAL EXPENDITURES OF FEDERAL AWARDS 2,290,264$ 790,224$ CITY OF PALO ALTO Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2013 Pass‐through from State of California Department of Resources Recycling and Recovery See Notes to the Schedule of Expenditures of Federal Awards 167 CITY OF PALO ALTO Notes to the Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2013 168 NOTE 1 – REPORTING ENTITY The schedule of expenditures of federal awards (the Schedule) includes expenditures of federal awards for the City of Palo Alto, California (City), and its component units as disclosed in the notes to the basic financial statements. NOTE 2 – BASIS OF ACCOUNTING Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of measurement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting. All proprietary funds are accounted for using the accrual basis of accounting. Expenditures of federal awards reported in the Schedule are recognized when incurred. NOTE 3 – DIRECT AND INDIRECT (PASS‐THROUGH) FEDERAL AWARDS Federal awards may be granted directly to the City by a federal granting agency or may be granted to other government agencies which pass‐through federal awards to the City. The Schedule includes both of these types of federal award programs when they occur. NOTE 4 – RELATIONSHIP TO FEDERAL FINANCIAL REPORTS Amounts reported in the Schedule agree to or can be reconciled with the amounts reported in the related federal financial reports. NOTE 5 – RELATIONSHIP TO BASIC FINANCIAL STATEMENTS Federal awards and expenditures agree to or can be reconciled with the amounts reported in the City’s basic financial statements. CITY OF PALO ALTO Schedule of Findings and Questioned Costs For the Year Ended June 30, 2013 169 Section I ‐ Summary of Auditor’s Results Financial Statements Type of auditor’s report issued on the basic financial statements of the City: Unmodified Internal control over financial reporting: Material weakness(es) identified? No Significant deficiency(ies) identified that are not considered to be material weaknesses? None reported Noncompliance material to the financial statements noted? No Federal Awards Internal control over major programs: Material weakness(es) identified? No Significant deficiency(ies) identified that are not considered to be material weaknesses? Yes Type of auditor’s report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A‐133? Yes Identification of Major Programs: 14.218 CDBG – Entitlement Grants Cluster 20.205 Highway Planning and Construction Dollar threshold used to distinguish between type A and type B programs: $300,000 Auditee qualified as a low‐risk auditee? No Section II – Financial Statements Findings No findings reported. CITY OF PALO ALTO Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2013 170 Section III ‐ Federal Award Findings and Questioned Costs Reference Number: 2013‐01 Federal Program Title: Highway Planning and Construction Federal Catalog Number: 20.205 Federal Agency: U.S. Department of Transportation Pass‐Through Entity: Santa Clara Valley Transportation Authority Federal Award Number and Year: CML‐5100(018) Category of Finding: Procurement, Suspension and Debarment Criteria: The A‐102 Common Rule and OMB Circular A‐133 require that non‐Federal entities receiving federal awards establish and maintain internal control designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The regulations state that, before entering into a covered transaction, the contracting entity must verify the entity with whom it intends to do business is not suspended or debarred or otherwise excluded from participating in the federal program. This may be accomplished by checking the Excluded Parties List System (EPLS) maintained by the General Services Administration, obtaining vendor certifications, or adding clauses or conditions to the contracts. Condition: During our review of the City’s compliance with the suspension and debarment requirements, we noted that one new contract did not contain a certification within the contract showing that the contractor was not suspended or debarred, nor was there any evidence that the City verified that the contractor was not suspended or debarred by checking the Excluded Parties List System (EPLS) maintained by the General Services Administration. The amount reimbursed by the federal grant for this contract was $144,081. Questioned Costs: N/A‐ The contractor is not/has not been suspended or debarred. Therefore, the costs reimbursed for payments made to this contractor were allowable under the grant. Cause: The City’s Public Works Department was not aware of the federal requirement at the time the contract was awarded. Effect: Without internal controls in place to adequately review and monitor whether vendors are suspended or debarred from participating in the federal program, the City runs the risk of noncompliance with the requriements of federal awards. CITY OF PALO ALTO Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2013 171 Section III ‐ Federal Award Findings and Questioned Costs (Continued) Recommendation: We recommend that the City establish internal control policies over performing the verification check for covered transactions and maintaining documentation as evidence. Management Response and Corrective Action Plan: Prior to awarding future contracts, City staff will perform a debarment and suspension check by checking the Excluded Parties List System or including a clause in the contract stating the recipient is eligible to receive Federal funds. CITY OF PALO ALTO Schedule of Prior Years Findings and Questioned Costs For the Year Ended June 30, 2013 172 Schedule of Prior Year Findings and Questioned Costs Finding #SA 2012‐1 Reporting Federal Program Title: CDBG – Entitlement Grants Cluster Federal Catalog Number: 14.218 Condition: The City did not report the sub‐award information related to the 6 sub‐grantees to the Federal Funding Accountability and Transparency Act (FFATA) Sub‐award Reporting System (FSRS) during FY2012. Status of Corrective Action Plan: Corrected. Finding #SA 2012‐2 Completeness of Schedule of Expenditures of Federal Awards Condition: The City inadvertently excluded federal program expenditures of Highway Planning and Construction (CDFA 20.205) in the Schedule of Federal Awards (SEFA) in the amount of $678,105. The inclusion of this program resulted in an additional major program in FY2012 and an reissuance of the City’s single audit report for the year ended June 30, 2012. Status of Corrective Action Plan: Corrected. CITY OF PALO ALTO Schedule of Prior Years Findings and Questioned Costs For the Year Ended June 30, 2013 173 Finding #SA 2011‐3 Schedule of Expenditures of Federal Awards Reporting Federal Program Title: ARRA – Energy Efficiency and Conservation Block Grant Program Federal Catalog Number: 81.128 Condition: Two invoices were not included in the preliminary SEFA provided by the Administrative Services Department of the City due to a coding error in the general ledger. The related expenditures were for allowable costs under the program guidelines incurred in the current fiscal year. Therefore, the expenditures should be reported as part of the program expenditures on the SEFA for the current fiscal year. In the future, staff will keep a hard copy of the financial reports reflecting both federal and city expenditures. Status of Corrective Action Plan: Not applicable as the City did not have any expenditures incurred in current year under this program. ………………………………………………………………………. City of Palo Alto 174 ………………………………………………………………………………… 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. ………………………………………………………………………………… AMERICANS WITH DISABILITIES ACT STATEMENT In compliance with Americans with Disabilities Act (ADA) of 1990, this document may be provided in other accessible formats. For information contact: ADA Coordinator 250 Hamilton Avenue (650) 329-2550 ADA@cityofpaloalto.org FINANCE COMMITTEE EXCERPT MINUTES Page 1 of 8 Regular Meeting November 19, 2013 The Finance Committee met on this date in the Council Chambers at 6:59 P.M., 250 Hamilton Avenue, Palo Alto, California. Present: Berman, Burt (Chair), Shepherd, Schmid Absent: 2. Recommendation to Adopt Ordinance Authorizing Closing of FY 2013 Budget, Including Re-appropriation Requests, Closing Completed Capital Projects and Authorizing Transfers to Reserves; Approval of FY 2013 Comprehensive Annual Financial Report (CAFR). David Ramberg, Assistant Director of the Administrative Services Department, presented the Fiscal Year (FY) 2013 year-end report. Staff was scheduled to present the FY 2014 first quarter financial report on December 3, 2013. Overall the City finished FY 2013 in a positive position. Revenues continued to return to pre-recession levels. All major tax revenues showed strong growth, particularly sales tax and the Transient Occupancy Tax (TOT). Expense controls such as cost sharing with employees in the medical and pension plans and systematic budget controls helped keep expenses in line with the Budget. Vacancy savings produced less than budgeted actual amounts on the expense side. In several categories revenues exceeded the Adjusted Budget. All of this allowed funds to be transferred to the Budget Stabilization Reserve (BSR) in the General Fund and the Infrastructure Reserve. Approximately $8.9 million would be transferred to the Infrastructure Reserve. Laura Kuryk, Accounting Manager, reported tax revenue sources outperformed expectations in FY 2013. The City experienced double digit year-over-year growth in sales tax, TOT, and document transfer tax categories. FY 2013 revenue exceeded the Adjusted Budget by $3.5 million. The current budgeted amounts for FY 2014 sales tax and documentary transfer tax were 7 percent and 16 percent less than actual revenue levels for FY 2013. Property tax and TOT were budgeted at 3 percent and 7 percent higher than FY 2013 actuals. Revenue forecasts for FY 2014 would be refreshed with the Long Range Financial Forecast (LRFF) in December 2013, and mid-year changes would be presented to the Finance Committee (Committee) in February 2014. The FY 2013 actual expenses totaled $144.6 million, which was $3.4 million less than the Adjusted Budget. Savings WORKING MINUTES Page 2 of 8 Finance Committee Regular Meeting Working Minute: 11/19/2013 resulted from higher than expected vacancy savings, and non-salary savings were spread evenly across departments. Police and Fire Departments reduced expenses by 4 percent from FY 2012, due to reduced overtime and increases in pension and medical contributions. Planning and Community Environment Department increased expenses by $1.9 million, due to an increased volume in development and building activities. An increase in revenues offset increased expenses. Combined expenses remained flat at $137 million year-over-year. The BSR had an opening balance of $28.1 million as of July 1, 2013. The surplus for FY 2013 was $8.9 million. Staff presented an Adjusted Budget which indicated a surplus of $1.7 million. Additional revenue totaled $3.5 million. Reduced expenditures totaled $4.6 million. A net change in operating transfers totaled $0.9 million. Net changes in other Reserve Fund balances totaled $2.2 million. Thus, the total FY 2013 surplus was $11.1 million. Staff recommended $8.9 million in surplus funds be transferred to the Infrastructure Reserve, leaving a BSR balance of $30.4 million or 19 percent of the FY 2014 budgeted expenditures. The FY 2012 surplus amount was $7.6 million. Those funds were in addition to the transfer of $2.2 million for keep-up items. Mr. Ramberg clarified that a portion of BSR funds accumulated in FY 2011 was included in the $7.6 million transfer to the Infrastructure Reserve in FY 2012. Ms. Kuryk indicated the Infrastructure Reserve balance totaled $17.5 million as of June 30, 2013. The Infrastructure Reserve balance was calculated only once per year and was a snapshot of one day in time. All Enterprise Funds had surplus funds from operations in FY 2013 with the exception of the Airport Fund, which continued to be funded through General Fund loans. As of June 30, 2013, General Fund loans totaled $610,000. All Rate Stabilization Reserve (RSR) positions were in a positive balance as of June 30, 2013 with the exception of the Refuse Fund. The Refuse Fund negative RSR was created by the reserve for landfill closure. FY 2013 results improved the position from -$4.1 million to -$2.8 million. If the landfill reserve did not have to be included, the RSR would be positive in the Refuse Fund. The Airport Fund continued to show a negative RSR. The Airport Fund incurred costs without generating revenue during the transition. The negative position would continue for the next few years. Vice Mayor Shepherd inquired about the City's financial position in relation to years prior to the recession. Lalo Perez, Chief Financial Officer and Director of Administrative Services, believed the City's position improved in almost all categories and reached WORKING MINUTES Page 3 of 8 Finance Committee Regular Meeting Working Minute: 11/19/2013 record highs in the documentary transfer tax category. In general, the City's position was better than it was in 2008. Vice Mayor Shepherd wanted to understand whether revenues were meeting or exceeding those prior to 2008. She asked if current revenue streams were exceeding 2008 levels. Mr. Perez answered yes. Council Member Schmid noted packet page 87 listed sales tax reaching $25.6 million; whereas, Santa Clara County (County) reported Palo Alto received $27.8 million in sales tax. He inquired about the reason for the discrepancy. Joe Saccio, Assistant Director of Administrative Services, explained Staff would provide an adjustment for FY 2014 revenue in the mid-year review. The LRFF would contain a projection aligned with the information presented to the Committee. The dramatic increase in revenue was due to a particular vendor. Staff was attempting to determine whether the windfall would continue into the future. Staff would provide an adjustment at mid-year to reflect the current year's revenue. Council Member Schmid asked if the Committee should interpret the sales tax amount as possibly being $2 million higher; although, the increase could be one time only. Chair Burt suggested Council Member Schmid's question was directed to a disparity between the accounting number and the report. Mr. Saccio described the number as reflecting remittances received from a particular vendor only in the last two or three quarters. The number in the Budget was calculated prior to Staff's realization that the City would receive that revenue. Council Member Schmid asked if Staff's recommendation to transfer $8.9 million might be outdated. Mr. Saccio believed the revenue that would be booked for FY 2013 was correct and due to the City. It correlated with the amount stated in the report from the Auditor's Office. David Bullock, Macias Gini & O’Connell, explained that revenue recognition required the City to recognize revenue up to 60 days of collections. The numbers presented to the Committee might not correlate exactly to WORKING MINUTES Page 4 of 8 Finance Committee Regular Meeting Working Minute: 11/19/2013 numbers stated on the accounting records. Based on the date receipts were received, receipts might not be reflected on the accounting records. Council Member Schmid inquired whether the Committee could confidently recommend the numbers in the report to the Council. Mr. Perez viewed the sales tax increase as one-time excess funding and recommended they be transferred to the Infrastructure Reserve. Council Member Schmid noted the property tax amount stated in the table on page 87 was $28.7 million; however, the table on page 274, Governmental Activities, indicated property taxes totaled $31.9 million. He inquired about the distinction between the General Fund and Governmental Activities. Ms. Kuryk reported page 37 of the Comprehensive Annual Financial Report (CAFR) indicated $28.7 million was General Fund and $3.188 million was other governmental. The total was $31.9 million. Council Member Schmid referenced the definition of Governmental Activities on page 143, and asked how Governmental Activities could be separate from the General Fund. Ms. Kuryk indicated that Special Revenue Funds would be considered part of Governmental Activities and would combine into the Governmental Activities statement. Council Member Schmid clarified that Special Revenue Funds were not part of the General Fund. Ms. Kuryk concurred that Special Revenue Funds were separate and apart from the General Fund. Council Member Schmid inquired whether they were equivalent to $3 million, $4 million, $5 million. Ms. Kuryk reported according to the report they totaled $3.2 million. Council Member Schmid asked if they were all based on property taxes. Ms. Kuryk answered yes. In this case, the $3.188 million was all property tax for the library project. Mr. Saccio added that the amount was basically the assessment for the General Obligation (GO) bonds. The $3.188 million amount was collected WORKING MINUTES Page 5 of 8 Finance Committee Regular Meeting Working Minute: 11/19/2013 from property owners according to the assessment. That amount was not placed into the General Fund; it was used to offset debt service. Council Member Schmid noted the Airport Fund had a deficit and asked when the City could anticipate the Airport generating revenue. Mr. Perez believed the current agreements were effective through 2017. The City could not change the structure of those agreements at the current time. Staff anticipated revenue occurring in 2018 when new agreements were established. Council Member Schmid inquired whether the General Fund would provide an annual subsidy until that time. Mr. Perez reported the Council directed Staff to move forward with early transition of the Airport. Staff alerted the Council that the General Fund would have to provide loans to the Airport Fund. Under Federal Aviation Administration (FAA) requirements, the City could be eligible for reimbursements assuming net revenue was generated from operations within a seven-year window. Council Member Schmid asked if the Committee could expect deficits for four more years. Mr. Perez felt that was a safe estimate. Chair Burt recalled that the Council had two alternatives with respect to transition of the Airport. One was to renegotiate and extend leases to capture additional revenue in the short term. The other was to wait until leases expired to negotiate new leases and then perhaps capture higher long-term revenue. He inquired whether the Council could negotiate a lease extension in exchange for an increase in the lease amount in the near term. Mr. Perez agreed with Chair Burt's recollection. The Council could seek different options such as a partner in rebuilding facilities. Chair Burt felt it was important for the public to understand that the Council made a deliberate decision that it believed was the wiser option. Council Member Schmid understood the County did not wish to make long- term investments at the Airport, and the Council chose to speed up the transition so that it could make those investments. Mr. Perez indicated the County fell out of compliance and became ineligible for FAA grants. Airport users were concerned that the runway was not being WORKING MINUTES Page 6 of 8 Finance Committee Regular Meeting Working Minute: 11/19/2013 properly maintained. He understood the County was now in compliance. Staff was working closely with the FAA in the process in trying to be the lead agency. The City needed to take over the Airport officially in order to make plans and commitments. Council Member Schmid referenced the table on page 284 regarding assessed valuation. Currently residents were paying 73 percent of the assessed valuation. In 1979 the amount was 50/50 between commercial and residential. From 2010 to 2013 the percentage rose from 69 percent to 73 percent. There was a great deal of commercial building and development over that period, yet property tax was coming increasingly from residential. He asked if that information implied that investing in commercial development was not a good investment for the City. Mr. Perez reported the increase in residential resulted from Proposition 13. Council Member Schmid believed the numbers indicated that Proposition 13 favored commercial development over residential development. Mr. Perez agreed. Staff was working to perform an in-depth analysis of the data. Council Member Schmid was interested in having that data when the Committee discussed the Budget. Mr. Perez indicated Staff was working with the different departments to use the data in new ways. The sale of real property impacted the documentary transfer tax and reassessment. Having that information would assist Staff with forecasting as well. Chair Burt inquired whether the TOT projection included anticipated new inventory. Mr. Saccio reported the Budget included some revenue for the Casa Olga project for FY 2014; however, the amount projected would change because the opening date moved from January 2014 to April 2014. Chair Burt asked if the projected amount for the document transfer tax in FY 2014, $5.7 million, was realistic or conservative. Mr. Saccio stated the projection was low. Staff did not believe the $6.8 million amount experienced in FY 2013 was realistic for FY 2014. Staff would increase the projection considerably in the mid-year report. The amount probably would exceed $6.8 million based on current receipts. WORKING MINUTES Page 7 of 8 Finance Committee Regular Meeting Working Minute: 11/19/2013 Mr. Perez added that large commercial properties were being bought and sold as well. Mr. Saccio indicated the number of transactions was almost 10 percent more than the number in FY 2013. The value of transactions also increased. Council Member Berman requested an explanation of the decline in Gas Fund revenues and asked if revenues and expenses would even out. Mr. Perez understood the City received better pricing by purchasing at market rates rather than through long-term fixed contracts. Chair Burt asked when the adjustment would end. Mr. Perez would provide that answer at a later time. Mr. Saccio reported the City had few remaining long-term contracts and would move to all market-priced purchases in the next few months. MOTION: Vice Mayor Shepherd moved, seconded by Council Member Schmid to forward the attached Ordinance and associated exhibits to the City Council for its approval: Close the Fiscal Year 2013 Budget; Authorize re-appropriation of Fiscal Year 2013 funds into the Fiscal Year 2014 Budget; Close completed Capital Improvement Projects; Transfer remaining balances to or drawing from the appropriate reserves, including the transfer of the General Fund surplus of $8.9 million from the General Fund to the Infrastructure Reserve in the Capital Projects Fund; and Request that the Finance Committee review and forward to the City Council for its approval the City’s Fiscal Year 2013 Comprehensive Annual Financial Report (CAFR). Vice Mayor Shepherd inquired whether the surpluses from FY 2012 and FY 2013 would be utilized for catch-up infrastructure projects. Mr. Perez reported Staff could provide recommendations for utilization of the surpluses; however, Staff would not make recommendations until the Infrastructure Committee identified priorities. WORKING MINUTES Page 8 of 8 Finance Committee Regular Meeting Working Minute: 11/19/2013 Mr. Saccio believed the analysis for the Infrastructure Committee included a projection of the FY 2013 surplus amount. Vice Mayor Shepherd felt the surplus was an excellent means to fund catch- up and keep-up infrastructure projects. Chair Burt stated the surplus over the prior three years was a major achievement, but a small fraction of the amount needed for the infrastructure backlog. He hoped the Council would discuss specific projects and allocations and include in the Budget an annual increase for infrastructure projects. Mr. Perez indicated Staff would discuss that as part of the LRFF presentation. MOTION PASSED: 4-0 ADJOURNMENT: This meeting was adjourned at 8:41 P.M. City of Palo Alto (ID # 4345) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: California Avenue Construction Contract Title: Approval of a Construction Contract with Redgwick Construction Company in The Amount of $7,143,031 for the California Avenue Streetscape Improvements Project, including Waterline Replacement, and Approval of a Budget Amendment Ordinance From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council approve the following actions related to the award of the California Avenue – Transit Hub Corridor Streetscape project, including waterline replacement: 1. Approve, and authorize the City Manager or his designee to execute, the attached construction contract with Redgwick Construction Company (Attachment A) in an amount not to exceed $6,211,331 for the Based Bid elements of the California Avenue Transit Hub Corridor Streetscape Improvements Project, CIP – PL-11002; 2. Authorize City Manager or his designee to negotiate and execute one or more change orders to the contract with Redgwick Construction Company for related, unforeseen work, which may develop during the project, for a total value of not to exceed $931,700, or 15% of the Based Bid work, bringing the total construction contract award total to $7,143,031; and 3. Adopt a Budget Amendment Ordinance (Attachment B) to increase funding for the California Avenue Transit Hub Corridor Streetscape Improvements Project (PL-11002) in the amount of $5,370,745 and a reduction to the Infrastructure Reserve by $4,740,745 as well as other adjustments to the General Fund and Water Fund. City of Palo Alto Page 2 Background The California Avenue Transit Hub Corridor Improvements project provides for streetscape and utility improvements along California Avenue between El Camino Real and the California Avenue Caltrain Station. Improvements include landscaping, traffic calming treatments, streetscape elements, new street lighting, parking enhancements, improvements to the Park Boulevard Plaza, public art elements, and replacement of water line utilities. The project includes sidewalk replacement in many areas to accommodate wider pedestrian walking and dwelling areas. A number of the improvements were included after the City conducted an extensive outreach with merchants and other community members, including identifying preferences for specific streetscape furniture and placement. A project Fact Sheet is included as Attachment E of this report. Discussion Staff continues to work with the California Avenue merchants to develop and implement an advertising and marketing plan to increase patronage during construction activities. The recommendations included in this report allow for a $30,000 allocation to be used for business preservation, which will be managed by the Planning and Community Environment Department with the assistance of the Economic Development Manager. The City plans to provide a noontime shuttle to bridge California Avenue with the adjacent Stanford Research Park; that shuttle will begin in March (Attachment C). The noontime shuttle will be financed through the existing and future shuttle program contracts. To supplement parking demand, the City will be restriping Birch Street, to provide 32 additional on street, 2-hour parking spaces along Birch Street between California Avenue and Sheridan Avenue during normal business hours (8AM – 5PM). The Birch Street parking improvements are scheduled for completion in February 2014 and are being funded by PL-12000 (Parking & Transportation Improvements) using existing on-call contracts. Additional Patron Outreach and Marketing Plan strategies include changeable message signage along El Camino Real, banners, print and online advertising, sponsoring events during construction, phasing and hours of operation, and extensive signage to direct customers to stores and restaurants and drivers to parking lots. The City anticipates both daytime and nighttime construction activities to expedite the construction schedule and to minimize business impacts from the project. The City plans to City of Palo Alto Page 3 maintain vehicle and pedestrian access to the project area at all times during construction. Furthermore, the construction firm will be required to provide regular updates to the surrounding community and create a point of contact available to address any concerns. Resource Impact On December 5, 2013, a notice inviting formal bids (IFB) for the California Avenue Transit Hub Corridor Streetscape Project was posted online and sent to 12 builder’s exchanges and 5 contractors. The bidding period was 41 calendar days. Bids were received from 4 contractors on January 14, 2014 as listed on the Bid Summary (Attachment D). Summary of Bid Process Proposal Description/Number California Avenue Streetscape Project Proposed Length of Contract: 300 calendar days Number of Bid Packages sent to Contractors Number of Bid Packages sent to Builder’s Exchanges Total Days to Respond to Bids: 5 12 41 Pre-Bid Meeting Date: December 16, 2013 Number of Proposals Received: Bid Price Range*: *Bid Summary Provided in Attachment D 4 $5,715,715 - $7,717,340 Bids ranged from a high of $7,717,340 to a low bid of $5,715,715. The original engineers estimate for the project was $4,900,000. The higher bids are indicative of a changing economic climate where many recent project starts locally and regionally are quickly driving up construction prices. Staff has reviewed all the bids submitted and recommends that the base bid of $6,211,331, submitted by Redgwick Construction Company (Redgwick), be accepted and that Redgwick be declared the lowest responsible bidder. Redgwick had originally submitted a low bid of $5,715,715. After reviewing the bid, the bid amount was increased to $6,211,331 to account for discrepancies in the Redgwick construction bid schedule. Discrepancies on complicated schedules such as this project are normal and the City’s bid documents identify protocols for corrections. The revised bid amount was still $267,598 below the next low bidder making City of Palo Alto Page 4 Redgwick Construction the most responsive and low bidder for the project. In addition to the base bid modification, the City is also requesting a 15% contingency to the project to accommodate any unforeseen work during construction in the amount of $931,700. The total recommended contract award to Redgwick Construction is $7,143,031. Staff confirmed with the Contractor’s State License Board that Redgwick Construction has an active license on file without any claims. Staff checked references supplied by the contractor for previous work performed and the references confirmed that Redgwick Construction has a proven record in successfully completing streetscape projects of this type. RBF Engineers, the design firm for the project, helped provide additional design review work during the final Plans Specifications and Estimate’s (PS&E) and advertising phases of the project. Funding for this project will be accounted for in two distinct appropriations (PL-11002 and WS- 11003) in order to ensure that the Water Fund is only charged for work related to the waterline replacement on California Avenue. Current Project Funding: A summary of the costs and funding currently available for this project is outlined below: Project Construction Breakdown Amount Redgwick Construction Base Bid $6,211,331 2010 Base Project $1,375,200 Sidewalk Widening (ECR to Ash) $750,000 Sidewalk Widening (Birch to Park) $400,000 Street Lighting $1,200,000 Water Line Improvements $1,380,000 Increase above Engineer’s Estimate $1,106,131 15% Construction Contingency $931,700 Total Construction Cost $7,143,031 City of Palo Alto Page 5 In addition to the project construction cost, the City anticipates additional costs related to Patron Outreach and Marketing for the California Avenue Business District, as well as on-going project inspection for a total amount of $130,000 for both items. Construction Support Elements Amount Marketing/Outreach $30,000 City Staff Inspection $100,000 Total Construction Support Elements $130,000 Total Project Construction and Supporting Elements Cost: $7,273,031 Funding for the project comes from both outside grant funding and internal Capital Improvement Program (CIP) and General Fund sources: Summary of Project Funding Sources Amount VTA CDT Grant (Capital Improvement Fund) $1,175,200 VTA Vehicle Registration Fee (Capital Improvement Fund) $749,129 CIP PL-11002, California Avenue Streetscape Project Balance (Capital Impr. Fd.) $530,014 CIP WS-11003, Water Line Improvements (Water Fund) $1,372,272 CIP PE-86070 – Street Maintenance (Capital Improvement Fund) $550,000 CIP AC-86017 – Art in Public Spaces (Capital Improvement Fund) $50,000 CIP PG-06003- Benches, Signage, Fencing, Walkways, & Perimeter Landscaping (Capital Improvement Fund) $22,000 Public Art Maintenance (General Fund) $8,000 Total Project Fund Sources: $4,456,615 Additional Infrastructure Reserve Request (Capital Improvement Fund): $2,816,416 Project Construction and Supporting Elements: $7,273,031 Budget Amendment Ordinance A Budget Amendment Ordinance (BAO) is needed to reduce existing Capital Improvement projects such as the Street Maintenance CIP, transfer funds from the various budget sources to City of Palo Alto Page 6 this project, and appropriate funds for the Water line improvements at California Avenue. The BAO is available in Attachment B and provides additional details regarding allocations of funds in the General Fund, the Capital Improvement Fund, and the Water Fund. Recommended Budgetary Transactions in the Capital Improvement Fund: The table below summarizes recommended budgetary transactions for the California Avenue Project in the Capital Improvement Fund which includes decreasing existing appropriations and decreasing the Infrastructure Reserve by $4,740,745. However, the overall additional funding needed from the IR is only $2,816,416. The difference in IR funding in the amount of $1,924,329 is due to the VTA CDT Grant reimbursement ($1,175,200) and VTA Vehicle Registration Fee revenues ($749,129). Once construction is complete, the City can request reimbursement from VTA for the approved grant and the revenue will be deposited to the Capital Improvement Fund Ending Fund Balance. However, in order to fund the contract recommended for approval in this report, it is recommended that the IR front the grant reimbursement amount. In Fiscal Year 2013 and Fiscal Year 2014, the City received $383,378 and $365,751, respectively, in VTA Vehicle Registration Fee revenue, which is eligible for the California Avenue project. Both amounts totaling $749,129 were deposited in the Capital Improvement Fund and are now recommended to be appropriated to the California Avenue project. Additionally, it is recommended that $7,728 is transferred from the General Fund to the Capital Improvement Fund to reimburse the Capital Improvement Fund for design support for this project. Source Use Reduction to Street Maintenance Project (PE-86070) $550,000 Reduction to Art in Public Spaces Project (AC-86017) $50,000 Reduction to Benches, Signage, Fencing, Walkways, and Perimeter Landscaping (PG-06003) $22,000 Reduction to Infrastructure Reserve $4,740,745 Public Art Maintenance (Transfer from the General Fund) $8,000 Increase to California Avenue Project (PL-11002) $5,370,745 Total $5,370,745 $5,370,745 Water Fund: Reduction to Rate Stabilization Reserve to fund Water distribution system improvements ($1,380,000) City of Palo Alto Page 7 General Fund: Reduction to Community Services Department for Public Art Maintenance ($8,000) Timeline Construction for this project is anticipated to begin by March 2014 and be completed by the end of the calendar year, dependent on weather conditions. Policy Implications The City’s Comprehensive Plan recommends that the City enhance the California Avenue streetscape by upgrading the visual quality of the street to attract additional business and visitors to the area. Consistent with those Comprehensive Plan goals, the proposed streetscape and place-making improvements along California Avenue should ensure continued vitality of the California Avenue Business District. The Comprehensive Plan also encourages a mix of residential and non-residential uses at a scale of development that is comfortable for pedestrian use. The Plan encourages improving the appearance of the street while preserving its “hometown” character. Furthermore, Program L-18 specifically calls for street improvements that could make a substantial contribution to the character of Commercial Centers, including narrowing travel lanes. Environmental Review A preliminary Initial Study and the Negative Declaration - CEQA (California Environmental Quality Act) checklist for the project were completed, circulated for public review in December 2010 and approved by Council on February 14, 2011. The Negative Declaration concluded that the project will not result in any significant environmental impacts and may be reviewed online at www.cityofpaloalto.org/calave. Some local businesses brought a legal challenge to the sufficiency of the environmental review and the Court of Appeal recently upheld the City’s action. No further environmental review is required for this scope of work. Attachments: Attachment A: Draft Contract C14152629 with Redgewick Construction Company (DOC) Attachment B: Budget Amendment Ordinance - California Ave Project (DOC) City of Palo Alto Page 8 Attachment C: California Avenue Proposed Noontime Shuttle (PDF) Attachment D: Contractor Bid Summary (PDF) Attachment E: California Avenue Fact Sheet, 2014 (PDF) Invitation for Bid (IFB) Package 1 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 Attachment A CONSTRUCTION CONTRACT Contract No. C14152629 City of Palo Alto and REDGWICK CONSTRUCTION COMPANY PROJECT CALIFORNIA AVENUE TRANSIT HUB CORRIDOR STREETSCAPE IMPROVEMENTS PROJECT Invitation for Bid (IFB) Package 2 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 CONSTRUCTION CONTRACT TABLE OF CONTENTS SECTION 1. INCORPORATION OF RECITALS AND DEFINITIONS……………………………….. .................... 1 1.1 Recitals .............................................................................................................. 1 1.2 Definitions .......................................................................................................... 1 SECTION 2. THE PROJECT……………………………………………………………………………… .............................. 1 SECTION 3. THE CONTRACT DOCUMENTS…………………………………………………………. ......................... 1 3.1 List of Documents …………………………………………………………………………………………. ..... 1 3.2 Order of Precedence …………………………………………………………………………… ............... 2 SECTION 4. THE WORK ………………………………………………………………………………….............................. 2 SECTION 5. PROJECT TEAM ………………………………………………………………………….. ............................. 3 SECTION 6. TIME OF COMPLETION ………………………………………………………………….. .......................... 3 6.1 Time Is of Essence ....................................................................................... ……… 3 6.2 Commencement of Work .................................................................................... 3 6.3 Contract Time ..................................................................................................... 3 6.4 Liquidated Damages ........................................................................................... 3 6.4.1 Entitlement……………………………………………………………………………………………. 3 6.4.2 Daily Amount…………………………………………………………………………………………. 3 6.4.3 Exclusive Remedy………………………………………………………………………………….. 3 6.4.4 Other Remedies…………………………………………………………………………………... 4 6.5 Adjustments to Contract Time ......................................................................... … 5 SECTION 7. COMPENSATION TO CONTRACTOR………………………………………………………………………... 5 7.1 Contract Sum ……………………………………………………………………………………………………… 5 7.2 Full Compensation …………………………………………………………………………………………….. 9 7.3 Compensation for Extra or Deleted Work …………………………………………………………….9 7.3.1 Self Performed Work………………………………………………………………………………… 9 7.3.2 Subcontractors…………………………………………………………………………………………. 9 SECTION 8. STANDARD OF CARE .................................................................................................. 9 SECTION 9. INDEMNIFICATION .................................................................................................... 10 9.1 Hold Harmless…………………………………………………………………………………………………….. 10 9.2 Survival………………………………………………………………………………………………………………. 10 SECTION 10. NONDISCRIMINATION ............................................................................................. 10 SECTION 11. INSURANCE AND BONDS ......................................................................................... 10 Invitation for Bid (IFB) Package 3 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 SECTION 12. PROHIBITION AGAINST TRANSFERS ......................................................................... 11 SECTION 13. NOTICES .................................................................................................................. 11 13.1 Method of Notice ………………………………………………………………………………………………..11 13.2 Notice Recipients ................................................................................................ 11 13.3 Change of Address .............................................................................................. 12 14.1 Resolution of Contract Disputes .......................................................................... 12 14.2 Resolution of Other Disputes .............................................................................. 12 14.2.1 Non-Contract Disputes ……………………………………………………………………………….12 14.2.2 Litigation, City Election ……………………………………………………...........................12 14.3 Submission of Contract Dispute …………………………………………………………………………..13 14.3.1 By Contractor …………………………………………………………………………………………. 13 14.3.2 By City ……………………………………………………………………………………………………. 13 14.4 Contract Dispute Resolution Process .............................................................. …… 13 14.4.1 Direct Negotiation………………………………………………………………………… ………….13 14.4.2 Deferral of Contract Disputes ………………………………………………………………… 14 14.4.3 Mediation ………………………………………………………………………………………………….14 14.4.4 Binding Arbitration ……………………………………………………………………………………14 14.5 Non-Waiver …………………………………………………………………………………………………………15 SECTION 15. DEFAULT ................................................................................................................. 16 15.1 Notice of Default ................................................................................................ 16 15.2 Opportunity to Cure Default ............................................................................... 16 SECTION 16. CITY'S RIGHTS AND REMEDIES ................................................................................. 16 16.1 Remedies Upon Default ...................................................................................... 16 16.1.1 Delete Certain Servic………………………………………………………...........................16 16.1.2 Perform and Withhold ……………………………………………………………………………. 16 16.1.3 Suspend The Construction Contract ………………………………………………………….16 16.1.4 Terminate the Construction Contract for Default ……………………………………..16 16.1.5 Invoke the Performance Bond ………………………………………………………………….16 16.1.6 Additional Provisions ……………………………………………………………………………….17 16.2 Delays by Sureties .............................................................................................. 17 16.3 Damages to City ................................................................................................. 17 16.3.1 For Contractor's Default …………………………………………………………………………..17 16.3.2 Compensation for Losses ………………………………………………………………………….17 16.5 Suspension by City for Convenience .................................................................... 18 16.6 Termination Without Cause ................................................................................ 18 Invitation for Bid (IFB) Package 4 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 16.6.1 Compensation ………………………………………………………………………………………….18 16.6.2 Subcontractors …………………………………………………………………………………………18 16.7 Contractor’s Duties Upon Termination ................................................................ 19 SECTION 17. CONTRACTOR'S RIGHTS AND REMEDIES .................................................................. 19 17.1 Contractor’s Remedies ........................................................................................ 19 17.1.1 For Work Stoppage ………………………………………………………………………………….. 19 17.1.2 For City's Non-Payment …………………………………………………………………………… 19 17.2 Damages to Contractor ....................................................................................... 19 SECTION 18. ACCOUNTING RECORDS .......................................................................................... 19 18.1 Financial Management and City Access ......................................................... ……. 19 18.2 Compliance with City Requests ....................................................................... …. 20 SECTION 19. INDEPENDENT PARTIES ........................................................................................... 20 SECTION 20. NUISANCE ............................................................................................................... 20 SECTION 21. PERMITS AND LICENSES........................................................................................... 20 SECTION 22. WAIVER .................................................................................................................. 20 SECTION 23. GOVERNING LAW .................................................................................................... 20 SECTION 24. COMPLETE AGREEMENT .......................................................................................... 21 SECTION 25. SURVIVAL OF CONTRACT ......................................................................................... 21 SECTION 26. PREVAILING WAGES ................................................................................................ 21 SECTION 27. NON APPROPRIATION ............................................................................................. 21 SECTION 28. GOVERNMENTAL POWERS ...................................................................................... 21 SECTION 29. ATTORNEY FEES ...................................................................................................... 21 SECTION 30. COUNTERPARTS ...................................................................................................... 22 SECTION 31. SEVERABILITY .......................................................................................................... 22 Invitation for Bid (IFB) Package 1 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 CONSTRUCTION CONTRACT THIS CONSTRUCTION CONTRACT entered into on February ____, 2014 (“Execution Date”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("City"), and REDGWICK CONSTRUCTION COMPANY ("Contractor"), is made with reference to the following: R E C I T A L S: A. City is a municipal corporation duly organized and validly existing under the laws of the State of California with the power to carry on its business as it is now being conducted under the statutes of the State of California and the Charter of City. B. Contractor is a Corporation duly organized and in good standing in the State of California, Contractor’s License Number 140057. Contractor represents that it is duly licensed by the State of California and has the background, knowledge, experience and expertise to perform the obligations set forth in this Construction Contract. C. On 12/05/2013, City issued an Invitation for Bids (IFB) to contractors for the Cal Ave Transit Hub Corridor Streetscape Improvement Project (“Project”). In response to the IFB, Contractor submitted a bid. D. City and Contractor desire to enter into this Construction Contract for the Project, and other services as identified in the Bid Documents for the Project upon the following terms and conditions. NOW THEREFORE, in consideration of the mutual promises and undertakings hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between the undersigned parties as follows: SECTION 1 INCORPORATION OF RECITALS AND DEFINITIONS. 1.1 Recitals. All of the recitals are incorporated herein by reference. 1.2 Definitions. Capitalized terms shall have the meanings set forth in this Construction Contract and/or in the General Conditions. If there is a conflict between the definitions in this Construction Contract and in the General Conditions, the definitions in this Construction Contract shall prevail. SECTION 2 THE PROJECT. The Project is the construction of the Cal Ave Transit hub Corridor Streetscape Improvement Project ("Project"). SECTION 3 THE CONTRACT DOCUMENTS. 3.1 List of Documents. The Contract Documents (sometimes collectively referred to as “Agreement” or “Bid Documents”) consist of the following documents which are on file with the Purchasing Division and are hereby incorporated by reference. 1) Change Orders 2) Field Change Orders Invitation for Bid (IFB) Package 2 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 3) Contract 4) Project Plans and Drawings 5) Technical Specifications 6) Special Provisions 7) Notice Inviting Bids 8) Instructions to Bidders 9) General Conditions 10) Bidding Addenda 11) Invitation for Bids 12) Contractor's Bid/Non-Collusion Affidavit 13) Reports listed in the Bidding Documents 14) Public Works Department’s Standard Drawings and Specifications dated 2007 and updated from time to time 15) Utilities Department’s Water, Gas, Wastewater, Electric Utilities Standards dated 2005 and updated from time to time 16) City of Palo Alto Traffic Control Requirements 17) City of Palo Alto Truck Route Map and Regulations 18) Notice Inviting Pre-Qualification Statements, Pre-Qualification Statement, and Pre- Qualification Checklist (if applicable) 19) Performance and Payment Bonds 20) Insurance Forms 3.2 Order of Precedence. For the purposes of construing, interpreting and resolving inconsistencies between and among the provisions of this Contract, the Contract Documents shall have the order of precedence as set forth in the preceding section. If a claimed inconsistency cannot be resolved through the order of precedence, the City shall have the sole power to decide which document or provision shall govern as may be in the best interests of the City. SECTION 4 THE WORK. The Work includes all labor, materials, equipment, services, permits, fees, licenses and taxes, and all other things necessary for Contractor to perform its obligations and complete the Project, including, without Invitation for Bid (IFB) Package 3 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 limitation, any Changes approved by City, in accordance with the Contract Documents and all Applicable Code Requirements. SECTION 5 PROJECT TEAM. In addition to Contractor, City has retained, or may retain, consultants and contractors to provide professional and technical consultation for the design and construction of the Project. The Project requires that Contractor operate efficiently, effectively and cooperatively with City as well as all other members of the Project Team and other contractors retained by City to construct other portions of the Project. SECTION 6 TIME OF COMPLETION. 6.1 Time Is of Essence. Time is of the essence with respect to all time limits set forth in the Contract Documents. 6.2 Commencement of Work. Contractor shall commence the Work on the date specified in City’s Notice to Proceed. 6.3 Contract Time. Work hereunder shall begin on the date specified on the City’s Notice to Proceed and shall be completed within three hundred calendar days (300) after the commencement date specified in City’s Notice to Proceed. 6.4 Liquidated Damages. 6.4.1 Entitlement. City and Contractor acknowledge and agree that if Contractor fails to fully and satisfactorily complete the Work within the Contract Time, City will suffer, as a result of Contractor’s failure, substantial damages which are both extremely difficult and impracticable to ascertain. Such damages may include, but are not limited to: (i) Loss of public confidence in City and its contractors and consultants. (ii) Loss of public use of public facilities. (iii) Extended disruption to public. 6.4.2 Daily Amount. City and Contractor have reasonably endeavored, but failed, to ascertain the actual damage that City will incur if Contractor fails to achieve Substantial Completion of the entire Work within the Contract Time. Therefore, the parties agree that in addition to all other damages to which City may be entitled other than delay damages, in the event Contractor shall fail to achieve Substantial Completion of the entire Work within the Contract Time, Contractor shall pay City as liquidated damages the amount of $2,500 per day for each Day occurring after the expiration of the Contract Time until Contractor achieves Substantial Completion of the entire Work. The liquidated damages amount is not a penalty but considered to be a reasonable estimate of the amount of damages City will suffer by delay in completion of the Work. 6.4.3 Exclusive Remedy. City and Contractor acknowledge and agree that this liquidated damages provision shall be City’s only remedy for delay damages caused by Contractor’s failure to achieve Substantial Completion of the entire Work within the Contract Time. Invitation for Bid (IFB) Package 4 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 6.4.4 Other Remedies. City is entitled to any and all available legal and equitable remedies City may have where City’s Losses are caused by any reason other than Contractor’s failure to achieve Substantial Completion of the entire Work within the Contract Time. Invitation for Bid (IFB) Package 5 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 6.5 Adjustments to Contract Time. The Contract Time may only be adjusted for time extensions approved by City and agreed to by Change Order executed by City and Contractor in accordance with the requirements of the Contract Documents. SECTION 7 COMPENSATION TO CONTRACTOR. 7.1 Contract Sum. Contractor shall be compensated for satisfactory completion of the Work in compliance with the Contract Documents the Contract Sum of Six Million Two Hundred Eleven Thousand Three Hundred Thrity-one Dollars ($6,211,331.00). / / / / Invitation for Bid (IFB) Package 9 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 7.2 Full Compensation. The Contract Sum shall be full compensation to Contractor for all Work provided by Contractor and, except as otherwise expressly permitted by the terms of the Contract Documents, shall cover all Losses arising out of the nature of the Work or from the acts of the elements or any unforeseen difficulties or obstructions which may arise or be encountered in performance of the Work until its Acceptance by City, all risks connected with the Work, and any and all expenses incurred due to suspension or discontinuance of the Work. The Contract Sum may only be adjusted for Change Orders issued, executed and satisfactorily performed in accordance with the requirements of the Contract Documents. 7.3 Compensation for Extra or Deleted Work. The Contract Sum shall be adjusted (either by addition or credit) for Changes in the Work involving Extra Work or Deleted Work based on one or more of the following methods to be selected by City: 1. Unit prices stated in the Contract Documents or agreed upon by City and Contractor, which unit prices shall be deemed to include Contractor Markup and Subcontractor/Sub-subcontractor Markups permitted by this Section. 2. A lump sum agreed upon by City and Contractor, based on the estimated Allowable Costs and Contractor Markup and Subcontractor Markup computed in accordance with this Section. 3. Contractor’s Allowable Costs, plus Contractor Markup and Subcontractor Markups applicable to such Extra Work computed in accordance with this Section. Contractor Markup and Subcontractor/Sub-subcontractor Markups set forth herein are the full amount of compensation to be added for Extra Work or to be subtracted for Deleted Work that is attributable to overhead (direct and indirect) and profit of Contractor and of its Subcontractors and Sub-subcontractors, of every Tier. When using this payment methodology, Contractor Markup and Subcontractor/Sub-subcontractor Markups, which shall not be compounded, shall be computed as follows: 7.3.1 Markup Self-Performed Work. 10% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be performed by Contractor with its own forces. 7.3.2 Markup for Work Performed by Subcontractors. 15% of the Allowable Costs for that portion of the Extra Work or Deleted Work to be performed by a first Tier Subcontractor. SECTION 8 STANDARD OF CARE. Contractor agrees that the Work shall be performed by qualified, experienced and well-supervised personnel. All services performed in connection with this Construction Contract shall be performed in a manner consistent with the standard of care under California law applicable to those who specialize in providing such services for projects of the type, scope and complexity of the Project. Invitation for Bid (IFB) Package 10 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 SECTION 9 INDEMNIFICATION. 9.1 Hold Harmless. To the fullest extent allowed by law, Contractor will defend, indemnify, and hold harmless City, its City Council, boards and commissions, officers, agents, employees, representatives and volunteers (hereinafter collectively referred to as "Indemnitees"), through legal counsel acceptable to City, from and against any and all Losses arising directly or indirectly from, or in any manner relating to any of, the following: (i) Performance or nonperformance of the Work by Contractor or its Subcontractors or Sub- subcontractors, of any tier; (ii) Performance or nonperformance by Contractor or its Subcontractors or Sub- subcontractors of any tier, of any of the obligations under the Contract Documents; (iii) The construction activities of Contractor or its Subcontractors or Sub-subcontractors, of any tier, either on the Site or on other properties; (iv) The payment or nonpayment by Contractor to any of its employees, Subcontractors or Sub-subcontractors of any tier, for Work performed on or off the Site for the Project; and (v) Any personal injury, property damage or economic loss to third persons associated with the performance or nonperformance by Contractor or its Subcontractors or Sub- subcontractors of any tier, of the Work. However, nothing herein shall obligate Contractor to indemnify any Indemnitee for Losses resulting from the sole or active negligence or willful misconduct of the Indemnitee. Contractor shall pay City for any costs City incurs to enforce this provision. Nothing in the Contract Documents shall be construed to give rise to any implied right of indemnity in favor of Contractor against City or any other Indemnitee. 9.2 Survival. The provisions of Section 9 shall survive the termination of this Construction Contract. SECTION 10 NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, Contractor certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. Contractor acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and will comply with all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 11 INSURANCE AND BONDS. On or before the Execution Date, Contractor shall provide City with evidence that it has obtained insurance and Performance and Payment Bonds satisfying all requirements in Article 11 of the General Conditions. Failure to do so shall be deemed a material breach of this Construction Contract. Invitation for Bid (IFB) Package 11 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 SECTION 12 PROHIBITION AGAINST TRANSFERS. City is entering into this Construction Contract based upon the stated experience and qualifications of the Contractor and its subcontractors set forth in Contractor’s Bid. Accordingly, Contractor shall not assign, hypothecate or transfer this Construction Contract or any interest therein directly or indirectly, by operation of law or otherwise without the prior written consent of City. Any assignment, hypothecation or transfer without said consent shall be null and void. The sale, assignment, transfer or other disposition of any of the issued and outstanding capital stock of Contractor or of any general partner or joint venturer or syndicate member of Contractor, if the Contractor is a partnership or joint venture or syndicate or co-tenancy shall result in changing the control of Contractor, shall be construed as an assignment of this Construction Contract. Control means more than fifty percent (50%) of the voting power of the corporation or other entity. SECTION 13 NOTICES. 13.1 Method of Notice. All notices, demands, requests or approvals to be given under this Construction Contract shall be given in writing and shall be deemed served on the earlier of the following: (i) On the date delivered if delivered personally; (ii) On the third business day after the deposit thereof in the United States mail, postage prepaid, and addressed as hereinafter provided; (iii) On the date sent if sent by facsimile transmission; (iv) On the date sent if delivered by electronic mail; or (v) On the date it is accepted or rejected if sent by certified mail. 13.2 Notice Recipients. All notices, demands or requests (including, without limitation, Claims) from Contractor to City shall include the Project name and the number of this Construction Contract and shall be addressed to City at: To City: City of Palo Alto City Clerk 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 Copy to: City of Palo Alto Public Works Administration 250 Hamilton Avenue Palo Alto, CA 94301 Attn: Shahla Yazdy In addition, copies of all Claims by Contractor under this Construction Contract shall be provided to the following: Palo Alto City Attorney’s Office 250 Hamilton Avenue P.O. Box 10250 Palo Alto, California 94303 Invitation for Bid (IFB) Package 12 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 All Claims shall be delivered personally or sent by certified mail. All notices, demands, requests or approvals from City to Contractor shall be addressed to: Redgwick Construction Company 21 Hegenburger court Oakland, CA 94621 13.3 Change of Address. In the event of any change of address, the moving party shall notify the other party of the change of address in writing. Each party may, by written notice only, add, delete or replace any individuals to whom and addresses to which notice shall be provided. SECTION 14 DISPUTE RESOLUTION. 14.1 Resolution of Contract Disputes. Contract Disputes shall be resolved by the parties in accordance with the provisions of this Section 14, in lieu of any and all rights under the law that either party have its rights adjudged by a trial court or jury. All Contract Disputes shall be subject to the Contract Dispute Resolution Process set forth in this Section 14, which shall be the exclusive recourse of Contractor and City for such Contract Disputes. 14.2 Resolution of Other Disputes. 14.2.1 Non-Contract Disputes. Contract Disputes shall not include any of the following: (i) Penalties or forfeitures prescribed by statute or regulation imposed by a governmental agency; (ii) Third party tort claims for personal injury, property damage or death relating to any Work performed by Contractor or its Subcontractors or Sub-subcontractors of any tier; (iii) False claims liability under California Government Code Section 12650, et. seq.; (iv) Defects in the Work first discovered by City after Final Payment by City to Contractor; (v) Stop notices; or (vi) The right of City to specific performance or injunctive relief to compel performance of any provision of the Contract Documents. 14.2.2 Litigation, City Election. Matters that do not constitute Contract Disputes shall be resolved by way of an action filed in the Superior Court of the State of California, County of Santa Clara, and shall not be subject to the Contract Dispute Resolution Process. However, the City reserves the right, in its sole and absolute discretion, to treat such disputes as Contract Disputes. Upon written notice by City of its election as provided in the preceding sentence, such dispute shall be submitted by the parties and finally decided pursuant to the Contract Dispute Resolution Process in the manner as required for Contract Disputes, including, without limitation, City’s right under Paragraph 14.4.2 to defer resolution and final determination until after Final Completion of the Work. Invitation for Bid (IFB) Package 13 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 14.3 Submission of Contract Dispute. 14.3.1 By Contractor. Contractors may commence the Contract Dispute Resolution Process upon City's written response denying all or part of a Claim pursuant to Paragraph 4.2.9 or 4.2.10 of the General Conditions. Contractor shall submit a written Statement of Contract Dispute (as set forth below) to City within seven (7) Days after City rejects all or a portion of Contractor's Claim. Failure by Contractor to submit its Statement of Contract Dispute in a timely manner shall result in City’s decision by City on the Claim becoming final and binding. Contractor’s Statement of Contract Dispute shall be signed under penalty of perjury and shall state with specificity the events or circumstances giving rise to the Contract Dispute, the dates of their occurrence and the asserted effect on the Contract Sum and the Contract Time. The Statement of Contract Dispute shall include adequate supporting data to substantiate the disputed Claim. Adequate supporting data for a Contract Dispute relating to an adjustment of the Contract Time shall include both of the following: (i) All of the scheduling data required to be submitted by Contractor under the Contract Documents to obtain extensions of time and adjustments to the Contract Time and (ii) A detailed, event-by-event description of the impact of each event on completion of Work. Adequate data to support a Statement of Contract Dispute involving an adjustment of the Contract Sum must include both of the following: (a) A detailed cost breakdown and (b) Supporting cost data in such form and including such information and other supporting data as required under the Contract Documents for submission of Change Order Requests and Claims. 14.3.2 By City. City's right to commence the Contract Dispute Resolution Process shall arise at any time following City's actual discovery of the circumstances giving rise to the Contract Dispute. City asserts Contract Disputes in response to a Contract Dispute asserted by Contractor. A Statement of Contract Dispute submitted by City shall state the events or circumstances giving rise to the Contract Dispute, the dates of their occurrence and the damages or other relief claimed by City as a result of such events. 14.4 Contract Dispute Resolution Process. The parties shall utilize each of the following steps in the Contract Dispute Resolution Process in the sequence they appear below. Each party shall participate fully and in good faith in each step in the Contract Dispute Resolution Process, and good faith effort shall be a condition precedent to the right of each party to proceed to the next step in the process. 14.4.1 Direct Negotiations. Designated representatives of City and Contractor shall meet as soon as possible (but not later than ten (10) Days after receipt of the Statement of Contract Dispute) in a good faith effort to negotiate a resolution to the Contract Dispute. Each party shall be represented in such negotiations by an authorized representative with full knowledge of the details of the Claims or defenses being asserted by such party in the negotiations, and with full authority to resolve such Contract Dispute then and there, subject only to City’s obligation to obtain administrative and/or City Council approval of any agreed settlement or resolution. If the Contract Dispute involves the assertion of a right or claim by a Subcontractor or Sub-subcontractor, of any tier, against Contractor that is in turn being asserted by Contractor against City (“Pass-Through Claim”), then the Subcontractor or Sub-Subcontractor shall also have a representative attend the negotiations, with the same authority and knowledge as described above. Upon completion of the meeting, if the Contract Dispute is not resolved, the parties may either continue the negotiations or Invitation for Bid (IFB) Package 14 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 any party may declare negotiations ended. All discussions that occur during such negotiations and all documents prepared solely for the purpose of such negotiations shall be confidential and privileged pursuant to California Evidence Code Sections 1119 and 1152. 14.4.2 Deferral of Contract Disputes. Following the completion of the negotiations required by Paragraph 14.4.1, all unresolved Contract Disputes shall be deferred pending Final Completion of the Project, subject to City’s right, in its sole and absolute discretion, to require that the Contract Dispute Resolution Process proceed prior to Final Completion. All Contract Disputes that have been deferred until Final Completion shall be consolidated within a reasonable time after Final Completion and thereafter pursued to resolution pursuant to this Contract Dispute Resolution Process. The parties can continue informal negotiations of Contract Disputes; provided, however, that such informal negotiations shall not be alter the provisions of the Agreement deferring final determination and resolution of unresolved Contract Disputes until after Final Completion. 14.4.3 Mediation. If the Contract Dispute remains unresolved after negotiations pursuant to Paragraph 14.4.1, the parties shall submit the Contract Dispute to non-binding mediation before a mutually acceptable third party mediator. .1 Qualifications of Mediator. The parties shall endeavor to select a mediator who is a retired judge or an attorney with at least five (5) years of experience in public works construction contract law and in mediating public works construction disputes. In addition, the mediator shall have at least twenty (20) hours of formal training in mediation skills. .2 Submission to Mediation and Selection of Mediator. The party initiating mediation of a Contract Dispute shall provide written notice to the other party of its decision to mediate. In the event the parties are unable to agree upon a mediator within fifteen (15) Days after the receipt of such written notice, then the parties shall submit the matter to the American Arbitration Association (AAA) at its San Francisco Regional Office for selection of a mediator in accordance with the AAA Construction Industry Mediation Rules. .3 Mediation Process. The location of the mediation shall be at the offices of City. The costs of mediation shall be shared equally by both parties. The mediator shall provide an independent assessment on the merits of the Contract Dispute and recommendations for resolution. All discussions that occur during the mediation and all documents prepared solely for the purpose of the mediation shall be confidential and privileged pursuant to California Evidence Code Sections 1119 and 1152. 14.4.4 Binding Arbitration. If the Contract Dispute is not resolved by mediation, then any party may submit the Contract Dispute for final and binding arbitration pursuant to the provisions of California Public Contract Code Sections 10240, et seq. The award of the arbitrator therein shall be final and may be entered as a judgment by any court of competent jurisdiction. Such arbitration shall be conducted in accordance with the following: .1 Arbitration Initiation. The arbitration shall be initiated by filing a complaint in arbitration in accordance with the regulations promulgated pursuant to California Public Contract Code Section 10240.5. Invitation for Bid (IFB) Package 15 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 .2 Qualifications of the Arbitrator. The arbitrator shall be approved by all parties. The arbitrator shall be a retired judge or an attorney with at least five (5) years of experience in public works construction contract law and in arbitrating public works construction disputes. In addition, the arbitrator shall have at least twenty (20) hours of formal training in arbitration skills. In the event the parties cannot agree upon an arbitrator, the provisions of California Public Contract Code Section 10240.3 shall be followed in selecting an arbitrator possessing the qualifications required herein. .3 Hearing Days and Location. Arbitration hearings shall be held at the offices of City and shall, except for good cause shown to and determined by the arbitrator, be conducted on consecutive business days, without interruption or continuance. .4 Hearing Delays. Arbitration hearings shall not be delayed except upon good cause shown. .5 Recording Hearings. All hearings to receive evidence shall be recorded by a certified stenographic reporter, with the costs thereof borne equally by City and Contractor and allocated by the arbitrator in the final award. .6 Limitation of Depositions. The parties may conduct discovery in accordance with the provisions of section 10240.11 of the Public Contract Code; provided, however, that depositions shall be limited to both of the following: (i) Ten (10) percipient witnesses for each party and 5 expert witnesses per party. Upon a showing of good cause, the arbitrator may increase the number of permitted depositions. An individual who is both percipient and expert shall, for purposes of applying the foregoing numerical limitation only, be deemed an expert. Expert reports shall be exchanged prior to receipt of evidence, in accordance with the direction of the arbitrator, and expert reports (including initial and rebuttal reports) not so submitted shall not be admissible as evidence. .7 Authority of the Arbitrator. The arbitrator shall have the authority to hear dispositive motions and issue interim orders and interim or executory awards. .8 Waiver of Jury Trial. Contractor and City each voluntarily waives its right to a jury trial with respect to any Contract Dispute that is subject to binding arbitration in accordance with the provisions of this Paragraph 14.4.4. Contractor shall include this provision in its contracts with its Subcontractors who provide any portion of the Work. 14.5 Non-Waiver. Participation in the Contract Dispute Resolution Process shall not waive, release or compromise any defense of City, including, without limitation, any defense based on the assertion that the rights or Claims of Contractor that are the basis of a Contract Dispute were previously waived by Contractor due to Contractor’s failure to comply with the Contract Documents, including, without limitation, Contractor’s failure to comply with any time periods for providing notice of requests for adjustments of the Contract Sum or Contract Time or for submission of Claims or supporting documentation of Claims. Invitation for Bid (IFB) Package 16 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 SECTION 15 DEFAULT. 15.1 Notice of Default. In the event that City determines, in its sole discretion, that Contractor has failed or refused to perform any of the obligations set forth in the Contract Documents, or is in breach of any provision of the Contract Documents, City may give written notice of default to Contractor in the manner specified for the giving of notices in the Construction Contract. 15.2 Opportunity to Cure Default. Except for emergencies, Contractor shall cure any default in performance of its obligations under the Contract Documents within two (2) Days (or such shorter time as City may reasonably require) after receipt of written notice. However, if the breach cannot be reasonably cured within such time, Contractor will commence to cure the breach within two (2) Days (or such shorter time as City may reasonably require) and will diligently and continuously prosecute such cure to completion within a reasonable time, which shall in no event be later than ten (10) Days after receipt of such written notice. SECTION 16 CITY'S RIGHTS AND REMEDIES. 16.1 Remedies Upon Default. If Contractor fails to cure any default of this Construction Contract within the time period set forth above in Section 15, then City may pursue any remedies available under law or equity, including, without limitation, the following: 16.1.1 Delete Certain Services. City may, without terminating the Construction Contract, delete certain portions of the Work, reserving to itself all rights to Losses related thereto. 16.1.2 Perform and Withhold. City may, without terminating the Construction Contract, engage others to perform the Work or portion of the Work that has not been adequately performed by Contractor and withhold the cost thereof to City from future payments to Contractor, reserving to itself all rights to Losses related thereto. 16.1.3 Suspend The Construction Contract. City may, without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, suspend all or any portion of this Construction Contract for as long a period of time as City determines, in its sole discretion, appropriate, in which event City shall have no obligation to adjust the Contract Sum or Contract Time, and shall have no liability to Contractor for damages if City directs Contractor to resume Work. 16.1.4 Terminate the Construction Contract for Default. City shall have the right to terminate this Construction Contract, in whole or in part, upon the failure of Contractor to promptly cure any default as required by Section 15. City’s election to terminate the Construction Contract for default shall be communicated by giving Contractor a written notice of termination in the manner specified for the giving of notices in the Construction Contract. Any notice of termination given to Contractor by City shall be effective immediately, unless otherwise provided therein. 16.1.5 Invoke the Performance Bond. City may, with or without terminating the Construction Contract and reserving to itself all rights to Losses related thereto, exercise its rights under the Performance Bond. Invitation for Bid (IFB) Package 17 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 16.1.6 Additional Provisions. All of City’s rights and remedies under this Construction Contract are cumulative, and shall be in addition to those rights and remedies available in law or in equity. Designation in the Contract Documents of certain breaches as material shall not waive the City’s authority to designate other breaches as material nor limit City’s right to terminate the Construction Contract, or prevent the City from terminating the Agreement for breaches that are not material. City’s determination of whether there has been noncompliance with the Construction Contract so as to warrant exercise by City of its rights and remedies for default under the Construction Contract, shall be binding on all parties. No termination or action taken by City after such termination shall prejudice any other rights or remedies of City provided by law or equity or by the Contract Documents upon such termination; and City may proceed against Contractor to recover all liquidated damages and Losses suffered by City. 16.2 Delays by Sureties. Without limiting to any of City’s other rights or remedies, City has the right to suspend the performance of the Work by Contractor’s sureties in the event of any of the following: (i) The sureties’ failure to begin Work within a reasonable time in such manner as to insure full compliance with the Construction Contract within the Contract Time; (ii) The sureties’ abandonment of the Work; (iii) If at any time City is of the opinion the sureties’ Work is unnecessarily or unreasonably delaying the Work; (iv) The sureties’ violation of any terms of the Construction Contract; (v) The sureties’ failure to perform according to the Contract Documents; or (vi) The sureties’ failure to follow City’s instructions for completion of the Work within the Contract Time. 16.3 Damages to City. 16.3.1 For Contractor's Default. City will be entitled to recovery of all Losses under law or equity in the event of Contractor’s default under the Contract Documents. 16.3.2 Compensation for Losses. In the event that City's Losses arise from Contractor’s default under the Contract Documents, City shall be entitled to withhold monies otherwise payable to Contractor until Final Completion of the Project. If City incurs Losses due to Contractor’s default, then the amount of Losses shall be deducted from the amounts withheld. Should the amount withheld exceed the amount deducted, the balance will be paid to Contractor or its designee upon Final Completion of the Project. If the Losses incurred by City exceed the amount withheld, Contractor shall be liable to City for the difference and shall promptly remit same to City. Invitation for Bid (IFB) Package 18 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 16.4 Suspension by City for Convenience. City may, at any time and from time to time, without cause, order Contractor, in writing, to suspend, delay, or interrupt the Work in whole or in part for such period of time, up to an aggregate of fifty percent (50%) of the Contract Time. The order shall be specifically identified as a Suspension Order by City. Upon receipt of a Suspension Order, Contractor shall, at City’s expense, comply with the order and take all reasonable steps to minimize costs allocable to the Work covered by the Suspension Order. During the Suspension or extension of the Suspension, if any, City shall either cancel the Suspension Order or, by Change Order, delete the Work covered by the Suspension Order. If a Suspension Order is canceled or expires, Contractor shall resume and continue with the Work. A Change Order will be issued to cover any adjustments of the Contract Sum or the Contract Time necessarily caused by such suspension. A Suspension Order shall not be the exclusive method for City to stop the Work. 16.5 Termination Without Cause. City may, at its sole discretion and without cause, terminate this Construction Contract in part or in whole by giving thirty (30) Days written notice to Contractor. The compensation allowed under this Paragraph 16.5 shall be the Contractor’s sole and exclusive compensation for such termination and Contractor waives any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect or incidental damages of any kind resulting from termination without cause. 16.5.1 Compensation. Following such termination and within forty-five (45) Days after receipt of a billing from Contractor seeking payment of sums authorized by this Paragraph 16.5, City shall pay the following to Contractor as Contractor’s sole compensation for performance of the Work : .1 For Work Performed. The amount of the Contract Sum allocable to the portion of the Work properly performed by Contractor as of the date of termination, less sums previously paid to Contractor. .2 For Close-out Costs. Reasonable costs of Contractor and its Subcontractors and Sub-subcontractors for: (i) Demobilizing and (ii) Administering the close-out of its participation in the Project (including, without limitation, all billing and accounting functions, not including attorney or expert fees) for a period of no longer than thirty (30) Days after receipt of the notice of termination. .3 For Fabricated Items. Previously unpaid cost of any items delivered to the Project Site which were fabricated for subsequent incorporation in the Work. 16.5.2 Subcontractors. Contractor shall include provisions in all of its subcontracts, purchase orders and other contracts permitting termination for convenience by Contractor on terms that are consistent with this Construction Contract and that afford no greater rights of recovery against Contractor than are afforded to Contractor against City under this Section. Invitation for Bid (IFB) Package 19 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 16.6 Contractor’s Duties Upon Termination. Upon receipt of a notice of termination for default or for convenience, Contractor shall, unless the notice directs otherwise, do the following: (i) Immediately discontinue the Work to the extent specified in the notice; (ii) Place no further orders or subcontracts for materials, equipment, services or facilities, except as may be necessary for completion of such portion of the Work that is not discontinued; (iii) Provide to City a description, in writing no later than fifteen (15) days after receipt of the notice of termination, of all subcontracts, purchase orders and contracts that are outstanding, including, without limitation, the terms of the original price, any changes, payments, balance owing, the status of the portion of the Work covered and a copy of the subcontract, purchase order or contract and any written changes, amendments or modifications thereto, together with such other information as City may determine necessary in order to decide whether to accept assignment of or request Contractor to terminate the subcontract, purchase order or contract; (iv) Promptly assign to City those subcontracts, purchase orders or contracts, or portions thereof, that City elects to accept by assignment and cancel, on the most favorable terms reasonably possible, all subcontracts, purchase orders or contracts, or portions thereof, that City does not elect to accept by assignment; and (v) Thereafter do only such Work as may be necessary to preserve and protect Work already in progress and to protect materials, plants, and equipment on the Project Site or in transit thereto. SECTION 17 CONTRACTOR'S RIGHTS AND REMEDIES. 17.1 Contractor’s Remedies. Contractor may terminate this Construction Contract only upon the occurrence of one of the following: 17.1.1 For Work Stoppage. The Work is stopped for sixty (60) consecutive Days, through no act or fault of Contractor, any Subcontractor, or any employee or agent of Contractor or any Subcontractor, due to issuance of an order of a court or other public authority other than City having jurisdiction or due to an act of government, such as a declaration of a national emergency making material unavailable. This provision shall not apply to any work stoppage resulting from the City’s issuance of a suspension notice issued either for cause or for convenience. 17.1.2 For City's Non-Payment. If City does not make pay Contractor undisputed sums within ninety (90) Days after receipt of notice from Contractor, Contractor may terminate the Construction Contract (30) days following a second notice to City of Contractor’s intention to terminate the Construction Contract. 17.2 Damages to Contractor. In the event of termination for cause by Contractor, City shall pay Contractor the sums provided for in Paragraph 16.5.1 above. Contractor agrees to accept such sums as its sole and exclusive compensation and agrees to waive any claim for other compensation or Losses, including, but not limited to, loss of anticipated profits, loss of revenue, lost opportunity, or other consequential, direct, indirect and incidental damages, of any kind. SECTION 18 ACCOUNTING RECORDS. 18.1 Financial Management and City Access. Contractor shall keep full and detailed accounts and exercise such controls as may be necessary for proper financial management under this Construction Contract in accordance with generally Invitation for Bid (IFB) Package 20 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 accepted accounting principles and practices. City and City's accountants during normal business hours, may inspect, audit and copy Contractor's records, books, estimates, take-offs, cost reports, ledgers, schedules, correspondence, instructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data relating to this Project. Contractor shall retain these documents for a period of three (3) years after the later of (i) final payment or (ii) final resolution of all Contract Disputes and other disputes, or (iii) for such longer period as may be required by law. 18.2 Compliance with City Requests. Contractor's compliance with any request by City pursuant to this Section 18 shall be a condition precedent to filing or maintenance of any legal action or proceeding by Contractor against City and to Contractor's right to receive further payments under the Contract Documents. City many enforce Contractor’s obligation to provide access to City of its business and other records referred to in Section 18.1 for inspection or copying by issuance of a writ or a provisional or permanent mandatory injunction by a court of competent jurisdiction based on affidavits submitted to such court, without the necessity of oral testimony. SECTION 19 INDEPENDENT PARTIES. Each party is acting in its independent capacity and not as agents, employees, partners, or joint ventures’ of the other party. City, its officers or employees shall have no control over the conduct of Contractor or its respective agents, employees, subconsultants, or subcontractors, except as herein set forth. SECTION 20 NUISANCE. Contractor shall not maintain, commit, nor permit the maintenance or commission of any nuisance in connection in the performance of services under this Construction Contract. SECTION 21 PERMITS AND LICENSES. Except as otherwise provided in the Special Provisions and Technical Specifications, The Contractor shall provide, procure and pay for all licenses, permits, and fees, required by the City or other government jurisdictions or agencies necessary to carry out and complete the Work. Payment of all costs and expenses for such licenses, permits, and fees shall be included in one or more Bid items. No other compensation shall be paid to the Contractor for these items or for delays caused by non-City inspectors or conditions set forth in the licenses or permits issued by other agencies. SECTION 22 WAIVER. A waiver by either party of any breach of any term, covenant, or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant, or condition contained herein, whether of the same or a different character. SECTION 23 GOVERNING LAW. This Construction Contract shall be construed in accordance with and governed by the laws of the State of California. Invitation for Bid (IFB) Package 21 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 SECTION 24 COMPLETE AGREEMENT. This Agreement represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This Agreement may be amended only by a written instrument, which is signed by the parties. SECTION 25 SURVIVAL OF CONTRACT. The provisions of the Construction Contract which by their nature survive termination of the Construction Contract or Final Completion, including, without limitation, all warranties, indemnities, payment obligations, and City’s right to audit Contractor’s books and records, shall remain in full force and effect after Final Completion or any termination of the Construction Contract. SECTION 26 PREVAILING WAGES. This Project is not subject to prevailing wages. The Contractor is not required to pay prevailing wages in the performance and implementation of the Project, because the City, pursuant to its authority as a chartered city, has adopted Resolution No. 5981 exempting the City from prevailing wages. The City invokes the exemption from the state prevailing wage requirement for this Project and declares that the Project is funded one hundred percent (100%) by the City of Palo Alto. Or The Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations. Copies of these rates may be obtained at cost at the Purchasing office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of Sections 1775, 1776, 1777.5, 1810, and 1813 of the Labor Code. SECTION 27 NON APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that the City does not appropriate funds for the following fiscal year for this event, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Construction Contract are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 28 AUTHORITY. The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. SECTION 29 ATTORNEY FEES. Each Party shall bear its own costs, including attorney’s fees through the completion of mediation. If the claim or dispute is not resolved through mediation and in any dispute described in Paragraph 14.2, the prevailing party in any action brought to enforce the provision of this Agreement may recover its reasonable costs and attorney’s fees expended in connection with that action. The prevailing party shall be Invitation for Bid (IFB) Package 22 Rev. July 2012 CONSTRUCTION CONTRACT C14152629 entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorney’s’ fees paid to third parties. SECTION 30 COUNTERPARTS This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement. SECTION 31 SEVERABILITY. In case a provision of this Construction Contract is held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected. IN WITNESS WHEREOF, the parties have caused this Construction Contract to be executed the date and year first above written. CITY OF PALO ALTO ____________________________ City Manager APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney APPROVED: ___________________________ Public Works Director REDGWICK CONSTRUCTION COMPANY By:___________________________ Name:_________________________ Title:________________________ ORDINANCE NO. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR FISCAL YEAR 2014 TO PROVIDE ADDITIONAL APPROPRIATION OF $5,370,745 IN THE CALIFORNIA AVENUE TRANSIT HUB CORRIDOR STREET SCAPE IMPROVEMENTS PROJECT (PL-11002), BUDGETED IN THE CAPITAL IMPROVEMENTS FUND, FOR STREETSCAPE AND UTILITY IMPROVEMENTS ALONG CALIFORNIA AVENUE BETWEEN EL CAMINO REAL AND THE CALIFORNIA AVENUE CALTRAIN STATION. OFFSETTING A PORTION OF THE COSTS FOR THIS PROJECT ARE A SERIES OF ACTIONS, INCLUDING: REDUCTIONS TO THE STREET MAINTENANCE PROJECT – PE-86070 ($550,000), BENCHES, SIGNAGE, FENCING, WALKWAYS, AND PERIMETER LANDSCAPING PROJECT – PG-06003 ($22,000), AND ART IN PUBLIC SPACES PROJECT – AC-86017 ($50,000). ALSO REQUIRED ARE TRANSFERS OF $8,000 FROM THE GENERAL FUND TO THE CAPITAL IMPROVEMENTS AND $7,728 FROM THE WATER FUND TO THE CAPITAL IMPROVEMENTS FUND IS ALSO REQUIRED. AN INCREASE TO THE WATER DISTRIBUTION SYSTEM IMPROVEMENTS PROJECT - WS-11003 ($1,372,272) IS REQUIRED TO SUPPORT WATER UTILITY EXPENSES RELATED TO THIS PROJECT. A DECREASE TO THE INFRASTRUCTURE RESERVE IN THE AMOUNT OF $4,740,745 IS REQURED TO OFFSET THE REMAINDER OF THE INCREASED PROJECTS COSTS IN THE CAPITAL IMPROVEMENTS FUND. The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 10, 2013 did adopt a budget for Fiscal Year 2014; and B. At the time the 2014 Adopted Budget was being considered by the City Council, the costs associated with the California Avenue Transit Hub Corridor Streetscape project were not known; and C. The project will provide for streetscape and utility improvements along California Avenue between El Camino Real and the California Avenue Caltrain Station, including landscaping, traffic calming treatments, streetscape elements, new street lighting, parking enhancements, improvements to the Park Boulevard Plaza, and replacement of water line utilities; and D. In December 2013, the City issued a notice inviting formal bids (IFB) for the project, with a bidding period of forty one calendar days; and E. Bids received for this project ranged from $5.7 million to $7.7 million, significantly higher than the engineers estimate of $4.9 million, indicative of the current economic climate and rapidly escalating construction prices; and F. Staff recommends that the base bid of $6,211,331 submitted by Redgwick Construction Company be declated the lowest responsible bidder. Redgwick Construction had previously submitted a low bid of $5,715,715, but because of a clerical error the amount was revised to $6,211,331 which still makes Redgwick Construction the lowest responsible bidder; and G. A change order amount of $931,700, equal to fifteen percent of the total base bid contract amount, is requested for related, additional, but unforeseen work which may develop during the project; and H. Funds in the amount of $100,000 are also included in the project estimate to account for City staff hours related to Public Works Engineering and Utilities for project inspection during the construction of the project. SECTION 2. The sum of Five Million Three Hundred Seventy Thousand and Seven Hundred Forty Five Dollars is hereby appropriated for the California Avenue Transit Hub Corridor Streetscape Project and the sum of One Million Three Hundred Seventy Two Thousand Two Hundred Seventy Two Dollars is hereby appropriated for the Water Distribution System Improvements Project. To offset a portion of the increased costs in the Capital Avenue Transit Hub Corridor Streetscape Project, a series of reductions is recommended, including Five Hundred Fifty Thousand Dollars to the Street Maintenance Project (PE- 86070), Fifty Thousand Dollars to the Art in Public Spaces Project (AC-86017), Twenty Two Thousand Dollars to the Benches, Signage, Fencing, Walkways, and Perimeter Landscaping Project (PG-06003). A Transfer from the General Fund to the Capital Improvements Fund in the amount of Eight Thousand Dollars, offset by a reduction to the Community Services Department’s General Fund allocation for Art Maintenance is included as part of this action. Lastly, a transfer in the amount of Seven Thousand Seven Hundred and Twenty Eight Dollars from the Water Fund to the Capital Improvements Fund is included in this action. A reduction to the Capital Improvements Fund Infrastructure Reserve in the amount of Four Million Seven Hundred Forty Thousand and Seven Hundred and Forty Five Dollars is required, as is a reduction in the amount of One Million Three Hundred Eighty Thousand Dollars from the Water Fund Rate Stabilization Reserve. SECTION 4. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 5. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: City Manager Director of Public Works Director of Administrative Services BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE Mobilization $195,000.00 $275,000.00 $700,000.00 $700,000.00 Construction Surveying By Contractor $23,000.00 $23,000.00 $50,000.00 $50,000.00 $30,000.00 $30,000.00 $15,000.00 $15,000.00 Traffic Control $285,000.00 $285,000.00 $330,000.00 $330,000.00 $250,000.00 $250,000.00 $950,000.00 $950,000.00 Site Protection Plan $21,000.00 $21,000.00 $20,000.00 $20,000.00 $5,000.00 $5,000.00 $30,000.00 $30,000.00 Remove Miscellaneous Concrete $145,000.00 $145,000.00 $195,000.00 $195,000.00 $269,110.65 $269,110.65 $679,000.00 $679,000.00 Remove Asphalt Concrete Pavement $195,000.00 $195,000.00 $150,000.00 $150,000.00 $62,000.00 $62,000.00 $60,000.00 $60,000.00 7 1 LS Remove Miscellaneous Improvements $56,000.00 $56,000.00 $10,000.00 $10,000.00 $39,000.00 $39,000.00 $75,000.00 $75,000.00 8 1 LS Storm Water Pollution Prevention Plan $26,000.00 $26,000.00 $50,000.00 $50,000.00 $80,000.00 $80,000.00 $1,950.00 $1,950.00 9 1 LS Potholing $5,500.00 $5,500.00 $10,000.00 $10,000.00 $25,000.00 $25,000.00 $48,000.00 $48,000.00 10 1 LS Utility Coordination $500.00 $500.00 $5,000.00 $5,000.00 $12,000.00 $12,000.00 $4,500.00 $4,500.00 $952,000.00 $1,095,000.00 $1,472,110.65 $2,563,450.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 11 1 EA Adjust Existing Electrical Box To Grade $200.00 $200.00 $1,000.00 $1,000.00 $800.00 $800.00 $1,200.00 $1,200.00 12 4 EA Adjust Existing Utility Box & Gas Valve To Grade $400.00 $1,600.00 $500.00 $2,000.00 $800.00 $3,200.00 $500.00 $2,000.00 13 2 EA Adjust Existing Manhole Frame and Cover To Grade $800.00 $1,600.00 $1,000.00 $2,000.00 $1,300.00 $2,600.00 $1,060.00 $2,120.00 14 3 EA Relocate Fire Hydrant $9,900.00 $29,700.00 $10,000.00 $30,000.00 $10,700.00 $32,100.00 $3,950.00 $11,850.00 15 1 EA Relocate Electrical Cabinet $1,200.00 $1,200.00 $2,000.00 $2,000.00 $1,100.00 $1,100.00 $3,000.00 $3,000.00 16 1 EA Install New Box for Existing Monitoring Well $200.00 $200.00 $500.00 $500.00 $540.00 $540.00 $400.00 $400.00 17 19 EA Install New Sanitary Sewer Cleanout Box over Existing Sanitary Sewer Cleanout $450.00 $8,550.00 $500.00 $9,500.00 $490.00 $9,310.00 $340.00 $6,460.00 18 89521 SF Cold Milling $0.50 $44,760.50 $0.70 $62,664.70 $0.35 $31,332.35 $0.50 $44,760.50 19 1800 LF Crack Sealant $2.25 $4,050.00 $5.00 $9,000.00 $3.00 $5,400.00 $2.20 $3,960.00 20 1800 LF Interlayer Membrane $3.00 $5,400.00 $6.00 $10,800.00 $3.00 $5,400.00 $7.00 $12,600.00 21 1154 TON Asphalt Concrete Pavement $140.00 $161,560.00 $200.00 $230,800.00 $173.00 $199,642.00 $128.00 $147,712.00 22 6789 SF Textured Colored Crosswalks $5.50 $37,339.50 $17.50 $118,807.50 $16.00 $108,624.00 $14.00 $95,046.00 23 1413 SF Colored AC Paving Band Per Construction Note 30 $4.00 $5,652.00 $6.00 $8,478.00 $6.00 $8,478.00 $3.00 $4,239.00 24 2383 LF 6-inch Type A Concrete Curb And Gutter $64.00 $152,512.00 $65.00 $154,895.00 $70.00 $166,810.00 $73.00 $173,959.00 25 131 LF 6-inch Concrete Retaining Curb $28.00 $3,668.00 $40.00 $5,240.00 $40.00 $5,240.00 $41.00 $5,371.00 26 594 LF 6-inch Concrete Median Curb $26.00 $15,444.00 $40.00 $23,760.00 $55.00 $32,670.00 $81.00 $48,114.00 27 12517 SF 6-inch Portland Cement Concrete Pavement over 4-inch AB $12.00 $150,204.00 $11.00 $137,687.00 $10.00 $125,170.00 $18.00 $225,306.00 28 425 SF 5-inch Portland Cement Concrete at Bike Coral Per Construction Note 20A $10.00 $4,250.00 $15.00 $6,375.00 $13.00 $5,525.00 $19.50 $8,287.50 29 10 EA Corner Curb Ramps (with Detectable Warning Surfaces)$3,600.00 $36,000.00 $2,000.00 $20,000.00 $2,000.00 $20,000.00 $3,900.00 $39,000.00 30 24 EA Mid Block Ramps (with Detectable Warning Surfaces)$3,100.00 $74,400.00 $2,000.00 $48,000.00 $2,000.00 $48,000.00 $3,800.00 $91,200.00 31 1985 SF Concrete Driveways $18.00 $35,730.00 $12.00 $23,820.00 $12.00 $23,820.00 $21.00 $41,685.00 32 100 SF Portland Cement Concrete Slab Replacement $25.00 $2,500.00 $50.00 $5,000.00 $12.00 $1,200.00 $29.00 $2,900.00 33 100 SF Portland Cement Concrete Slab Replacement with Asphalt Concrete $23.00 $2,300.00 $100.00 $10,000.00 $26.00 $2,600.00 $40.00 $4,000.00 Ghilotti Construction $700,000.00 Ghilotti Construction Robert A Bothman $700,000.00 Robert A Bothman $195,000.00 5 1 LS 6 1 LS 3 1 LS 4 1 LS 1 1 LS 2 California Ave Bid Summary Results Redgwick O'Grady Paving General Improvements Total (items 001 through 010) B: Schedule II: Civil Improvements A: Schedule I: General Redgwick O'Grady Paving $275,000.00 1 LS 34 1 LS Striping, Legends, Markers and Signage $26,500.00 $26,500.00 $35,000.00 $35,000.00 $32,000.00 $32,000.00 $14,000.00 $14,000.00 $805,320.00 $957,327.20 $871,561.35 $989,170.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 35 1 LS Sheeting, Shoring and Bracing $2,500.00 $2,500.00 $2,000.00 $2,000.00 $1,900.00 $1,900.00 $25,000.00 $25,000.00 36 93 LF 6-inch PVC Pipe $260.00 $24,180.00 $270.00 $25,110.00 $280.00 $26,040.00 $250.00 $23,250.00 37 576 LF 12-inch High Density Polyethylene Pipe $270.00 $155,520.00 $280.00 $161,280.00 $290.00 $167,040.00 $300.00 $172,800.00 38 1596 LF ACO Trench Drain $120.00 $191,520.00 $250.00 $399,000.00 $150.00 $239,400.00 $179.00 $285,684.00 39 18 EA Catch Basin Type A per City of Palo Alto Standard Drawing 301, 303 and SD Marker $2,200.00 $39,600.00 $5,000.00 $90,000.00 $3,000.00 $54,000.00 $3,800.00 $68,400.00 40 6 EA Drop Inlet per City of Palo Alto Standard Drawing No. 304 $1,100.00 $6,600.00 $3,500.00 $21,000.00 $3,000.00 $18,000.00 $3,800.00 $22,800.00 41 2 EA Drop Inlet with Concrete Lid 2 x 2 – feet per Construction Note 41 $1,000.00 $2,000.00 $3,000.00 $6,000.00 $3,000.00 $6,000.00 $3,800.00 $7,600.00 42 2 EA Drop Inlet with Concrete Lid 2 x 2.5 – feet per Construction Note 41 $1,050.00 $2,100.00 $3,000.00 $6,000.00 $3,100.00 $6,200.00 $4,000.00 $8,000.00 43 1 EA Drop Inlet with Concrete Lid 2 x 3 – feet per Construction Note 41 $1,100.00 $1,100.00 $3,500.00 $3,500.00 $3,500.00 $3,500.00 $4,200.00 $4,200.00 44 4 EA Drop Inlet with Concrete Lid 2 x 3.5 – feet per Construction Note 41 $1,150.00 $4,600.00 $3,600.00 $14,400.00 $3,700.00 $14,800.00 $4,200.00 $16,800.00 45 3 EA Modify Existing Catch Basin per Construction Note 51 $900.00 $2,700.00 $3,000.00 $9,000.00 $3,000.00 $9,000.00 $2,500.00 $7,500.00 46 5 EA Modify Existing Catch Basin Per Construction Note 52 $950.00 $4,750.00 $3,500.00 $17,500.00 $3,000.00 $15,000.00 $2,500.00 $12,500.00 47 1 EA Storm Drain Manhole $8,500.00 $8,500.00 $8,500.00 $8,500.00 $8,500.00 $8,500.00 $5,000.00 $5,000.00 48 4 EA Curb Outlet per City of Palo Alto Standard Drawing 321 $4.00 $16.00 $1,500.00 $6,000.00 $1,600.00 $6,400.00 $850.00 $3,400.00 49 16 EA Connect Existing Roof Drain to Proposed Trench Drain per Construction Note 49.$300.00 $4,800.00 $2,500.00 $40,000.00 $270.00 $4,320.00 $550.00 $8,800.00 50 3 EA Connect Roof Drains / Install Cleanouts per Construction Note 50A $325.00 $975.00 $2,500.00 $7,500.00 $540.00 $1,620.00 $950.00 $2,850.00 51 14 EA Construct 3-inch Roof Drain Pipe and Connect to proposed Trench Drain Per Construction Note 50B $450.00 $6,300.00 $2,500.00 $35,000.00 $540.00 $7,560.00 $1,000.00 $14,000.00 52 1 LS Sewer Connection For Drinking Fountain at Plaza $8,000.00 $8,000.00 $13,000.00 $13,000.00 $3,300.00 $3,300.00 $13,000.00 $13,000.00 53 1 LS Water Connection for Drinking Fountain at Plaza $9,100.00 $9,100.00 $10,000.00 $10,000.00 $3,300.00 $3,300.00 $25,000.00 $25,000.00 $474,861.00 $874,790.00 $595,880.00 $726,584.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 54 31 EA Street Light Poles and Luminaires $6,600.00 $204,600.00 $4,800.00 $148,800.00 $5,200.00 $161,200.00 $4,800.00 $148,800.00 55 56 EA Pedestrian Light Poles and Luminaires $4,900.00 $274,400.00 $3,660.00 $204,960.00 $4,000.00 $224,000.00 $3,660.00 $204,960.00 56 2 EA Meter Pedestal, NEMA, 3R, 100A, 120/240 V with Panelboard & Concrete Pad $7,800.00 $15,600.00 $5,500.00 $11,000.00 $8,000.00 $16,000.00 $5,500.00 $11,000.00 57 700 LF 4-inch PVC Schedule 40 Conduit $8.50 $5,950.00 $4.00 $2,800.00 $5.00 $3,500.00 $4.00 $2,800.00 58 15,000 LF 2-inch PVC Schedule 40 Conduit $2.00 $30,000.00 $2.75 $41,250.00 $3.00 $45,000.00 $2.75 $41,250.00 59 1 LS Wire and Cables $75,000.00 $75,000.00 $91,000.00 $91,000.00 $98,000.00 $98,000.00 $91,000.00 $91,000.00 60 2 EA 30 x 48-inch Precast Concrete Pull Boxes $1,350.00 $2,700.00 $900.00 $1,800.00 $975.00 $1,950.00 $900.00 $1,800.00 61 50 EA 24 x 36-inch Precast Concrete Pull Boxes $800.00 $40,000.00 $600.00 $30,000.00 $650.00 $32,500.00 $600.00 $30,000.00 Ghilotti Construction Ghilotti Construction Robert A Bothman Robert A BothmanO'Grady Paving Utility Improvements Total (items 035 through 053) D: Schedule IV: Electrical Improvements Redgwick Civil Improvements Total (items 011 through 034) C: Schedule III: Utility Improvements Redgwick O'Grady Paving 62 176 LF Cast-in-Drill Hole Concrete Piles (Streetlight Poles – 24-inch CIDH)$400.00 $70,400.00 $190.00 $33,440.00 $200.00 $35,200.00 $190.00 $33,440.00 63 210 LF Cast-in-Drill Hole Concrete Piles (Pedestrian Light Poles – 18-inch CIDH)$370.00 $77,700.00 $175.00 $36,750.00 $190.00 $39,900.00 $175.00 $36,750.00 64 1 LS Miscellaneous Conduit Fittings, Sweeps, and Connectors $7,500.00 $7,500.00 $20,000.00 $20,000.00 $22,000.00 $22,000.00 $20,000.00 $20,000.00 65 1 LS Trenching $120,000.00 $120,000.00 $63,000.00 $63,000.00 $68,000.00 $68,000.00 $131,000.00 $131,000.00 $923,850.00 $684,800.00 $747,250.00 $752,800.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 66 12,626 SF Pedestrian Concrete Paving 4-inch Grey, Medium Broom Finish $13.00 $164,138.00 $9.00 $113,634.00 $12.00 $151,512.00 $17.50 $220,955.00 67 14,455 SF Special Concrete Paving 4-inch, Glass Aggregate Finish $18.00 $260,190.00 $23.00 $332,465.00 $20.00 $289,100.00 $27.00 $390,285.00 68 66 LF Concrete Seat Walls – 18-inch $62.00 $4,092.00 $450.00 $29,700.00 $200.00 $13,200.00 $238.00 $15,708.00 69 13 LF Brick Wall $225.00 $2,925.00 $500.00 $6,500.00 $160.00 $2,080.00 $550.00 $7,150.00 70 9 EA Relocate Existing Granite Boulders $200.00 $1,800.00 $500.00 $4,500.00 $700.00 $6,300.00 $550.00 $4,950.00 71 9 EA Wood Bench (Backless) Installation $160.00 $1,440.00 $500.00 $4,500.00 $500.00 $4,500.00 $600.00 $5,400.00 72 3 EA Wood Bench (with Back) Installation $160.00 $480.00 $600.00 $1,800.00 $500.00 $1,500.00 $675.00 $2,025.00 73 5 EA Granite Seat Pads $1,600.00 $8,000.00 $1,500.00 $7,500.00 $2,000.00 $10,000.00 $1,700.00 $8,500.00 74 20 EA Granite Bollards $1,800.00 $36,000.00 $1,700.00 $34,000.00 $2,500.00 $50,000.00 $2,200.00 $44,000.00 75 60 EA Bike Rack (single loop)$500.00 $30,000.00 $750.00 $45,000.00 $1,300.00 $78,000.00 $725.00 $43,500.00 76 23 EA Existing Tree Grate – Remove and Re-Install $300.00 $6,900.00 $600.00 $13,800.00 $1,000.00 $23,000.00 $600.00 $13,800.00 77 15 EA Trash/Recycle Combined Receptacle $2,500.00 $37,500.00 $2,500.00 $37,500.00 $3,200.00 $48,000.00 $3,000.00 $45,000.00 78 10 EA News Racks $800.00 $8,000.00 $1,000.00 $10,000.00 $600.00 $6,000.00 $725.00 $7,250.00 79 10 EA Fixed Bollard at Bike Corral Area $1,400.00 $14,000.00 $2,000.00 $20,000.00 $800.00 $8,000.00 $850.00 $8,500.00 80 1 EA Tree Grate $1,900.00 $1,900.00 $600.00 $600.00 $1,600.00 $1,600.00 $3,000.00 $3,000.00 81 5 EA Raised Concrete Pedestal $500.00 $2,500.00 $2,000.00 $10,000.00 $3,000.00 $15,000.00 $1,400.00 $7,000.00 82 5 EA Precast Concrete Pot $2,300.00 $11,500.00 $1,000.00 $5,000.00 $2,000.00 $10,000.00 $900.00 $4,500.00 83 2 EA Raised Concrete Cube $1,700.00 $3,400.00 $6,000.00 $12,000.00 $5,000.00 $10,000.00 $2,000.00 $4,000.00 84 3 EA Raised Concrete Base For Future Planter $700.00 $2,100.00 $2,500.00 $7,500.00 $3,000.00 $9,000.00 $1,450.00 $4,350.00 85 2 EA Kiosk $5,500.00 $11,000.00 $3,000.00 $6,000.00 $13,000.00 $26,000.00 $9,000.00 $18,000.00 86 45 EA Skate Stops $280.00 $12,600.00 $370.00 $16,650.00 $15.00 $675.00 $150.00 $6,750.00 87 190 SF Brick Pavers (Installation Only)$12.00 $2,280.00 $50.00 $9,500.00 $25.00 $4,750.00 $36.00 $6,840.00 88 1 LS Renovate Existing Kiosk Bench $900.00 $900.00 $5,000.00 $5,000.00 $3,000.00 $3,000.00 $3,500.00 $3,500.00 $623,645.00 $733,149.00 $771,217.00 $874,963.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 89 1 LS Irrigation Controller $9,500.00 $9,500.00 $19,000.00 $19,000.00 $6,600.00 $6,600.00 $10,400.00 $10,400.00 90 1 EA Master Valve and Flow Sensor $700.00 $700.00 $3,100.00 $3,100.00 $500.00 $500.00 $530.00 $530.00 91 1 EA Backflow Preventer and Enclosure $2,900.00 $2,900.00 $8,000.00 $8,000.00 $3,900.00 $3,900.00 $3,220.00 $3,220.00 92 64 EA Tree Bubblers $25.00 $1,600.00 $260.00 $16,640.00 $6.00 $384.00 $17.00 $1,088.00 93 7776 SF Irrigation for Planting Areas $17.00 $132,192.00 $15.00 $116,640.00 $16.00 $124,416.00 $29.50 $229,392.00 Ghilotti Construction Ghilotti Construction Robert A Bothman Robert A Bothman Redgwick O'Grady Paving Redgwick O'Grady Paving Electrical Improvements Total (items 054 through 065) E: Schedule V: Landscape Improvements - STREETSCAPE (CALIFORNIA AVE) Landscape Improvements (STREETSCAPE (CAL AVE) Total (items 066 through 088) F: Schedule VI: Landscape Improvements - PLANTING/IRRIGATION 94 7776 SF Shrubs and Groundcover Planting $3.00 $23,328.00 $7.00 $54,432.00 $5.00 $38,880.00 $4.00 $31,104.00 95 30 EA Tree 24-inch Box $165.00 $4,950.00 $450.00 $13,500.00 $500.00 $15,000.00 $330.00 $9,900.00 96 5 EA Tree 36-inch Box $400.00 $2,000.00 $1,300.00 $6,500.00 $1,100.00 $5,500.00 $930.00 $4,650.00 97 35 EA Tree Staking $11.00 $385.00 $30.00 $1,050.00 $45.00 $1,575.00 $54.00 $1,890.00 98 730 LF Root Barrier $7.00 $5,110.00 $11.00 $8,030.00 $9.00 $6,570.00 $5.20 $3,796.00 99 1 LS Tree Preservation and Pruning $1,600.00 $1,600.00 $20,000.00 $20,000.00 $8,300.00 $8,300.00 $10,000.00 $10,000.00 100 25 SF Decorative Gravels $30.00 $750.00 $50.00 $1,250.00 $27.00 $675.00 $14.50 $362.50 $185,015.00 $268,142.00 $212,300.00 $306,332.50 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 101 1 LS 90 Day Plant Establishment $1,600.00 $1,600.00 $7,000.00 $7,000.00 $8,000.00 $8,000.00 $7,800.00 $7,800.00 $1,600.00 $7,000.00 $8,000.00 $7,800.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 102 4575 SF Pedestrian Concrete Paving 4-inch Grey, Median Broom Finish $9.00 $41,175.00 $12.00 $54,900.00 $12.00 $54,900.00 $18.00 $82,350.00 103 603 SF Pedestrian Concrete Paving 4-inch Grey, Median Sandblast Finish $10.00 $6,030.00 $20.00 $12,060.00 $16.00 $9,648.00 $23.00 $13,869.00 104 440 SF Integral Color Concrete Pedestrian Paving 4-inch, Medium Broom Finish $12.00 $5,280.00 $17.00 $7,480.00 $14.00 $6,160.00 $25.00 $11,000.00 105 34 EA Skate Stops $240.00 $8,160.00 $370.00 $12,580.00 $86.00 $2,924.00 $150.00 $5,100.00 106 61 LF Stainless Steel Band in Concrete $105.00 $6,405.00 $50.00 $3,050.00 $200.00 $12,200.00 $180.00 $10,980.00 107 115 SF Granite Flagstone Pavers $40.00 $4,600.00 $20.00 $2,300.00 $28.00 $3,220.00 $54.00 $6,210.00 108 3 EA Game Table $1,200.00 $3,600.00 $2,000.00 $6,000.00 $2,000.00 $6,000.00 $1,700.00 $5,100.00 109 6 EA Game Table Stool Seat $650.00 $3,900.00 $1,000.00 $6,000.00 $1,000.00 $6,000.00 $1,200.00 $7,200.00 110 70 LF Concrete Seat Walls – 18-inch $65.00 $4,550.00 $450.00 $31,500.00 $200.00 $14,000.00 $238.00 $16,660.00 111 9 EA Bike Rack (Single Loop)$500.00 $4,500.00 $750.00 $6,750.00 $1,300.00 $11,700.00 $725.00 $6,525.00 112 6 EA Bench (with Back) Installation $160.00 $960.00 $1,000.00 $6,000.00 $800.00 $4,800.00 $675.00 $4,050.00 113 3 EA Trash/ Recycle Combined Receptacle $2,600.00 $7,800.00 $2,500.00 $7,500.00 $3,200.00 $9,600.00 $3,000.00 $9,000.00 114 11 EA Granite Seat pads $1,400.00 $15,400.00 $1,500.00 $16,500.00 $2,000.00 $22,000.00 $1,700.00 $18,700.00 115 3 EA Granite Bollards $1,800.00 $5,400.00 $1,700.00 $5,100.00 $2,500.00 $7,500.00 $2,200.00 $6,600.00 116 7 EA Granite Boulders around FTN Feature $1,700.00 $11,900.00 $2,000.00 $14,000.00 $2,000.00 $14,000.00 $2,150.00 $15,050.00 117 70 LF 6-inch Concrete Mowband $18.00 $1,260.00 $22.00 $1,540.00 $40.00 $2,800.00 $43.00 $3,010.00 118 1 LS Water Feature Concrete $65,400.00 $65,400.00 $50,000.00 $50,000.00 $70,000.00 $70,000.00 $26,000.00 $26,000.00 119 1 EA Kiosk $5,300.00 $5,300.00 $3,000.00 $3,000.00 $13,000.00 $13,000.00 $7,000.00 $7,000.00 120 1 EA Drinking Fountain with Pet Fountain and Jug Filler $4,800.00 $4,800.00 $6,000.00 $6,000.00 $7,000.00 $7,000.00 $5,800.00 $5,800.00 121 1 EA News Racks (6-unit)$4,100.00 $4,100.00 $1,000.00 $1,000.00 $5,500.00 $5,500.00 $900.00 $900.00 122 1 LS Concrete Work $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 123 1 LS Utility Conflicts $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $40,000.00 $290,520.00 $333,260.00 $362,952.00 $341,104.00 Ghilotti Construction Ghilotti Construction Robert A Bothman Robert A BothmanRedgwickO'Grady Paving Redgwick O'Grady PavingG: Schedule VII: Landscape Improvements - LANDSCAPE MAINENANCE Landscape Improvements (MAINTENANCE) Total (item 101) H: Schedule VIII: Landscape Improvements - STREETSCAPE ELEMENTS (PLAZA) Landscape Improvements (STREETSCAPE IMPROVEMENTS (PLAZA)) Total (items 101 throug Landscape Improvements (Planting/Irrigation) Total (items 089 through 100) BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 124 14 EA Tree bubblers $25.00 $350.00 $3,000.00 $42,000.00 $6.00 $84.00 $18.00 $252.00 125 3570 SF Irrigation for Planting Area $25.00 $89,250.00 $6.00 $21,420.00 $16.00 $57,120.00 $3.70 $13,209.00 126 2500 SF Shrubs and Groundcover Planting $3.00 $7,500.00 $7.00 $17,500.00 $5.00 $12,500.00 $5.00 $12,500.00 127 13 EA Tree 24-inch Box $165.00 $2,145.00 $450.00 $5,850.00 $500.00 $6,500.00 $350.00 $4,550.00 128 1 EA Specimen Tree Planting - 60-inch Box $1,900.00 $1,900.00 $10,000.00 $10,000.00 $9,500.00 $9,500.00 $6,200.00 $6,200.00 129 1070 SF Sodded Lawn $1.50 $1,605.00 $6.00 $6,420.00 $1.00 $1,070.00 $3.00 $3,210.00 130 250 LF Root Barrier $7.00 $1,750.00 $11.00 $2,750.00 $9.00 $2,250.00 $5.00 $1,250.00 131 14 EA Tree Staking $10.00 $140.00 $30.00 $420.00 $45.00 $630.00 $54.00 $756.00 132 1 LS Tree Preservation and Pruning $9,500.00 $9,500.00 $40,000.00 $40,000.00 $2,700.00 $2,700.00 $5,000.00 $5,000.00 $114,140.00 $146,360.00 $92,354.00 $46,927.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 133 1 LS 90 Day Plant Establishment $1,600.00 $1,600.00 $2,500.00 $2,500.00 $2,600.00 $2,600.00 $2,900.00 $2,900.00 $1,600.00 $2,500.00 $2,600.00 $2,900.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE 133a 1 LS Plaza Fountain Water Feature $66,500.00 $66,500.00 $150,000.00 $150,000.00 $164,000.00 $164,000.00 $100,000.00 $100,000.00 134 1 LS Water Connection $546,000.00 $546,000.00 $10,000.00 $10,000.00 $3,300.00 $3,300.00 $2,600.00 $2,600.00 135 1 LS Sewer Connection $34,500.00 $34,500.00 $13,000.00 $13,000.00 $3,300.00 $3,300.00 $2,000.00 $2,000.00 $647,000.00 $173,000.00 $170,600.00 $104,600.00 BID ITEM APPROX. QTY.UNIT DESCRIPTION BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE BID PRICE EXTENDED BID PRICE Robert A Bothman Robert A Bothman Robert A Bothman Robert A Bothman $5,306,825.00 Robert A Bothman Ghilotti Construction Ghilotti Construction Ghilotti Construction Ghilotti Construction $6,716,630.50 Ghilotti Construction $5,019,551.00 $5,275,328.20 Redgwick O'Grady Paving Redgwick O'Grady Paving Redgwick O'Grady Paving Plaza Fountain Sculpture Installation Total (items 133a through 135) Base Bid (Schedule I - XI) SUBTOTAL L: Schedule XII: Watermain Replacement Redgwick O'Grady Paving Redgwick O'Grady Paving I: Schedule IX: Landscape Improvements - PLANTING IMPROVEMENTS (PLAZA) Landscape Improvements (PLANTING IMPROVEMENTS (PLAZA)) Total (items 124 through 132 J: Schedule X: Landscape Improvements - PLANTING MAINTENANCE (PLAZA) Landscape Improvements (PLANTING MAINTENANCE (PLAZA)) Total (item 133) K: Schedule XI: Plaza Fountain Sculpture Installation 136 48 LF install 10” High Density Polyethylene (HDPE) pipe $420.00 $20,160.00 $450.00 $21,600.00 $470.00 $22,560.00 $220.00 $10,560.00 137 1705 LF install 8” High Density Polyethylene (HDPE) pipe $400.00 $682,000.00 $400.00 $682,000.00 $466.00 $794,530.00 $200.00 $341,000.00 138 35 EA install 2"HDPE pipe service laterals from new water mains to the existing water meter locations (single meter) $4,900.00 $171,500.00 $5,000.00 $175,000.00 $5,200.00 $182,000.00 $8,000.00 $280,000.00 139 8 EA install 2" HDPE pipe service laterals from new water mains to the existing water meter locations (two meters on a single service) $5,100.00 $40,800.00 $5,200.00 $41,600.00 $5,400.00 $43,200.00 $8,200.00 $65,600.00 140 2 EA install 2" HDPE pipe service laterals from new water mains to the existing water meter locations (three meters on a single service) $5,800.00 $11,600.00 $6,000.00 $12,000.00 $6,000.00 $12,000.00 $8,400.00 $16,800.00 141 2 EA install 2" HDPE pipe service laterals from new water mains to the existing water meter locations (four meters on a single service) $6,100.00 $12,200.00 $6,200.00 $12,400.00 $6,500.00 $13,000.00 $8,600.00 $17,200.00 142 5 EA install 6”High Density Polyethylene (HDPE)fire hydrant assembly lines $13,000.00 $65,000.00 $15,000.00 $75,000.00 $14,000.00 $70,000.00 $11,000.00 $55,000.00 143 5 EA abandon existing fire hydrant assemblies $900.00 $4,500.00 $1,000.00 $5,000.00 $760.00 $3,800.00 $1,200.00 $6,000.00 144 7 EA reconnect existing 6” ACP/CIP fire services at the property line $5,100.00 $35,700.00 $5,000.00 $35,000.00 $5,300.00 $37,100.00 $13,000.00 $91,000.00 145 6 EA perform new 8” water main tie-ins and existing water main abandonments $8,100.00 $48,600.00 $8,000.00 $48,000.00 $8,600.00 $51,600.00 $3,500.00 $21,000.00 146 1 EA install 8” linestopper $18,700.00 $18,700.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $10,000.00 $10,000.00 147 23 EA replace water meter boxes for 5/8”; 3/4”; 1” meters $415.00 $9,545.00 $500.00 $11,500.00 $430.00 $9,890.00 $700.00 $16,100.00 148 23 EA replace water meter boxes for 1-1/2;2”;double header &triple header meters. Install 2 boxes for 4 header meters $900.00 $20,700.00 $500.00 $11,500.00 $920.00 $21,160.00 $1,000.00 $23,000.00 149 23 EA exchange 5/8” or 1” water meters $950.00 $21,850.00 $1,000.00 $23,000.00 $1,000.00 $23,000.00 $750.00 $17,250.00 150 23 EA exchange 1-1/2” or 2” water meters $975.00 $22,425.00 $1,000.00 $23,000.00 $975.00 $22,425.00 $900.00 $20,700.00 151 1 LS perform Open Hole GPS survey of the installed piping system,prior to surface restoration $6,500.00 $6,500.00 $7,000.00 $7,000.00 $145.00 $145.00 $9,500.00 $9,500.00 $1,191,780.00 $1,203,600.00 $1,326,410.00 $1,000,710.00 $7,717,340.50 Robert A Bothman $6,633,235.00 Ghilotti ConstructionRedgwickO'Grady Paving $6,211,331.00 $6,478,928.20 Watermain Replacement Total (items 136 through 151) Cal Ave Streetscape Grand Total Schedule (1-XII) $5,715,715.00 $6,479,078.20 $6,690,000.00 $7,717,340.50Original Bid Amount CALIFORNIA AVENUE TRANSIT HUB CORRIDOR STREETSCAPE IMPROVEMENT PROJECT The California Avenue Transit Hub Corridor Streetscape Improvements Project provides for streetscape and utility improvements along California Avenue, between El Camino Real and the California Avenue Caltrain Station. Improvements include sidewalk widening to accommodate wider pedestrian walking and dwelling areas, new landscaping and streetscape furniture, new streetlights and pedestrian scale lighting, traffic calming treatments and improvements to the Park Boulevard Plaza. Background: In October 2010, the City submitted an application to the Valley Transportation Authority (VTA) for funding for the California Avenue Streetscape Project and VTA approved the allocation of the grant in the amount of $1,175,200. In February 2011, the scope of the project was broadened to identify sidewalk widening and enhanced landscape opportunities along California Avenue, especially between Birch Street and Park Boulevard to ensure a balance of enhancements along the corridor, and to better tie the streetscape improvements with the planned treatments at the plaza. The selection and placement of the proposed streetscape furniture such as seating walls, benches, bicycle racks and corrals, tree and planting species, media racks and color palette selection, were included after extensive outreach with merchants and other community members. Throughout the public outreach process, business owners and community members repeatedly requested that street lighting enhancements be included in the project, and in March 2013, the City Council gave direction to replace existing street lights with pedestrian-scale lighting. The palette of streetscape furniture was approved by the Architectural Review Board (ARB) on June 28, 2013. Project construction was originally scheduled to begin in Fall 2013, but was deferred to allow for concurrent replacement of a water main, avoiding the potential for additional construction impacts after the completion of the streetscape project. The existing California Avenue water main is approximately 74 years old, shows signs of extensive corrosion, and has recently had recurring breaks. Attachment E The City advertised the project in December 2013 and bids were opened in January 2014. Redgwick Construction Company has been identified as the projects most responsive and low bidder. Council award is scheduled for February 24, 2014. The total contract amount is $7,143,031, which includes a 15% contingency amount. Construction is scheduled to begin in March 2014 and to be completed by the end of the year. Project Breakdown: Street Resurfacing $550,000 Fountain at plaza $80,000 Waterline Replacement $1,380,000 Streetscape contract amount $4,201,331 Total Base Contract $6,211,331 Construction Schedule: Contractor: Redgwick Construction Duration: 10 months Period: Mar 2014 - Dec 2014 Both daytime and nighttime construction activities are anticipated to help expedite the construction schedule. Construction management firm, Ghirardelli Associates, will be available to address any concerns, at all times. Patron Outreach and Marketing Plan: The City has partnered with merchants to create on-street advertising and various other marketing for California Avenue merchants during construction. The City is also providing noon-time shuttles to increase patronage during construction. The shuttle will operate between 11:30AM to 1:30PM and provide 20-minute service between the California Avenue Business District and the Stanford Research Park. In addition, 32 new on-street parking spaces have been provided on Birch Street and are available daily between 8AM – 5PM, 2-Hour Limit. The contractor will maintain access to all businesses at all times, including pedestrian access. To minimize business disruption, the contractor will only be allowed work on one side of the street at a time, one block at a time. Staff will reach out to all businesses with specific phasing and timing information when the Contractor submits the project schedule and phasing plan after Council Contract award. Project Inspector Contact Information: James Beauchamp 650-302-1402 Bill Davis 510-772-9092 For More Information: For more detailed project information and construction updates, please visit: www.cityofpaloalto.org/calave The California Avenue Noon-Time Shuttle will be available every 20-minutes from 11:30AM – 1:30PM every weekday. CITY OF PALO ALTO OFFICE OF THE CITY CLERK February 24, 2014 The Honorable City Council Palo Alto, California SECOND READING: Adoption of a Park Improvement Ordinance for the Palo Alto Municipal Golf Course Reconfiguration Project (First Reading: February 3, 2014 PASSED: 9-0) This was first heard by Council on February 3, 2014 where it was unanimously passed. It is now before you for the second reading. ATTACHMENTS: Ordinance (PDF) Department Head: Donna Grider, City Clerk *NOT YET APPROVED* 140110 dm 00710332A Ordinance No. ______ Ordinance of the Council of the City of Palo Alto Approving and Adopting A Plan of Improvements for the Reconfiguration of the Palo Alto Municipal Golf Course The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings. The City Council finds and declares that: (a) Article VIII of the Charter of the City of Palo Alto and Section 22.08.005 of the Palo Alto Municipal Code require that, before any substantial building, construction, reconstruction or development is commenced or approved, upon or with respect to any land held by the City for park purposes, the Council shall first cause to be prepared and by ordinance approve and adopt a plan therefor. (b) Palo Alto Municipal Golf Course (the “Golf Course”) is dedicated to park and recreational purposes. (c) The City intends to authorize the construction of park improvements (the “Project”) within the Golf Course, as shown on the Golf Course Reconfiguration Project Site Plan (Exhibit “A”), and as described below. The Project will result in the reconfiguration of the layout of the entire Golf Course to a modified 18-hole, par 71, regulation-length course that will measure 6,685 yards from the back tees. Approximately 10.5 acres of the existing Golf Course will be reserved for use as a future recreational athletic facility, and 7.4 acres of the Golf Course will be incorporated in the adjacent San Francisquito Creek Flood Reduction Project (the “Flood Reduction Project”). The reconfigured Golf Course’s size will be approximately 156 acres, which includes the clubhouse, parking lot and maintenance areas. The existing driving range will be expanded to the north by approximately 8,000 square feet to accommodate approximately six new driving stations or “bays.” The Project will include new 6.5‐foot‐wide concrete golf cart paths, concrete footpaths at the practice putting green area, and compacted gravel maintenance path connections between the concrete cart paths. A pedestrian/bicycle trail will be constructed to link the Bay Trail to the Golf Course clubhouse area. The existing chain link fence, located along the west side of the Golf Course, will be removed and replaced with new chain link fencing as part of the Flood Reduction Project. The reconfigured Golf Course will not result in a change to lighting, operational hours, or number of employees. However, rounds of golf played per year are expected to rise to 67,900 rounds by 2015 and 75,700 rounds by 2017. In 2011, 65,653 rounds of golf were played. *NOT YET APPROVED* 140110 dm 00710332A The Golf Course’s reconfiguration will result in the following changes: Reconfiguration of 18 golf holes Construction of 18 new greens on the course and 3 new practice greens Creation of a par 71 course with the following yardages from each of the tees. o Championship Tee: 6,685 o Back Tee: 6,091 o Regular Tee: 5,374 o Forward Tee: 4,588 Reconstruction or construction of all new bunkers Transformation of 55 irrigated acres to naturalized areas (non‐managed turf) plus 7.5 acres to the realigned San Francisquito Creek Reduction in irrigated turf from 135 acres to 81.7 acres Construction of new player development area/practice green/short game area and Youth Golf Area Expansion of the practice range tee area Installation of new signage Replacement of the entire Golf Course irrigation system Construction of a new restroom that is accessible at Holes 4, 12 and 15 (d) The Project is consistent with park and recreation purposes. (e) The Council desires to approve the Project, described above, and as more specifically described in Golf Course Reconfiguration Project Site Plan, attached hereto as Exhibit "A.” SECTION 2. The Council hereby approves the construction of the improvements at the Palo Alto Municipal Golf Course, and it hereby adopts the Golf Course Reconfiguration Project Site Plan as part of the official plan for the construction of the park improvements at the Palo Alto Municipal Golf Course. SECTION 3. The Council finds that the Project (to construct the improvements at the Palo Alto Municipal Golf Course) under the California Environmental Quality Act requires an Environmental Impact Report, which has been completed. // // // *NOT YET APPROVED* 140110 dm 00710332A SECTION 4. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ ____________________________ Senior Asst. City Attorney City Manager ____________________________ Director of Community Services ____________________________ Director of Administrative Services City of Palo Alto (ID # 4393) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: Development Services On-call Contract Services Title: Approval of Contract Amendment One to Contract No. C13149364 with 4Leaf To Increase Funds Not to Exceed $1,500,000 and Approval of Contract Amendment One to Contract No. C14139368 with Kutzmann To Increase Funds Not to Exceed $363,000 for On-call Development Services Consulting Services From: City Manager Lead Department: Planning and Community Environment Recommended Motion Staff recommends that Council consider the following motion: Authorize the City Manager to execute Amendment One to 4Leaf Contract C13149364 to $1,500,000, and authorize the City Manager to execute Amendment One to Kutzmann Contract C13149368 to $363,000. Recommendation Staff recommends that Council: 1. Approve and authorize the City Manager to amend on-call development services contract C13149364 with 4 Leaf from $745,000 to $1,500,000. 2. Approve and authorize the City Manager to amend on-call development services contract C13149368 with Kutzmann from $240,000 to $363,000. Background Development Services utilizes contractors to process permit applications, perform plan reviews, and conduct inspections in response to the cyclical demands of the construction industry. Furthermore, contractors with specialty training and skills can be appointed as needed to accommodate projects that require specialized knowledge or training in a particular field. This affords the department the ability to quickly change the scale and scope of their contractors to City of Palo Alto Page 2 correspond to the needs at that time while providing high levels of customer service. Increases in contract limits for the Kutzmann and 4Leaf contracts are needed to continue to address the current workload. Currently, the revenues and expenditures associated with the Development Services Department are incurred in several different departments (Planning and Community Environment, Public Works, and Fire). In the Fiscal Year 2015 Budget, these expenses will be consolidated under the new Development Services Department. Discussion In April, 2013 (Staff Report 3394), the City Council authorized the City Manager to enter into building and inspection services contracts with six firms to provide on-call services for Development Services. The combined total capacity of all the contracts is $1.5 million, although each has a different limit based on the expected need at the time the contracts were recommended for award by the City Council. These contracts provide expert service that is efficient, responsive, and cost-effective over the long term. They have also been used to dedicate professional resources to very large projects when specifically requested and paid for by applicants. The majority of the revenues are posted to the Development Services portion of the PCE budget; revenues for fire plan checks are posted to the Fire Department’s budget. Development Services has been relying on these contracts to provide needed expertise to process permit applications, perform plan reviews, and conduct inspections. When these contracts were established at the beginning of the fiscal year, staff recognized it would be difficult to predict the actual rate of usage across a whole year and thus revenues and expenditures. For that reason, the department discussed with Budget and the City Manager an initial budget, set cautiously, with the expectation of needing to come back mid-year to increase the contract authority based upon service demand and after analyzing the actual rate of contract utilization. That analysis showed that contract utilization and the need for more contract authority has been driven by increasing development activity, staff vacancies, and the complexity of development projects. A spike in the number of complex projects this fiscal year have required the use of more contract resources for plan reviews and inspections than initially expected for the first half of the year. The 4Leaf and Kutzmann contracts are best suited to currently anticipated needs. As a result, they have been used more frequently than the other contracts and as such are reaching their contract limits more quickly than the other contracts. Both are expected to reach their contract limits in March, 2014. Since current contract capacity is insufficient to keep up with the workload, Council approval is requested to extend the 4Leaf contract from $745,000 to $1.5 million and the Kutzmann contract from $240,000 to $363,000. Based on the analysis of the current and projected future usage of these two contracts, the department expects to incur expenses up to these increased contract limits by the end of the fiscal year. City of Palo Alto Page 3 These contracts are up for renewal July 1, 2014. The department will reexamine the relationship with these contractors, expects to renegotiate contract terms, and will return to Council in June for contract extensions. Resource Impact There are sufficient resources allocated to the Planning and Community Environment and Fire Departments to support the increased contractual expenses through salary savings and other onetime savings on the expenditure side of the budget. Salary savings are available due to several positions that were vacant early in the fiscal year but which have now been filled or are in the process of being filled. Contractors took on additional work until these positions were filled. A Planning Manager, an Administrative Assistant, and two Building/Planning Technician positions have recently been filled. Recruitment is currently underway for an Administrative Associate II position. As the year progresses, expenditures will continue to be monitored, and if activity levels increase requiring higher than currently anticipated expenditures, a Budget Amendment Ordinance will be brought forward for City Council consideration at year-end. Current and projected revenues for Fiscal Year 2014 are flowing in at a level to make these expenditures all self-supporting. Attachments: Attachment A: 4Leaf Contract Amendment 1 (PDF) Attachment B: Kutzmann Contract Amendment 1 (PDF) AMENDMENT NO. 1 TO CONTRACT NO. Cl3149364 BETWEEN THE CITY OF PALO ALTO AND 4LEAF, INC. This Amendment No. I to Contract No. CI 3149364 ("Contract") is entered into lOth Day ofFebruary, 2014, by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and 4LEAF, INC. a California Corporation, located at 2110 Rheem Drive, Ste. A, Pleasanton, California, 94588, Telephone (925)462-5959 ("CONSULTANT"). RECITALS: WHEREAS, the Contract was entered into between the patties for the provision of On-Call Permit Processing, Building Plan Check, and Building Inspection Services ("Project") and desires to engage a consultant to provide On-Call services in connection with the Project ("Services"); and WHEREAS, CITY intends to increase the Not to Exceed Compensation from $725,000.00 by $775,000.00 to $1,500,000.00; and WHEREAS, the parties wish to amend the Contract; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the patties agree: SECTION 1. Section 4 is hereby amended to read as follows: "SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit "A", including both payment for professional services and reimbursable expenses, shall not exceed One Million Five Hundred Thousand Dollars ($1,500,000.00). The applicable rates and schedule of payment are set out in Exhibit "C-1 ",entitled "HOURLY RATE SCHEDULE," which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit "C". CONSULTANT shall not receive any compensation for Additional Services petformed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit "A"." SECTION 2. The following exhibit(s) to the Contract is/are hereby amended to read as set fotth in the attachment(s) to this Amendment, which are incorporated in full by this reference: a. Exhibit "C" entitled "COMPENSATION". 1 Revision July 25, 2012 SECTION 3. Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO City Manager APPROVED AS TO FORM: Title: .Q ~ l D E:-,(lf Senior Asst. City Attorney Attachments: EXHIBIT "C": COMPENSATION 2 Revision July 25, 2012 EXHIBIT "C" COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit "A" ("Services") and reimbursable expenses shall not exceed $1,500,000.00. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial ovettime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: A. Travel outside the San Francisco Bay area, including transpmtation and meals, will be reimbursed at actual cost subject to the City ofPalo Alto's policy for reimbursement of travel and meal expenses for City of Palo Alto employees. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost. All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $0.00 shall be approved in advance by the CITY's project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY's project manager's request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effmt, and CONSULTANT's proposed maximum compensation, including reimbursable expenses, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY's Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. 3 Revision July 25, 2012 AMENDMENT NO. 1 TO CONTRACT NO. C13149368 BETWEEN THE CITY OF PALO ALTO AND KUTZMANN & ASSOCIATES, INC. This Amendment No. 1 to Contract No. C13149368 ("Contract") is entered into the lOth Day of February 2014, by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and KUTZMANN & ASSOCIATES, INC. a California corporation, located at 39355 California Street, Ste. 200, Fremont, California, 94538, Telephone (510)796-3003 ("CONSULTANT"). RECITALS: WHEREAS, the Contract was entered into between the parties for the provision of On-Call Building Plan Check and Building Inspection Services ("Project") and desires to engage a consultant to provide On-Call services in connection with the Project ("Services"); and WHEREAS, CITY intends to increase the Not to Exceed Compensation from $240,000.00 by $123,000.00 to $363,000.00; and WHEREAS, the parties wish to amend the Contract; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 4 is hereby amended to read as follows: "SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULT ANT for performance of the Services described in Exhibit "A", including both payment for professional services and reimbursable expenses, shall not exceed Three Hundred Sixty Three Thousand Dollars ($363,000.00). The applicable rates and schedule of payment are set out in Exhibit "C-1 ",entitled "HOURLY RATE SCHEDULE," which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit "C". CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit "A". " SECTION 2. The following exhibit(s) to the Contract is/are hereby amended to read as set forth in the attachment( s) to this Amendment, which are incorporated in full by this reference: a. Exhibit "C" entitled "COMPENSATION". 1 Revision July 25, 2012 SECTION 3~ Except as herein modified, ail other provisions of the Contract, including any ~hibits and subsequeJ:It amendments th~eto, shall remain in fti!l force and effect. IN WITNESS WHEREOF, th11 parties have bytbeir duly authorized representatives· executed this Amendment on the date first above written. City ~anager APPROVED AS TO FORM: Senior Asst. City Attorney Attachments: EXHlBIT"C"·COMPENSA'riON 2 Ruvisio~luly 25, 21H2 EXHIBIT "C" COMPENSATION The CITY agrees to compensate the CONSULT ANT for professional services performed in accordance with the terms and conditions of this Agreement based on the hourly rate schedule attached as Exhibit C-1. The compensation to be paid to CONSULTANT under this Agreement for all services described in Exhibit "A" ("Services") and reimbursable expenses shall not exceed $363,000.00. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: A. Travel outside the San Francisco Bay area, including transportation and meals, will be reimbursed at actual cost subject to the City of Palo Alto's policy for reimbursement of travel and meal expenses for City of Palo Alto employees. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost. All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $0.00 shall be approved in advance by the CITY's project manager. ADDITIONAL SERVICES The CONSULT ANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULT ANT, at the CITY's project manager's request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT's proposed maximum compensation, including reimbursable expenses, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY's Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. 3 Revision July 25, 2012 City of Palo Alto (ID # 4375) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: Lot R Parking Garage Attendant Program Title: Approval of Contract with Standard Parking Corporation in the Amount of $120,000 for Operation of the Lot R Parking Garage Attendant Program and Adoption of a Budget Amendment Ordinance Amending the Fiscal Year 2014 University Avenue Parking Permit Fund Operating Budget to Provide Additional Appropriations of $120,000 From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council award a contract for up to three (3) years to Standard Parking Corporation in the amount of $120,000 per year for the implementation and operation of the Lot R Attendant Parking Program and adopt a Budget Amendment Ordinance (Attachment A) to increase the University Avenue Parking Permit Fund Fiscal Year 2014 operating budget. Background Parking in downtown Palo Alto is provided on-street and in off-street surface lots and garages that provide hourly parking for downtown visitors and permit parking for employees. Priority for parking permit sales is currently given to employees working within the Downtown Assessment District in agreement with merchants who secured revenues to build the parking garages Lot R (Alma/High South) and Lot S (Bryant Street) in 2002. The Assessment District boundaries are presented in Attachment A. In the spring of 2013, Council authorized staff to pursue a series of near-term parking strategies aimed at helping to reduce spillover parking into neighboring residential areas. The strategies and their status are summarized in Table 1 below, and additional strategies are scheduled for discussion on tonight’s Council agenda. City of Palo Alto Page 2 Table 1 Initial Parking Strategies Authorized by City Council Strategy No. Description Current Status 1 Attendant Parking Trial at Lot R Proposed for award as part of this report with implementation in March 2014. 2 Reduce City Hall Parking Space Demand by 50-100 Spaces Caltrain GoPass for City Employees (Pilot Program) Proposed for adoption in February, with implementation starting in April 2014. 3 Evaluate Restrictions on the Creation/Use of TDRs Council approval effective in December 2013. 4 Revise Zoning Exemptions for Parking Standards Council approval effective December 2013. 5 Residential Parking Considerations Based on Council direction on January 27, 2014, an ordinance establishing a Citywide framework for Residential Permit Parking (RPP) is in development and a stakeholder group regarding implementation will be convened. Ordinance adoption is scheduled for November 2014 and implementation of the first district is targeted for January 2015 6 Transportation Demand Management (TDM) A Council study session was held in December and staff recommendations on TDM strategies are scheduled for Council consideration in February 2014. The first near-term strategy listed in Table 1, the Attendant Parking Trial, aims to increase parking supply for downtown employees. When operational, an operator(s) at a garage would guide motorists to tandem or aisle parking within the permit parking areas of a garage. The driver would then leave their keys with the operator, who may move the vehicle throughout the day as marked parking spaces become available. Attendant parking strategies are a natural progression of off-street parking management and help maximize parking supply before or while additional parking supply strategies are being developed. City of Palo Alto Page 3 The City anticipates attendant parking operations at Lot R to increase parking supply by at least 42 vehicles. This may allow up to 50 or more parking permits to be sold as many motorists take advantage of public transit and don’t drive every day. The City released an RFP to solicit parking attendant operators on November 5, 2013 for a one- year trial project at Lot R. The RFP work scope includes the Lot R Attendant Parking Program as a Base Bid element but also solicited pricing for attendant parking operations at other Downtown Garages so that expansion could be provided if the trial is successful. A contract for up to three (3) years is being recommended, but if the trial is not successful then the contract will not be renewed after the first year. The RFP closed on November 26, 2013 and the City received a total of seven proposals in response to the RFP. A proposal review committee was established with representatives from the Transportation Division, Police Department Enforcement Unit, and Revenue Collections. Three vendors were selected to participate in oral interviews that were held on January 8, 2014. Table 2 provides a complete list of vendors whom responded to the RFP and that participated in the oral interviews. Table 2 Parking Operators that Responded to the RFP No. Vendor Name Interviewed Project Award Year 1 Cost 1 Standard Parking Corp. Yes Yes $104,420 2 ProPark Yes No $94,640 3 LAZ Parking Yes No $129,354 4 ABM No 5 All About Parking No 6 Parking Comp of America No 7 PCI No Standard Parking Corporation is recommended as the preferred vendor for this project due to their exemplary experience in municipal parking operations and strong interview performance. Standard Parking Company also has the capability to provide the City with additional design service to help implement technology solutions around parking management such as Parking City of Palo Alto Page 4 Guidance Systems and Revenue Collection/Access Systems. An additional $15,580 is provided in the recommended contract for additional services for a total Year 1 cost of $120,000, Attachment B. Cost proposals from each of the operators varied due to proposed contract exemptions and operating assumptions. For this reason, only the “Year 1” operating costs for the three interviewed vendors are provided in Table 3, which are based on a common set of assumptions for garage operations, including two full-time operators at the garage 5-days per week, Monday through Friday, from 10:00AM – 6:00PM. Standard Parking Corporation also provided operating costs for expansion of the Attendant Parking Operations at three additional garages owned and operated by the City of Palo Alto. Those costs are provided in Table 3. Table 3 Standard Parking Corporation Lot Location Hourly Rate Estimated Hours/Year Extended Cost Start-Up Cost Project Cost Base Bid Project R Alma/High (South) $24.50 4,160 $101,920 $2,500 $104,420 Alternate Base Bid Locations CC Civic Center $20.90 4,853.3 $101,435 $2,500 $103,935 CW Cowper-Webster $20.90 4,853.3 $101,435 $2,500 $103,935 S Bryant St $20.90 4,853.3 $101,435 $2,500 $103,935 Potential Annual Operating Cost for Downtown Attendant Parking: $416,225 Award to Standard Parking Corporation for only the Lot R Attendant Parking Program is recommended at this time. At the completion of the first year of the program staff will evaluate the program to determine if expansion of the program is appropriate and provide Council with an update by December 2014. Factors that will be used in evaluating success of the program are increases in permit sales, average parking occupancy increases per month, customer satisfaction surveys, and a cost/benefit analysis. City of Palo Alto Page 5 Summary of Key Issues Downtown Parking Assessment District The Downtown Parking Assessment District was established to help finance parking supply projects that include the construction of the last two parking garages built in 2002 at Lot R (High Street – South) and Lot S (Bryant Street). The Parking Assessment District agreement with the City provides that parking permits be made available to employees working within the boundary of the district, (Attachment A). The district provides the City with two revenues streams to help manage the Downtown Parking Program: 1. Parking Assessment Fund: Paid by lease holders in downtown, each leased office or retail space includes a $0.13/SQ FT fee paid monthly to help pay back public bonds sold by the city to build the two parking garages at Lot R and Lot S. 2. University Avenue Parking Permit Fund: Downtown employees pay $144/Quarter or a discounted fee of $466/Year for parking permits. Revenues from this fund are used to pay for operations & maintenance associated with both the parking garages and surface lots. Revenues from the University Avenue Parking Permit Fund will also be used to pay for the proposed Lot R Attendant Parking Program. If expansion of the program is approved following a positive evaluation at the end of the year, the University Avenue Parking Permit Fund would also cover the cost of the expansion of the program to one or more the of Alternate Base Bid Locations. Council is requested to approve the attached Budget Amendment Ordinance to amend the Fiscal Year 2014 University Avenue Parking Permit Fund operating budget to include funds for both the Lot R Attendant Parking Program and Parking Technology Improvements recommended in the Additional Services portion of the Standard Parking Company contract. The recommended Lot R Attendant Parking Program review in December 2014 will allow expansion of the program through the Parking Committee operating budget to be considered in time for expansion in future budgets. Lot R Parking Attendant Operations The City contracted with Sandis Engineering to provide estimates regarding how many additional vehicles could be parked at downtown garages through Attendant Parking operations. The Sandis Engineering study estimates that 42 additional vehicles can be parked through both tandem parking and stack parking in drive aisles at Lot R. Increasing the parking capacity at Lot R would subsequently result in additional revenue of approximately $19,500. City of Palo Alto Page 6 Long-Term Attendant Parking Operations A one-year trial at Lot R is recommended at this time with an evaluation by December 2014 to determine if on-going operation is appropriate beyond the end of the one-year trial (February 2015). Long-term attendant parking operations will be considered as additional parking supply projects are considered and implemented by the City. Policy Implications Implementation of the Lot R Attendant Parking Program is consistent with the City Council near-term parking strategy approved on March 18, 2013. The program is also consistent with the current Comprehensive Plan Goals: Policy T-45: Provide sufficient parking in the University Avenue/Downtown and California Avenue business districts to address long-range needs. Program T-52: Evaluation options to ensure maximum use of the City parking structures in the University Avenue/Downtown and California Avenue areas. Resource Impact The attached Budget Amendment Ordinance will increase the Fiscal Year 2014 University Avenue Parking Permit Fund operating budget by $120,000 for the Lot R Attendant Parking Program and Parking Technology Improvements that will be evaluated through the Additional Services task of the project. It should be noted that a portion of the expense will be offset by increased revenues which will be generated by increasing the parking capacity in Lot R. Assuming the lot is fully utilized at the level Sandis Engineering estimated, an additional $19,500 could be realized. There are sufficient reserves in the Universtiy Avenue Parking Permit Fund to accomodate this additional expense. Timeline The Lot R Attendant Parking Program will be implemented on March 3, 2014 through February 27, 2015 as part of a one-year trial project of the program. A check-in with Council will be provided in December 2014 to determine if expansion beyond the trial period and/or expansion to other parking garage sites is appropriate. City of Palo Alto Page 7 Environmental Review The proposed action would implement operational changes at an existing garage on a trial basis and is exempt from review under the California Environmental Quality Act (CEQA) under Class One (CEQA Guidelines Section 15301, Existing Facilities) and because it can be seen with certainty that the proposed action to incrementally increase garage capacity via operational changes could not have a significant effect on the environment (CEQA Guidelines Section 15061(b)(3), the “general rule”). Courtesy Copies Russ Cohen, Palo Alto Downtown (PAD) - Business and Professionals Association Attachments: Attachment A: BAO xxxx - P&CE Parking Valet Program (DOC) Attachment B: Contract between the City of Palo Alto and SP Plus Corporation (PDF) Attachment A ORDINANCE NO. XXXX ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR FISCAL YEAR 2014 TO PROVIDE ADDITIONAL APPROPRIATION OF $120,000 IN THE UNIVERSITY AVENUE PARKING PERMIT FUND FOR THE PROVISION OF A PARKING ATTENDANT PROGRAM ($104,420) AND ASSISANCE TO THE CITY FOR TECHNOLOGY SOLUTIONS AROUND PARKING MANAGEMENT ($15,580) AND AN INCREASE TO THE BUDGETED REVENUE ESTIMATE ($19,500) RESULTING FROM INCREASED PARKING CAPACITY FROM THE PARKING ATTENDANT PROGRAM. The Council of the City of Palo Alto does ordain as follows: SECTION 1. The Council of the City of Palo Alto finds and determines as follows: A. Pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 10, 2013 did adopt a budget for Fiscal Year 2014; and B. At the time the 2014 Adopted Budget was being considered by the City Council, the Planning and Community Environment Department was developing a series of near term parking strategies aimed at helping to alleviate concerns from adjacent residential areas regarding spillover parking; and C. The City Council at that time authorized staff to pursue a trial parking lot attendant program at Lot R; and D. The City released an RFP to solicit parking attendant operators on November 5, 2013 for a one-year trial project at Lot R, with the RFP closing on November 26, 2013. E. The RFP work scope included the Lot R Attendant Parking Program as a base bid element, but also solicited pricing for attendant parking operations at other Downtown Garages so that expansion could be provided upon the completion of a one-year trial project; and F. The RFP work scope also included, as an additional service, assistance in implementing technology solutions around parking management; and G. The trial parking lot attendant program is expected to increase parking capacity in Lot R. As a result of the increased parking capacity, additional revenue may be realized in the University Avenue Parking Permit Fund. SECTION 2. The sum of One Hundred Twenty Thousand Dollars is hereby appropriated for the Trial Parking Attendant Program at Lot R and for assistance in implementing technology solutions around parking management systems. The revenue estimate within the University Avenue Parking Fund is hereby increased by Nineteen Thousand and Five Hundred Dollars as a result of increased parking capacity, and the ending fund balance in the University Avenue Parking Permit Fund is decreased by One Hundred Thousand and Five Hundred Dollars. SECTION 4. As specified in Section 2.28.080(a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 5. As provided in Section 2.04.330 of the Palo Alto Municipal Code, this ordinance shall become effective upon adoption. SECTION 6. The Council of the City of Palo Alto hereby finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: City Manager Director of Public Works Director of Administrative Services Attachment B CITY OF PALO ALTO OFFICE OF THE CITY CLERK February 24, 2014 The Honorable City Council Palo Alto, California Policy and Services Committee Recommendation for the City Council to Approve the Revised Boards and Commission Applications RECOMMENDED MOTION: Approval of the revised Boards and Commissions Applications. EXECUTIVE SUMMARY In April 2013 the Policy and Services Committee formed a Subcommittee of Council Members Holman and Price to revise the Boards and Commissions applications, with the assistance of the City Clerk’s Office. On October 8, 2013 Staff brought suggested revisions to the Boards and Commissions applications to the Policy and Services Committee. The Committee provided some suggestions and requested that the Subcommittee work with Staff to complete some additional changes then bring those revisions back to the Committee. On December 10, 2013 Staff brought the applications with the proposed changes to the Policy and Services Committee. The Policy and Services Committee unanimously approved the revised applications and made some minor changes that have been incorporated in the attached applications. DISCUSSION Staff would like to start using the new versions of the applications for the spring recruitment. We are still in the process of evaluating electronic application programs. Please review the attached applications for content, versus aesthetics. Significant content changes include: A significant reduction in the number of questions A friendlier “greeting” at the beginning of the application (last paragraph on the first page) Eliminated the “within two miles” statement on the question that asks about property The revised applications are attached as are minutes from the October 8, 2013 and December 10, 2013 Policy and Services Committee Meeting. ATTACHMENTS: 12-10-13 P&S Board and Commission Excerpt (DOCX) 10-08-13 P&S Boards and Commissions Excerpt (DOC) ARB 2014 (DOCX) HRB 2014 (DOCX) Page 2 HRC 2014 (DOCX) LAC 2014 (DOCX) PAC 2014 (DOCX) PaRC 2014 (DOCX) PTC 2014 (DOCX) SDOC 2014 (DOCX) UAC 2014 (DOCX) Department Head: Donna Grider, City Clerk POLICY AND SERVICES COMMITTEE EXCERPT MINUTES Page 1 of 5 Sp. Policy & Services Committee Meeting Special Meeting: 12/10/2013 Special Meeting December 10, 2013 3. (Former Agenda Item Number 1) Boards and Commissions Applications Revisions. Donna Grider, City Clerk, reported the item concerned the final step in changes to the process for recruiting Board and Commission Members. The recognition event held on November 7, 2013, was successful. Council Members presented Proclamations to Board and Commission Members. Chair Kniss inquired about the number of people present. Beth Minor, Assistant City Clerk, responded approximately 50. Council Member Price felt it was well done, and attendees were engaged and pleased. A former Commissioner reported recognition events were held in the past. She inquired whether appreciation certificates could be sent to all people who served on Boards and Commissions in the prior 15 years. Ms. Grider indicated the number would be high. She wanted to establish a relationship among the Clerk's Office, the candidates, the Council, and the liaisons. She did not believe liaisons presented Resolutions of Appreciation to Board and Commission Members when they left. That would be a way to recognize Board and Commission Members. She was unsure if she could present certificates to everyone who served in the prior 15 years. Council Member Price stated having the liaisons present Resolutions might be more appropriate. Council Member Holman agreed it was a successful event. It was important for Council Members and critical Staff to be present. She requested Staff attempt to determine the reasons for Board and Commission Members resigning. Council Member Klein hoped the event would continue. In years past, recognition events were held in the summer at a park. Ms. Grider recalled firefighters hosted the barbeque at Foothill Park at a prior recognition event. DRAFT MINUTES Page 2 of 5 Policy and Services Committee Regular/Special Meeting Draft Minutes 12/10/13 Council Member Klein suggested alumni be invited to attend every few years, particularly if an event was scheduled in 2019 for the City's 125th Anniversary. Chair Kniss asked how many people were invited. Ms. Grider noted Parks and Recreation Commissioners did not attend. Chair Kniss asked if they were invited. Ms. Grider responded yes and that she did not know the reason they did not attend. She should have followed up with Mr. Betts. That was a learning experience, and she would do that in the future. Chair Kniss was pleased Ms. Grider held the event. Everyone loved to be thanked and to have casual conversations. Ms. Grider indicated everyone networked well. Chair Kniss felt gathering everyone allowed a different kind of conversation. Council Member Holman believed one of the most important aspects was the opportunity for everyone to become acquainted. Communication among Board and Commission Members would benefit the City. Chair Kniss noted two Council Members worked to revise the applications. Ms. Grider reported the Council amended the Municipal Code to allow recruitments twice a year. The final step was revision of applications. The recommendation was to reduce the number of questions, to review the way questions were presented, to consider a friendlier greeting, and to eliminate the two-mile requirement for conflict of interest. Chair Kniss asked if applications indicated the number of Board or Commission Members. Ms. Grider replied yes. The application for the Architectural Review Board (ARB) provided that information in the middle of the page. Chair Kniss suggested the statement be bolded. Sheila Tucker, Assistant to the City Manager, reported the City Attorney was working to update the Meeting Code and anticipated returning to the Committee in February 2014. At that time, Ms. Stump would propose a number of simple amendments that would require Ordinance revisions. Ms. Stump would also present a work plan, schedule, and resource impact for DRAFT MINUTES Page 3 of 5 Policy and Services Committee Regular/Special Meeting Draft Minutes 12/10/13 topics that would require substantial policy discussion and decision. Council Member Holman understood many items were basic changes that were made. Ms. Grider indicated the Clerk's Office did not make Municipal Code changes. She updated webpage descriptions that did not require Code changes. Ms. Tucker noted any changes to the Municipal Code required two hearings at the Council. Council Member Holman clarified that basic items, such as missing Code references, were changed. Council Member Price felt one of the goals was to make applications more understandable and accessible to an applicant. She wanted to encourage residents to apply. The changes were good. Council Member Holman recommended the last paragraph on page 1 be moved to the top of the page. Council Member Klein agreed, it should be at the top of the page. He did not wish to edit it any further. He questioned whether the Council needed to approve the revised applications as stated in the Staff recommendation. Ms. Grider assumed Council approval was necessary. Ms. Tucker believed it was important to inform the Council of the changes as they would affect the community. If the Policy and Services Committee (Committee) voted unanimously, the item would be placed on the Consent Calendar. Council Member Klein did not believe the item would be removed from the Consent Calendar. He questioned the need for future Council approval of minor revisions if the Clerk's Office and the Committee agreed on those revisions. Ms. Grider wanted Council approval for changing the entire process. Council approval should not be needed for future minor revisions. Council Member Klein suggested the cover sheet contain language indicating revised applications were presented to the Council for informational purposes. Ms. Grider inquired whether language could be inserted that indicated future minor revisions would be made administratively. DRAFT MINUTES Page 4 of 5 Policy and Services Committee Regular/Special Meeting Draft Minutes 12/10/13 Council Member Price responded yes. It was time consuming for the Council to review every change. Council Member Holman noted over time the applications all became the same. She cautioned against overuse of changes. MOTION: Council Member Holman moved, seconded by Council Member Price to recommend to the City Council to approve the revised Boards and Commissions Applications; and 2) to move the paragraph written as: “Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. If you have any questions or concerns please contact the City Clerk’s Office” to be moved at the top of the cover page of the application packet. Council Member Holman felt the applications were greatly improved. Council Member Price appreciated Committee remarks. Chair Kniss indicated Staff and the Council had to keep the public informed of the importance of applying for Boards and Commissions. She asked how Staff planned to make the public aware of the new process. Ms. Grider reported Staff would try different avenues to reach out to the public, such as large ads in the front of the newspaper or a booth at public events. Chair Kniss noted the City was moving away from print and toward social media. She suggested Staff work with Claudia Keith. Ms. Grider agreed to do so. It was an excellent idea. Chair Kniss asked if the Clerk's Office used interns. The younger generation was adept with social media. Ms. Grider used high school students to videotape Board and Commission meetings; however, that did not work well. Council Member Price inquired whether Staff worked with the Information Technology (IT) Department to place links to the applications in highly visible locations on the City's website or to place references on several pages of the website. Ms. Minor reported the Board and Commission page would be redesigned to include more information about the new program and links to current recruitments. DRAFT MINUTES Page 5 of 5 Policy and Services Committee Regular/Special Meeting Draft Minutes 12/10/13 Council Member Holman recommended the online look of the applications be user friendly. Chair Kniss presumed residents could request applications by mail. Ms. Grider replied yes. Chair Kniss suggested placing applications at libraries. Ms. Grider tried bookmarks, but they did not work well. She would determine if applications could be placed in libraries. MOTION PASSED: 4-0 POLICY AND SERVICES COMMITTEE EXCERPT Page 1 of 7 Regular Meeting October 8, 2013 2. (Former Agenda Item Number 1) Board and Commission Applications Revisions. Chair Kniss said that the Boards and Commissions Recruitment Program was brought to the Policy and Services Committee (Committee) in April, 2013. The application piece was referred back to Committee while the rest of the program went on to Council for approval. Donna Grider, City Clerk said that in April of 2013 the Committee requested that Council Member’s Price and Holman form a Subcommittee to work with Staff to revise the Board and Commission applications. The goal was to find qualified candidates to apply. The deadline for revision was for January 1, 2014. Chair Kniss recollected that the goal was to have applicants apply continuously and to discuss the Board and Commission Volunteer Fair. Ms. Grider agreed, and said the Board and Commission Volunteer Fair was to take place in the spring. Ronna Gonsalves, Deputy City Clerk confirmed that the date for the Board and Commission Recognition event was set for November 7, 2013. Chair Kniss confirmed that other Items being discussed included benchmarking with other agencies for input on application revision. Ms. Grider said her office reached out to City Clerk’s in surrounding areas and discovered that surrounding agencies were actually waiting to hear the results of Palo Alto’s Board and Commission program. She added that Staff wanted to move forward with an online application process in an effort to simplify the process. Chair Kniss recalled that there was going to be advertising that would also take place. Ms. Grider said they wanted to move away from only using newspaper ads and wanted to refresh the program through a variety of different methods. EXCERPT Page 2 of 7 Policy and Services Committee Special Meeting Excerpt: 10/8/13 Council Member Holman noted that she and Council Member Price divided the benchmarked applications to even out the load. She remarked that the process was lengthy and added that her objective was to write the application so that the applicant was informed of what they were applying for. In addition, the she wanted to have enough information from the applicant to make the interview process more efficient. Council Member Price commented on educating candidates and suggested listing relevant parts of the Municipal Code and other relevant documents on the application so that interested people will be informed of their obligation. She noted there were now more thought provoking essay questions on the application. These revisions showed the applicant that they City cared about the Boards and Commissions positions. Council Member Klein commented that many of the questions were prefaced similarly and suggested changing it to a kinder statement, such as “Please identify…” He thought the length of time it took to fill out the application should be shortened and suggested eliminating the statement, “I understand my role to be an advisor to the Council”. He emphasized not overwhelming the applicant and asked for clarification on the question “Excluding your principle residency, do you own real property in Palo Alto, or within two miles of Palo Alto”. Molly Stump, City Attorney noted that she was unsure of the source of that question. Council Member Klein did not think it was necessary to stress the conflict of interest laws on the application. Ms. Stump confirmed that Staff was recommending the question regarding owning property in Palo Alto or within 500 feet from Palo Alto but said Staff did not need to include this question on the application. Council Member Klein suggested the question about owning property in Palo Alto should be narrowed down to just Palo Alto. Chair Kniss suggested some guidelines for the applicant when filling out the application and proposed saying that not every question needed to be answered. She remarked that making this provision made the application process less daunting. Having more view-point questions, such as “What about this interests you and why” was good. Council Member Holman recalled that there were two questions that the EXCERPT Page 3 of 7 Policy and Services Committee Special Meeting Excerpt: 10/8/13 Subcommittee wanted to add and explained that the application did need to be completed entirely. Ms. Gonsalves asked whether the question was in the application. Council Member Holman referenced an Architectural Review Board (ARB) application question that said: “If applicable, please identify a project or projects” and suggested that “if applicable” be taken out. Ms. Gonsalves clarified that the Municipal Code says applicants did not have to submit samples of their work. She added that there was difficulty in applicants adding samples on the on-line applications. Council Member Holman added that the Municipal Code did not say they had to submit examples, but she recalled that Council always asks for examples of good or bad projects from applicants. She suggested applicants submit a project address or an online link on the application. Ms. Stump said there was no reason an address or link could not be requested. Council Member Holman directed Staff to change the words “if applicable” from the ARB and the Historic Resources Board application. Ms. Grider was concerned about losing applicants attention and reiterated that the application questions were crafted with the idea of not being too lengthy. Chair Kniss agreed and felt that getting people to apply was important and that Council would weed out applicants in the interview process. Council Member Holman reminded the Committee that the application review process was being revised to better prepare Council for an applicant’s interview and that asking some of the operative questions ahead of time was time saving. Ms. Grider remarked that she was referring to a specific application question. Council Member Holman explained that most of the questions did not require lengthy responses. Chair Kniss remarked that there were many questions. Ms. Grider had concerns with questions such as “Have you ever attended or EXCERPT Page 4 of 7 Policy and Services Committee Special Meeting Excerpt: 10/8/13 reviewed an online Staff Report.” She said that having questions in writing emitted a certain expectation of the applicant to answer the question. Ms. Gonsalves went back to Council Member Holman’s remark and said there was a similar question that she was referring to. Ms. Grider confirmed that the question being discussed was “Have you ever attended a meeting.” She remarked that some questions were more in- depth. Chair Kniss remarked that the application questions were not permanent and that there would be more input from the applicants in the future. Ms. Grider said Staff received input from applicants all year long. Ms. Gonsalves confirmed that the Clerk’s department worked quite closely with the applicants. Council Member Holman suggested that the format of the application be changed. Ms. Gonsalves remarked that the setup was going to be different, as it was going to be transformed to an online format. She relayed that Staff was looking into a few different programs for the application and was unsure at this time what the format would look like exactly. Council Member Holman also suggested that Staff look into ensuring that all Boards and Commission be listed on the website and added that she sent in some questions/suggestions to Staff a week ago that she was looking forward to having answered at this meeting. Sheila Tucker, Assistant to the City Manager said that Staff would be happy to bring Council Member Holman’s questions back to the Committee for input. Council Member Price agreed with Council Member Klein about asking an applicant a question that was not well informed. She suggested Staff remove “How would you view your role as a Board Member and your role toward policy” and add the disclaimer of “brief” comments being acceptable on the application. She wanted a welcoming spirit to the application and concluded by asking if the bulk of the revisions needed to be approved at this meeting. Council Member Klein suggested Staff come back to the Committee because EXCERPT Page 5 of 7 Policy and Services Committee Special Meeting Excerpt: 10/8/13 there were too many application questions that needed to be revised; he did not want all possible questions to be listed on the application and suggested Council Member’s Price and Holman work with Staff to cut the questions down to about half. Council Member Holman pointed out that there was not actually 19 questions. Council Member Klein compared the Board and Commission application to a college application and wanted to explore more with open-ended questions. Chair Kniss gave an example of a bad answer to a view-point question to emphasize her recommendation. Council Member Klein clarified that answers to view-point questions told him a lot about the candidate. This method showed more clearly which candidates were thinking individuals; this was the type of candidate that was desirable. Council Member Price asked about the timeline for changing the format. Ms. Grider noted that Staff could still use the existing application if this discussion was not resolved in time. Chair Kniss suggested Staff continue to revise the questions, to streamline them, and bring them back to the Committee. Council Member Price thought it was ideal to have some kind of timeline. Chair Kniss said there was a meeting in November and December of 2013 and thought there would be time then. MOTION: Council Member Klein moved, seconded by Chair Kniss to continue this Item and to direct Staff and the Subcommittee to reduce the number of questions on the application. Council Member Holman wanted to clarify that her questions to Staff would be answered at the next meeting. MOTION PASSED: 4-0 Pamela Antil, Assistant City Manager clarified that Council Member Holman’s suggested changes required changes to the Municipal Code. She said Staff was happy to work with the City Attorney on Municipal Code changes but EXCERPT Page 6 of 7 Policy and Services Committee Special Meeting Excerpt: 10/8/13 said this would be separate from Board and Commission application revisions. Council Member Holman remarked that Council suggested this topic be brought up at the same time and said changes to the Municipal Code applied because it referred to application changes and clean-ups. Ms. Antil asked if the changes were for the applications or the Municipal Code. Council Member Holman said it was clean-up to the Municipal Code. Ms. Grider did not feel these questions regarding the Municipal Code were applicable to the application revision process. Chair Kniss inquired whether there were general Municipal Code revisions that needed to be made, or did these changes make the application revisions difficult. Council Member Holman said it was the references to the Municipal Code in the applications. She remarked on the importance of some Boards and Commissions not being directly listed in the Municipal Code. Chair Kniss asked the City Attorney if it was possible to look into these concerns. Ms. Stump commented that some proposals were straight forward and some required substantial work. She said that work on the Municipal Code required Staff time, a lot of work, and input from Council. Chair Kniss asked Staff to put together a general time-line, then go to Council for a discussion. Ms. Stump accepted the task but requested work begin after Council Member Holman completed her input. Chair Kniss suggested having a piece of the time-line at the next meeting. Ms. Antil added that the City Manager’s Office and the City Clerk’s Office would correct the issues with the website. She noted that some of Municipal Code references were correct. Council Member Holman explained that the Municipal Code did not directly mention some Boards and Commissions. She suggested language that EXCERPT Page 7 of 7 Policy and Services Committee Special Meeting Excerpt: 10/8/13 would direct people to the spot in the Code relevant to the specific Board or Commission they were in search of. Council Member Klein agreed and said Staff did not need a Motion to add links to sections in the Code. Amending the Code was extensive and discussing the time it was going to take needed to be established before that project went further; he suggested putting that Item on the Council Agenda. Chair Kniss recapped that the City Attorney would work on a timeline, the City Manager’s Office and the Clerk’s Office could work on links to Boards and Commissions on the website, and Boards and Commissions applications revisions would be continued in December, 2013. Application to Serve on the Architectural Review Board Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. Authority of Board: The Architectural Review Board is charged with design review of some new construction, as well as changes and additions to commercial, industrial and multiple- family projects. The Board is responsible for: Promoting orderly and harmonious development of the City, Enhancing the desirability of residence or investment in the City, Encouraging the attainment of the most desirable use of land and improvements, Enhancing the desirability of living conditions upon the immediate site or in adjacent areas, Promoting visual environments which are of high aesthetic quality and variety and which, at the same time, are considerate of each other. Please see Palo Alto Municipal Code Sections 2.16 and 2.21, as well as Titles 16 and 18 for more detailed information. The Architectural Review Board is composed of five members who are not Council Members, officers, or employees of the City, at least three of whom shall be architects, landscape architects, building designers or other design professionals. Palo Alto residency is not required. Terms of Members will be for three years. The Architectural Review Board typically meets on the first and third Thursdays of each month at 8:30 am. In addition to regular meetings, Members may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or Beth. Minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Commissioners or Board Members? Are you available and committed to complete the term applied for? California state law requires appointed board and commission members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Architectural Review Board? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Architectural Review Board that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Board that is of particular interest to you and describe why you are interested in it. If you have never been to a Board meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Architectural Review Board achieve, and why? How would you suggest accomplishing this? 4. Please identify a project or projects that you find to be examples of good architecture, and explain why. You may attach samples, identify project addresses, or provide links. If you attach samples, Staff may request that you bring hard copy print outs to the interviews. 5. Architectural Review Board Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Palo Alto Comprehensive Plan LINK Zoning Code LINK El Camino Real Design Guidelines and Master Plan LINK Urban Design Guide/Plan LINK Area Plans such as the South of Forest Avenue (SOFA) I and II Plans LINK California Environmental Quality Act LINK Permit Streamline Act LINK Density Bonus Law LINK Secretary of the Interior’s Standards LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Historic Resources Board Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. The Historic Resources Board is responsible for: Reviewing and making recommendations to the Architectural Review Board on proposed exterior changes of commercial and multiple-family buildings on the Historic Building Inventory Reviewing and making recommendations on exterior changes of significant (Categories 1 and 2) single-family residences on the Historic Building Inventory Researching and making recommendations to the City Council on proposed additions and on reclassifications of existing buildings on the Inventory; and Performing other functions as may be delegated from time to time to the Historic Resources Board by the City Council Please see Palo Alto Municipal Code Sections 2.16 and 16.49 for more detailed information. The Historic Resources Board is composed of seven members who are not Council Members, officers, or employees of the City. Members shall have demonstrated interest in and knowledge of history, architecture or historic preservation. One member shall be an owner/occupant of a category 1 or 2 historic structure, three members shall be architects, landscape architects, building designers or other design professionals and at least one member shall possess academic education or practical experience in history or a related field. Terms of Board Members will be for three years. The Historic Resources Board typically meets on the first and third Wednesdays of each month at 8:00 am. In addition to regular meetings, members may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? Are you available and committed to complete the term applied for? California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Historic Resources Board? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Historic Resources Board that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Board that is of particular interest to you and describe why you are interested in it. If you have never been to a Board meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Historic Resources Board achieve, and why? How would you suggest accomplishing this? 4. Please identify a project or projects that you find to be examples of good historic architecture, and explain why. You may attach samples, identify project addresses, or provide links. If you attach samples, Staff may request that you bring hard copy print outs to the interviews. 5. Historic Resources Board Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Palo Alto Comprehensive Plan Land use Element LINK Palo Alto Municipal Code Chapter 16.49 LINK Secretary of the Interiors Standards for Preserving, Rehabilitating, Restoring, and Reconstructing Historic Buildings LINK California Environmental Quality Act, Section 15331 LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Human Relations Commission Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. Authority of Commission: • To foster public awareness and understanding of human relations problems by any means of disseminating information including, but not limited to, educational programs and printed and electronic media, • To facilitate resolution of problems or improvement of conditions within the jurisdiction of the commission by encouragement, persuasion and mediation and by pointing out private or public agencies which might provide assistance, • To make such studies which, in the judgment of the commission, might aid in affecting matters within the jurisdiction of the commission, • To recommend local legislation or other action to the Council and to encourage the Council to support or oppose state or federal legislation or regulation relating to matters within the jurisdiction of the commission, • To coordinate programs of the commission with similar programs by private and public agencies and organizations, and • To recommend or oppose legislation other than that of the City, provided that the City Council has not taken an official position with respect to such legislation, and provided further that any communication, whether oral or written, from the commission concerning such legislation clearly indicates that such recommendation or opposition is that of the commission and is not necessarily that of the City Council. Please see Palo Alto Municipal Code Sections 2.16 and 2.22 for more detailed information. The Human Relations Commission is composed of seven members who are not Council Members, officers, or employees of the City, and who are residents of the City of Palo Alto. Terms of Commissioners will be for three years. The Human Relations Commission typically meets on the second Thursday of each month at 7:00 pm. In addition to regular meetings, Commissioners may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board Members or Commissioners? Are you available and committed to complete the term applied for? California state law requires appointed board and commission members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Human Relations Commission? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Human Relations Commission that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Commission that is of particular interest to you and describe why you are interested in it. If you have never been to a Commission meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Human Relations Commission achieve, and why? How would you suggest accomplishing this? 4. Human Relations Commission Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Human Services Needs Assessment LINK Muni Code 9.72 – Mandatory Response Program LINK Community Services Element of the Comprehensive Plan LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Library Advisory Commission Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. Authority of Library Advisory Commission: To advise the City Council on matters relating to the Palo Alto City Library, excluding daily administrative operations. The Library Advisory Commission is responsible for: Advising the city council on planning and policy matters pertaining to: The goals of and the services provided by the Palo Alto City Library, The future delivery of services by the Palo Alto City Library, The City Manager's recommendations pertaining to the disposition of major gifts of money, personal property and real property to the city to be used for library purposes, The construction and renovation of capital facilities of the Palo Alto City Library, Joint action projects with other public or private information entities, including libraries. Reviewing state legislative proposals that may affect the operation of the Palo Alto City Library. Reviewing the city manager's proposed budget for capital improvements and operations relating to the Palo Alto City Library, and thereafter forward any comments to one or more of the applicable committees of the city council. Providing advice upon such other matters as the city council may from time to time assign. Receive community input concerning the Palo Alto City Library. Review and comment on fund-raising efforts on behalf of the Palo Alto City Library. The Library Advisory Commission typically meets on the fourth Thursday of each month at 7:00 pm. In addition to regular meetings, Commissioners may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? Are you available and committed to complete the term applied for? California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Library Advisory Commission? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Library Advisory Commission that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Commission that is of particular interest to you and describe why you are interested in it. If you have never been to a Commission meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Library Advisory Commission achieve, and why? How would you suggest accomplishing this? 4. Library Advisory Commission Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Library Service Model Analysis and Recommendations LINK Library Technology Plan LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Public Art Commission Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. The duties of the Commission are: To advise the city in matters pertaining to the quality, quantity, scope, and style of art in public places, To periodically review, at least once a year, the capital improvement program with the director of arts and culture and such other members of the city staff as may be appropriate for inclusion of works of art in various projects, To devise methods of selecting and commissioning artists with respect to the design, execution, and placement of art in public places and, pursuant to such methods, to advise the director of arts and culture on the selection and commissioning of artists for such purposes, To advise the city regarding the amounts to be expended on art in public places, To advise and assist the director of arts and culture in obtaining financial assistance for art in public places from private, corporate, and governmental sources, To review plans for the installation of art in public places, To review the inventory of art in public places and to advise the city in matters pertaining to the maintenance, placement, alteration, sale, transfer, ownership, and acceptance or refusal of donations of, and other mailers pertaining to, art in public places, To recommend the retention of consultants, consistent with the city's consultant selection procedures, to assist the city in making decisions concerning the art in public places program, To advise the city on such other matters pertaining to the art in public places program as may be appropriate, To advise and assist private property owners who desire such advice and assistance regarding the selection and installation of works of art to be located on their property in the public view, To act as a liaison between local artists and private property owners desiring to install works of art on their private property in public view, To give recognition to, and to maintain, an inventory of meritorious works of art in the public view, and To endeavor to preserve works of art in the public view deemed to be meritorious by the public art commission through agreements with the property owner and/or the artist. Please see Palo Alto Municipal Code Sections 2.16, 2.18, and 2.26 for more detailed information. The Public Art Commission is composed of seven members who are not Council Members, officers, or employees of the City and shall be members of the architectural review board or shall be professional visual artists, professional visual arts educators, professional visual arts scholars, or visual arts collectors whose authorities and skills are known and respected in the community and, whenever feasible, who have demonstrated an interest in, and have participated in, the arts program of the city. Palo Alto residency is not required. Terms of Commissioners will be for three years. The Public Art Commission typically meets on the third Thursday of each month at 7:00 pm. In addition to regular meetings, Commissioners may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? Are you available and committed to complete the term applied for? California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Public Art Commission? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Public Art Commission that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Commission that is of particular interest to you and describe why you are interested in it. If you have never been to a Commission meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Public Art Commission achieve, and why? How would you suggest accomplishing this? 4 Public Art Commission Members work with the document listed below. If you have experience with this document, please describe that experience. Experience with this document is not required for selection. Municipal Arts Plan LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Parks and Recreation Commission Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. Authority of Commission: The purpose of the Parks and Recreation Commission shall be to advise the City Council on matters relating to the activities of the Parks and Golf Division and the Recreation, Open Space and Sciences Division of the Community Services Department, excluding daily administrative operations. The Commission is responsible for: Reviewing plans for park and community center renovations and expansions, Reviewing information from stakeholder and community meetings and working to resolve competing needs from different constituents, Developing Rules and Regulations that govern the congenial use of park facilities and community centers, and Creating broad policies on trail connections, field use priorities and conservation of our natural resources, the Parks and Recreation Commission provides advice to the City Council on how the goals and objectives of the City’s Comprehensive Plan can best be implemented and achieved. Please see Palo Alto Municipal Code Sections 2.16 and 2.25 for more detailed information. The Parks and Recreation Commission is composed of seven members who are not Council Members, officers, or employees of the City, and who are residents of the City of Palo Alto. Each member of the Commission shall have a demonstrated interest in parks, open space and recreation matters. Terms of Commissioners will be for three years. The Parks and Recreation Commission typically meets on the fourth Tuesday of each month at 7:00 pm. In addition to regular meetings, Commissioners may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board Members or Commissioners? Are you available and committed to complete the term applied for? California state law requires appointed board and commission members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Parks and Recreation Commission? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Parks and Recreation Commission that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Commission that is of particular interest to you and describe why you are interested in it. If you have never been to a Commission meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Parks and Recreation Commission achieve, and why? How would you suggest accomplishing this? 4. Parks and Recreation Commission Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Palo Alto Comprehensive Plan: Community Services and Facilities Element LINK Natural Resources Element LINK Baylands Master Plan LINK Park Dedication Ordinance (City Charter) LINK Bicycle - Pedestrian Master Plan LINK Youth Master Plan LINK Foothill Park Fire Management Plan LINK Cubberley Community Advisory Committee Report LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Planning and Transportation Commission Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. The Planning and Transportation Commission is responsible for: Preparing and making recommendations to the City Council on the City's Comprehensive Plan regarding development, public facilities and transportation in Palo Alto, Considering and making recommendations to the City Council on zoning map and zoning ordinance changes, Reviewing and making recommendations to the City Council on subdivisions, on appeals on variances and use permits, Considering other policies and programs affecting development and land use in Palo Alto for final City Council action, Reviewing and making recommendations on individual projects such as Planned Community Zones, Open Space development, and those other projects as are directed by the zoning code, staff and City Council. Please see Palo Alto Municipal Code Sections 2.16 and 2.20, and 19.04.10 for more detailed information. The Planning and Transportation Commission is composed of seven Members who are not Council Members, officers, or employees of the City, and who are residents of the City of Palo Alto. Terms of Commissioners will be for four years. The Planning and Transportation Commission typically meets on the second and last Wednesdays of each month at 6:00 pm. In addition to regular meetings, Commissioners may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? Are you available and committed to complete the term applied for? California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Planning and Transportation Commission? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Planning and Transportation Commission that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Commission that is of particular interest to you and describe why you are interested in it. If you have never been to a Commission meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Planning and Transportation Commission achieve, and why? How would you suggest accomplishing this? 4. Planning and Transportation Commission Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. Palo Alto Comprehensive Plan LINK Zoning Code LINK City Charter LINK California Environmental Quality Act LINK El Camino Real Design Guidelines and Master Plan LINK Downtown Urban Design Guide/Plan LINK South of Forest Avenue Plans I and II LINK Baylands Master Plan LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Storm Drain Oversight Committee Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. Authority of Committee: The Storm Drain Oversight Committee is charged with reviewing the annual budget and expenditures of the Storm Drainage Enterprise Fund in order to ensure that revenue from the Storm Drainage Fee is being budgeted and spent in accordance with the terms of the storm drain ballot measure approved by a majority of property owners in 2005. The Committee is responsible for: Performing an annual review of the proposed Storm Drainage Enterprise Fund budget, Performing an annual review of actual expenditures from the Storm Drainage Enterprise Fund, Adopt findings on an annual basis that the proposed budget and actual expenditures of the Storm Drainage Enterprise Fund are consistent with the spending plan outlined in the 2005 storm drain ballot measure, and Report findings on an annual basis to the City Council. The Storm Drain Oversight Committee is composed of five Members who are not Council Members, officers, or employees of the City, and who are residents of, own property in, or employed within the City of Palo Alto. Terms of Members will be for four years. The Storm Drain Oversight Committee meets at least two times per year and additionally on an as needed basis. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board or Commission Members? Are you available and committed to complete the term applied for? California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board or commission you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Storm Drain Oversight Committee? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Storm Drain Oversight Committee that is compatible with your experience and of specific interest to you, and why? 2. Storm Drain Oversight Committee Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. City of Palo Alto Annual Budget LINK 2005 Ballot Measure Authorizing Storm Drainage Fees LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ Application to Serve on the Utilities Advisory Commission Palo Alto welcomes volunteers and we appreciate that you are taking the time to apply. Completion of this application provides valuable information to the City Council. Please complete the application to the best of your abilities. If you have any questions or concerns please contact the City Clerk’s Office. Authority of Utilities Advisory Commission: To advise the city council on present and prospective long-range planning and policy and major program and project matters relating to the electric utility, gas utility, water utility, wastewater collection utility, fiber optics utility and recycled water matters, excluding daily operations. The Utilities Advisory Commission is responsible for advising the Council on: Development of the City utilities and the recycled water resources; Joint action projects with other public or private entities; Environmental aspects and attributes City utilities and the recycled water resources; Water and energy conservation, energy efficiency, and demand side management; The consistency with adopted and approved plans, policies, and programs of any major utility; Legislative proposals regarding City utilities and the recycled water resources, to which the city is a party, in which the city has an interest, or by which the city may be affected; Utility capital improvement programs, operating budgets and related reserves, and rates, and the recycled water program, budget, and rate. Please see Palo Alto Municipal Code Sections 2.16 and 2.23 for more detailed information. The Utilities Advisory Commission is composed of seven members who are not Council Members, officers, or employees of the City, and who are Palo Alto utility customers or the authorized representative of a utility customer. Terms of Commissioners will be for three years. The Utilities Advisory Commission typically meets on the first Wednesday of each month at 7:00 pm. In addition to regular meetings, Commissioners may be asked to participate on at least one sub-committee which could hold additional meetings. Click here to receive email notifications of vacancies CLICK HERE. You are also welcome to contact the City Clerk's Office at 329-2571 or beth.minor@cityofpaloatlo.org. Personal Information Name: Address: Phone 1: Phone 2: E-mail: Are you a Palo Alto Resident? Do you have any relatives or members of your household who are employed by the City of Palo Alto, who are currently serving on the City Council, or who are Board Members or Commissioners? Are you available and committed to complete the term applied for? California state law requires appointed Board and Commission Members to file a detailed disclosure of their financial interests, Fair Political Practices Commission, Conflict of Interest, Form 700. Do you have an investment in, or do you serve as an officer or director of, a company doing business in Palo Alto which you believe is likely to; 1) engage in business with the City, 2) provide products or services for City projects, or 3) be affected by decisions of the board you are applying for? Excluding your principal residence, do you own real property in Palo Alto? How did you Learn about the vacancy on the Utilities Advisory Commission? Community Group Email from City Clerk Palo Alto Weekly Daily Post (Will Customize this section based on current advertising strategy) List relevant education, training, experience, certificates of training, licenses, or professional registration: Employment Present or Last Employer: Occupation: Describe your involvement in community activities, volunteer and civic organizations: 1. What is it about the Utilities Advisory Commission that is compatible with your experience and of specific interest to you, and why? 2. Please describe an issue that recently came before the Commission that is of particular interest to you and describe why you are interested in it. If you have never been to a Commission meeting you can view an archive here: LINK. 3. If appointed, what specific goals would you like to see the Utilities Advisory Commission achieve, and why? How would you suggest accomplishing this? 4. Utilities Advisory Commission Members work with the documents listed below. If you have experience with any of these documents, please describe that experience. Experience with these documents is not required for selection. The Utilities Strategic Plan LINK The Long Term Electric Acquisition Plan LINK The Gas Utility Long-term Plan LINK Urban Water Management Plan LINK Ten-Year Electric Energy Efficiency Plan and Ten-Year Natural Gas Energy Efficiency Plan LINK Utilities Quarterly Update for the most recently reported quarter LINK Consent to Publish Personal Information on the City of Palo Alto Website California Government Code Section 6254.21 states, in part, “No state or local agency shall post the home address or telephone number of any elected or appointed official on the Internet without first obtaining the written permission of that individual.” The full code is attached. This consent form will not be redacted and will be attached to the Application and posted to the City’s website. The full code can be read here: LINK Read the code, and check only ONE option below: I give permission for the City of Palo Alto to post to the City’s website the attached Board and Commission Application intact. I have read and understand my rights under Government Code Section 6254.21. I may revoke this permission at any time by providing written notice to the Palo Alto City Clerk. OR I request that the City of Palo Alto redact my home address, phone numbers, and email address from the attached Board and Commission Application prior to posting to the City’s website. I am providing the following alternate information and request that they use the following contact information instead. Address: Phone 1: Phone 2: E-mail: Signature: ________________________________________________________ Date: _____________ CITY OF PALO ALTO OFFICE OF THE CITY CLERK February 24, 2014 The Honorable City Council Palo Alto, California Approval of City Clerk Recommendation to Add to the Spring Board and Commission Recruitment the Vacancy on the Planning & Transportation Commission DISCUSSION On January 27, 2014 the City Clerk’s Department was notified that Alex Panelli had resigned from the Planning & Transportation Commission. His term would not have ended until October 31, 2016. The City Council on August 12, 2013 approved revisions to the board and commission recruitment program to allow two scheduled recruitments per year (spring and fall). Any resignation that occurred during the year were to be brought to the City Council for a determination on whether to hold a special recruitment to fill the vacancy or wait until the next scheduled recruitment. The City Clerk’s Department is currently working on the upcoming spring recruitment, which would be for terms ending on April 30, 2014 for the Human Relations Commission, Library Advisory Commission and the Public Art Commission. The next scheduled recruitment for the Planning & Transportation Commission would be in the fall of 2014. Due to the volume of work currently before the Planning & Transportation Commission, it is the recommendation of the City Clerk to add this recruitment to the spring recruitment. Department Head: Donna Grider, City Clerk City of Palo Alto (ID # 4466) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: Approval of an Agreement with Townsend Title: Approval of an Agreement with Townsend Public Affairs for Up To 22 Months in an Amount not to Exceed $187,000 for State Legislative Advocacy Services From: City Manager Lead Department: City Manager Recommendation Staff recommends that Council approve and authorize the City Manager or his designee to execute the attached contract (Attachment A) with Townsend Public Affairs (Townsend) in the amount of $85,000 for the first 10 months of the contract (March 1, 2014 – December 31, 2014); and $102,000 for the last 12 months of the contract (January 1, 2015 – December 31, 2015) based on satisfactory performance of the firm for a total amount not to exceed $187,000 for state legislative advocacy services. Background For the last two years (2012 & 2013) the City of Palo Alto has retained the Professional Evaluation Group (PEG) for state legislative advocacy services on issues related to California High Speed Rail (HSR) and related topics including potential changes to the California Environmental Quality Act (CEQA). During this time the City did not retain a state legislative advocate to handle any other matters. In mid-2013 the City issued a request for proposal (RFP) seeking proposals from state legislative advocates for how they might provide comprehensive legislative advocacy services. The City received seven proposals in response (one of which was from PEG). Following a thorough review of the seven proposals, four firms were selected for interviews (one of which was PEG). Each of the four selected firms then interviewed with two separate interview panels. Following those interviews Townsend was selected by staff for recommendation to City of Palo Alto Page 2 Council. Discussion Staff believes that state legislative advocacy representation is important for the City in several ways. Most importantly, it improves the presence and voice Palo Alto has with our state representatives. Staff believes it is important to have a physical presence in Sacramento both tracking issues that might impact Palo Alto and building relationships with key elected officials and their offices. Based on these reasons, staff is recommending that the City retain a firm to provide comprehensive state legislative advocacy services. Under the terms of the proposed contract, the City would retain representation services for all legislative matters including appropriations. Additionally, under the proposed contract, the City would also receive assistance in obtaining state grants. Staff feels that this comprehensive approach to state legislative advocacy will maximize City value through economies of scale and provide tangible financial returns for the City. Below is the Scope of Services staff has proposed for this contract: General Develop an annual state legislative strategic plan by outlining action that should be taken in a given year to achieve the City’s goals related to legislation, appropriations, and grants. Once approved by the City, this plan will outline an approach for working with the appropriate elected officials and agencies on the City’s legislative priorities. Track legislation, appropriations, and grants through the entire legislative process so the City knows both the status of legislation, appropriations, and grants and when advocacy measures, such as correspondence, are necessary. Conduct a strategic assessment of legislative opportunities by gaining a complete understanding of City priorities and services to ensure that the City is taking advantage of every opportunity for state assistance whether through legislation, appropriations, or grants. Provide assistance in setting short and long-term legislative priorities for the City and perform in-depth analysis of current and anticipated legislation and state funding opportunities on an on-going basis. Grants City of Palo Alto Page 3 Assist the City in obtaining state grants by making the City aware of grant opportunities and helping the City obtain them through coordination with state agencies. Reporting On a weekly basis, conduct conference calls with City staff to ensure the state legislative program is being implemented and to inform them of the status of legislation, appropriations, and grants. On a weekly basis, provide the City with analysis of current events and the implications they may have on the City’s legislative program. On a weekly basis, provide a comprehensive picture of what actions are expected by the Assembly, Senate, and Governor. Correspondence Work with the City to help draft correspondence that will be used to influence legislation and seek funding opportunities. When appropriate, review City press releases prior to distribution. Meetings When appropriate, attend meetings on behalf of the City and, when appropriate, provide spoken comments, testimony, and/or written correspondence on behalf of the City. When appropriate, arrange meetings for City officials with state officials and their offices and prepare City officials for those meetings in order to optimize effectiveness. Coalition Building Build support for City endorsed legislation, appropriations, and grants by working with stakeholders at the local, regional, and state level. Support shall be conveyed through letters, phone calls, and visits. Resource Impact In order to retain full service state legislative advocacy representation, the City will pay Townsend $102,000 annually. $34,000 of funding for this contract will be allocated from the City Manager’s Contingency Fund for the four months of this contract in FY 2014 (March 1, 2014 – June 30, 2014). Ongoing funding for the FY 2015 and FY 2016 City of Palo Alto Page 4 portions of the contract will be programmed as part of the budget process for each corresponding fiscal year. If approved, this agreement will authorize the City Manager to enter into a 22 month contract (March 1, 2014 – December 31, 2015) with Townsend for state legislative advocacy services. The contract can be terminated with 10 day notice at any time in the event performance is not satisfactory. Attachments: A - C14152163 Townsend Contract (PDF) CITY OF PALO ALTO CONTRACT NO. C14152163 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND TOWNSEND PUBLIC AFFAIRS, INC. FOR PROFESSIONAL SERVICES This Agreement is entered into on this 24 day of February, 2014, ("Agreement") --byand-between-the-GITY OF-]2ALQ-Ab-1'Q,-a-Ga~if0mia-Ghartered-muniGipal-corp0Fation-- ("CITY"), and TOWNSEND PUBLIC AFFAIRS, INC., a California corporation, located at 1401 Dove Street, Ste. 330, Newport Beach, California, 92660, Telephone (949) 399-9050 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to be represented in all state legislative advocacy matters ("Project") and desires to engage a consultant to provide representation in connection with the Project ("Services"). B. CONSULTANT has represented that it has the necessary professional expertise, qualifications, and capability, and all required licenses and/or certifications to provide the Services. C. CITY in reliance on these representations desires to engage CONSULTANT to provide the Services as more fully described in Exhibit "A", attached to and made a part of this Agreement. NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, in this Agreement, the parties agree: AGREEMENT SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described in Exhibit "A" in accordance with the terms and conditions contained in this Agreement. The performance of aU Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date March 1, 2014 through December 31, 2015 unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit "B", attached to and made a part of this Agreement. Any Services for which times for performance are not specified in this Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT. CITY's agreement to extend the term or the schedule for performance shall Professional Services Rev. Nov. 1,2011 not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit "A", including both payment for professional services and reimbursable expenses, shall not exceed One Hundred Eighty Seven Thousand Dollars ($187,000.00). The applicable rates and schedule of payment are --set-out-in--Exhibit-"C~l "; -entitted-R:kTE SCHEDULE," w h ich is attached to and made a palt of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit "C". CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described in Exhibit "A". SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the services performed and the applicable charges (including an identification of personnel who performed the services, hours worked, hourly rates, and reimbursable expenses), based upon the CONSULTANT's billing rates (set forth in Exhibit "C-· 1 "). If applicable, the invoice shall also describe the percentage of completion of each task. The information in CONSULTANT's payment requests shall be subject to verification by CITY. CONSULTANT shall send all invoices to the City's project manager at the address specified in Section 13 below. The City will generally process and pay invoices within thirty (30) days of receipt. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT's supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All of the services to be furnished by CONSULTANT under this agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances. SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of and in compliance with all federal, state and local laws, ordinances, regulations, and orders that may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services. SECTION 8. ERRORS/OMISSIONS. CONSULT ANT shall correct, at no cost to CITY, any 2 Professional Services Rev. Nov. 1,2011 and all errors, omissions, or ambiguities in the work product submitted to CITY, provided CITY gives notice to CONSULTANT. If CONSULTANT has prepared plans and specifications or other design documents to construct the Project, CONSULTANT shall be obligated to correct any and all errors, omissions or ambiguities discovered prior to and during the course of construction of the Project. This obligation shall survive termination ofthe Agreement. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works -------project,-CONStltTA:NT-shall-submitestimate-s-ofproo-able-cofistructIDn-c-ostn{Ceach-phaStn)f~- design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of the CITY's stated construction budget, CONSULTANT shall make recommendations to the CITY for aligning the PROJECT design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in performing the Services under this Agreement CONSULTANT, and any person employed by or contracted with CONSULTANT to furnish labor and/or materials under this Agreement, shall act as and be an independent contractor and not an agent or employee ofthe CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSUL T ANT are material considerations for this Agreement. CONS UL T ANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSULTANT's obligations hereunder without the prior written consent of the city manager. Consent to one assignment will not be deemed to be consent to any subsequent assignment. Any assignment made without the approval of the city manager will be void. SECTION 12. SUBCONTRACTING. CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization ofthe city manager or designee. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Niccolo De Luca as the project manager to have supervisory responsibility for the performance, progress, and execution of the Services to represent CONSULTANT during the day-to-day work on the Project. If circumstances cause the substitution of the project director, project coordinator, or any other key personnel for any reason, the appointment of a substitute project director and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY's project manager. CONSULTANT, at CITY's request, shall promptly remove personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property. 3 Professional Services Rev. Nov. 1,2011 The City's project manager is Richard Hackmann, City Manager's Office, 250 Hamilton Avenue, Palo Alto, CA 94303, Telephone: (650) 617-3174. The project manager will be CONSULTANT's point of contact with respect to performance, progress and execution of the Services. The CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, all writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shan be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall be vested in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other intellectual property rights in favor of the CITY. Neither CONSULTANT nor its contractors, if any, shall make any of such materials available to any individual or organization without the prior written approval of the City Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the scope of work. SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time during the term of this Agreement and for three (3) years thereafter, CONSULTANT's records pertaining to matters covered by this Agreement. CONSUL T ANT further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this Agreement. SECTION 16. INDEMNITY. 16.l. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmles.s CITY, its Council members, officers, employees and agents (each an "Indemnified Party") from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorneys fees, experts fees, court costs and disbursements ("Claims") resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2.. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT's services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. SECTION 17. WAIVERS. The waiver by either party of any breach or violation of any covenant, term, condition or provision of this Agreement, or of the provisions of any ordinance or law, will not be deemed to be a waiver of any other term, covenant, condition, provisions, ordinance or law, or of any subsequent breach or violation of the same or of any other term, covenant, condition, provision, ordinance or law. 3 Professional Services Rev. Nov. 1,2011 SECTION 18. INSURANCE. 18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit "D". CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies. 18.2. All insurance coverage required hereunder shall be provided through carriers with AM Best's Key Rating Guide ratings of A-:VII or higher which are licensed or authorized to transact insurance business in the State of California. Any and all contractors of CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above. 18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY's Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days' prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days' notice to CONSULTANT, CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or ,modification within two (2) business days of the CONSULTANT's receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY's Purchasing Manager during the entire term ofthis Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 19.2. CONSULTANT may terminate this Agreement or suspend its performance of the Services by giving thirty (30) days prior written notice thereof to CITY, but only in the event of a substantial failure of performance by CITY. 19.3. Upon such suspension or termination, CONSULTANT shall deliver to the 4 Professional Services Rev. Nov. 1,2011 City Manager immediately any and all copies of studies, sketches, drawings, computations, and other data, whether or not completed, prepared by CONSULTANT or its contractors, if any, or given to CONSULTANT or its contractors, if any, in connection with this Agreement. Such materials will become the property of CITY. 19.4. Upon such suspension or termination by CITY, CONSULTANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of .sern:ces -on or before-1:he-::effective -date_ i:e. H> days _after iyjng-onoJi'ce) of-susp-enston:-or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that portion of CONSULTANT's services which are of direct and immediate benefitto CITY as such determination may be made by the City Manager acting in the reasonable exercise of his/her discretion. The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 19.4,20, and 25. 19.5. No payment, partial payment, acceptance, or partial acceptance by CITY will operate as a waiver on the part of CITY of any of its rights under this Agreement. SECTION 20. NOTICES. All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention ofthe project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, contractors or persons having such an interest. CONSULTANT certifies that no person who has or will have any financial interest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions ofthe Palo Alto Municipal Code and the Government Code of the State of California. 5 Professional Services Rev_ Nov_ 1,2011 21.3. If the Project Manager determines that CONSULTANT is a "Consultant" as that term is defined by the Regulations of the Fair Political Practices Commission, CONSULTANT shall be required and agrees to file the appropriate financial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act. SECTION 22. NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not 'scnmma ~ III e-employment 0 'any person-6ecause--o t ~ race, skm co or, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with the City's Environmentally Preferred Purchasing policies which are available at the City's Purchasing Department, incorporated by reference and may be amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of the City's Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, Consultant shall comply with the following zero waste requirements: . • All printed materials provided by Consultant to City generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by the City's Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post- consumer material and printed with vegetable based inks. • Goods purchased by Consultant on behalf of the City shall be purchased in accordance with the City's Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy ofthis policy is on file at the Purchasing Office. • Reusable/returnable pallets shall be taken back by the Consultant, at no additional cost to the City, for reuse or recycling. Consultant shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. NON-APPROPRIATION 24.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion ofthe fiscal year and funds for this Agreement are no longer available. This section shall take precedence in the event of a contlict with any other covenant, term, condition, or provision of this Agreement. SECTION 25. MISCELLANEOUS PROVISIONS. 6 Professional Services Rev. Nov. 1,2011 25.1. This Agreement will be governed by the laws of the State of California. 25.2. In the event that an action is brought, the parties agree that trial of such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. 25.3. The prevailing partYin any action brought-to en oree-the provisions-ofthis Agreement may recover its reasonable costs and att<;>rneys' fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys' fees paid to third parties. 25.4. This document represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This document may be amended only by a written instrument, which is signed by the parties. 25.5. The covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, successors, executors, administrators, assignees, and consultants of the parties. 25.6. If a court of competent jurisdiction finds or rules that any provision of this Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement and any amendments thereto will remain in full force and effect. 25.7. All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules to this Agreement which, from time to time, may be referred to in any duly executed amendment hereto are by such reference incorporated in this Agreement and will be deemed to be a part of this Agreement. 25.8 If, pursuant to this contract with CONSULTANT, City shares with CONSULTANT personal inforination as defmed in California Civil Code section 1798.81.5( d) about a California resident ("Personal Information"), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City's express written consent. 25.9 All unchecked boxes do not apply to this agreement. 25.10 The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf oftheir respective legal entities. 25.11 This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement 7 Professional Services Rev, Nov. 1,201 I EXHIBIT" A" SCOPE OF SERVICES CONSUL T ANT shall represent CITY in all state legislative advocacy matters including grant and funding advocacy. The CONSULTANT'S objective shall be to execute a comprehensive legislative strategy on behalf of CITY. CONSUL TANT shall not attempt to achieve CITY'S goals while dj~aciv~t~ging-anQtp~r entity, city pr GQunty. W1L~n pos~ibl~, CE.>NSJJLTANT s~aJl--w9rlc-tow_~rds win- win scenarios. In order to achieve the CITY'S objectives, advocacy must encompass an understanding of all matters related to the CITY'S legislative program. CONSUL T ANT shall: General • Develop an annual state legislative strategic plan by outlining action that should be taken in a given year to achieve CITY'S goals related to legislation, appropriations, and grants. Once approved by CITY, this plan will outline an approach for working with the appropriate elected officials and agencies on CITY'S legislative priorities. • Track legislation, appropriations, and grants through the entire legislative process so CITY knows both the status oflegislation, appropriations, and grants and when advocacy measures, such as correspondence, are necessary. • Conduct a strategic assessment of legislative opportunities by gaining a complete understanding of CITY priorities and services to ensure that CITY is taking advantage of every opportunity for state assistance whether through legislation, appropriations, or grants. • Provide assistance in setting short and long-term legislative priorities for CITY and perform in- depth analysis of current and anticipated legislation and state funding opportunities on an on- going basis. Grants • Assist CITY in obtaining state grants by making CITY aware of grant opportunities and helping CITY obtain them through coordination with state agencies. Reporting • On a weekly basis, conduct conference calls with CITY staffto ensure the state legislative program is being implemented and to inform them ofthe status oflegislation, appropriations, and grants. • On a weekly basis, provide CITY with analysis of current events and the implications they may have on CITY'S legislative program. • On a weekly basis, provide a comprehensive picture of what actions are expected by the Assembly, Senate, and Governor. Correspondence • Work with CITY to help draft correspondence that will be used to influence legislation and seek funding opportunities. • When appropriate, review CITY press releases prior to distribution. Meetings • When appropriate, attend meetings on behalf of CITY and, when appropriate, provide spoken comments, testimony, and/or written correspondence on behalf of CITY. • When appropriate, arrange meetings for CITY officials with state officials and their staffs and prepare CITY officials for those meetings in order to optimize effectiveness. \0 Professional Services Rev. Nov. 1,2011 Coa lition Building • Build support for CITY endorsed legislation, appropriations, and grants by working with stakeholders at the local, regional, and state level. Support shall be conveyed through leners, phone calls, and visits. II Professional Services Rev, Nov. 1,2011 EXHIBIT "B" SCHEDULE OF PERFORMANCE (NOT APPLICABLE) 12 Professional Services Rev. Nov. 1,2011 EXHIBIT "C" COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement based on the rate schedule attached as Exhibit C-1. The_ compensation to __ be p_aid to CONSULTANT _under thi~ t\gr_eeroent _fQr all s_e(vices described in Exhibit "A" ("Services") and reimbursable expenses shall not exceed $187,000.00. CONSULTANT agrees to complete all Services, including reimbursable expenses, within this amount. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: None All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $0.00 shall be approved in advance by the CITY's project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY's project manager's request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT's proposed maximum compensation, including reimbursable expenses, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY's Project Manager and CONSUL TANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. 13 Professional Services Rev_ Nov_ 1,2011 Advocacy Services EXHIBIT "C-l" RATE SCHEDULE (22 months @ $8,500.00 = NTE $18'7,000.00) 14 $8,500.00IPer Month Professional Services Rev Nov. 1,2011 EXHIBIT "D" INSURANCE REQUIREMENTS CONTRACTORS TO TIlE CITY OF PALO ALTO (CITY), AT TIlEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR TIlE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST'S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITII CITY'S INSURANCE REQUIREMENTS, AS SPECIFIED. BELOW: -----MIRIHUM LIm~s-_~:-=--= REQUIRE TYPE OF COVERAGE REQUIREMENT D YES YES YES YES YES YES EACH OCCURRENCE AGGREGATE WORKER'S COMPENSATION STATIJTORY EMPLOYER'S LIABILITY STATIJTORY BODILY INJURY $1,000,000 $1,000,000 GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE $1,000,000 $1,000,000 PROPERTY DAMAGE BLANKET CONTRACTIJAL, AND FIRE LEGAL BODILY INJURY & PROPERTY DAMAGE $1,000,000 $1,000,000 LIABILITY COMBINED. BODILY INJURY $1,000,000 $1,000,000 -EACH PERSON $1,000,000 $1,000,000 -EACH OCCURRENCE $1,000,000 $1,000,000 AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED PROPERTY DAMAGE $1,000,000 $1,000,000 BODILY INJURY AND PROPERTY $1,000,000 $1,000,000 DAMAGE, COMBINED PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR., AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT TIlE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH TIlE EXCEPTION OF WORKERS' COMPENSATION, EMPLOYER'S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY (30) DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR'S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY'S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO "ADDITIONAL INSUREDS" A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY 15 Professional Services Rev Nov. 1,2011 THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER TIDS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TmRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON- PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITX OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 16 Professional Services Rev Nov. 1,2011 City of Palo Alto (ID # 4373) City Council Staff Report Report Type: Action Items Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: TDM Strategy Update Title: Transportation Demand Management (TDM) Recommendations. Staff Recommends City Council Authorize Staff to Take The Following Actions In Furtherance of a Coordinated TDM Program Aimed At Reducing Traffic Congestion And Parking Demand: a. Solicit Proposals to Establish A Non- Profit Transportation Management Authority (TMA); b. Solicit Proposals For An Expanded Palo Alto Shuttle Program; c. Solicit Proposals to Provide Car Share Services Within City-Owned Parking Lots; and d. Evaluate Rideshare Tools, Including a Trial of the Twogo Rideshare App, for Coordination and Marketing By The TMA. From: City Manager Lead Department: Planning and Community Environment Recommendation: Staff recommends that Council direct staff to take the following actions to implement a coordinated Transportation Demand Management (TDM) program aimed at reducing traffic congestion and parking demand in Palo Alto: 1. Solicit Proposals to Establish A Non-Profit Transportation Management Authority (TMA); 2. Solicit Proposals For An Expanded Palo Alto Shuttle Program; 3. Solicit Proposals to Provide Car Share Services Within City-Owned Parking Lots; and 4. Evaluate Rideshare Tools, Including a Trial of the “Twogo” Rideshare App, for Coordination and Marketing By The TMA. Executive Summary: The term Transportation Demand Management (TDM) refers to coordinated strategies aimed at reducing the use of single occupancy vehicles in order to reduce traffic and parking demand. TDM programs generally include investments in alternative modes of transportation, incentives for employees and employers to use transit/carpools/bicycles, parking management programs, City of Palo Alto Page 2 coordination and marketing. The City Council held a study session on TDM strategies on December 9, 2013, and requested a staff analysis and recommendation regarding establishment of a Transportation Management Authority (TMA) to oversee development and implementation of a TDM program for Palo Alto. If the Council takes the requested actions, staff would solicit proposals from organizations and consultants interested in establishing a TMA, from vendors interested in providing expanded shuttle service, and from car share organizations wishing to locate their vehicles in City owned parking lots. Staff would also evaluate rideshare tools for future coordination and implementation. To fully leverage commute resources, staff will coordinate implementation of the TMA with the Bay Area Commuter Benefits Pilot Program mandated by SB 1339. The TMA is envisioned as an independent non-profit organization that would work in collaboration with the City and the business community. Establishment of a TMA would require seed funding from the City, but the organization would ultimately seek financial support from large employers and other sources for its ongoing operations. New development projects could be required to participate. The TMA’s primary responsibilities would be to coordinate and market an expanded City shuttle program, to coordinate and market incentive programs aimed at increasing the use of transit, carpooling, and bicycling, and to pursue additional incentives and initiatives consistent with this mission. Background: Since early 2013, the City has been actively engaged in developing strategies to address Palo Alto’s growing traffic and parking concerns, including Transportation Demand Management (TDM) strategies which are intended to encourage alternatives to driving alone, reducing traffic and parking demand. A City Council colleagues memo dated October 3, 2013 resulted in Council direction to convene a study session and develop an initial staff recommendation. The Colleagues memo and minutes from the Council’s discussion are included as Attachment A. On December 9, 2013 Council held a study session with representatives of Google, Contra Costa Centre and Stanford. All three are considered Bay Area leaders in applying TDM strategies, and are achieving aggressive single-occupancy vehicle reduction targets. Minutes from the Study Session are attached as Attachment B. Since the study session, staff has taken various actions devoted to the study of transportation demand management and its more formal implementation in Palo Alto, including the following: City of Palo Alto Page 3 1. Engaging a third-party TMA expert to develop an implementation strategy for a Downtown Palo Alto TMA. Results of this engagement are outlined in this report and include identification of needed steps and stakeholders to initiate the formation of a TMA and a potential timeline for this effort. 2. Outreach to neighboring jurisdictions, including East Palo Alto, Menlo Park and Mountain View to share ideas and identify opportunities for collaboration in TDM measures and/or the formation of a regional TMA. Results of this discussion included a more comprehensive discussion around regional shuttles and a proposal to include the East Palo Alto Caltrain shuttle in the renewal of Palo Alto’s shuttle program (see “Expansion of Shuttle Program”), as well as plans to conduct regional transportation surveys. 3. Research on other successful county or city-based TMAs that have focussed on engaging businesses and providing resources to promote alternate modes of commuting. The City’s interest in TDM strategies also resulted in City Council direction to develop an agreement with Caltrain to encourage city employee ridership (see staff report 4285, also an action item on February 24). The proposed program would provide eligible City employees a Go Pass in exchange for forgoing a City-issued parking permit. Proposed as a way to free up parking spaces within the Civic Center garage, the pilot program will begin in April 2014 and be evaluated over the next nine to 21 months. During the exploration of the Go Pass program staff evaluated several other transit pass options including the VTA Eco Pass but found that the Go Pass offered the most robust option for getting employees to and from Palo Alto. The City Council has also provided recent direction on substantive actions related to neighborhood parking restrictions (January 29, 2014) and parking supply increases (February 10, 2014). These are both related to TDM, and Councilmembers have aptly referred to parking supply, parking restrictions, and TDM as a “three legged stool.” Coordination with SB 1339 In addition to local efforts to encourage TDM, the Bay Area in general is experiencing a substantial increase in commute traffic and is stepping up regional efforts to reduce single occupacy vehicle commute trips. In Fall 2012, the Governor signed Senate Bill 1339, a pilot program aimed at reducing single occupant vehicle trips in the Bay Area region. This new law, codified as Section 65081 of the California Government Code, authorizes the Bay Area Air Quality Management District (Air District) and Metropolitan Transportation Commission (MTC) to adopt and implement a regional ordinance, known as the Bay Area Commuter Benefits Program (Program). The program will require employers with 50 or more full-time employees in City of Palo Alto Page 4 the Bay Area to select one of the following four commuter benefit options to offer to their employees: Option 1: Pre-tax option: A program, consistent with Section 132(f) of the Internal Revenue Code, allowing covered employees to elect to exclude from taxable wages costs incurred for transit passes or vanpool charges, up to the maximum amount allowed by federal tax law. Option 2: Employer-paid benefit: A program whereby the employer offers employees a subsidy to offset the monthly cost of commuting via transit or by vanpool. An employer may also elect to provide a subsidy for bicycle commuting costs in addition to subsidies for transit and vanpool costs. Option 3: Employer-provided transit: Transportation furnished by the employer at no cost, or low cost, to employees in a vanpool or bus, or similar multi-passenger vehicle operated by or for the employer. Option 4: Alternative Commuter Benefit Program: An employer may offer an alternative benefit, either directly or through a Transportation Management Association. The criterion for approval of an alternative commuter benefit is that it must provide at least the same reduction in single-occupant vehicle trips as any of the three above options. The Air District Board of Directors will consider the proposed program on March 19, and the MTC Commission will consider it on March 26. If the rule is approved by both governing boards, employers would then have six months to comply with the Program. For additional information, see:www.baaqmd.gov/commuterbenefits. This State pilot program provides a regulatory framework for businesses employing 50 or more full time employees. Also, as some cities have already adopted similar programs for businesses employing 20 or more employees, the Pilot program envisions some local flexibility. Staff anticipates that Palo Alto’s program will follow a similar regulatory framework as SB 1339, but will try to encourage employers to move beyond Option 1 and focus on more substantive commute programs. The City of Palo Alto already meets the requirements of Option 1 above. Discussion: A Transportation Management Authority (TMA) could effectively market and manage TDM strategies, and monitor their effectiveness on a district- or city-wide basis. As an independent non-profit organization, a TMA can also build collaboration between businesses and government, working towards a common goal of decreasing trips by single occupancy vehicle. Formation of a TMA would provide the following benefits: 1. It would allow for a comprehensive approach to managing transportation needs in Palo Alto’s Downtown, and provide a framework for multiple constituents to work collaboratively on transportation solutions. City of Palo Alto Page 5 2. It would provide a mechanism to offer branded services to both residents and commercial businesses cost-effectively and efficiently through a network of alliances and partnerships, using a grass-roots approach. 3. It would position Palo Alto to work cooperatively with its neighborhoods and potentially neighboring cities in providing a flexible array of programs and services. Some transportation programs may be neighborhood specific; others designed for a targeted customer demographic (i.e., seniors or school-age children; hospitality workers); others yet for various trip types (i.e., medical trips, inter-city and intra-city commuters); and others still for the general public or for specific business interests within the community. 4. It would support Palo Alto’s economic vitality, health and wellness lifestyle, and benefit an overall quality of life. Additionally, an effective TMA can have significant measurable benefits such as: 1. Reducing the number of single-occupancy-vehicle (SOV) trips made within and through Palo Alto, which reduces traffic congestion and the demand for parking; 2. Reducing total vehicle miles traveled (VMT); 3. Reducing greenhouse gas emissions generated both locally and at the regional level, which contributes to Palo Alto’s sustainability goals. Staff recommends that Council authorize Staff to release a request for proposal for a consultant who would be charged with developing a TMA for Palo Alto. It is suggested that the TMA development have a multi-phase process, as follows: Phase I: Community Outreach, Data Collection and Marketing. The purpose of Phase I is to assess the most pressing transportation needs within the Downtown areas and establish a TMA stakeholder group, or Steering Committee. The Steering Committee will develop a mission statement for the TMA, guide its organizational development, identify funding sources and champion the value of a TMA in the community; some members of the Committee may ultimately sit on the Board of Directors of the TMA once it is formally established. During Phase I, the Steering Committee will also compile data from existing data points to establish baselines and current travel behavior. Phase II: During Phase II, the Steering Committee in conjunction with the TMA consultant will develop a 2-3 year work plan, regulatory framework for Council approval and budget which includes securing financial commitments from business interests in the community. In order for the TMA to be successful, the City will need to implement regulations for new businesses and/or development projects, and these will be brought to Council for consideration. During this phase the Steering Committee will continue to develop membership and identify partnerships in the community to create new transportation programs or continue existing ones. In addition to having the TMA consultant provide ongoing leadership and continuing support in managing the Working Group, staff recommends that Phase II include provision of City incentive money to help encourage participation in programs that the TMA would manage. These programs City of Palo Alto Page 6 could include Carshare memberships, Rideshare program memberships and potentially subsidies of shuttle and bike services within the community. Phase III: Once the TMA is established, the Steering Committee (or Board of Directors) will continue to manage and market transportation services, expand the TMA’s membership and identify new and ongoing sources of funding. The City would be represented on the Board of Directors. During this phase, the TMA would begin to monitor and evaluate existing programs. The Role of the City The City must play an important role in the developmental phases of the TMA and also once the TMA has been officially launched. The City will also play a leadership role in developing the metrics and programs by which the TMA can track performance, including the following: 1. Establishing baselines and single-occupancy vehicle reduction targets for targeted areas (e.g. Downtown). 2. Establishing TMA participation for businesses or projects of a certain size or dollar value. 3. Establishing both prescriptive measures and ultimately performance targets for new development projects. (The City currently has TDM requirements for new development projects, but the formation of the TMA would create a platform to monitor these measures over time.) The Structure of the TMA TMAs can be structured in a number of ways, and once the Steering Committee has been established part of their charge will be to determine what form the TMA will take. It could be managed under the umbrella of another existing organization such as the Chamber of Commerce; it could function as an extension of City government or it could ultimately become its own separate non-profit entity. Depending on its structure, the TMA will have operating policies, accounting procedures, bylaws and articles of incorporation, as well as official elections and regular meetings. The Steering Committee will develop the membership policies of the TMA and overall governance strategy. Expansion of the Palo Alto Shuttle Program The City currently operates two shuttles: the Embarcadero shuttle, which provides service between the University Avenue Caltrain Station, and the Baylands Business Parks, and the Crosstown shuttle, which connects the downtown, residential neighborhoods, schools, libraries, recreation centers, and commercial districts between the Palo Alto Caltrain station and East Charleston Road. The Embarcadero Shuttle runs every 15 minutes during peak hours. The Crosstown shuttle operates hourly all day (7:30AM – 5:30PM). Ridership for the shuttles is currently around 135,000 riders per year, or about 375 people per day. In the absence of a robust regional transit network, an effective shuttle service is crucial for the success of Transportation Demand Management. It provides an alternative to solo driving for City of Palo Alto Page 7 local commuting and errand-running; it requires no additional infrastructure other than potential additional stops, and it can help Caltrain riders get to other parts of the City without the use of a car. Staff is recommending that the City solicit proposals from shuttle service providers to build an expanded shuttle network, including new routes and more frequent service, with the aim of significantly increasing ridership within three years (concurrent with the development of the TMA). Specific proposals include: Increasing service on the existing Crosstown shuttle route between the Palo Alto Caltrain station and East Charleston Road, providing busses every 20 minutes rather than every hour. Expanding the Embarcadero shuttle route to provide transit connections all day long and support satellite parking concepts. The Embarcadero Shuttle is currently jointly funded between by Caltrain and the City of Palo Alto. Staff is recommending that the City explore the cost impact of taking over the funding and management of this route through the RFP process. Adding a West Shuttle route to provide service between South Palo Alto and the Stanford Shopping Center, linking senior housing facilities with commercial centers such as Town & Country Shopping Center and the California Avenue Business District. The West Shuttle would also support school connections to Palo Alto High School, Palo Alto Medical Foundation, and Stanford University Medical Center. This route may also include a link to the North Bayshore Business Park in Mountain View to link high tech employment centers with local residential districts. Managing and maintaining current service on the East Palo Alto Shuttle which provides service between University Avenue Caltrain station and East Bayshore. This route is currently managed by East Palo Alto and would still be funded by East Palo as part of the current proposal. It would continue to run on weekends as well as weekdays. Adding an East Bay Commuter Shuttle to provide service during commute hours only between the Freemont BART Station or a similar location and Downtown Palo Alto. Staff suggests that the solicitation invite shuttle vendors to suggest modification to these routes, which are shown in Attachment C, if those modifications have the potential to increase ridership without increasing costs, and also invite proposals for additional inter-city commuter routes. All shuttle services are intended to be free, except for inter-city commuter routes, which would be operated to recover the cost of service. City of Palo Alto Page 8 Carshare Opportunities Staff proposes that carsharing, a service which provides cars to members who pay a monthly fee (which covers gas and insurance), be added to the transportation options in Downtown Palo Alto. Carshare programs generally work in one of two ways – either the user must return the car to the location, or “pod”, where they started from, or they can take one-way trips at leave the car at any location, as is the case with BMW’s Drive Now program. Zipcar, a major carshare provider, has just under sixty cars available at Stanford University locations, and Drive Now has 68 Palo Alto members. With carshare spots available at Downtown locations, Palo Alto residents and employees would have access to vehicles during the day without relying on their own automobiles. Staff consulted with carshare providers to identify desirable locations for cars at Downtown lots and the Civic Center garage. Twenty parking spots (currently designated as hourly spots) are proposed for carshare dedication with up to three carshare organizations; these locations are listed in Attachment D. The carshare providers would lease the spots from the City and the City or the proposed TMA would help market the services and provide community outreach. Rideshare Opportunities Rideshare Apps, or applications which can be accessed via mobile phones and websites to find carpooling opportunities, have seen increased popularity as alternatives to either single- occupancy vehicle or public transportation. Leading rideshare apps include Uber, which connects drivers to riders in more than thirty cities worldwide and Lyft, with its pink-mustached cars and reciprocal ratings for both passengers and drivers. The City has entered into a trial agreement with TwoGo, an app developed by SAP, for 1,000 City employees to test in 2014. The City will evaluate the effectiveness of the app and determine if frequent ridesharing, in partnership with Caltrain Go Passes, can help free spaces in the Civic Center parking garage. The benefits of using an app such as TwoGo include its ability to track data from the users, such as where they commute from and at what time. Staff is also proposing to evaluate other Apps for inclusion in the programs marketed through the TMA. Policy Implications City of Palo Alto Page 9 Implementation of a TMA and other TDM measures is consistent with Comp plan goal T-1: Less Reliance on Single-Occupant Vehicles. It also aligns with several policies under this category, particularly including the following: Policy T-1: Make land use decisions that encourage walking, bicyclings and public transit use; Policy T-2: Consider economic, environmental, and social cost issues in local transportation decisions; and Policy T-3: Support the development and expansion of comprehensive, effective programs to reduce auto use at both local and regional levels. Expanding the existing shuttle program is consistent with Goal T-2: A Convenient, Efficient, Public Transit System that Provides a Viable Alternative to Driving and in particular Policy T-4: Provide local transit in Palo Alto. Implementing a holistic TDM strategy throught the formation of a TMA is also consistent with greenhouse gas reduction targets mandated state-wide by AB-32 and SB-375. Resource Impact The effectiveness of Transportation Demand Management strategies like those recommended here (specifically establishment of a TMA, and expanded shuttle service) is likely to depend on the level of financial support that is made available. To guage the potential costs and benefits, staff is recommending a competitive RFP process, requesting proposals from consultants and service providers with relevant experience. Upon receipt of proposals, the staff will evaluate the costs and benefits as well as availability of funds and based on that analysis will bring forward recommenations to the City Council. Recommendation No. 1: TMA Consultant The costs represented here are estimates, but it is expected that TMA consultant, who would be essentially working nearly full time to establish a Downtown TMA, would cost the following: 1. Phase I (one year): $150,000 for marketing, Steering Committee development and outreach to businesses and residents City of Palo Alto Page 10 2. Phase II (two years): a. $150,000 for marketing, development and outreach b. $250,000 for funding additional programs and providing incentives (note that the City can require businesses to participate in the TMA and that money spent on many programs, such as the shuttle, would need to be spent anyway, but that it will be critical to provide seed funding for additional programs as the TMA gets established) 3. Phase III: It is expected that the TMA would be self-supporting after three years, although staff time would be committed on an ongoing basis. The TMA might ultimately take over management and funding of existing transportation programs. Recommendation No. 2: Palo Alto Shuttle Expansion Staff estimates that the expansion of the existing shuttle program, depending on what alternate routes are suggested, could cost up to $1,360,000 annually as follows: 1. $450,000 for Crosstown Shuttle (currently the program costs about $150,000 per year, but increasing to 20-minute headways is suggested which would triple the current cost) 2. $150,000 for Embarcadero Shuttle 3. $300,000 for a West Shuttle operating with 30 minute headways 4. $60,000 for a Commuter Shuttle (some or all of this would be reimbursed) 5. $400,000 for continuing the East Palo Alto Shuttle (this is reimbursed by EPA , so the net cost is $0) 6. Additional Innovative Routes TBD In years past, the Palo Alto Unified School District (PAUSD) provided a school bus service, which was stopped due to budget impacts. This resulted in parents driving to and picking up their children from schools, which increased traffic within the City. It is anticipated that this potential shuttle service routes will be used by school children. Therefore, the current annual City of Palo Alto General Fund expense for the payment to PAUSD, which the City remits to the school district for not developing the Cubberley property, could be reallocated to pay the shuttle service. Recommendation No. 3: Carshare Opportunities Carshare implementation, since it involves organizations leasing spaces from the City of Palo Alto, could generate revenue to the City. It is suggested that the twenty spots targeted be leased at a rate which is at least equal to the current annual rate for a parking permit: City of Palo Alto Page 11 20 spots x $466/spot = $9,320 annually Staff also recommends that the Carshare organization provide some level of profit sharing with the City as part of their agreement. Recommendation No. 4: Rideshare Opportunities The current trial program with TwoGo for City Employees costs $5,000 for 1000 users. It is unknown at this time what additional programs may cost, so Staff recommends that $15,000 annually be allocated to agreements with other app providers and marketing as part of a TMA. Timeline Staff hopes to receive proposals for services in the following timeline: TMA Consultant: Release RFP in March of 2014; receive proposals in May and bring to Council in June of 2014. Palo Alto Shuttle: Release RFP in February of 2014; receive proposals in April and bring to Council in June of 2014. Carshare Opportunities: Release RFP in March of 2014, receive proposals in April and bring to Council in June of 2014. Rideshare Opportunities: The TwoGo trial will begin in spring of 2014 The Caltrain Go Pass program for City employees who work downtown (discussed as a separate agenda item) will initiate on April 1, 2014. Attachments: Attachment A: October 3, 2013 Colleagues Memo and Excerpt Minutes on TDM (PDF) Attachment B: TDM Study Session Report of December 9, 2013 (PDF) Attachment C: Proposed Shuttle Routes Map (PDF) Attachment D: Proposed Downtown Car Share Locations (PDF) CITY OF PALO ALTO OFFICE OF THE CITY CLERK October 3, 2013 The Honorable City Council Palo Alto, California Discussion of Palo Alto Transportation Demand Management Plan (continued from September 16, 2013) On September 16, 2013 the City Council discussed the Colleague’s Memo regarding Palo Alto Transportation Management Plan that was authored by Mayor Scharff, Vice Mayor Shepherd and Council Members Kniss and Price. After much discussion, the Council approved a Motion to Continue and directed the Mayor to form a Committee of two Council Members, to draft a resolution with respect to a Transportation Demand Management plan and bring back to Council by the first meeting in October. Attached please find a proposed motion by Council Member Klein that was discussed with Mayor Scharff. ATTACHMENTS: Council Member Klein Letter (DOCX) Colleagues' Memo Report #4087 Dated September 16, 2013 (PDF) September 16, 2013 CCM Excerpt TDM Minutes (DOC) Department Head: Donna Grider, City Clerk Attachment A Page 2 Proposed Motion from Council Member Klein Subject: Transportation Demand Management (TDM) Districts In order for the City Council to determine whether one or more Transportation Demand Management (TDM) Districts as proposed on the Colleagues’ memorandum or as reasonably modified would be legal, effective, practical and economic for any or all of the University Avenue, California Avenue, East Meadow Circle and Stanford Research Park Business District, the City Council hereby directs the City Manager and the City Attorney as follows: City Attorney – Advise the Council whether such TDM Districts would be legal and if so what laws and legal procedures and processes would apply to them; City Manager – 1) Prepare a preliminary report on the proposed TDM Districts, at a cost of not more than $100,000 in staff time, (a) setting forth staff’s initial views on TDM Districts, (b) outlining the steps necessary for an in-depth study of TDM Districts and its timeline, (c) identifying any local or regional governments that have TDM Districts comparable to that proposed in the Colleagues’ memorandum and (d) advising whether the services of a consultant would be needed for a more detailed, in-depth study of such proposed TDM Districts and if so what the consultant would be expected to do and his/her expected cost. 2) Organize one or more Study Sessions on TDM Districts with (a) appropriate speakers with relevant experience in TDM programs such as Stanford’s and Contra Costa County’s and (b) outreach to various stakeholders including but not limited to adjacent residential neighborhoods and potentially effected business interests to attend and participate in such Study Session(s) 3) Advise the Council on other possible solutions to the City’s traffic and parking problems Schedule – The reports from the City Attorney and the City Manager shall be due not later than January 20, 2014 and the initial Study Session shall take place not later than February 03, 2014 City of Palo Alto COLLEAGUES MEMO September 16, 2013 Page 1 of 3 (ID # 4087) DATE: September 16, 2013 TO: City Council Members FROM: Council Member Price, Mayor Scharff, Vice Mayor Shepherd, Council Member Kniss SUBJECT: PALO ALTO TRAFFIC DEMAND MANAGEMENT PLAN Recommendation: Direct staff to develop a comprehensive Transit Demand Management (TDM) plan for the California Ave and University Ave Downtown Districts and the Stanford Research Park with the goal of reducing solo car trips by at least 30% and return to the full Council for further policy direction prior to initiating CEQA review, soliciting contracts, or proposing new fees, ordinances or resolutions. If appropriate, the City Manager may wish to consider retaining a consultant to assist in the expeditious development of a rigorous TDM plan. The TDM plan should: 1) Create a defined TDM boundary area for the University Avenue TDM District, the California Avenue TDM District and the Research Park TDM District; 2) Provide a funding mechanism for the TDM districts (such as, for example, assessments on existing businesses, impact fees on new developments, or a combination of both) that will fund a robust TDM plan with measurable outcomes based on identified goals; 3) Develop a request for proposals (RFP), based on identified goals to contract out ongoing TDM services which would include, but are not limited to, using revenue offsets for subsidizing public transit, parking strategies and management, carpooling incentives, biking, car sharing services, etc. for the purpose of reducing car trips into, out of and within Palo Alto, and supplementing existing services provided by Caltrain, SamTrans, VTA, Margarite Shuttles, AC transit and links to surrounding transit systems such as Bart, ACE and the Capital Corridor express; 4) Outreach to Stanford's TDM director for the purpose of collaboration and integration of services; 5) Develop tools to monitor, evaluate and measure utilization of the various TDM elements and progress towards the overall goal of reducing solo car trips throughout the city. Enforcement could include penalties for applicants not meeting approved TDM criteria. 6) Return to full City Council for discussion and approval. September 16, 2013 Page 2 of 3 (ID # 4087) Background: Parking and traffic are one of the toughest challenges facing the City at this time and a major concern for our residents. The twin challenges of parking and traffic are being dealt with in a multi-pronged approach. The infrastructure committee is working on using a funding mechanism such as a Mello Roos district to create new parking garages both downtown and on California Ave. The City Manager advises that staff is developing a framework for a Comprehensive Residential Parking Permit system for Council to consider in the next 90 days to deal with the substantial issues of parking intrusion into our neighborhoods. In the next 45 days, staff will also bring to Council proposals to suspend parking exceptions so that new developments provide an appropriate amount of parking spaces. However, a Residential Permit Parking program, new parking garages and requiring new developments to be parked appropriately will not alone solve the issues of parking and traffic. The City needs a comprehensive TDM program that will reduce trips by at least 30%. Stanford has reduced trips by 40% or more through a comprehensive TDM program, and with the right focus and attention Palo Alto could have similar results. Comprehensive TDM ordinances and policies cover a range of areas and use various types of management models in the public and private sectors. Over the past 30 years, numerous cities, counties and states have successfully developed comprehensive TDM programs specifically designed to reduce single occupant vehicle trips. During that period, a number of TDM specialists and consultants have prepared plans for both the public and private sectors. In general, the key elements of these comprehensive TDM programs focus on reducing use and reliance on single-occupant vehicles through a combination of regulation, incentives and demand pricing. Ultimate solutions have included transportation options (walking, biking, pedestrian, transit), promotion of the use of alternative transportation modes and parking management/pricing. The key elements of a TDM program should focus on reducing use and reliance on single-occupant vehicles through the promotion of various strategies such as improving transportation options (walking, biking, transit); promotion of alternative transportation modes (ridesharing, vanpools, shuttles), parking management of various types and mass transportation (i.e Caltrain, BART, etc.). Palo Alto now finds itself experiencing significant economic development and prosperity. Although the City has existing Municipal Code provisions that address TDM measures, they are not comprehensive, mandatory or current in nature or consider these districts as a unit. Furthermore, the Municipal Code includes several “by right” parking reductions for new commercial buildings. These provisions, in combination with nearby, unrestricted (free) residential neighborhood parking, have encouraged the use of single-occupant vehicles, while affecting the quality of life in residential neighborhoods. Finally, the workplace itself has changed. The tech and start-up industry have abandoned cubicles and offices in exchange for collaborative rooms that hold more people per square foot. For these and many other reasons traffic and parking demands are currently unmanageable, and a comprehensive, district-wide TDM program needs to emerge in our jobs intensive areas. September 16, 2013 Page 3 of 3 (ID # 4087) In August, Vice Mayor Shepherd, Councilmembers Price and Kniss, and Interim Planning Director Aaron Aknin, took a field trip to the Contra Costa Transit Center to see firsthand how its TDM program has successfully reduced single car trips by more than 30%. The program emerged as BART ridership expanded in the 1980s and large and small companies brought jobs into the area. Palo Alto could have a similar experience as both Contra Costa and Stanford have shown with the right TDM policies and focus in place. The Contra Costa Transit Center offers on-site services for commuters employed by companies of anywhere from 2 to 1,000 employees. The Center’s initial capital came from new commercial development of 50 cents per square foot, grants, and now a voluntary transit district assessment. BART fare subsidies, gas cards and special parking for carpools are examples of their TDM strategies. Car share services are available for mid-day errands or emergency trips home, and a contract with the local taxi company gives the commuter vouchers for final leg journeys if needed. This is all being done in conjunction with a mandatory TDM ordinance that applies to this entire district, thereby creating the regulation that is necessary to create the critical mass of employers participating in the program. This approach actually created a Transportation Management Agency (TMA) to manage these programs. Palo Alto’s review of TDM options should consider a TMA and also explore ways to capture funding and participation related to existing development and existing traffic, in addition to new projects. One emerging trend in terms of demographics is that young adults are choosing not to own a car if there are viable alternative transportation options. A significant percentage of young workers want to live in San Francisco and commute via Caltrain to work in Palo Alto As this trend matures, commute options into, out of and within Palo Alto also need to reflect what is called a "shared economy" where people borrow, rent or pay for the short time use of vehicles and equipment. A TDM program could support and encourage this new trend. Conclusion: Alternative transportation models are not a new idea in Palo Alto. Many of our policy documents have identified the importance of alternative modes as a means of reducing greenhouse gas reductions. The City, employers and transit agencies have already promoted trip reduction and alternative transportation options. Yet, these initiatives are not comprehensive in nature, and have not been effective from a district wide standpoint. The idea of considering downtown districts as a unit, with an experienced TDM contractor, working directly with employers and commuters is a smart, and proven strategy to address the City’s traffic and parking issues. Staff Impact: The implementation of this program will take a considerable amount of staff time in the short term during the RFP and consultant selection process. In addition, an ongoing connection with the TDM contractor will be necessary, and take additional staff time. To some extent, however, this will be offset in the long run. As the more comprehensive strategy takes effect, staff will not have to tackle individual issues to the same degree. A new position in the department, Parking Manager, will soon be hired and will provide needed support in the above mention efforts, under the direction of the Chief Transportation Official. CITY OF PALO ALTO CITY COUNCIL DRAFT EXCERPT MINUTES Page 1 of 7 Special Meeting September 16, 2013 12. Colleague’s Memo From Mayor Scharff, Vice Mayor Shepherd, Council Members Kniss and Price Regarding Palo Alto Traffic Demand Management Plan. Vice Mayor Shepherd noted Palo Alto had 65,000 residents and those numbers doubled during the day. A Transportation Demand Management (TDM) Program was intended to reduce solo trips throughout the downtown area it was never intended to burden those who reside in the City from being able to accomplish day-to-day errands. The purpose of the Colleagues Memo was directed toward creating better corporate citizenship and a smoother process for those entering the City from neighboring communities. Staff was instrumental in writing the Colleagues Memo and she felt some of the information needing to be included the future Staff Report; 1) The Infrastructure Committee was looking into a mechanism for parking garages called the Mello-Roos District, 2) The City Manager had introduced the concept of a residential parking permit system, and 3) Council would be reviewing the proposal to suspend parking exemptions for new developments. The recommendation of the Colleagues Memo was for Staff to develop a comprehensive TDM Plan for the California Avenue, Downtown Districts, and Stanford Research Park for the goal of reducing solo car trips by a minimum of 30 percent. During a Bay Area Council Regional meeting she met someone who had been involved in similar processes over the past 30-years for the Contra Costa Transit Center (Center). She visited the Center with Council Member’s Kniss and Price and Acting Director Aaron Aknin. They were pleasantly surprised to see what had been crafted was a system that was not waiting for the Bay Area Rapid Transit (BART) System but rather working with other transit systems and businesses to create a program that was able to subsidize upward of 50 percent of their own ridership. Council Member Price stated TDM was not a new concept; it began in the 1980’s both, in the public and private sectors. Within the region there were a number of sophisticated corporate campus TDM systems; although, Stanford was the poster child for such programs. The concept of the program included climate change and greenhouse gas reductions. DRAFT EXCERPT MINUTES Page 2 of 7 City Council Meeting Draft Excerpt Minutes: 9/16/13 Council Member Kniss noted the Contra Costa and Stanford areas were contained; however, she believed Palo Alto could do very well with the program. She expressed a program of this extent had not been undertaken by Palo Alto and it was ambitious. She strongly suggested the recommendation incorporate a consultant. Arthur Keller, Planning & Transportation Commissioner, felt the Planning & Transportation Commission (P&TC) should be involved in the effort. The P&TC was currently finalizing the transportation element which was scheduled to be reviewed by Council soon. He noted Google had inquired whether there was a TDM for the East Meadow Circle area so he suggested considering widening the areas of TDM consideration. He spoke with a number of startup companies in the downtown area and they agreed to participate in a shuttle program for their employees. Neilson Buchanan stated the TDM program was a positive idea for the City. He requested proper funding, tracking, and staffing of the effort in order to accomplish it in a timely manner. Herb Borock stated the future development of the types of transportation in the City was important. He did not believe the road network in the region could satisfy any further growth. It was important the issue being presented to the public matched the objective for achievement. He felt the future intent of the TDM needed a link between the program and the amount of development. Adina Leven noted Stanford had reduced the amount of parking development necessary by $100,000,000 because of their TDM program’s success. When their program began there was 72 percent of employee’s driving and now, a decade later, there was 42 percent. She urged Council to engage the consultants to determine an aggressive and achievable goal. Omar Chatty asked the Council to recognize the value of a single occupied vehicle. He mentioned San Francisco had a TDM program and the city was continuously in a state of gridlock. The High Speed Rail advocates higher density and more growth while the Supreme Court has upheld growth control since the early 1970’s. Stephanie Munoz spoke about Stanford providing housing for their hospital employees and encouraged the Council to promote that type of TDM. She requested the Council suggest the County of Santa Clara eliminate a transfer fee on the bus schedules. She suggested the High Speed Rail train could be more useful in a TDM program. DRAFT EXCERPT MINUTES Page 3 of 7 City Council Meeting Draft Excerpt Minutes: 9/16/13 Mayor Scharff understood the realization of the parking and traffic issues in Palo Alto becoming the number one concern for the City. The issues need to be resolved and the community needed to see there is a comprehensive plan to accomplish a resolution. The Colleagues Memo was a step in laying out the vision on how to accomplish the end result; 1) suspend the parking exemptions, 2) institute a residential parking permit system, and 3) a plan to build parking garages. He believed items 1 and 2 were in play and being returned to Council soon while building garages would take significantly more time. Palo Alto was a terrific City and deserved to be highly functional; a reduction in transportation was necessary. MOTION: Mayor Scharff moved, seconded by Council Member Price to direct Staff to develop a comprehensive Transportation Demand Management (TDM) plan for the California Avenue and University Avenue Downtown Districts, the Stanford Research Park, and East Meadow Circle, with the goal of reducing solo car trips by at least 30 percent and return to the full Council for further policy direction prior to initiating CEQA review, soliciting contracts, or proposing new fees, Ordinances or Resolutions. The City Manager shall retain a consultant to assist in the expeditious development of a rigorous TDM plan. Council Member Price encouraged her Colleagues to move forward with the Motion on the table. Council Member Klein believed there needed to be dramatic action taken in the community. He noted he was familiar with one of the cities mentioned earlier with respect to their TDM program and he did not see it made a positive difference. He believed the entire community residential and business needed to be involved before such a program was implemented. SUBSTITUTE MOTION: Council Member Klein moved, seconded by Council Member Burt to direct Staff to organize one or two Study Sessions with outreach to various stakeholders, to have appropriate speakers including representatives from Stanford and Contra Costa County and anyone else identified as an expert or critic, and Staff will report to the City Council at the same time as to the cost of any such study and its feasibility at an appropriate timeframe to come forward. Also to have the City Attorney identify and speak to any legal issues. Identify an outline for proposed ideas of financing such a program. Identify possible other solutions to the traffic and parking problems. Such report and Study Sessions to take place no later than January 2014. DRAFT EXCERPT MINUTES Page 4 of 7 City Council Meeting Draft Excerpt Minutes: 9/16/13 Council Member Klein did not feel the current recommendation of Staff developing a comprehensive TDM was sufficient. There was not a clear understanding of the time or cost implications. He questioned whether there was Staff with ample expertise to accomplish the lofty goal. He stated he was not advocating for any specific solution although he felt casting a wide net to capture any relevant solutions for the issues including but not limited to parking garages, a more sophisticated shuttle system, and additional parking lots east of Bayshore should be considered. Mayor Scharff clarified a TDM consultant was to be hired. Council Member Klein stated it was not the normal practice for the Council to authorize Staff to hire a consultant and the City Manager had a limit to his spending account. He was unclear as to what precisely the consultant was being asked to study. Council Member Burt was enthusiastic with the perspective of a TDM program. He agreed the normal practice was not to move from a Colleagues Memo to an authorization of a significant expenditure. The purpose of a Colleagues Memo was to discuss an important concept to agendize a more meaningful discussion after feedback from Staff. A TDM program was a complex process needing a great deal of work, commitment, significant community engagement, and P&TC involvement. The Colleagues Memo discussed solo car trips and car trips which were not the same issue. He agreed the solo car trip was an important metric but did not believe the best metric for a TDM discussion. If the solo car trips were reduced by 30 percent by two single drivers commuting in one car it would not be a true 30 percent reduction. Council Member Holman stated the topic of transportation affects every person who lived and worked in the community and it was an important topic to be brought forward. She agreed because of the importance of the matter she did not feel rushing into a resolution was beneficial. She asked the Maker of the Substitute Motion whether the Motion was to route through the P&TC. Council Member Klein noted although he neglected to mention the P&TC involvement he agree it should be included. INCORPORATED INTO THE MOTION WITH CONSENT OF MAKER AND SECONDER for Staff to consult with the Planning and Transportation Commission during the time period between now and January 2014. DRAFT EXCERPT MINUTES Page 5 of 7 City Council Meeting Draft Excerpt Minutes: 9/16/13 Council Member Holman mentioned the Motion talked about traffic and parking problems, if the Council was looking for solutions with community support she felt the Motion should include a reference to the Residential Parking Program (RPP) specifically. Council Member Klein agreed and would consider altering the Motion language prior to the vote. Council Member Kniss asked who would be the intended audience and participants for the Motioned Study Sessions. Council Member Klein stated the City Council and Staff would identify the various stakeholders. Council Member Kniss noted she was not in support of the Substitute Motion but asked for clarification on the goal of the Substitute Motion. She felt the original Motion clarified a comprehensive TDM program. Council Member Price mentioned she would not be supporting the Substitute Motion. She felt if additional study and investigation were to be accepted the TDM program would lack the focus which would result in delaying incremental changes. Mayor Scharff agreed there needed to be Study Sessions although without hiring a consultant to determine what direction was best for Palo Alto there was not a subject to study. Council Member Berman asked the number of employees in the downtown business district. Aaron Aknin, Acting Director of Planning and Community Environment, stated an exact number would be difficult to determine but the last conversation with the Economic Development Manager the estimation was between 10,000 to 15,000 and the same for California Avenue. James Keene, City Manager, noted there was not an accurate matrix system for tracking all employees throughout the City with varied shifts and schedules. Council Member Berman stated for a comprehensive TDM there needed to be accessible data whether through a business registry or a business license tax that was revenue neutral. He did not see a clear difference in the end result between the Motion and Substitute Motion with the exception of a DRAFT EXCERPT MINUTES Page 6 of 7 City Council Meeting Draft Excerpt Minutes: 9/16/13 comprehensive process in the Substitute Motion. He noted his support for the Substitute Motion. Council Member Schmid asked if there were continued plans to move forward with a comprehensive parking plan in the downtown area. Mr. Keene recognized the Colleagues Memo tried to identify some tracks that were concurrent with TDM. Some of the concepts could be partly identified as TDM such as an RPP. Council Member Schmid suggested changing the language after Study Sessions to include Transportation Demand Management; so the Motion was specific. INCORPORATED INTO THE MOTION WITH CONSENT OF MAKER AND SECONDER to add “on transportation demand management” after “direct Staff to organize one or two study sessions” Mr. Keene agreed with the thought process of Council Member Berman that there was unification between the two Motions with a matter of emphasis separating them. The question was to what extend did the Council see a TDM program happening and to necessity. He reiterated once the process began Staff would be returning to the Council regarding updated timelines. Council Member Kniss expressed bringing both the Motion and Substitute Motion together. Traffic and parking have been a point of debate for the community for many years. She suggested Staff attempt to combine the Motions to a suitable and agreeable product for the entire Council. MOTION: Council Member Kniss moved, seconded by Council Member Price to Table the item. Vice Mayor Shepherd clarified Council Members’ Kniss and Price were electing to have Staff return to the Council with a combined effort of the Motions but she did not feel tabling was the proper method to accomplish that goal. Council Member Klein asked Councilmember Kniss to withdraw her Motion to Table and replace it with a Motion to Continue. He felt the creation of a Committee with one Council Member from each side of the argument, appointed by the Mayor, to resolve the differences. MOTION TO TABLE WITHDRAWN DRAFT EXCERPT MINUTES Page 7 of 7 City Council Meeting Draft Excerpt Minutes: 9/16/13 MOTION TO CONTINUE: Council Member Klein moved, Mayor Scharff seconded to form a Committee of two Council Members, to be appointed by the Mayor to draft a Resolution with respect to a Transportation Demand Management plan and bring back to Council by the first meeting in October. Council Member Burt supported the Motion to Continue. He believed the entire Council was in agreement on the issue and on embracing an aggressive and comprehensive TDM program. It was well advised to not rush in to something that was going to be a multi-year project. He acknowledged input from experts and the community would be an important part on how to frame the direction to the consultant. Vice Mayor Shepherd saw the merit of the Substitute Motion and had some of the same views in developing the Colleagues Memo. Her understanding as a participant of the Colleagues Memo was there would be community and expert involvement and outreach prior to moving forward with the TDM program. Council Member Kniss stated the four Council Members who brought the Colleagues Memo forward had been more than accommodating to the suggested changes. MOTION TO CONTINUE PASSED: 9-0 City of Palo Alto (ID # 4215) City Council Staff Report Report Type: Study Session Meeting Date: 12/9/2013 City of Palo Alto Page 1 Summary Title: Study Session - TDM Title: Transportation Demand Management Study Session From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council hold a study session, receive a report from staff and Transportation Demand Management (TDM) experts and engage in a discussion regarding potential TDM solutions for the City of Palo Alto. Background As the economic recovery progresses, concerns about traffic congestion have increased in tandem with employment rates. Traffic congestion impacts everyone in the community, whether they live, work, shop or are only passing through the City of Palo Alto. This congestion not only has a negative quality of life impact on all Palo Alto residents, but can also pose a safety concern for pedestrians, bicyclists and motorists. In fact, traffic congestion and related parking concerns have been one of the primary complaints voiced to staff, the Planning and Transportation Commission and the City Council over the past year. The recent increase in traffic congestion is a regional issue, and certainly not an isolated issue within the City of Palo Alto. As noted in a recent San Jose Mercury News Article (attached), “Bay Area commuters are getting a sinking feeling as we see firsthand what economic recovery looks like -- miles of brake lights on commutes so congested we're wasting hours a week inching to work and back.” Throughout the Bay Area, local agencies and the private sector employers are searching for ways to solve this complicated problem. Single-occupant vehicle transportation also has an increasingly negative impact on the environment. The EPA estimates that transportation emissions account for 23% of all greenhouse gas emissions, and that percentage is rising. In accordance with AB 32: Global Warming Solutions Act, regional and local emissions reductions targets are necessary in order to address the global climate change and the related health and environmental concerns. Given the complexity of the transportation problem and its far-reaching implications, a Attachment B City of Palo Alto Page 2 comprehensive approach to getting people in, out and through the City of Palo Alto using multiple means of transportation is necessary. The term used for a comprehensive approach to solving transportation issues is “Transportation Demand Management” or “TDM”. Although there are numerous TDM definitions, the San Francisco County Transportation Management Agency summarizes the intent concisely: “Transportation Demand Management (TDM) is a set of programs and policies that respond to real and perceived barriers to taking trips by transit, bicycling, walking, or carpooling/vanpooling, and that use market signals to reduce drive-alone trips. TDM strategies include information and education, incentives, physical changes, technology, and pricing.” In other words, a TDM policies take many forms, all of which aim to get people to reduce “solo” driving, in favor of other modes of transportation. Following a September Colleagues Memo, on October 3, 2013 the City Council gave direction to staff to begin determining whether establishing one or more Transportation Demand Management (TDM) Districts would be a legal, effective, practical and economic solution for the City and its business districts. The Colleagues Memo and October 3rd memo are attached to this report. As part of their direction, the Council requested that staff organize a study session with appropriate speakers with relevant TDM experience. Representatives from Stanford, Google and the Contra Costa Centre Transit Village have all agreed to present an overview of their programs and answers questions of December 9th. The following report gives a brief, written overview of their respective programs; greater detail will be presented in the oral report. The report also outlines several TDM related efforts already underway within the City of Palo Alto. These efforts could potentially become part of a more coordinated TDM program within the City. Staff’s report and recommendations regarding the use of TDM districts in Palo Alto will be scheduled for the Council’s consideration in January or February of 2014. Discussion As noted above, the Council requested that staff organize a study session with TDM experts that have relevant experience. With that in mind, representatives of the Contra Costa Centre Transit Village, Stanford and Google will be present at the December 9th studdy session to give an overview of their respective programs. The following section provides an overview of each program as provided by the speakers or the associated online resources: Contra Costa Centre (CCC) Contra Costa Centre (CCC) is a non-profit mutual benefit company for which its purpose is to enable its members to provide planning and programs designed to promote efficient transportation services thereby reducing traffic congestion. Contra Costa Centre is comprised of 14 property owners with 6,000 employees and includes multi-tenant and single tenant buildings. Transportation Demand Management (TDM) include: Expanding the supply and availability of (more sustainable) alternatives City of Palo Alto Page 3 Controlling demand for the use of unsustainable modes Providing incentives and rewards for undertaking sustainable commuting habits Contra Costa Centre has been operating a Transportation Demand Management (TDM) program since 1988. CCC Transportation Demand Management Programs include a broad range of commute alternative programs offering employees cash incentives and subsidies to help promote taking an alternative to the worksite. These services help offset the cost of their daily commute, provide transit alternatives, and benefit our community by alleviating single- occupant vehicle traffic to and from the Contra Costa Centre area. The TDM programs include: Green Fleet Program with the use of; o Car share vehicles (Smart Cars & Electric Leafs) o Segway’s o Bicycles BART subsidies (Authorized Clipper card dealer) Bus subsidies Carpool incentives Vanpool incentives Bike to Work incentives Walk to Work incentives Guaranteed Ride Home program Free Mid-Day Shuttle to shopping centers Since the Contra Costa Centre TDM’s inception, with a hands-on program, the Centre has successfully achieved a 30-36% rate of employees using a commute alternative to arrive at work for over 20 years. John Muir Hospital– The Commute Solution (Managed and implemented by CCC) The John Muir Health Transportation Demand Management Program is responsible for managing programs to alleviate single-occupant vehicles to and from John Muir facilities, including but not limited to two major hospitals totaling nearly 1,000 beds in Walnut Creek and Concord. The John Muir Health Commute Solutions program is also responsible for creating a good-neighbor policy by keeping employee vehicles from parking in surrounding neighborhoods. The program’s purpose is to provide available parking for the patients and visitors by encouraging commute alternatives for the employees. By encouraging the use of alternative modes of transportation such as carpooling, vanpooling, public transportation, bicycling and walking, John Muir is contributing to the welfare of the community with the reduction of energy consumption, air and noise pollution and traffic congestion. The Commute Solutions program components include; Reduced BART fares (Authorized Clipper card dealer) Free taxi to/from campuses and BART Bus subsidies Monthly carpool incentives Special carpool parking City of Palo Alto Page 4 Train subsidies Bike and Walk to Work Incentives Monthly cash drawings for commute alternative participants Guaranteed Ride Home program Rideshare matching services Since 2006 John Muir Health’s Commute Solutions has provided a comprehensive commute alternative program to reduce single-occupant vehicles on our roadways. Stanford Stanford University operates a comprehensive Transportation Demand Management program in order to reduce traffic congestion, as well as reduce parking demand. A comprehensive list of programs can be found at: http://transportation.stanford.edu/alt_transportation/Programs.shtml. The following is a summary: Commute Club: A club for individuals agreeing not to drive alone to work, that includes: Up to $300/year in Clean Air Cash or Carpool Credit, Reserved parking spaces for all carpools/vanpools, Complimentary daily parking passes for carpoolers, Vanpool subsidies, Online Stanford Ridematching Services, Commuter buddy program, Pretax payroll deduction for transit passes, Caltrain parking, and commuter checks, A Refer-a-friend program pays you $50, Emergency Ride Home , Up to $102 a year in Zipcar driving credit, Up to 12 free hourly car rental vouchers a year (through Enterprise Rent-a-Car), Ability to purchase up to eight daily permits per month, and have them mailed to your home, Exclusive member gifts, and automatic entry into Commute Club promotion prize drawings. Marguerite Shuttle: A free, comprehensive campus shuttle system, open to the public and connects with local transit and Caltrain (as well as shopping and dining options). Also includes a “Midnight Express”, which provides a night safety service. The system includes an Automated Transportation Management System, with real-time information on the web. Subsidized Transit Ridership: Eligible Stanford employees are provided free use of VTA buses and light rail, Dumbarton Express, Highway 17 Express, Monterey-San Jose Express, and Caltrain by (Eco Pass/Go Pass), and free use of “East Bay Express” bus that connects BART and ACE train to Stanford (Line U Stanford Express). In addition, faculty, staff, and students receive a 50- percent discount on ACE train monthly passes or 20-trip tickets (Altamont Corridor Express). Bicycle Program: Bicycle registration, free bike rental and folding-bike promotion (limited time and restrictions apply), complimentary Mid-Peninsula bike map, as well as city and county bike maps, clothes and bike locker rental/shower information, safety education program (Sprocket Man, helmet safety), dorm bike safety road show, bicycle facilities development, commute planning/cycling information, liaison with campus Bike Shop, and bike light giveaways. City of Palo Alto Page 5 Vehicle Rentals: Self-service, on-demand car sharing program with Zipcar, offering discounts and driving credit to Stanford affiliates. Short or long-term car rental (through on-campus Enterprise Rent-A-Car office) with discounts for Stanford affiliates. Both the campus Zipcar and Enterprise programs are available to faculty, staff, and students 18 years of age and older Other services: In addition to the services above, the Transportation program also includes Charter Bus Services, a comprehensive parking program (including Residential Permit Parking), additional bike resources and education, commute planning assistance and flexible work hour for employees. Google OVERVIEW Google’s Transportation program was established in 2004 and includes numerous programs and incentives designed to encourage alternative commute transportation modes. Google’s key program elements include free commute shuttles, community bicycles, self powered commuting incentives, vanpools, carpools and carsharing. Google’s Shuttle (GBus) carries over 6,000 unique riders (12K one way trips) per day. Our shuttles and GFleet result in net annual savings of more than 20,471 metric tons of CO2. That’s like taking about 4,014 cars off the road or avoiding Over 71 million vehicle miles every year. Google has its own carsharing program which is 60+ Evcars Self Powered Commuters travel to and from work on bikes, rollerblades and on foot. Carpooling and vanpooling is encouraged. Community Bikes are available to all employees to travel around campus. Showers and bicycle storage facilities (lockers, racks and indoor storage) are located on campus. Visitor bikes are loaned to provide for short-term use. GRide offers scheduled service for movement around the Mountain View campus. Guaranteed Ride Home is available for emergencies. Tax savings through employee benefit plans. The Hub is designed as a fun and functional space while waiting for GBus. The City of Palo Alto As directed by Council, in January or February, staff will be bringing forward a preliminary report that will provide staff’s initial views on TDM Districts in Palo Alto, outline the steps necessary for an in-depth study of TDM Districts and its timeline, identify any local or regional governments that have comparable TDM Districts and advise whether the services of a consultant would be needed for a more detailed, in-depth study of such proposed TDM Districts and if so what the consultant would be expected to do and his/her expected cost. Although not part of a comprehensive strategy that includes metrics and targets, there are several current or in progress programs that could later become part of a more comprehensive and coordinated TDM framework. Current programs include: City of Palo Alto Page 6 1. Parking Management The City currently provides free short term parking in its commercial districts, and charges for long term (commuter) parking in off-street lots and garages. This form of parking management creates an incentive for commuters to use alternatives to the private automobile where they are available. In addition, the City is considering establishment of an RPP (Residential Preferential Parking) program, which would regulate parking and traffic within residential neighborhoods by restricting the ability of non-residents to park there at certain hours. The City has received significant feedback from residents in favor of a several neighborhood level programs. This has spurred a development of a citywide framework so that all neighborhoods in all of Palo Alto could have the option of becoming an RPP District if they meet certain criteria. Staff will be presenting an RPP framework to Council on December 16th for consideration and policy direction. 2. Caltrain GoPass and Related Incentive Programs Staff entered into discussions with Caltrain around the possibility of creating a Downtown business district GoPass program. Although this was not ultimately approved due to concerns about equity for existing Caltrain customers, Council recommended that the Staff still find a way to leverage Caltrain ridership to relinquish at least 50 parking spots within the Civic Center garage. This can potentially be accomplished through an expansion to the commuter check program or participation in the existing Caltrain Go-Pass program. Staff will also continue to pursue ways in which Caltrain GoPass purchase can be incentivized in the community 3. Development Requirements The City Council has approved recent development with specific conditions of approval related to TDM. For example, as part of the project approvals associated with the Lytton Gateway Planned Community project, the property owner is required to purchase a Caltrain Go-Pass for all employees who work in the building. Staff will look to standardize project conditions to routinely require TDM plans. As is the case with all project conditions, staff is tasked with monitoring project compliance. Staff will also need to gauge the effectiveness of these type of requirements, to determine if they are appropriate for future developments. 4. Carshare Opportunities in Downtown City Staff have engaged with representatives from City CarShare and Zipcar to discuss the potential of dedicating at least 20-30 spots in Downtown lots and garages to a Carshare service. An RFP is in development for a Carshare entity to enter into an agreement with the City to provide these services for Downtown. City of Palo Alto Page 7 5. Satellite Parking Lots City Staff are investigating whether it would be possible to use parking lots located outside of the downtown core to provide additional places for commuters to park. A shuttle would then bring these commuters directly to Downtown. A number of locations are also being investigated. 6. Palo Alto Shuttle Program Staff has drafted an RFP to continue and expand the Palo Alto Shuttle Program, which is a key service to promote use of public transportation. There are currently two shuttles which are free to the public, and the City is investigating aggressive expansion of this service to serve adjacent communities and provide more frequent and user-friendly service. 7. Improved Bike Infrastructure Palo Alto has a variety of existing efforts underway to promote a bike-friendly community, including the following: Improvement of existing and new bike boulevards Multiple events to promote use of bikes around the City Bay Area Bike Share services available at University and California Avenue locations Bike Corrals Bike Lockers for local use Local Adoption of Calgreen ordinance which requires bike parking for all commercial developments with visitors 8. Incentives for Rideshare Applications Rideshare applications accessible by mobile phone allow the users to find out whether employees located in the same area can find a carpool opportunity. The City is investigating the use of these applications to determine if incentives could be provided for local businesses to use apps like Lyft and Sidecar. 9. Safe Routes to School Safe Routes to School is an international movement to make it safe, convenient, and fun for children to bicycle and walk to school. In Palo Alto, City Staff work to make sure that the program embodies what are known as the “5 ‘e’s”: education, encouragement, engineering, enforcement, and evaluation. The program provides infrastructure such as bike and walking paths to support children walking to school rather than being driven by their parents. Parents are also exposed to alternate forms of transportation through the program. City of Palo Alto Page 8 In addition to the demand-based strategies listed above, the City is also aggressively managing its parking supply. While this topic will be discussed at greater length in the context of the Residential Permit Parking framework on December 16, 2013, some strategies to address this include the following: New Garage Studies: City staff is investigating the possibility of creating public/private partnerships to develop garages on existing City lots and is also investigating the potential for public financing of new garages. Attendant Parking: The City has a live RFP which is expected to be awarded in early January to assign at least one City-owned garage (R) with attendants. If the program is successful the City may consider implementing this strategy at other garages. Permit Management: The City actively monitors activity in garages to confirm that the number of permits released is maximized. The most recent permit release was in November of 2013. An online permit management system is in the final stages of development so that applications can be done without visiting City Hall. Technology Enhancements for Garages: The City is developing an RFP for gate controls and parking guidance systems to more actively monitor the occupancy of the garages and provide the infrastructure to potentially implement paid parking solutions in the Downtown. Timeline City staff will be returning to the Council in January or February 2014 with a preliminary report on potential TDM Districts and related programs. In accordance with the October 5th memo from Council, this preliminary report will provide staff’s initial views on TDM Districts, outline the steps necessary for an in-depth study of TDM Districts and its timeline, identify any local or regional governments that have comparable TDM Districts and advise whether the services of a consultant would be needed for a more detailed, in-depth study of such proposed TDM Districts and if so what the consultant would be expected to do and his/her expected cost. Resource Impact Staff has only begun initial work on a comprehensive TDM strategy. In accordance with the October Memo from Council, no more than $100,000 worth of staff time on this initial work. It is expected that a comprehensive TDM program, however, would cost considerably more to establish and operate. Staff will bring forward estimated costs to Council in January. Environmental Review This is only an informational report, therefore no enviromental review is necessary. Attachments: Attachment A: Mercury News Article on Traffic Jams Paralyzing Bay Area (PDF) City of Palo Alto Page 9 Attachment B: September 16, 2013 Colleagues Memo on Palo Alto Traffic Demand Management Plan (PDF) Attachment C: October 3, 2012 Follow Up Memo from Councilmember Klein (PDF) Traffic jams paralyzing Bay Area By Gary Richards grichards@mercurynews.com Posted: 11/10/2013 12:01:00 AM PST Updated: 11/12/2013 08:08:32 AM PST Bay Area commuters are getting a sinking feeling as we see firsthand what economic recovery looks like -- miles of brake lights on commutes so congested we're wasting hours a week inching to work and back. It almost makes you miss the recession. Commuters say trips that took 30 minutes a year ago now may take 60 or more. It's happening on Highway 85 in the South Bay, Highway 101 along the Peninsula, Interstate 880 through the East Bay and Interstate 680 from the Sunol Grade to the Benicia Bridge. Forget talk about Twitter stock. When people gather around the office water cooler, it's often to gripe about traffic, traffic, traffic. Highway 24 in Lafayette, Calif., October 2013. (Kristopher Skinner, Bay Area News Group) San Jose had the 13th worst congestion in the nation in 2010, but now ranks fifth, according to Inrix, which monitors traffic nationwide. Delays are also growing through San Francisco and Oakland, which are counted together and are considered the country's third most congested city, a spot it has held for years. "It's gotten noticeably worse, even in the last two weeks," said KQED traffic reporter Joe McConnell. "Every morning has been nightmarish. "Something may have tipped, but it could be like trying to connect any particular stormy day to climate change or just bad weather." Mostly, experts say, the congestion is a testament to the growth in jobs in Silicon Valley, San Francisco and the East Bay as the economy recovers from the Great Recession. And that has exacerbated problems that were already worse here than elsewhere. Where drivers nationwide spend about 38 hours stuck in traffic a year, drivers in California's most urban areas waste 62 hours a year, says the Texas Transportation Institute. "It takes me 1.5 to 2 hours to drive 30 miles from San Jose to Livermore each evening," said Sean Lamson of his I-680 trek. If Brenda Nguyen hears a crash reported along her route from San Francisco through the Caldecott Tunnel, her 22-mile drive can turn into two hours. "Bank on it," she said. "It used to be maybe 50 minutes at its worst." Chris Lee of San Jose just wants to get her kid to class on time at Archbishop Mitty High School in west San Jose. "In the past few months we have noticed a huge increase in the time it takes to get from 280 and 87 to Saratoga Avenue," she said. "We are now almost late every day, even though we allow 35 minutes to go about four miles." Other than an improving economy that's putting workers back on the road, here are some factors behind our growing woes: Truck traffic from the Port of Oakland to the Central Valley has turned I-80, I-580 and I-880 into big rig alleys. Thieves continue to steal copper wiring at metering lights, and when they don't work, highway traffic backs up. Road construction is underway seemingly everywhere. Schools are back in session. Gas prices have fallen 28 cents a gallon over the past year. And more traffic on the road means likely more crashes that make things even worse. While ridership on BART, Caltrain, light rail and buses continues to grow and carpool use is on the rise, there are simply too many of us driving solo to work. Honolulu ranks as the nation's most congested city, followed by Los Angeles, San Francisco-Oakland, Seattle and San Jose. New York is No. 6. Through the early part of this year, 61 of America's top 100 cities with the worst congestion saw delays worsen compared to the year before -- and San Jose's jump is at the top of the list. In 2012, only six cities experienced increases. "That's incredible, to have such a huge increase so quickly," said Jamie Holter of Inrix. "San Jose people really have no choice but to drive." Traffic delays dropped by more than 22 percent during the recession of 2008, says Inrix, making any increase now seem unbearable. But make no mistake, traffic officials say, delays are on a rapid spiral upward and might be a sample of what is down the road as highway work wraps up and state transportation dollars dwindle. "We are only experiencing the tip of the Silicon Valley congestion iceberg," said Rod Diridon of the Mineta Transportation Institute. "Since what we knew of as full employment before the Great Recession, government has been unable to invest significantly in highway capacity expansion." He says Silicon Valley will soon bump against "terminal gridlock" like the kind that occurred in Beijing six years ago when commuters were trapped in their cars for days. "The capital of China was nearly paralyzed for almost seven days while that massive traffic jam was cleared," Diridon said. "That crisis doesn't happen gradually. There is no quick fix." Not unless we have another recession. City of Palo Alto COLLEAGUES MEMO September 16, 2013 Page 1 of 3 (ID # 4087) DATE: September 16, 2013 TO: City Council Members FROM: Council Member Price, Mayor Scharff, Vice Mayor Shepherd, Council Member Kniss SUBJECT: PALO ALTO TRAFFIC DEMAND MANAGEMENT PLAN Recommendation: Direct staff to develop a comprehensive Transit Demand Management (TDM) plan for the California Ave and University Ave Downtown Districts and the Stanford Research Park with the goal of reducing solo car trips by at least 30% and return to the full Council for further policy direction prior to initiating CEQA review, soliciting contracts, or proposing new fees, ordinances or resolutions. If appropriate, the City Manager may wish to consider retaining a consultant to assist in the expeditious development of a rigorous TDM plan. The TDM plan should: 1) Create a defined TDM boundary area for the University Avenue TDM District, the California Avenue TDM District and the Research Park TDM District; 2) Provide a funding mechanism for the TDM districts (such as, for example, assessments on existing businesses, impact fees on new developments, or a combination of both) that will fund a robust TDM plan with measurable outcomes based on identified goals; 3) Develop a request for proposals (RFP), based on identified goals to contract out ongoing TDM services which would include, but are not limited to, using revenue offsets for subsidizing public transit, parking strategies and management, carpooling incentives, biking, car sharing services, etc. for the purpose of reducing car trips into, out of and within Palo Alto, and supplementing existing services provided by Caltrain, SamTrans, VTA, Margarite Shuttles, AC transit and links to surrounding transit systems such as Bart, ACE and the Capital Corridor express; 4) Outreach to Stanford's TDM director for the purpose of collaboration and integration of services; 5) Develop tools to monitor, evaluate and measure utilization of the various TDM elements and progress towards the overall goal of reducing solo car trips throughout the city. Enforcement could include penalties for applicants not meeting approved TDM criteria. 6) Return to full City Council for discussion and approval. September 16, 2013 Page 2 of 3 (ID # 4087) Background: Parking and traffic are one of the toughest challenges facing the City at this time and a major concern for our residents. The twin challenges of parking and traffic are being dealt with in a multi-pronged approach. The infrastructure committee is working on using a funding mechanism such as a Mello Roos district to create new parking garages both downtown and on California Ave. The City Manager advises that staff is developing a framework for a Comprehensive Residential Parking Permit system for Council to consider in the next 90 days to deal with the substantial issues of parking intrusion into our neighborhoods. In the next 45 days, staff will also bring to Council proposals to suspend parking exceptions so that new developments provide an appropriate amount of parking spaces. However, a Residential Permit Parking program, new parking garages and requiring new developments to be parked appropriately will not alone solve the issues of parking and traffic. The City needs a comprehensive TDM program that will reduce trips by at least 30%. Stanford has reduced trips by 40% or more through a comprehensive TDM program, and with the right focus and attention Palo Alto could have similar results. Comprehensive TDM ordinances and policies cover a range of areas and use various types of management models in the public and private sectors. Over the past 30 years, numerous cities, counties and states have successfully developed comprehensive TDM programs specifically designed to reduce single occupant vehicle trips. During that period, a number of TDM specialists and consultants have prepared plans for both the public and private sectors. In general, the key elements of these comprehensive TDM programs focus on reducing use and reliance on single-occupant vehicles through a combination of regulation, incentives and demand pricing. Ultimate solutions have included transportation options (walking, biking, pedestrian, transit), promotion of the use of alternative transportation modes and parking management/pricing. The key elements of a TDM program should focus on reducing use and reliance on single-occupant vehicles through the promotion of various strategies such as improving transportation options (walking, biking, transit); promotion of alternative transportation modes (ridesharing, vanpools, shuttles), parking management of various types and mass transportation (i.e Caltrain, BART, etc.). Palo Alto now finds itself experiencing significant economic development and prosperity. Although the City has existing Municipal Code provisions that address TDM measures, they are not comprehensive, mandatory or current in nature or consider these districts as a unit. Furthermore, the Municipal Code includes several “by right” parking reductions for new commercial buildings. These provisions, in combination with nearby, unrestricted (free) residential neighborhood parking, have encouraged the use of single-occupant vehicles, while affecting the quality of life in residential neighborhoods. Finally, the workplace itself has changed. The tech and start-up industry have abandoned cubicles and offices in exchange for collaborative rooms that hold more people per square foot. For these and many other reasons traffic and parking demands are currently unmanageable, and a comprehensive, district-wide TDM program needs to emerge in our jobs intensive areas. September 16, 2013 Page 3 of 3 (ID # 4087) In August, Vice Mayor Shepherd, Councilmembers Price and Kniss, and Interim Planning Director Aaron Aknin, took a field trip to the Contra Costa Transit Center to see firsthand how its TDM program has successfully reduced single car trips by more than 30%. The program emerged as BART ridership expanded in the 1980s and large and small companies brought jobs into the area. Palo Alto could have a similar experience as both Contra Costa and Stanford have shown with the right TDM policies and focus in place. The Contra Costa Transit Center offers on-site services for commuters employed by companies of anywhere from 2 to 1,000 employees. The Center’s initial capital came from new commercial development of 50 cents per square foot, grants, and now a voluntary transit district assessment. BART fare subsidies, gas cards and special parking for carpools are examples of their TDM strategies. Car share services are available for mid-day errands or emergency trips home, and a contract with the local taxi company gives the commuter vouchers for final leg journeys if needed. This is all being done in conjunction with a mandatory TDM ordinance that applies to this entire district, thereby creating the regulation that is necessary to create the critical mass of employers participating in the program. This approach actually created a Transportation Management Agency (TMA) to manage these programs. Palo Alto’s review of TDM options should consider a TMA and also explore ways to capture funding and participation related to existing development and existing traffic, in addition to new projects. One emerging trend in terms of demographics is that young adults are choosing not to own a car if there are viable alternative transportation options. A significant percentage of young workers want to live in San Francisco and commute via Caltrain to work in Palo Alto As this trend matures, commute options into, out of and within Palo Alto also need to reflect what is called a "shared economy" where people borrow, rent or pay for the short time use of vehicles and equipment. A TDM program could support and encourage this new trend. Conclusion: Alternative transportation models are not a new idea in Palo Alto. Many of our policy documents have identified the importance of alternative modes as a means of reducing greenhouse gas reductions. The City, employers and transit agencies have already promoted trip reduction and alternative transportation options. Yet, these initiatives are not comprehensive in nature, and have not been effective from a district wide standpoint. The idea of considering downtown districts as a unit, with an experienced TDM contractor, working directly with employers and commuters is a smart, and proven strategy to address the City’s traffic and parking issues. Staff Impact: The implementation of this program will take a considerable amount of staff time in the short term during the RFP and consultant selection process. In addition, an ongoing connection with the TDM contractor will be necessary, and take additional staff time. To some extent, however, this will be offset in the long run. As the more comprehensive strategy takes effect, staff will not have to tackle individual issues to the same degree. A new position in the department, Parking Manager, will soon be hired and will provide needed support in the above mention efforts, under the direction of the Chief Transportation Official. Proposed Motion from Council Member Klein Subject: Transportation Demand Management (TDM) Districts In order for the City Council to determine whether one or more Transportation Demand Management (TDM) Districts as proposed on the Colleagues’ memorandum or as reasonably modified would be legal, effective, practical and economic for any or all of the University Avenue, California Avenue, East Meadow Circle and Stanford Research Park Business District, the City Council hereby directs the City Manager and the City Attorney as follows: City Attorney – Advise the Council whether such TDM Districts would be legal and if so what laws and legal procedures and processes would apply to them; City Manager – 1) Prepare a preliminary report on the proposed TDM Districts, at a cost of not more than $100,000 in staff time, (a) setting forth staff’s initial views on TDM Districts, (b) outlining the steps necessary for an in-depth study of TDM Districts and its timeline, (c) identifying any local or regional governments that have TDM Districts comparable to that proposed in the Colleagues’ memorandum and (d) advising whether the services of a consultant would be needed for a more detailed, in-depth study of such proposed TDM Districts and if so what the consultant would be expected to do and his/her expected cost. 2) Organize one or more Study Sessions on TDM Districts with (a) appropriate speakers with relevant experience in TDM programs such as Stanford’s and Contra Costa County’s and (b) outreach to various stakeholders including but not limited to adjacent residential neighborhoods and potentially effected business interests to attend and participate in such Study Session(s) 3) Advise the Council on other possible solutions to the City’s traffic and parking problems Schedule – The reports from the City Attorney and the City Manager shall be due not later than January 20, 2014 and the initial Study Session shall take place not later than February 03, 2014 ATTACHMENT A: CARSHARE LOCATIONS Lot H Location: Cowper and Hamilton 1 2 3 4 5 Attachment D Lot N Location: Emerson and University 1 2 3 4 5 Lot K Location: Florence and Lytton Ave 2 3 4 5 Civic Center Lot: Between Ramona and Bryant, Hamilton and Forest: Entrances on both Bryant and Ramona 5 spots on first level City of Palo Alto (ID # 4506) City Council Staff Report Report Type: Action Items Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: Cubberley Lease Between City of Palo Alto and Palo Alto Unified School District Title: Direction to Staff on Lease Terms for the Renewal of the Cubberley Lease Between City of Palo Alto and Palo Alto Unified School District From: City Manager Lead Department: Administrative Services RECOMMENDATION Staff recommends that Council authorize the City Manager to negotiate with the Palo Alto Unified School District (PAUSD) Superintendent to execute a new lease agreement based on the following potential terms and conditions, offered for Council consideration. These terms are intended to provide a balance of flexibility and certainty to both City and PAUSD for the Cubberley site, in the near term and the long term, while enabling most effective investment of public funds. Suggested terms for consideration: 1. Eliminate the Covenant not to Develop from the lease. Reallocate that funding towards investment in the Cubberley facilities for long neglected and ongoing maintenance. Consider inclusion of Ventura Community Center site for reinvestment dollars. 2. Eliminate the Consumer Price Index (CPI) annual increases. 3. Create a longer term lease (20 year) with PAUSD to allow creation of a long-term plan for the City owned 8-acre site, investment in facility improvements and public access to playing fields. 4. Explore new terms with PAUSD to allow potential reconfiguration of City 8 acres within the Cubberley site. 5. Eliminate the language allowing PAUSD to purchase the City’s 8 acres. 6. Eliminate the buy-back /repurchase option clause that allows PAUSD to repurchase Ventura. 7. Continue Child Care program per terms and condition of the existing lease. 8. Allow for use of the playing fields at Cubberley for maximum time period possible. City of Palo Alto Page 2 Other issues to consider: Process for adjustment of rent paid by City to PAUSD, if City loses anchor tenants such as Foothill College? 24 month notice clause in the existing lease which gives the PAUSD the right to cancel the lease if PAUSD plans to open a compact high school? Discussion of better access to other school site field and facility use? EXECUTIVE SUMMARY Over the past few months, the City Manager and School Superintendent have had exploratory negotiation meetings regarding terms for any potential renewal of the Cubberley Lease and Covenant Not to Develop, which expires at the end of this year. Both parties see great value in developing a new lease and an agreement seems within reach on a number of terms. We have not been able to reach tentative agreement yet at staff level regarding the Covenant Not to Develop. The District does not want to lose the money provided through the Covenant terms (approximately $1.8 million out of the $7.16 million the City will pay in 2014). After this year, the City sees no rationale for continuing to pay for a purpose no longer necessary (preserving school sites from sale) and greater needs that lack funding. Notably, this includes needed maintenance and investment in the Cubberley facilities themselves and planning and funding towards potential redevelopment of the facilities on the City’s 8 acres at Cubberley into a true community serving center. A recommendation to reinvest covenant funds into Cubberley, negates any need from the School District towards shared maintenance costs. BACKGROUND Originally opened as a high school in the 1950’s, Cubberley was closed due to decreasing Enrollment in 1979. At that time, substantial budget pressures were being experienced by the PAUSD due to a variety of circumstances starting in the late 1970s and early 80s, including Passage of Proposition 13 in 1978 and declining PAUSD enrollment and revenue during the post–Baby Boom era. In response to that stressed financial situation, the PAUSD closed several schools and sold some existing school sites in order to help sustain its educational programs at the level the community expected. This included the closure of Cubberley in 1979 and the City’s acquisition of Terman in 1981, among the sale and/or closure of other sites. City of Palo Alto Page 3 The City realized that the PAUSD is one of the City’s defining assets and its decline would have severely negative impacts on the City as a whole. The City and the PAUSD also recognized that sites once sold would never again be available for school use should the trends reverse in the future. In 1987, the City put Measure B on the ballot with the intent to create a 5 percent utility users tax (UUT). (Infrastructure Blue Ribbon Commission (IBRC) Final Report) On September 1, 1989, the City and the PAUSD entered into a lease agreement (Lease). Under the lease agreement, the City provided PAUSD with annual revenue in exchange for the City receiving: 1) a lease on the former 35-acre Cubberley High School site, including 180,000 square feet in improvements to be used for community theater, sport and art groups; 2) a Covenant Not to Develop five neighborhood elementary school sites (Jordan, Jane Lathrop Stanford, Ohlone, Garland and Greendell); and 3) an agreement that PAUSD provide space for extended day care at each of eleven remaining elementary school sites. In July 1998, the Agreement was amended (Amendment #1) to provide for the reopening of one of the covenanted sites (the “old” Ohlone site, now renamed Hoover School) and the substitution of two operating sites, Walter Hays and Juana Briones, for the covenanted site to be reopened. The amendment also provided for the addition of a twelfth extended day care site to be opened at the Hoover School. On December 10, 2001, City and PAUSD entered into a property exchange agreement whereby City conveyed to the district the Terman site and in exchange received 7.97 acres of the Cubberley site. The original lease Agreement was for 15 years, beginning January 1, 1990 and ending on December 31, 2004. The option to extend the lease for an additional ten years was exercised by the City and the current term of the lease will expire on December 31, 2014. Background information on the Cubberley Lease agreement with the City as well as Communication with the PAUSD is extensive. Specifically, since 1989 City staff and PAUSD have entered into several lease amendments and other agreement regarding the site needs. DISCUSSION Much has been studied and written about Cubberley over the past decade. Some facts and excerpts from earlier reports and other discussion factors have been included (below). Additional background information can be found in the attachments and reports City of Palo Alto Page 4 Cubberley Property: The Cubberley Community Center currently occupies the entire 35-acre site, the City owns 8 acres in the northeast corner of the site; the remaining 27 acres are owned by PAUSD and leased to the City. Together, this 35-acre site is the last major plot of publicly owned land in the City proper, and its long term future use is critical to both community services and education. (Note attachment A). The city’s acreage contains campus classroom space, art and dance studios, some parking, a portable building used by Friends of the Palo Alto Library (FOPAL), and the tennis courts. The 27-acre area contains the playing fields, a dance studio, weight room, gymnasiums and pavilion, multi-purpose auditorium and theater with music rooms, three wings of classrooms, a portable building used by Friends of Palo Alto Library(FOPAL), and most of the parking areas. Facility: According to Cubberley Community Advisory Committee report (CCAC Report), most of the buildings and other facilities at the Cubberley site were completed by 1955. Some additional buildings (Pavilion, Theater, and others) were added in the early 1960’s along with a new artificial turf field in 2009. The site was built to then-existing school standards. While the structures have stood up well given their age, they have become increasingly run-down and expensive to maintain and were not designed to support current and future needs. The Cubberley site is inefficiently used by modern standards. Existing buildings are single story, per the 1950’s model of Palo Alto school architecture. The building layout results in long distances between buildings through low, covered walkways that give a foreboding tunnel effect block natural light and require costly repair and replacement. Single pane windows, poor insulation and louvers contribute to high energy costs. Air conditioning is not provided throughout most of the site, heating is ineffective and aged wiring does not adequately support today’s technological needs. The small, largely uniform, individual classroom design also limits the types of groups and activities that can be accommodated and fails to provide appropriate gathering spaces for modern school or community use. In addition to being inefficiently designed and poorly suited to the structural needs of modern school and community programming, the aged site is costly to maintain. Covenant Not to Develop Section 4.1 of the Lease indicates that the purpose of the covenant is “to prevent further burden on the City’s infrastructure and in order to preserve a substantial amount of the City’s remaining open space.” The Lease includes a "Covenant Not To Develop" payment that was intended to safeguard District owned properties from being sold. It is the City's agreement to pay the District in return for the District not selling its land. This is no longer an immediate issue as the school sites identified in the Covenant are now all in use. (Source CCAC Report) City of Palo Alto Page 5 This clause now appears to be obsolete given the district’s recently expressed intent to reopen existing sites. Further, there is no current plan for any sites to be sold for development, and the district has just recently purchased additional property at 525 San Antonio Road. Ironically, the $1.78 million annual covenant payment (from the City to the PAUSD) directly or indirectly puts a burden on the City’s infrastructure budgeting because these funds are not available to support infrastructure needs including Cubberley maintenance. (Note IBRC Final Report) The Cubberley Community Advisory Committee (CCAC) Report recommends the removal of the “Covenant not to Develop” from the Lease; however the reports states the recommendation should not be understood to imply deleting the dollars associated from the covenant. Lease Term: The term of the current lease will expire on December 31, 2014. According to section 6.1.3 of the lease, City and PAUSD can extend the lease for two (2) additional Five (5) year periods. The parties can also extend the lease term base on mutual agreement by a longer term period. The lease provides a hold-over clause that allows the continuation of the tenancy after the expiration date. The City and School District have discussed a new lease. Future plan for the use of the 8- Acre Site: If City develops a specific plan for the City owned 8 acre site, the City may need to have the flexibility of being able to change the footprint of the 8 acre site with the cooperation of PAUSD to create a new configuration to maximize its potential to support the City plan and vision. Requires agreement from PAUSD. Child Care: Cubberley is home to several high quality centers providing both childcare and early education, supporting both the children and their parents. Good early care and education are part of the infrastructure of any vibrant city and are especially valued in our city. Palo Alto has recognized this since the 1970s with innovative support for such programs. City needs to continue this support as the city grows and develops. (CPI) Annual Adjustments: The Cubberley Lease calculates annual lease payment adjustments using the Consumer Price Index which has been steadily increasing over time. This is an inconsistent correlation of income and expense for the City. Recommend elimination. City of Palo Alto Page 6 Playing Fields: The demand for fields is growing faster than the population, yet there are few locations for additional fields in Palo Alto. The proposed new fields near the golf course will help a bit, but these fields are not funded, are likely to be windy and will not be easily accessible. If a full high school reopens on this site, it will not be possible to continue the same recreation programs unless additional fields become available somewhere else. The City needs the fields for as long as possible at Cubberley in order to develop a long term use plan and be able to meet the future demands for playing field by the users. Loss of Anchor Tenant: Foothill College represents a significant portion of the current tenant lease income and serves as the anchor tenant at Cubberley paying approximately a million dollars to City for rent of its space. Foothill College is planning to move to a new Sunnyvale campus located at the Onizuka Air Force Base in the next three years. The new lease agreement with PAUSD should allow reduction in rent payment from the City to the District in the event of loss of a major tenant. Capital Improvement & Maintenance: According to the recent Infrastructure Blue Ribbon Commission (IBRC) report, current, ongoing maintenance requires a minimum annual expenditure of $330,000 (optimal maintenance should be closer to $800,000 per year). On top of that, the IBRC concluded that an additional $10.2 million in major deferred maintenance would be required between now and 2016, followed by $4.9 million before 2026 and another $3.7 million by 2036. CCAC recommended for the School District to pay for its share of the projected capital improvements, and for City to negotiate regarding contribution toward ongoing maintenance and repairs beyond routine maintenance. As discovered through our Commission’s infrastructure investigations, this maintenance liability – not included in the above figures – cumulatively totals about $18.8 million through 2036, with $10.2 million scheduled between now and 2016. Public works indicates that optimal maintenance expenditures should be about $800,000 versus the $330,000 currently expended. This projected aggregate maintenance liability has several implications. Long term, the City has identified $18.8 million in infrastructure improvements that must be made at Cubberley. Of those, $8.4 million is on City Buildings and $10.4 is on School District Buildings. This would cover infrastructure improvements which would extend the life of the buildings for 25 years but most would need to be accomplished within 10 years. These improvements have not yet been funded. The nature of both agencies’ budgets requires that capital investment in the Cubberley site be well-planned, deliberate and suited to a long term vision for the site. Presently the City is responsible for all City of Palo Alto Page 7 maintenance expenses for the site but does not have adequate funding. The cost of maintenance for the site rises as the buildings age and continue to deteriorate. Eliminate PAUSD right to cancel the lease to open a compact high school: Section 10 of the Second Amendment of the Cunbberley lease grants the PAUSD the right to terminate the lease by exercising a twenty-four (24) months written notice with respect to all or a portion of Leased Site so it may operate a compact high school at Cubberley. Recommend elimination. Eliminate the buy-back / repurchase option clause that allows PAUSD to repurchase Ventura: Section “H” of the Purchase Agreement that was executed on October 30, 1980 between City of Palo Alto and PAUSD grant a repurchase right to PAUSD to buy back the Ventura School site from the City by exercising a one-year prior notice. Staff recommends the elimination of this clause in conjunction with development and negotiation of the new Cubberley lease agreement. Eliminate the PAUSD’s right to acquire City’s Interest at Cubberley: Section “3” of the Lease Amendment and Land Exchange between City of Palo Alto and PAUSD executed on August 13, 2002 provides the school district with the right-of-first-refusal on the sale until September 1, 2022, if City offers to sell its 8 acres to another party. (This is dependent on renewal of lease on existing terms). After that time the City has an unencumbered right to sell the 8 acres, if it decides to do so. Of course, the City and the district can negotiate a sale to the district at any time. The clause restricts the City’s ability to make much needed infrastructure improvements. TIMELINE Does Council want to establish a negotiation completion deadline? RESOURCE IMPACT The District has developed a dependency on the lease payment funds, comprising now approximately 4.4% of the District's annual budget as revenue. These funds also constitute approximately 4.6% of the City's annual budget as an expense (CCAC Report). PAUSD’s 27 acres is currently leased to the City for approximately $7.16 million per year including Covenant Not to Develop plus all maintenance costs, expenses which are supported by the City’s General Fund. City of Palo Alto Page 8 Cubberley Finances There are three components to the Lease and Covenant Not to Develop, (Office of Management & Budget) that will total to the amount of $7,159,827 for the Calendar year 2014: 1. The lease of the Cubberley Facility – cost in calendar Year 2014 = $4.7 million 2. The Covenant Not to Develop – cost in calendar year 2014 = $1.8 million 3. Payment for provision of space at each elementary school for child care – current cost in calendar year 2014 = $ 615 thousand; According to CCAC Finance Committee Report, there is an annual CPI adjustment built into the document so that each component increases each year. Aside from the lease payments, Cubberley has expenses for: General operating maintenance: $430,000 Operations expense (CSD): $1,325,000 In 2013, Cubberley generated revenues of, (Office of Management & Budget): Tenant leases (Foothill-DeAnza, artists, nonprofits, etc.) $1,602,143 Hourly rentals (events, use of theater, etc.) $907,098 Office space rental by City $73,000 Total: $2,582,241 History of Payments City to PAUSD Between 1989 to 2013 City has paid approximately a total of $136 million (maintenance cost and operating expenses are not included) to PAUSD for lease of the Cubberley site, Covenant not to Develop and child care program. Projected Future Payment to PAUSD Extending the Lease Agreement without the “Covenant not to Develop” and the “CPI” increases, for 20 years (2014 -2034), will result in projected cost of $106,714,200 to City’s General Fund for payments to PAUSD, plus additional costs for maintenance and operating expenses. City of Palo Alto Page 9 POLICY IMPLICATIONS Exercising the option to extend or entering into a new Lease Agreement is consistent with policies and programs in the Comprehensive Plan promoting City-PAUSD collaboration and the effective provision of community services. ENVIRONMENTAL REVIEW Extension or re-negotiation of an existing lease and agreement does not constitute a project for purposes of the California Environmental Quality Act (CEQA). Links to additional reports: G– CMR 2861- 5/14/2012 Cubberley Guiding principles Link http://tinyurl.com/mhkq49a H– CMR 3824 – 5/13/2013 Discussion of Cubberley Report & Lease Link http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=34285 I– CMR 4476 2/18/2014 Artists Studio Program Hyper Link http://www.cityofpaloalto.org/civica/filebank/blobdload.asp?BlobID=39050 Below are four links to the four volumes of the CCAC final report: Volume 1 http://www.cityofpaloalto.org/civicax/filebank/documents/33438 Volume 2 http://www.cityofpaloalto.org/civicax/filebank/documents/33439 Volume 3 http://www.cityofpaloalto.org/civicax/filebank/documents/33440 Volume 4 http://www.cityofpaloalto.org/civicax/filebank/documents/33441 City of Palo Alto Page 10 Infrastructure Blue Ribbon Commission (IBRC) Final Report http://www.cityofpaloalto.org/civicax/filebank/documents/29729 Cubberley Master Plan http://www.city.palo-alto.ca.us/civicax/filebank/documents/30937 Attachments: Attachment: A. Cubberley CC - Map (PDF) Attachment: B Exh 1. Amendment 1 to CCC Lease (PDF) Attachment: B Exh 2. Amendment 2 to CCC Lease (PDF) Attachment: B Exh 3. CCC Lease Amendment and Land Exchange (PDF) Attachment: B. CCCLease and Covenant Not To Develop (PDF) Attachment: C.CMR Staff Report 535-9 (PDF) Attachment: D.CMR Staff Report 448-01 (PDF) Attachment: E. CMR Staff Report 498-03 (PDF) Attachment: F. CMR Staff Report 556-03 (PDF) C) ) ) ',. 1 LEASE AMENDMENT AND LAND EXCHANGE AGREEMENT This Lease Amendment. and Land Exchange Agreement is entered into this 1~.1h day of ii()l.W{,r~~, 2001,. by and between the Palo Alto Unified School District ("District") and the City of Palo Alto, a municipal corporation ("City"). RECITALS A. The District is the owner of the certain property as described and shown in Exhibit A attached hereto and commonly referred to as the Cubberley Site. Lease whereby B. The District and the City have entered into a and Covenant Not to Develop dated September 1, 1989 the District leased to the City the Cubberley Site. C. The District is property as shown in Exhibit B referred to as the Terman Site. the legal owner of attached hereto and certain commonly D. In 1981, the District entered into a Lease to Purchase Agreement (the "Terman Lease Purchase Agreement") with the City whereby the City leased the Terman Site, including both the New Terman School Site and the adjacent Terman Park, from the District for 20 years with the right to acquire the Terman Site on November 1, 2000. The City exercised its option under the lease in a timely fashion, but with the consent of City, the District has not yet delivered title to the Terman Site to the City, and the" City has remained in possession of the Terman Site. E. The District has determined that in order to provide a quality education experience the desired range of school size for middle schools is 600 to 900 students. The District currently operates two middle SChools, one of which has an enrollment of 1,076 students and the other of which has an enrollment of 1, 179 students. In order to ensure that middle school students in the District receive the best education possible, the District has determined that it is necessary to open a third middle school in order to reduce the enrollments at the middle schools to the range of 600 to 900 students. F. The District has conducted an extensive search for a site of the new middle school. Based on the residences of 1 011205 ')'II 0090986 () ) ) the current middle school population, the District determined that a portion of the Terman Site, as shown Exhibit C attached hereto and incorporated herein ("the Terman School Site") is the most appropriate location for middle school. has in New the G. In order to permit the District to reopen a middle school at the New Terman School Site the City has agreed to exchange its right to acquire the New Terman School Site for a fee interest in a portion of the Cubl;lerley School Site which portion is of equal size to the New Terman School Site. H. The City, with the consent of the District, and the Albert L. Schultz. Jewish Community Center ("the JCC") entered into a sublease for a portion of the New Terman School Site ("the JCC Sublease") in 1982. The JCC Sublease has not expired. Onder the terms of a Lease Termination and Mutual Release Agreement approved by the City Council on September 10, 2001 between the City and the JCC and a separate Settlement and Relocation Agreement between the District and the JCC, the sublease between the City and the JCC will continue in effect after transfer of title to the New Terman School Site. I. The City and the District recognize and acknowledge that if the parties did not enter into this Agreement, and the parties and the JCC had not entered into the Lease Termination and Mutual Release Agreement and the Settlement and Relocation Agreement, the District would consider instituting eminent domain action to acquire the New Terman School Site and there would likely be opposition to such eminent domain action. NOW, THEREFORE, for good and valuable consideration, the City and the District agree as follow: 1. Terman Site The Terman Lease currently provides that upon expiration of the Lease Term, which expiration occurred on November 9, 2000, the District was to have conveyed to the City fee title to the "Terman Site". Due to the District I s determination that a portion of the Terman Site, namely the New Terman School Site, is the most appropriate place to open a middle school that is needed to serve the community, the City and the District hereby agree to amend the Terman Lease as follows: 2 011205 'yn 0090986 () i) ) (a) The Term of the Terman Lease is hereby extended to September I, 2002. (b) The City shall make 'no further rental payments. (c) Notwithstanding anything to the contrary in the Terman Lease, the District agrees that on or before September 1, 2002, the District shall convey to the City by grant deed fe. title to that portion of the Terman Site identified in Exhibit D attached hereto and incorporated herein as Terman Park, subject to those exceptions shown on the Preliminary Report attached hereto as Exhibit E. The City shall chose the escrow company and title company to be used and shall pay all costs of escrow and title insurance; the District shall sign and deliver a grant deed and such other documents as are reasonably required to close escrow within thirty days after they are presented to District for signature. (d) Notwithstanding anything to the contrary in the Terman Lease, the City agrees that on or before September 1, 2002, the City shall execute a quitclaim deed or such other document as the District may request relinquishing any leasehold rights or rights of ownerShip the City has to the New Terman School Site, as shown in Exhibit C. (e) The City and the District agree to execute and record in the Official Records of the County of Santa Clara a termination of lease terminating the Terman Lease effective as of September 1, 2002. (f) The City shall convey its interest in the New Terman School Site subject to the sublease to the JCC. (g) The City and the District shall enter into a joint use agreement, regarding Terman Site in substantially the form attached hereto as Exhibit F. 2. Cubberley Property (a) The District in consideration for the City relinquishing control of the New Terman School Site hereby agrees to convey fee title by way of a grant deed a portion of the Cubberley Site ("Cubberley Conveyance Property") as set forth in Exhibit G attached hereto and incorporated herein 3 011205 ')'ll 0090986 () ) simultaneously with City's relinquishments of its rights to the New Terman School Site subject to those exceptions shown on the Preliminary Report attached hereto as Exhibit H. The City shall chose the escrow company· and title company to be used and shall pay all costs of escrow and title insurance; the District shall sign and deliver a grant deed and such other documents as are reasonably required to close escrow within thirty days after they are presented to District for signature. (b) Prior to the conveyance of the Cubberley Conveyance Property, the City and the District will agree on the legal description and surveyor's map describing the Cubberley Conveyance Property, which legal description and map shall generally conform to the property lines set forth in Exhibit G. At the time the Cubberley Conveyance Property is conveyed to the City, the City and the District shall execute the Amendment No. 2 to Lease and Covenant Not to Develop attached hereto and incorporated herein as Exhibit I. 3. pistrict Right to Acquire If the City wishes to sell its fee interest in the Cubberley Conveyance Property any time prior to September 1, 2022, the City shall give written notice of such intention to the District. The District shall have the option to acquire the Cubberley Conveyance Property for fair market value. If the City and the District are unable to agree on fair market value, the purchase price for the Cubberley Conveyance Property shall be determined as follows: The fair market value of the property shall be determined bya state-certified appraiser acceptable to City and District with the cost of the appraisal to be shared by City and District equally. Should City and PAUSD not agree upon a State certified designated appraiser, one shall be appointed by the presiding judge of the Superior Court of Santa Clara County. The district must provide the City with written notice of its intent to acquire the Cubberley Conveyance Property within ninety (90) days of receiving notice from the City of its intent to sell the Cubberley Conveyance Property. 4. City Right to Acquire If the District wishes to sell its fee interest in the New Terman School Site any time prior to September I, 2022, the District shall give written notice of such intention to the City. The City shall have the option to acquire the New Terman School Site for fair market value. If the District and the City are unable to agree on fair market value, the purchase 4 011205 syn 009{)986 C) ( ) ) price for the District Portion of the Terman Site shall be determined as follows: The fair market .value of the property shall be determined by a state-certified appraiser acceptable to City and District with the cost of the appraisal to be shared by City and District equally. Should City ,and PAUSD not agree upon a State certified appraiser, one shall be appointed by 'the presiding judge of the Superior Court of Santa Clara County. The City must provide the District with written notice of its intent to acquire the New Terman School Site vlithin ninety (90) days of receiving notice from the District City of its intent to' sell the new Terman School Site. 5. Settlement of Potential~~~i.tigatio!J: The City and the District acknowledge that this Agreement is being entered into. in order to settle potential litigation regarding the possession of the New Terman School Site. The Parties agree that no part of this Agreement will be admissible as evidence in a court of law in the event the District institutes eminent domain actions to acquire possession of the New Terman School Site and that this Settlement Agreement shall be subject to the applicable California Evidence Code Section related to the inadmissibility of settlement discussions. 6. Mutual Release Upon performance of the parties' obligations under this Agreement, and in consideration for the conveyance of the Cubberley Conveyance Property, and other consideration set forth herein, the City hereby releases and forever discharges, on behalf of the City, and its successors, assigns, ·heirs, executors and administrators, the District and its board members, officers, directors, employees, agents, contractors and affiliates from any and all demands, claims or causes of action against the District, including without limitatiqn all claims, demands or causes of action arising out of or pertaining to any occurrence, event, circumstances or matter of any kind or nature arising out of, directly or indirectly, the acquisition of the New Terman School Site by the District, including, but not limi ted, to any claims for compensation for leasehold value, fixtures and equipment, loss of business goodwill, severance damages, interest, litigation expenses, attorneys' fees and costs (including, but not limited to, costs incurred to negotiate this Agreement) , loss or damages for inverse condemnation, unreasonable precondemnation delay, unreasonable precondemnation activities and statutory relocation benefits. 5 011205 syn 0090986 () ) Upon performance of the parties' obligations under this Agreement, and in consideration for the City relinquishing its rights to the New Terman School Site and other consideration herein set forth, the District hereby releases and forever discharges, on behalf of the District, its successors, assigns, heirs, executors and administrators, the City and its council members, officers, directors, employees, agents, contractors and affiliates from any and all demands, claims or causes of action against the City relating to the' City's occupancy of the New Terman School Si te including attorneys' fees and costs (including costs to negotiate this Agreement). In giving this release, the City and the District expressly waive the protection of civil Code Section 1542, which statute provides as follows: "A general re~ease does not extend to c~aims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have' materially ~l~d his setUement with debtor." District ~i~ . City 7 0 7. Headings The title and headings of the various Section of this Agreement are intended for means of reference and are not intended to place any construction on the provisions of this Agreement. 8. Invalidity If any provisions of this Agreement shall be invalid or unenforceable, the remaining provisions shall not be affected thereby, and every provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 9. Entire Agreement The terms of this Agreement are intended by the Parties as a final expression of their agreement and may not be contradicted by evidence of any prior or contemporaneous agreement. No provision of this Agreement may be amended except 6 O1l205 ,yn 0090986 () by an agreement in writing signed by the Parties hereto or their respective successors in interest. The Parties were represented by attorneys with regard to the drafting of this Agreement, and neither party shall be deemed to be the drafter of this Agreement. 10. Successors This Agreement shall be binding upon and inure to the benefit of. the· heirs, executors, administrators, successors and assigns of the Parties hereto. 11. Governing Law This Agreement shall be governed by the laws of the State of California. 12. Execution· This Agreement may be executed in multiple counterpart originals. 13. Attorneys' Fees ) In the event of a breach of this Agreement, the ) non-breaching party shall recovery all attorneys' fees and litigation expenses incurred as a result of such breach andlor to enforce this Agreement, including without limitation costs of appeal. II II II II II II II II II II 7 011205 ,yn 0090986 () ) IN WITNESS WHEREOF, the Parties have executed this Agreement on or as of the date first above written. CITY OF PALO ALTO, Lessee APPROVED AS TO FORM; ~~./ S~Asst. City Attorney APPROVED; c~ EXHIBITS; Exhibit A; Exhibit B; Exhibit C; Exhibit D; Exhibit E; Exhibit F; Exhibit G; Exhibit H; Exhibit I: 011205 syn 0090986 Legal Description Cubberley Site and Map of entire Map of the Terman Site 1 (including both New Terman School Site and Terman Park, both of which are identified on Exhibit B.) Map of New Terman School Site, (which City will quitclaim to District.) Map of Terman Park Preliminary Report on Terman Park Joint Use Agreement for Terman Site Map of Cubberley Conveyance Property Preliminary Report on Cubberley Conveyance Property Amendment No. 2 to Lease and Covenant Not to Develop 8 · CUCBEHLEY SITE .' I:.t$9al Oeser 1ption EXHIBIT A () i'bRCEL 1 (continued) seqinning at a point en the Southwesterly line of Middlefield Road at the :Illost Northerly corner of that oertain parcel of land conveyed by Ralph Gre.bmeier, at uX', to Rolf Grebrneier I a married lIIan, by Deed dated August 14 I :1954 and recorded october 15, 1954 in Book 2983 of Official Records, Page 211 i . thence leavin9 said line of M~ddlefield Road and running along the Northwesterly line of said Clrebllleie:r paroel, South 57' 42' 46 11 West :a:n.S3 ,:feet; thence leaving said Northwesterly line of said Grebmeier paroel and running North :)2' 04' 46" El!l.Iit 200.00 he,t t~ a pOint on the Southwesterly loins of Middlefield Road, thence along s/ud ll.ne of Mido.l~field Road, South 57' 55 I 14" East 9.6.97 feat to the point of beqinning ano. being a portion of the Rancho Rinoon de San Francisquito. pARCEL 2 ~eqinning at the most Southerly corner of Lot 11 in Blook 1, as Shown on the Nap of Traot 1310, Greenmeadow I whioh Map was filed for reoord in the off ice of the ReOOl:'der of the County of santa Clara, state of California on July 7; 2$54 in Book SO of Maps, Pages 50 and 51; thence along southwesterly iine ot saio Lot 11, North 33' 33' 18" West 40.00 feElt;thenoe along a Southeasterly line of Lots 11 and 12, b10cX 1, as shown on the loIap ,hClreinal:iove referred to, south 56' 26' 42" Weat50,OO feet: thence along a Northeasterly lineo! said Lotl2, south 33'.33 ' 18" East 40.00 feet! thence alon~ the Northeasterly p:Nlonqation of thEa ,most Southerly line of said Lot 12, North 56' 26 ' 4 ~i':' ) . East 50.00 feet to the point of beginning I and being a portion Qf the Sant!~: Ri:1:I Rancho. . ) PARCEL 3 tleqinninq at $. point on the Northwesterly liM of that oertain parcel of land conveyed by ~alph Grebmeier, at UX, to Rolf Grebmsiel:',& married man by Oeed dated. Auqust 14, 19.154 and recorded october 15, 15154 in Book 2983 of Off'ioiU Records, Page2ll, distant thereon, south 51' 42' 46" Wsst 221.83 feet from the point of intersE\ctionof said Northwelilter1y-line with the Southwesterly line of Middlefield Road; thence along the Northwesterly lin~ of· said Grebmlllier parcel, south 57' 42' 46" West 221. 83 feet to the IIIOlllt Westerly corner thereof! thence along the Southwesterly line of said Grabmeier parcel anCi parallel with said line of MiC!d1efieldRoad, South 51' 55' 14 II East 95. )).7 teet~ thence leavinq the Southwesterly lirlC~ of said Clrab:me1er. par.cel lind runnin/l North 32" 04' 46" East 200.00 feet, to tM point of l:leginning and baing a portion of the Rancho Rincon de San Francisquito, . EXCEPTION Excepting therefrom a portion of Parcel 1 and Par,cel 3 described as follo\,ls: Seginnin9 at the most Southerly corner of thlll above described Parcel 3 I th6lll'loe North 57' S5' 14" west !15.97 feet! thlllnoe South 57' 42' 46" West l' .41 flleti thence North 32' 04 '46" East !S3.19 feet: thence South 57' 55' l4" Ea~+- 103. so feet; thfinoe South 32' 04' ij 6 11 west 37.50 feet· to the po int i'.: l:leqinning. 2 Exhibit A ).,. ~Z~ .. ,),.,., '.' ) 3 ---, DRA\.IlNG -/ t!i96' ! calc-' ('251 ret:ord 2: / I I I '-' / ./ f .I , 1?-8.,/ , ""I I , ~ -' ;' ..,.~""'--_-__ 1:1:"" ___ -___ -___ -""', -~""-""-'-~---;{-_-_--_-_~ -___ --_"'1'''' , , e #'- t ~. ~ ",", ~f ,Ii' ~ ~ If " AJl'.l\ro. m __ !I\Ilm,JlI!~ IPAllClElL "lB" .$ PM :Ii-'i,t 4-M-49 &:5 ;, r'ARCEL 2 -----'li ~ ----" ' '07' ~'. SIlo ~ ------",-oS' -"" -.. ,,:.~" ,,!.~--., .' CITY AND COUNTY OF SAN FRANCISCO TERMAN SITE S 46" 22" J6w \{ 24.15' "-7--s: l~ eZ' le;.' \I 2.31' ~ $I t ~ ~ ~ " r---------~r---------_,----------_, K I i I 200 0 200 400 ,c,LALE, 1 u '" 200' REVISION· (4)12/03/2001 REviSION< (3) !l/2l1Ol REVISION. (2) Cl12/2001 REVISION. (J) 11/09/2000 t'l :><: ::tl '"' OJ '"' I-;l OJ --------~~ / f ~-------------------------.;---~----;---~----- .I 2;4:~' .I U.l'!4lI._ ~ ~ mm.~ palC1l!'JL"'IIB" ~ / I / ! , / ! i.?>", I / 9 C'i! ..;{?;/ I , 1 ! 0 I I' / 1>8,,1 / ..,;;,.- / /' 30 / / I /' ~~ .. i I . . I 1iI.1 I 6;. 28 / () .. ~ : <G,..,., 27 ~<?..:.:§ .>f' .". ~-1[(£-'l~:::-:::-:::-_ 'M<:M:."::'41£.&f.W.-M " 'E-L-_1..--_-_--,~ , ... v_ N ,,. ,.' 44' \I 5 •.• 5' I' & ~~ III 20'" «" 57~ \I 7UD' , ~a 6 ~ ff'" ·N ,,,. 56' "" \I "a7S' A;;~ /;;I ~ ~ ~ ~l e ~l1(!! : ,,#,i'~ I o s: 46-22" 16" '-' t4.7S' S 19" 1;'1' 19~ '\I 19E1.67+ it ttl c ~ ~ ~. SIS· 22' 16'" V 2.31' " ~. t ~ :t ~ " pI{" EX. """'" " 514-M-49&::5 '" »lImJCl.I"IJUr1~»Itl PARCEL 2 ro i:l:il-~!;i"""'" II -,,-'" s ' ' '\I ' S B3' '" •• ' \I ""SA.' ,.,'A5" CITY AND COUNTY OF SAN FRANCISCO I F ~==~===~F=== 200 ~ I 1 200 4 j 00 NEW TERMAN SCHOOL ST'T'd;,CALE: l' = 200' REVISION, (4) 12/03/2001 REVISION: (3) lI/21/0l REVISION' (c) 2/12/2001 REVISION, (J) 11/0912000 f t<I X ::t: H to H I-:l n AJP.I'IIJI.U01'- <';' FIMlm.lI&_ ,/"" _t .. 'I2S"'\ l"el!o:rd. :z 1S7.6~ AJI".N@. ]Jii1~~ 514"":'M-49&50 PARCEL 1 19" 13' 16" t; ti c i;' <I' ~ 211~ 5E" 16"' Y 83.16' V 2.31' !; C ~ ~ :j~ ,...l I'dtCElL 1IIir . ,'" PM 5 ,~'''' " ./4-M-49&5 "',,' ~""'"'' , p~m' ''','''''''',''''''-,.-""" """,,"""" ,~," $ roo 7' '" 50' " " , " .. ~ "'" ' :M';.""'''''''''''' " " CITY AND COUNTY OF SAN FRANCISCO FI ~===f====F==== 200 ~ I =1 200 400 CITY ROADWAY OF AND PALO ALTO TERMAN PARK l' 200' REVISIIJN, (4) 12103/200) REVlSlON, (3) lllZVOl REVJSlD~ (2) iU1e/COO') REVrSlON, (l) 11/0910000 t'I :><: iIi H U;1 H 1-3 I:l () ) ) rilIINoRTH _AMERICAN .TITLE 1111 COM PANY February 8, 2000 CITY OF PALO ALTO 250 HAMILTON AVENUE PALO ALTO, CALIFORNIA 94301 ATTN: ELAINA CHAN PROPERTY ADDRESS NO SITUS GIVEN ExhibitE Preliminary Report DIRECT ALL INQUIRES TO: Escrow Officer: DEBORAH MINARIK Telephone No. 650·917-5699 . Our No.: 50370029 IN RESPONSE TO THE A80VE REFERENCED APPLICATION FOR A POLICY OF TITLE INSURANCE, .North American Title Company, Inc. HEREBY REPORTS THAT IT IS PREPARED TO ISSUE, OR CAUSE TO BE ISSUED, AS OF THE DATE HEREOF, A POLICY OR POLICIES OF TITLE iNSURANCE, DESCRIBINGTHE LAND AND THE ESTATE OR INTEREST HEREINAFT·ER SET FORTH, INSURING AGAINST LOSS WHICH MAY BE SUSTAINED SYREASON OF ANY . DEFECT, LIEN, OR ENCUMBRANCE NOT SHOWN OR REFERRED TO AS AN EXCEPTION BELOW OR NOT EXCLUDED FROM COVERAGE PURSUANT TO THE PRINTED SCHEDULES, CONDITIONS AND STIPULATIONS OF SAID POLICY FORMS. THE PRINTED EXCEPTIONS AND EXCLUSION FROM THE COVERAGE OF SAID POLICY OR POLICIES ARE SET FORTH ON THE ATTACHED COVER, COPIES OF THE POLICY FORMS SHOULD BE READ, THEY ARE AVAILABLE FROM THE OFFICE WHICH ISSUED THIS REPORT. PLEASE READ THE EXCEPTIONS SHOWN OR REFERRED TO BELOW AND THE EXCEPTIONS AND EXCLUSIONS SET. FORTH IN EXHIBIT A OF THIS REPORT CAREFULLY. THE EXCEPTIONS AND EXCLUSIONS ARE MEANT TO PROVIDE YOU WITH NOTICE OF MATTERS WHICH ARE NOT COVERED UNDER THE TERMS OF THE TITLE INSURANCE POLICY AND SHOULD BE CAREFULLY CONSIDERED. IT IS IMPORTANT TO NOTE THAT THIS PRELIMINARY REPORT IS NOT A WRITTEN REPRESENTATION AS TO THE CONDITION OF TITLE AND. MAY NOT UST ALL LIENS, ·DEFECTS, AND ENCUMBRANCES AFFECTING TITLE TO THE LAND. THIS REPORT lAND ANY SUPPLEMENTS OR AMENDMENTS THERETOI IS ISSUED SOLELY FOR THE PURPOSE OF FACILITATING THE ISSUANCE OF A POLICY OF TITLE INSURANCE AND NO LIABILITY IS ASSUMED HEREBY. IF IT IS DESIRED TI-lAT LIABILITY BE ASSUMED PRIOR TO THE ISSUANCE OF POLICY TITLE INSURANCE, A BINDER OR COMMITMENT SHOULD BE REQUESTED. . Dated as of JANUARY 28, 2000 at 7:30 A.M. DONNA HARNDEN Till. Officer 419 S. SAN ANTONIO ROAD #106, LOS ALTOS, CA 94022·1650j917-5699FAX 1650)917-8607 , () :) ) The form of policy of title insurance contemplated by this report is: ALTA Loan Policy -Form 1 (10-17-92) and/or CLTA Standard Coverage Policy -1990 The estate or interest in the land hereinafter described or referred to covered by this report is: A FEE Title to said estate or interest at the date hereof is vested in: PALO ALTO UNIFIED SCHOOL DISTRICT Page 2 of 8 Order No. 5037002 L C) () ) Description: The land referred to herein is situated in the State of California, County ot SANTA CLARA, CITY OF PALO ALTO, and is described as follows: PARCELS A AND C AS SHOWN ON PARCEL MAP FILED 12/5/83 IN BOOK 521 OF MAPS AT PAGES 52 AND 53; AND PARCEL 1 AS SHOWN ON PARCEL MAP FILED 7/13/83 IN BOOK 514 OF MAPS AT PAGES 49 AND 50. ASSESSOR'S PARCEL NO.: 167-05-003,028,030,031 Page 3 of 8 Order No. 50370029 i I ,I I ~ LANDS Cft PAUl ALiO ~ N o CHR1$TlAN REf'CRiiiE: D CHURCH " c, .,' ·l.. .... v~I'i,,;: ~O;l4~~1W D rIC MlL '5£1" '''-'", • tIlle SO' l!lIL9f"_*~ ll1f WM«l Ul(~Oo" .. Of" 1lI( ~£.uTUIU PA~CEl MAP 0G) \ !.lit 011 tan 1 .... U S!!O\II'I( OR 1'»£ I4Al" 0IT11U:1l ""flt1.Cr Ik.t4'ot.lW:OI "tI\#.I:T" IIItr.CMI!')tI) Off;lV;!' Ill."" N 11001( ~" QIf IUI'j; .L'I' I'IC£ l4 IN YIt1: ~ eu.u eI.lIJIlft ~. CAUJ'OIIHU,. ~ 'I'Al(o. M me ~'tw IEJI.JlIJII45 ''Of! T~}tAP. .- •• , ~ ~ ~ ,. PORTION OF RANCHO 'RINCON DE SAN FRANCISaUITO RECORDED IN BOOK "A" MiSe, PAGE 66-RECORDS OF SAIITA CLARA COUNTY -CALIFORNIA CITY OF PALO ALTO 'SCAt.E:! .-.. iIIto'-d" F"E:$~ m!I3 'fA fl£ARING • • N.2S"32'4 <. ""'" ;W ... 27.0 'lEnS' 5.Gl'·'z7"I:I" E. "m 44"'1l>~ "'. :!.\4.00' ""m-30.0 ...... . '>.:c~ , '" "'" if' SHeFr 'l! Of' 'l! SHE'E'I'$ Ft~ it' 77f.t.';}?S";:') iI'I' ~..l S1'r p. ,0 , " ~ ~,:-.~" "'~,,-.-, .. ~ _ ,~' .• '.l'.'" ",'" "THE . INfORMATION ON i:firs. PLAT IS PRoviDEo' FOfl YOUR CONVENIENCE AS A GUIDE TO THE GENERAL LOCATION OF THE SUBJECT PROPERTY. THE ACCURACY OF THIS PLAT IS NOT GUAIWffEl'D. NOR IS IT A PART Of ANY POLICY. REPOFIT OR GUARANltt TO WHICH IT MAY BE ATTACHED" -','., 61f t so () ) ) EXHIBIT F AGREEMEN'l' FOR JOIN'l' USE OF TERMAN SITE This AGREEMENT FOR JOINT USE OF TERMAN SITE, entered into this day of , 2001, by and between City of .Palo Alto and Palo Alto Unified School District, hereinafter referred to as "City" and "School District". RECITALS 1. The City and School District have entered into a property exchange agreement in which the City obtains fee title to approximately eight (8) acres of land at the Cubberley Community Center and the School District obtains fee title to an equivalent area at the Terman Site. At the Terman Site, the City will own a dedicated public park, Terman Park, which includes playing fields and tennis courts. The School District will own the Terman Middle School, developed with school buildings, including a gymnasium, a parking lot, and a swimming pool. A map showing the Terman Si te, Terman Park, and the Terman Middle School is attached as E:x:hib~t A. As part of the land exchange' agreement, the City and the School District have agreed to enter into this joint use agreement for the Terman Site. The purpose of the agreement is to cooperatively use the Terman Site so that both educational and community services can be provided to those living in the City and the School Distri<;::t. 2. The City and the School District also have power to assist each other under Education Code Sections 17051(a) and 35275 and Government Code section 6500 et seq. of the State of California, which authorize and empower public school districts and municipalities to cooperate with each other and to that end enter into agreements with each other for the purpose of organizing, promoting and conducting such programs of community recreation and education for children and adults of the state. 3. The School District has need of the Terman Park playing fields for its middle schOOl, and the City has need of a portion of the Terman Middle School buildings for its library and related activities. Both City and School District wish to have the City provide recreational programs for middle school children and others that will make use of both the Park and the Middle School. Terman Park is a dedicated park and use of the Park by the School District must be consistent with that des,ignation; Terman Middle School will be a public school 1 011206 syn 00909 IO \) ) ) facility, and its use as a middle school will have priority over all other uses. NOW, THEREFORE, the City and School District mutually covenant and agree with each other as follows: A. Principles 1. The City and School District shall cooperate in the use of the Terman Site. 2. The City shall control use of the Terman Park and the School District shall control use of the Terman Middle School, in a manner that is consistent with this Joint Use Agreement. B. Joint Use of the Terman Site. 1. The School District shall make Terman Middle School facilities and equipment available to the City as described-in Attachment 1. The School District-shall also make such facilities and equipment available upon application of the City provided that their use for City purposes does not interfere with the School District's use of such facilities and equipment for Terman Middle School or constitute a violation of provisions of the California Education or Government Codes. No charges shall .be made for such use other than those specifically described in this Agreement. 2, The City shall make Terman . Park facilities available to the School District as described in Attachment 2. The City shall also make such facilities and equipment available upon application of the School District, provided that their use for School District purposes does not interfere with the use of the facilities or equipment by the City in connection with its stated purposes or with City Charter provisions and ordinances regulating the use of dedicated park land. No charges shall be made for such use other than those specifically described in this Agreement. 3, The City Manager and the Superintendent of Schools do hereby delegate the responsibility for establishing schedules for facilities and equipment use to the City Director of Community Services and the School District Business Manager. 4. Each party using facilities or equipment owned by the other pursuant to this agreement shall furnish qualified personnel for the proper conduct and supervision of the use, 2 011206 ,yo 009091Q ) ) 5. The party using facilities or equipment of the other under this agreement shall repair, or cause to be repaired, or will reimburse the owner for the actual cost of repairing damage done to the facilities or equipment during the period of such use, excluding damage attributed to ordinary wear and tear. C. Scheduling and Supervision 1. Subject to the limitations in Section A above and to the specific commitments set forth in Attachment 1, in scheduling the use of Terman Middle School, Terman Middle School events and programs' shall have first priori ty and Ci ty recreation programs, and City co-sponsored programs shall have second priori ty. In cases of emergencies or errors in scheduling, the Terman Middle Schocilevents and 'programs shall have first priority for use. Every reasonable attempt will be made to avoid such conflict. City activities shall, not be scheduled on Terman Middle School facilities between the hours of seven thirty a.m. and three-thirty p.m, on days when school is in session without the permission of the school principal. 2. Subject to the limitations in Section A above and to the specific commitments set forth in Attachment 2 below, in scheduling the use of Terman Park, City recreation programs and Ci ty co-sponsored programs shall have first priority. Terman Middle School events and programs shall have second priority. In cases of emergencies or errors in scheduling, the City programs and events shall have first priority for use. Every reasonable attempt will be made to avoid such conflict. School activities shall not be scheduled before seven thirty a.m. or after three-thirty p.m. 3. The City will have a responsible adult representative, present at all times at any City event held on the Terman Middle School. That representative may be a volunteer or a paid City employee responsible to see that School District rules and regulations are observed and complied with and that the facilities and grounds are returned to existing condition upon completion of the activity. The City will have a City employee on call at all times that a City~sponsored or' scheduled activity is occurring in the Terman Middle School in order to respond and investigate any questions or improper action at such activities and events. 4. The School District will have a responsible adult representative present at all times at a School District 3 Oil 206 'YO 0090910 / ') activity or event is held in Terman Park. That representative \, may be a volunteer' or a paid School District employee responsible to see that City rules and regulations are observed and complied with and that the facilities and grounds are returned to existing condition upon completion of the activity. The School District will have a School District employee on Call at all times that a School District-sponsored or scheduled activity is occurring in Terman Park in order to respond and investigate any questions or improper action at such activities and events. ) ) 5. The other written use schedul ing shall following schedule: City and School District shall submit requests in advance. Requests for be submitted annually according July 1st for the School Year February 1st for the summer months to each advance to the The Terman Site Joint Use Committee shall approve a master calendar for each of these periods within thirty (30) days of the submi ttal of the requests for advanc',e scheduling. Each schedule will be arranged so as to avoid any conflict between the School District's and City's uses of the facilities and equipment. The City, or the School District shall not schedule other uses until first and second priorities are set as prescribed herein. D. Maintenance of Terman Site Facilities. 1.' Basic Standard. Facilities jointly used shall be adequately' maintained to insure appropriate and safe use, appearance and longevity. 2. Basi<::..l'esponsibility. Except as may otherwise be specified herein, the responsibility for maintenance, repair and ,renovation of facilities shall be the responsibility of the owner of the real property on ''''hich the facility is situated, E. Maintenance of Athletic Fields. ---~-- 1. Turf Areas and Tennis Courts on Terman Site. a. The City will maintenance program for turf areas of areas are shown on Attachment 3. 4 011206 ,yn 0090910 continue its existing the Terman Site. These Pursuant to that Master () ! ) Maintenance Agreement, the City will mow, trim, fertilize and irrigate and perform other maintenance work of a general nature at the fields at the frequencies and times in accordance with· the field maintenance standards adopted by the City. The School District will pay one half of the city's actual cost to maintain the fields. b. The City will also maintain the drainage and irrigation systems of the fields under the terms and conditions described in the Master Maintenance Agreement between the City and the District. If these systems need repair or replacement, the City will consult with the School District on the SCOPe of work and estimated cost to perform it, and the School District shall confirm its approval of the scope of· work. The School District shall pay one half of the City's actual costs for such approved repair or replacement work. c. The City will continue its . existing maintenance program for tennis courts in Terman Park. The City will wash and air blow the surfaces of the courts, repair and/or replace, as reasonably necessary, the tennis nets and screens, and perform other maintenance work of a general nature at the frequencies and times in accordance with the maintenance standards adopted by the City. The City will also resurface and restripe the courts ~ Such resurfacing and restriping will be scheduled to match the Ci ty' s existing tennis court resurfacing program at an approximate five year interval for such work. The School District shall pay one half of the City'S actual cost of maintaining and resurfacing the courts. d. Money owed by the School District to the City under this Agreement will first be credited against any monthly lease payments due and payable by the City under its lease agreement with the District entitled "Lease and COvenant Not to Develop," as amended from time to time. If the sums owed under this agreement exceed those payments, the City shall bill the School District and the School District shall pay the City within forty-five days after receipt of its invoice. 2. Custodial Services. The School District shall provide all custodial services for the Terman Middle School. If the Terman Middle School is used by the City at a time when custodial staff is not regularly on duty, or when a custodian is required to open a facility, the City shall pay the cost of the custodial time to the School. Alternatively, the City may arrange with the School District to open and close a facility ) itself. 5 011206 ,yo 0il90910 () F.Library Facilities. City vrill continue its existing library at the Terman Middle School until such time as the District gives it notice tha.t all or a portion of those facilities are needed for district purposes. Upon six months vrritten notice that all or a portion of the facilities are needed for district purposes, the City shall vacate the identified portions of the premises. G. Restroo~s at Terman Middle School. 1. The restroom facilities located at Terman Middle Scho'ol shall be available for public use while City programs are scheduled at either Terman' Middle Schocl or Terman Park,and while the Terman Library is open to the.public. They shall also. be available to library staff during their working hours. 2. The School District shall' perform custodial maintenance of the restrooms on a da'ily basis when its custodians are on duty. On days when its custodians are not on duty, the School district shall make arrangements in advance, as part of the scheduling agreements, to provide supplies to the City on site so that is may restock the restrooma. on those days. ) H. Establishment of City and School District Joint lise ) Committee. The Ci ty Manager designate two staff members which is hereby established. three times a year, but may necessary to administer this responsible for administering I. Term of Agreement. and the Superintendent shall each to the Terman Joint Use Commi ttee The Committee shall meet at least meet additional times each year as agreement. The Committee shall be this joint use agreement. This agreement shall commence upon the date first entered above and shall end upon termination of the Cubberley Lease between the City and the School District unless otherwise terminated by consent of the parties. J. Indemnification. The ci ty shall investigate, defend and indemnify the School District from any and all claims, demands, actions or damages arising out of the City's use of School District Facili ties to which the School District may be subj ected as a direct consequence of this agreement except for those claims, 6 0l120G syu. 009091 0 () ) demands, actions or damages resulting solely from the negligence of the School District, its officers, agents and employees. The School District shall investigate, defend and indemnify the City from any and all claims, demands, actions or damages arising out of the School District's use of City Facilities to which the City may be subjected as a direct consequence of this agreement except for those claims, demands, actions or damages resulting solely from the negligence of the City, its officers, agents and employees. K. Complete Understanding and Amendments. This agreement and the attached exhibits set forth the complete agreement and understanding of the parties; any modification must be in writing executed by both parties. L. . Notices. If at any time after the execution of this agreement, it shall become necessary or convenient for one of the parties hereto to serve any notice, demand or communication· upon the other party, such notice, demand or communication shall be in writing and shall be served personally or by depositing the same in the United States mail, return receipt requested, first class postage prepaid and (1) if intended for City shall be addressed to: with a copy to: City Clerk City of Palo Alto P.O. Box 10250 Palo Alto, CA 94301 Director of Community Services Department P.O. Box 10250 Palo Alto, CA 94301 and (2) if intended for PALO ALTO UNIFIED SCHOOL SCHOOL DISTRICT shall be addressed to: 011206 S)'ll 0090910 Palo Alto Unified School District 25 Churchill Avenue Palo Alto, CA 94306 7 C) ( ) ) or to such other address as either party may have furnished to the other in writing as a place for the service of notice. Any notice so mailed shall be deemed to have been given as of the time the same is deposited in the United States mail. IN WITNESS WHEREOF, the parties have executed this agreement on the date and year first above written. CITY OF PALO ALTO A municipal corporation Frank Benest City Manager ATTEST: City Clerk APPROVED AS TO FORM: Ariel Pierre Calonne, City Attorney By __________________ __ APPROVED AS TO CONTENT: PALO ALTO UNIFIED SCHOOL DISTRICT Robert Golton Acting Superintendent Paul Thiltgen, Parks and Recreation Director By __________________ __ 8 Otl206 'YO 0090910 <:m.lv'(2S') .....,.,.,....a 2 .-AJI'.l'ID. . _.~ __ _ . ,lI;r~~3 _ _ _ -:;:...~".'M~'~~: -::::::;~'NCISCO PM PARCEL 2 ~ N F.lV'> . . SA CITY AND COUNTY OF TERMAN SITE 1 I I I ---, 200 0 200 400 REVISION, (4) IE/03/EOOI REVISION, (3) 11/21101 REVISIIJN, (2) 2/12/2001 REVJSl\:J~ m 11/09/200\) ~ ~ >-l » () A'l"l'ACHMEN'I' 1 CI'I'Y USE OF 'I'ERMAN MIDDLE SCHOOL A'I''I'ACHMEN'I' 1 The JCCsha11 have priority over the City for use of the pool and the gymnasium for its programs year round until it relocates to its permanent facilities or until August 31, 2009, whichever is earlier. All exceptions to this can be found in Attachment lAo The City'S use of the Terman site following August 2003 will include: 1. Swimming Pool a. School year-After school, evening and weekends for instructional programs .and lap. swimming .. b. Summer-Seven-day and night uses for instructional programs, recreational swimming and lap swimming. i ) 2. Gymnasium ) a. School Year-After school for middle school athletics, youth and teen programs evenings; Weeknights for youth and adult programs; Weekend and night use for youth, teen and adult programs. b. Summer-Seven-day and night uses for youth, teen and adult programming. 3. Library Wing OIlW6,yu009091O Use of that wing as a neighborhood library subject to section F of this agreement. This use may be converted to City/School joint library services at some time in the future. 9 ) ) , - 1)1\~'~V\\\ • ...... I 1\ 1\1' k ~~~lli!\'" J!III1IAlq,'IY!\'J\ . l.11/1111rlll~ , 1'111 ~.iI't!"!I .. .14\\\ "'~~'~\' f)1'1~1 ,Iji{!\'l! I, 'i1'1.;I('~ , . ~j.~Y¢.f~9_AJt9 D~p«I'l!Jte/l1 n!('.D/tHlI~!liIJl Smlle"s O\lO\lm1)(lf 5, ZOO J . MI', ~lli!)' I.3ll'lvad , AlbC1i Scl\lIl1r. Jew/An Comm4nity Ci;;n!~r ~>5 Ai<l~lI'jI(!ero Ito~ 1\~10 Ah(), CA 94)OC , mur~nndr: TI,I/> 11I1<mHI1Il 9f thi~ dtlOUlw>nl I.; In ""',Ie IIw \>I~)' j.o !ln~ !hll Jowhlh (,;Olllt'l)\lI'llty Cenl~' illtljrlm 1.l~(l 9r c.xYl'!' A it th~ (1IlbMrley CQI1IIJ1\!lill,Y ~1l11l(l''. In thi8 r~,!W'd1 tbe JCC will h~v(,l cx\>h.!slv{l \IJI) <lI'Qym A. ut ihil ("\,\'Illlirl~ C\Jmmillllty Ctlnter\ tl'lroU!hOlil Ib,. yw, with the t'lCOlllpl\OIl ill' , MdBYS, (\:30 p.li!, tQ !O;)() p.m •• lln~ SiitlAfdayS, *:~O a,lll, To flOOIl, $1l1llln,s A\lI!u&~ 1, 2(JO~. 'U\ ol'dotl0 rl!Kla~d i§l.!oh lJJIill Qf'tlym A to lhe n:c lIlI of 1 lie ,i':OfQatkmi£! tlrQmtm. tbM prc$tntiy ,e!t'\S! ill Gylll A 111\1$t'hflnln~i"iPrf~ tli 'Ih~ ·1\li'.m~n;3rm. SllOllhllho City eb~nge; 1\, Ptog,a.riimingIlllIMtlll~ 11ll11li,'l\ ilr!Ufll, thfl JCC wl:llI!,d him I'Il'st rialit (If use of dl1ll Ti;l'l'l'iall ()yll\, . Atlditlolllllly, thl1 Cib Will hi; tlelilble In illll pn~WillllMilli m Ihe 'i'lI'rl1!llil OYIli, lind, wllellovllI' pO$s!bll'!, Ill)lIa~\)li4l!l with Ihe JCC tlil j:lfb~.ims, 'I~I~ wl,ditiQII; I)r.lbi~ dQtlI41!~l.rll' ~Ibj(lc\ \0 Iill! .!I\.\ItOOS~fllllljlj!rovl!I! of'1I B\,bl~~e ~tWW!l \hQ rIC() (llid the (:n~ Qf Jl!'I;lg A!~~ tor trw Interim \.ISO \)f' tJw CI.lbl,.\ll'lll1 CC>lF'\I'lIlt~ C0l\\~r .1~Cr Il.ti,d CIII\"O~ 11\1' r",lll!~ Ihp .... n 'Ill! ~~,~ tMfa j'll\l'ty (iill1l!ldlft/ll th1s PAUSD) unlll such iljlpmval.' 7'his fcttl.lf WIU b<*lMHI'I llddou4Um to> th'l City I'IrPllIo Al\\If1'illo Alt9 Ui~tI~ Sdl~IJl ,IJill!ri\i1 ~1'=4l1!11'1!lt liil Jllln( lJij~(~inbtll'u!llmll $lw; , . '. . C()!1~i110h~ ii, 'r.1l1'JM1I Middltl Sehtlcl *Ylnlll.';luBI: , B. 'I.'hl). uw (lr ~w 'rorilliil~ B)'II!\. tw.t9ldf-of'l» AlJSI) mse, ~Ii ~ $(liI~dl!lt:d i1fS\ by tho YCc, 'rhe CILy 01111 $Oil(Jdllle lin (I1l!$( times trot U!lOO by Ih0 JC!e ~fld J'AU$U, I:!ltelipliOIlUo 1hi~ poUo)' $1~ fiB follawll: .. \I Ueeigll'll~ In SepUrnber :too3, Ihe Pl.I\o AHt) RI:lllI'lllilioll DM~ll'ln wi!! hl\V¢ 1l4i:1 $tnll,l 'A'1."I)llSII Gym MOlld~y Uirol.lmn .'I'I.y, Sllptll!'lber tlu\1lif,\h 1unC! rrom'3:J.O, p.m. to' I O:3() p,I~. ~fr.i' Silturd&y .d SllIi1!IlI)1i>, lII;~O 3,\1'1: thVQ.1i!!b IO:~1) ~.ID, , . . . L,,<lf.III!\'I'I\ C>'I>lIL'l' 1,lOll Mf<IIIMI"'~ II~Ml ,I'»l!)oo\1I1), tA ~~~nl , () i) ) '.1 "' •• -_. '. . . , \ JiVlli\l\lK .. .0 n I , If Ail, ll' ';I1II\l\~ . t 1\U,lu'l !l\'1 VI(I'~ I l\,i"III,'fi .' /\1, ~j Ii \1,~11 11'1'~j"1!i~n, tll~ll\ ~'I'~n: '8J.l\~1QnM.'v . ATTACHMENT1A ~#y'Qt Pm9 f,\J~Q D~fll/rll/l,t'Ill ¢f C91111111111I1!18t'rvi"'~ • r}~glrinlng in ZOO;!, YMOA Hn~ke!bIlU Will u..e tile Tcrlll~n GYlll J<lI111nIY t!Il'l.'luSh M'~l'ch Ilf\l~{:h Y~llf, lJ.:J.(J.I!.Iii, thro\l~[\ 6:00 P f!'I, ttn ,~!,lh1'l'day~ •. ~fl:llQ ICO Jlilll inrQr!ll.~ ~\\e City or iUI il'llqnijrm to ooniin.uespo!\9<lrohip . or $\Wlt'\<:!~ ¢.iIjnjls. ill thl'! '1'Ilrmq,n Gym, 11$ !~ ~all f(lt Ihlb laal :l,Q yeil.!'i. If fho Jt:() dllQ1110\ sponSl)r lIYUlmott."lIII)) ~\lIMlIe~ 1l\'I"*' TermAn sym, tho el~y of' ~~1!) :Alto rcq\\osls the ~Plli;l(l (0 Jiroaram CAIl'lPS rrom 111.111\: tblXllluh J\,1\~.\f. 1J~8inll!.rw II'! 2(,lO~ fr(,ltll 8:110 ,,",11'1,' ~lu))ugh 3:00 p,m.; Mimduy Ihl'I.l\I!:\h Frld~YI. . '. . .' . . , C) ) ) AT'l'ACHMENT 2 SCHOOL DISTRICT USE OF TEru\'IA1:i! PA:RK School District shall be entitled to the issuance of a City pe,rmit under Chapter 22 of the Palo Alto Municipal Code for use of portions of Terman Park during certain, hours. School District shall not be required to pay for such permit, and in any case where there is a contradiction between the terms of the permit and the terms of this Agreement, this Agreement shall govern. 1. Terman Tennis Courts a. Terman Middle School shall have first calIon the tennis courts between the hours of 7:30 a.m. and 3:30 p.m. on days when Terman Middle School is in regular session. b. School District shall pick up all litter and leave courts in good condition at end of every day of use. 2. Terman Playfields. a. Terman Middle School shall have first call on the playing fields between the hours of 7 :30 a.m. and 3 :30 p.m. on days when Terman Mid¢lle School is in regular session. School District will not have the right to routinely exclude members of the public from any dedicated playing field or parkland. School District will have the right to take reasonable actions to prote'ct both its first call on the playing fields and the safety of the students. No permanent fence or other barriers to public access will be constructed. b. School District shall pick up all litter and leave fields in good condition at end of every day of use. The public will have unrestricted access to those portions of Terman Park not being used by the Terman Middle School. 10 011206 'yn 0090910 EXHIBITG 1ft, ~1.fII(j)fNI \lJJ1F' uJ !Jl'Ift,IRlICIeL m«ll N51'30'OQ"W ''D.\ ~OOItt ~~@® 19.80' :t [illIft,G~ ~~~ U.~$ $~~r~ ICL~~~ 1C\lJJ~~V '0 '" IMiJO[l)'i'«llWINI ~1E1i' ~OIL r" !P' ~lil'f(lNIrelRl$ ib!Jl' to ~ , lMIDl$ (\))IF' Ii!:: 1i'~<e;'ii' INJ@. ~~~@ 8-lIl'~ib«ll ~1L'ii'«ll 18 ~te~f.!iIIE~OOW If! SCl'llOOIL IiJIO$'ii'IRlIIC'ii' '0 oo©[t{ 00 \lJJ1F' <v. 34l5,322. 00, 1F'il', !'> to IMIAfF' /J;. 'ii' [ill A@IE ,l,J' 1,00 AICIRl~ !2 00 1§1 ;;II /!l '" 10 !£ 0 ~ N Ii!:: Ig 10' PG&E GAS 'b N43'26' 42"E MAIN EASEMENT &; S51'30'OO"E i:l 71.1.3' 170.00' I BK, 748 PG, 487 l-t---=---=-4-------- - - - - ----------------------- til N56'26'42"E J.--{l2.20' ""+0--P.D.S N51'.30'Oor.W-·548.44' tEs LEA &. SUNG ENGINEERING, INC. ONiL ENGINEERS • LAND SURVEYORS 2495 I~DUS1RIAL PARKWAY 'M':ST HA \'WARD, CAUFORNIA 94545 (510) 887-4086 FA)( (510) 887-3019 , JOB NO, 2010248 200 J SCALE. 1"· 100' EXHIBIT "G" PROPOSED LOT-LINE ADJUSTMENT PALO ALTO UNIFIED SCHOOL DISTRICT CUBBERLEY SCHOOL 4000 MIDDLEFIELD ROAD PALO ALTO, CALIFORNIA SANTA CLARA COUNTY APN: 147-08-003 JUNE 14, 2002 () ) IIINORTH _AMERICAN • TITLE Iii COMPANY City of Palo Alto Attn: Janet Freeland 250 Hamilton Avenue Pale Alto CA 94303 Property Address: 4000 Middlefield Road Palo Alto, California Our No.: Customer No.: Exhibit H Preliminary Report 56901-51990229-PRT 4000 Middlefield Road IN RESPONSE TO THE ABOVE REFEI>ENCED APPLICATION FOR A POLICY OF TITLE INSURANCE, North American Title Company, Inc. HEREBY REPORTS THAT IS PREPARED TO ISSUE, OR CAUSE TO BE ISSUED, AS Of THE DATE HEREOF,A POLICY OR POLICIES OF TITLE INSURANCE, DESCRIBING. THE LAND AND THE ESTATE OR INTEREST HEREINAFTER SET FORTH, INSURING AGAINST LOSS WHICH MAY BE SUSTAINED BY REASON OF ANY DEFECT, LIEN, OR ENCUMBRANCE NOT SHOWN OR REFERRED TO AS AN EXCEPTION BELOW OR NOT EXCLUDED FROM COVERAGE PURSUANT TO THE PRINTED SCHEDULES, CONDITIONS AND STIPULATIONS OF SAID POLICY FORMS. THE PRINTED EXCEPTIONS AND EXCLUSION FROM THE COVERAGE OF SAID POLICY OR POLICIES ARE SET FORTH ON THE ATTACHED COVER, COPIES OF THE POLICY FORMS SHOULD BE READ, THEY ARE AVAILABLE FROM THE OFFICE WHICHlpSUED THIS REPORT. PLEASE READ THE EXCEPTIONS SHOWN OR REFERRED TO BELOW AND THE EXCEPTIONS AND EXCLUSIONS SET FORTH IN EXHIBIT A OF THIS REPORT CAREFULLY. THE EXCEPTIONS ARE MEANT TO PROVIDE YOU WITH NOTICE OF MATTERS WHICH ARE NOT COVERED UNDER· THE TERMS OF THE TITLE INSURANCE POLICY AND SHOULD BE CAREFULLY CONSIDERED. IT IS IMPORTANT TO NOTE THAT THIS PRELIMINARY REPORT IS NOT A WRITTEN REPRESENTATION As TO THE CONDITION OF TITLE AND MAY NOT LIST ALL LIENS, DEFECTS, AND ENCUMBRANCES AFFECTING TITLE TO THE LAND. THIS REPORT (AND ANY SUPPLEMENTS OR AMENDMENTS THERETO) IS ISSUED SOLELY FOR THE PURPOSE OF FACILITATING THE ISSUANCE OF A POLICY OF TITLE INSURANCE AND NO LIABILITY IS ASSUMED HEREBY. IF IT IS DESIRED THAT LIABILITY BE ASSUMED PRIOR TO THE ISSUANCE OF A POLICY OF TITLE INSURANCE, A BINDER OR COMMITMENT SHOULD BE REQUESTED. . Dated as of October 15, 2001 at 07:30 am Pam Thompsonlpu Title Officer/Examiner 4255 Hopyard Road, Suite 1, Pleasanton, CA 94588 Phone No.: (925) 399·3000 Fax No.: (925) 399-3028 The form of policy oftltle Insurance contemplated by this report is: () Preliminary Report Only The estate or interest In the land hereinafter described or referred to covered by this report is: A fee Title to said estate or Interest at the date hereof is vested In: Palo Alto Unified School District aka Palo Alto Unified School Dlstric! of Santa Clara County ) Page 2 Order No.: 56901·51990229·PRT () { ) Description: The land referred to herein is situated in the Slate of California, County of Santa Clara, Cily of Palo Alto, and Is described as follows: BEGINNING AT THE MOST WESTERLY CORNER OF THE PARCEL OF LAND CONTAINING 42.27 ACRES DESCRIBED IN THE DECREE OF DISTRIBUTION MADE IN THE ESTATE OF JOHN MILLER RECORDED OCTOBER 7, 1937 IN BOOK 849 OF OFFICIAL RECORDS. AT PAGE 61, RECORDS OF SANTA CLARA COUNTY, CALIFORNIA; THENCE FROM SAID POINT OF BEGINNING NORTH 57° 42' 46" EAST ALONG THE NORTHWESTERLY LINE OF SAID 42.27 ACRE PARCEL 327.41 FEET TO THE POINT OF INTERSECTION THEREOF WITH A LINE DRAWN PARALLEL WITH AND DISTANT 400 FEET, SOUTHWESTERLY AT A RIGHT ANGLE, FROM THE SOUTHWESTERLY LINE OF MIDDLEFIELD ROAD 60 FEET IN WIDTH; THENCIO SOUTH 57° 55' 14" EAST PARALLEL WITH AND DISTANT 400 FEET SOUTHWESTERLY AT A RIGHT ANGLE FROM SAID SOUTHWESTERLY LINE OF MIDDLEFIELD ROAD 572.04 FEET; THENCE AT RIGHT ANGLES TO THE LAST COURSE SOUTH 32° 04' 46" WEST 373.77 FEET TO THE SOUTHWESTERLY LINE OF THE 42.27 ACRE PARCEL; THENCE NORTH 51° 38' 17" WEST 717.99 FEET ALONG SAID LINE TO THE POINT OF BEGINNING. PARCEL TWO: BEGINNING AT A POINT ON THE CENTERLINE OF MIDDLEFIELD ROAD ATTHE MOST SOUTHERLY CORNER OF TRACT 870 CHARLESTON GARDENS UNIT NO.1 AS SHOWN ON A MAP THEREOF WHICH WAS FILED IN BOOK 33 OF MAPS AT PAGES 26 AND 27 IN THE OFFICE OF THE COUNTY RECORDER OF THE COUNTY OF SANTA CLARA; THENCE FROM .SAID POINT OF BEGINNING SOUTH 57° 42' 46" WEST 804.35 FEET TO AN IRON PIPE ON THE NORTHEASTERLY LINE OF LAND FORMERLY OF D.L. SLOAN; THENCE SOUTH 51 0 37' 17" EAST 224.14 FEET TO A POSTMARKED P.S. 7 ATTHE MOST NORTHERLY CORNER OF LOT 11 OF THE J. J. MORRIS REAL ESTATE CO'S SUBDIVISION OF THE LOUOKS TRACT, A MAP OF WHICH IS OF RECORD IN THE OFFICE OF THE COUNTY RECORDER OF THE SANTA CLARA, STATE OF CALIFORNIA, IN BOOK "l" OF MAPS, PAGE 35 RECORDS OF SANTA CLARA; THENCE ALONG THE NORTHERLY LINE OF LOTS 10 AND 11 OF SAID SUBDIVISION SOUTH 38° 23' 31" WEST 657.32 FEET TO A POINT WHICH IS DISTANT ALONG THE NORTHERLY LINE OF LOTS 9 AND 10 OF SAID SUBDIVISION NORTH 38° 23' 31" EAST 520.00 FEET FROM THE MOST EASTERLY CORNER OF LOT 6 OF SAID SUBDIVISION; THENCE PARALLEL WITH AND DISTANT NORTHEASTERLY 520 FEET FROM THE NORTHEASTERLY LIEN OF LOTS 4, 5 AND 6 NORTH 51° 36' 25" WEST 941.59 FEET TO A POINT WHICH IS DISTANT NORTHEASTERLY, MEASURED AT RIGHT ANGLES, 260 FEET FROM THE NORTHEASTERLY, BANK OF ADOBE CREEK; THENCE PARALLEL WITH AND DISTANT NORTH EASTERLY 260 FEET FROM SAID CREEK NORTH 14° 12' WEST 501.67 FEETTO A POINT WHICH IS DISTANT 657 FEET SOUTHEASTERLY MEASURED AT RIGHT ANGLES FROM THE CENTERLINE OF CHARLESTON ROAD; THENCE PARALLEL WITH AND DISTANT 657 FEET SOUTHEASTERLY FROM THE CENTER LlNEOF CHARLESTON ROAD NORTH 56° 26' 42" EAST 340.00 FEET TO A POINT ON THE CENTERLINE OF A 10 FOOT EASEMENT GRANTED TO THE PACIFIC GAS & ELECTRIC COMPANY BY DEED DATED NOVEMBER 21, 1935 AND RECORDED DECEMBER 11, 1935 IN BOOK 748 OF OFFICIAL RECORDS, PAGE 487; THENCE NORTH 43° 26' 42" EAST 170.00 FEET TO A POINT WHICH BEARS. SOUTH 57° 55' 14" EAST 70.00 FEET; SOUTH32' 04' 46" WEST 235.00 FEET AND SOUTH 56° 26' 42" WEST 265.00 FEET FROM A POINT ON THE CENTERLINE OF MIDDLEFIELD ROAD AT THE MOST WESTERLY CORNER OF THE ABOVE MENTIONED CHARLESTON GARDENS UNIT NO.1; THENCE NORTH 56° 26' 42" EAST 265.00 FEET; THENCE NORTH 32° 04' 46" EAST 235.00 FEET TO THE CENTERLINE OF MIDDLEFIELD ROAD; THENCE ALONG THE CENTERLINE OF MIDDLEFIELD ROAD SOUTH 52° 55' 14" EAST 1212.79 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM, THAT PORTION CONVEYED TO ROLF GRABMEIER BY DEED RECORDED APRIL 8, 1955,3138·82 ) PARCEL THREE: Page3 Order No.: 56901·51990229·PRT C) . ) BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF THAT CERTAIN PARCEL OF LAND CONVEYED BY RALPH GROBMEIER: ET UX, TO ROLF GROBMEIER, A MARRIED MAN BY DEED DATED AUGUST 14,1954 AND RECORDED OCTOBER 15, 1954 IN BOOK 2983 OF OFFICIAL RECORDS, PAGE 211, DISTANT THEREON, S. 57 DEG. 42' 46" W. 221.83 FEET, FROM THE POINT OF INTERSECTION OF SAID NORTHWESTERLY LINE WITH THE SOUTHWESTERLY LINE OF MIDDLEFIELD ROAD; THENCE ALONG THE NORTHWESTERI-Y LINE OF SAID GROBMEIER PARCEL,S. 57 DEG.42' 46" W. 221.83 FEET TO THE MOST WESTERLY CORNER THEREOF; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID GROBMEIER PARCEL AND PARALLEL WITH SAID LINE OF MIDDLEFIELD ROAD, S. 57 DEG. 55' 14" E. 95.97 FEET; THENCE LEAVING THE SOUTHWESTERLY LINE OF SAID GROBMEIER PARCEL AND RUNNING, N. 32 DEG. 04' 46" E. 200.00 FEET TO THE POINT OF BEGINNING AND BEING A PORTION OF THE RANCHO RINCONDE SAN FRANCISQUITO. PARCEL FOUR: BEGINNING AT THE MOST SOUTHERLY CORNER OF LOT11IN BLOCK 1, AS SHOWN ON THE MAP OF TRACT 1310, GREENMEADOW, WHICH MAP WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON JULY 7, 1954, IN BOOK 50 OF MAPS, PAGES 50 AND 51; THENCE ALONG A SOUTHWESTERLY LINE OF SAID LOT 11, N. 33· 33' 18" W., 40.00 FEET; THENCE ALONG A SOUTHEASTERLY LINE OF LOTS 11 AND LOT 12, iN BLOCK 1, AS SHOWN ON THE MAP HEREINABOVE REFERRED TO, S. 56° 26' 42" W., 50.00 FEET; THENCE ALONG A NORTHEASTERLY LINE OF SAID LOT 12, S. 33· 33' 18" E., 40.00 FEET; THENCE ALONG THE NORTHEASTERLY PROLONGATION OF THE MOST SOUTHERLY LINE OF SAID LOT 12, N. 56· 26' 42" E., 50.00 FEET TO THE POINT OF BEGINNING, AND BEING A PORTION OF THE SANTA RITA RANCHO. ASSESSOR'S PARCEL NUMBER: 147-08-003 Page 4 Order No.: 56901-51990229-PRT At the date hereof exceptions to coverage In addition to the printed exceptions and exclusions contained In said policy form would be as follows: 1, The Lien of Supplemental Taxes, if any, assessed pursuant to the provisions of Chapter 3,5 (commencing with Section 75) of the Revenue and Taxation Code of the State of California, 2, Rights of the public, county and/or city in that portion lying within the street as it now exists: Middlefield Road: 3, An easement affecting the portion of said tand and for the purpose stated herein, and incidental purposes, In Favor of: Pacific Gas and -Electric Company, a California corporation No representation is made as to the present ownership of said easement. Purpose: Recorded: BooK: Page: - Affects: Gas pipeline December 11, 1935 748 487 As therein described 4, An easement affecting the portion of said land and for the purpose slaled herein, and incidenlal purposes, In Favor of: City of Palo Allo No representation is made as to the present ownership of said easemen!. Purpose: Recorded: Book: Page: Affects: Public street July 22, 1954 2920 557 The Southwestarly boundary of Parcel Two, as therein described 6, Any rights of parties in possession of said land, based on any unrecorded lease or leases, as disclOSed by an Inspection of said land aMlor inquiry. Note: Please submit copies of leases for review, 6. Matters which may be disclosed by an inspection or survey of said land or by inquiry of the parties In possession thereof. Note: An inspection of said land should be ordered prior 10 close of escrow and upon its completion, we will advise you of our findings, . Page5. Order No,: 56901-51990229-PRT '--' ~/I / .,'" "'< .... (')"" e ,'"....--"", . ................ ~ ..... \._.,(:r:.o.. ... -~Ijo.. Q.I\ltI". ~MTl~t.AU~r.. " ~~: 2l '''i'' ilil cfIoIll'!lilltDfII~urru:1:S::.'nl ' f1F 'f)!;E Ii!EWt:lN£ iDo ~.ewe El'F'P.'CT!t£ ~'t£~.!!" ~ ~_§._~-~OR ~ ~ -------,-_ MIDDLEFIELD --, "---~~ 111 --J j/ ,4 t AA.\o ALTO lINU'lED 5C1n)t DistRiCT . I , I-' <> '" ';( w '" ~~.t£UMg :! y,,= \\ " x- \ ~ . R!lS.l.SO-M-\7 -~' ~o; II '"'" 1\ II ~1'H 8 ! CD @ \ 0 :z. I?: 47 ""1\ CD ~ on ~ ,-' -( ,-,0 r j_ L. -----r--="'''''----------.Jf, t_ »'\f!1 . @ "lllE 1NfORMI\l1011 ON nns PIJ!J III PRO\IIDBJ fOR 'VOUR CONVENll:SNGE AS A SUlDe TO 'THE. GENERAL UlCATlON OFlHE SIJl!JECT PROPERTY.1HE ACCURACY ,llFllllSPlATlSNOTSUARAI/TE8J,NQR IS ITA PIlRT OF I\lf( POlICY REPORT DR GI.JJ\IlAI'ffi: 10 WI1IGII IT W\Y BE JI1ll\C!!BJ.' @ '\~~/ .~) .pi /~~ , () ! ) ) EXHIBIT I AMENDMENT NO. 2 TO LEASE AND COVENANT NOT TO DEVELOP BETWEEN THE CITY OF PALO ALTO AND THE PALO ALTO UNIFIED SCHOOL DISTRICT 'This Affiendment No. 2 to Lease and Covenant Not Develop is entered into this day of _-:-__ "'_-' 200_ by between the Palo Alto Unified School District (UDistrict U) the City of Palo Alto, a municipal Corporation (UCityU). to and and RECITALS A. The City and the District entered into that certain Le,ase and Covenant Not to Develop on September 1, 1989 ("Lease") which provides in part that the City leases from the District certain property cormnonly referred to as the Cubberley Site. The parties entered into the Amendment No. 1 to Lease and Covenant Not to Develop on July 20, 1998. B. The City and the District have now entered into a property exchange agreement whereby the City will convey to the District a portion of a site known as the Terman site in exchange for the District conveying fee title to the City of 7.97 acres of the Cubberley Site. The City will continue to lease from the District the remaining portion of the Cubberley Site. C. Pursuant to Section 4.1 of the Lease, District covenants with City and City covenants with District that, in order to prevent further burden on City's infrastructure and preserve a substantial amount of City's remaining open space, certain school sites shall not be subdivided, sold or developed with additional square footage to be used for non-school district purposes. D. Section 6.5.2(b) of the Lease provides that in the event District wishes to reopen, as an operating school, any of the Covenanted Sites described in Exhibits D, E, and F, it may do so upon written notice to City, provided that in such event, City and District shall amend the Lease to include within the Covenant Not to Develop two operating elementary school sites of District within the city limits of the City of Palo Alto. Amendment No. 1 to the Lease and Covenant Not to Develop 1 011206 syn 0090980 () ) substituted the Walter Hays Site and replacements for the "old" Ohlone site "Hoover School." Juana Briones Site as which has been renamed E. The District has now re-opened the Garland Site and wishes to designate Addison and El Carmelo as the two operating school sites to be substituted for the Garland Site. F. Section 4.1 of the Lease limits additional development on any Covenanted Site for non-school district purposes to 2,000 square feet. As part of the re-opening of the Terman Middle School, the District will grant a' license to use the Greendell Site to the AlbertL. Schultz Jewish Community Center (" JCC") for interim childhood development programs. The JCC wishes to use nine (9) portable classrooms and one portable bathroom, each with an area of approximately 960 square feet, on the Greendell Site. City is willing to amend the Lease to permit the installation and use of these portable facilities by the JCC wi thout addi tional consideration;: however, the installation and use of such portable facilities requires a conditional use permit from the City. G. Ci ty and District wish to amend the Lease and· Covenant Not to Develop to provide for the reduction in area of the Cubberley Site and reduction in rent; the reopening of the Garland Site and the substitution of the Addison 'site and the El Carmelo site within the Covenant Not to Develop; to permit the interim use of portable buildings at the Greendell Site; and to grant to District the right to open a compact high school at Cubberley after the JCC has ceased relocated its operations from' CUbberley. NOW, THEREFORE, for consideration, receipt of which is acknowledged, the parties agree as follows: 1. Site Description. Section 1.1.5 of the Lease is hereby amended in its entirety to read as follows: "1.1.5 ,Leased Site-Cubberley Site. Effective September 1, 2002; the term 'Leased Site' means all of that certain real property situated in the City described in Exhibit A attached hereto and made a part hereof, and all improvements thereon as of September 1, 2002." 2 011206 syn 0090980 C) ) ) 2. Covenanted Sites. --..... hereby Paragraph 1.1. 8 is amended to read as follows: \\ 1. 1. 8 Covenanted Sites. The term 'Covenanted Sites' means all that certain property situated in the City described in Exhibits B, C, D-l, D-2, E-l, E-2, F, and G attached hereto and made a part hereof." 3. Reo12ening of Garland Site. hereby deleted. Paragraph 1.1.10 is 4. Substitution of Paragraphs 1.1.10.1 and 1.1.10.2 added to read as follows: Addison and El are, respectively, Carmelo. are hereby "1.1.10.1 Addison Site. The term 'Addison Site' means all that certain real property situated in the City described in Exhibit E-l attached hereto and made a part hereof. 1.1.10.2 El Carmelo Site. The term 'El Carmelo Site' means all that certain real property situated in the City described in Exhibit E-2 hereto and made a part hereof." 5. Covenant Payments. Section 2.2 is hereby amended to read as follows: Walter Hayes/Juana Briones Addison/El Carmela Greendell Jane Lathrop Stanford Jordan $204,742 $182,804 $182,804 $236,000 $164,000 6. Lease Payments. Section 2.8 is added to the Lease and Covenant Not to Develop to read as follows: "2.8 Reduction in Rent. City obligation to pay rent to the District for the Cubberley Site shall be reduced, commencing September 1, 2002, by an amount equal to $23,490 per month, ('the Offset Amount.') Whenever the Payment is adjusted pursuant to Section 2.7, the Offset Amount shall be adjusted by the same method." 3 011206 ')'11 OO9IJ9S0 l () ) 7. Cubber~eyLease. Section 3.0 of the Lease is hereby amended in its entirety to read as follows: "3:0 Cubberley Lease. District hereby leases to City and City hereby leases from District for the term, at the rental, and upon all of the conditions set forth herein, the Leased Site commonly known as 'Cubberley School' situated in the City of Palo Alto described in Exhibit A attached hereto and made a part hereof, and all improvements thereon. ' As of September 1, 2002, the total acreage of the Leased Site is approximately 27.48 acres of which 15.94 acres is outdoor recreation area; the remaining 11.54 acres is comprised of parking lot area, walkways, and approximately 80,150 square feet of buildings; however I it is understood that such acreage and square footage figures are only approximate and have not been precisely detemined. 8. Covenant Not to Develop. Section 4.1 of the Lease is hereby amended in its entirety to read as follows: "4.1 D:j.stricthereby covenants with City and City hereby covenants with District that, in order to prevent a further burden on the City's infrastructure and in order to preserve a substantial amount of the City's remaining open space, which contributes to the welfare of the City's residents, the Covenanted Sites situated in the City of Palo Alto and described in Exhibits B, C, D-1, D-2, E-1, E-2, F and G attached hereto and made a part hereof, shall not be (1) subdivided, (2) sold or (3) developed with additional square footage to be used for non-school district purposes for the term of this Lease, for the consideration and upon all the conditions set forth herein, provided that the district may add portable non-permanent structures totaling no more than 2,000 square feet per Covenanted Site. If the District adds such square footage on any Covenanted Site, it shall give written notice to the City within 30 days of such addition. Provided, City hereby agrees tha't placement of up to nine portable class rooms and one portable bathroom, each consisting of approximately 960 square feet, on the Greendell Site, to be used by the JCC as 4 011206 .yn 0090980 () ) ) an interim relocation site for childhood development programs for not more than eight years, shall not be a . violation of this Covenant. City acknowledges that location and use of such facilities by District itself for school-district purposes is not a violation of the Covenant and does not require City consent. JCC may not place or use portable facilities on the Greendell Site prior to obtaining a conditional use permit from City. Upon the expiration or earlier termination of this Lease, except as provided. in Section 4.2, the City shall execute and deliver to District a quitclaim deed for the Covenanted Sites, unless otherwise agreed to by the parties." 9. Exhibit E to the Lease is deleted and replaced ~Iith Exhibits E-1 and Exhibits E.-2, respectively; and the Summary of Exhibits is amended accordingly. 10. District Option to Open ·Compact HighSchool. Not withstanding any other provision of the Lease, after the JCC ·has removed its programs from the City-owned property at the former Cubberley School and from the Leased . Site, District may terminate the Lease with respect to all or a portion of the. Leas.ed Site so that it may operate a compact high school at Cubberley. District must provide twenty-four (24) months .wri tten notice to City of such termination or partial termination. If the District elects a partial termination, the notice shall include a map and legal description specifying the·> new Leased Site, and the City's payment for the Leased Site, shall be reduced in proportion to the reduction in the land area of the Leased Site. Further, if the District elects a complete or partial termination of the Lease under this Section 10, the District and City shall enter into a joint use agreement regarding the gym, ·cafeteria, theatre and fields. The COvenant Not to Develop shall remain in effect. 11. Effect of Amendment No.2 . . (a) As amended herein, the Lease dated September 1, 1989 and Amendment No. 1 remain in full force and effect. In case of any conflict bet'tJeen any of the amendments made in thi~ Amendment No. 2 and the remaining provisions of the Lease as entered into September 1, 1989 and Amendment No.1, the 5 011205 'yn 0090980 ) ) Lease and Amendment No. 1 shall be interpreted so as to give effect to the provisions of this Amendment No.2. (b) This Amendment No. 2 shall be effective upon the date first written above. By separate agreement, parties have agreed that prior to September 1, 2002! District shall transfer to City fee title to that portion of the Cubberley Site removed from the leasehold by Section 7 of this Amendment No.2. If, pursuant to that agreement, the transfer of Cubberley property to City and the release of City's interest in the reduction in City rent will be accelerated to coordinate with that .closing, and the transfer to the District of the City! s right to receive rental income for the Terman Site from the JCC. IN WITNESS WHEREOF, the District and ,the City have caused this Amendment No. 2 to be executed by their respective officers as of the day and year first· above written. ATTEST: CITY OF PALO ALTO City Clerk Mayor APPROVED AS TO FORM: PALO ALTO UNIFIED SCHOOL DISTRICT! Lessor Sen Asst. City Attorney President, Board of Education .4 APPROVED: Manager Exhibit E-l Exhibit E-2 01!206 syn 0090980 APPROVED: Superintendent of Schools Addison Site (Legal Description and Map) El Carmela Site (Legal Description and Map) 6 () ) A,P,NO, .120-006-010 650 ADDISON AVENUE EXHlBITEl ADDISON SITE PROPERTY DESCRIPTION April 24, 2002 A portion of,real property situated in the City of Palo Alto, County of Santa Clara, State of California more particularly described as follows; ALL of Lots 1,2,3 and 4 of Block 81 as shown on the map titled "OlUGINAL MAP SHOWING SUBDIVISION OF UNIVESITY PARK, SANTA CLARA CO, CALIFORNIA" and recorded in the office of the County Recorder of said Santa CI!\Tll County on February 27, 1889 hi Book uD" of maps, at page 69 Parcel contains 200,000 square feet or 4.5913 acres more or less, Parcel is shown on attached map J:XHIBIT E-! and made a part hereof BND OF DESClUPTION _____ --c-=_expires 6-30-03 lAMES DAVIDK1E;BL P.L,S.7152 PP.BPAREDBY I APPROVED LBGAL: .l20061O.Word REVISION (1) 34-24-2002 PLAT: 1200610.DWG REFERENCE: TITLE REPORT: #56901·52990147·PRT Dated March 28,2002. This d~cription are b!lsed upon information from record data and said title Report '. C) EXH IBIT ,""E~1~-;r-l -"DRAWN BY: JAM . KIEH PALO ALTO HIGH SCHOOL DISTRICT OF, SANTA CLARA COUNTY ) -:AL FILENAME: 12000510.WORD !-__ 6...;..5_0~A_D_D_I_S_O_N~A_V_E_N_U_E_-.I DRAWING FIlENAME: 12000610.DWG CITY OF PALO ALTO. CALIFORNIA REVISION'. (1) 04/24/2002 ". " (' .) \ ) ) AP.NO. 132-048-034 EXHIBITE2· EL CARMELO SITE PROPERTY DESCRIPTION April 30, 2002 A portion of real property' situated in the City of Palo Alto, County of Santa Clara, State ofCaJifornia more particularly described as follows; (Grant Deed Book 2116 page 52'S, dated July 2,1951) . ALL of Block 20 as laid down designated and delineated upon that certain map entitle, "Map No. 1 Map of Stanford City, Santa Clara County, California "recorded May 3, 1910 in the office of the Recorder of the County of Santa Clara, State of California, in Vol. HM" Of Maps, page 97 records of said County and (Resolution and "Order proclaiming the Abandonl1ient of a County Road Book 2140 page 146, dated January 22,2951) El Capitan Road from its intersection with Ramona Street to its intersection with Bryant Stree~ as the same is delineated and designated upon that certain Map entitled ''Map No. 1 Map of Stanford City, Santa Clara County, California " recorded May 3, 1910 in the office of the Recorder of the· County of Santa Clara, State of Californi!l., in Vol. "11" of Maps, page 97 records of said County al)d (Corporation Grant Deed Book 2143 page 235, dated JanU£lry 30, 1951) Lots 1 to 18 inclusive in Block ,;n as laid down, designated and delineated upon that certain Map entitled, "Map No, 1 Map of Stanford City, Santa Clara County, C:ilifornia " recorded May 3, 1910 in the office of the Recorder oftbe County of Santa Clara, State of California, in VoL "hi" of Maps, page 97 records of said County and excepting therefrom: . (Grant Deed Book 2455 page.5~4, dated February 13,1952) Beginning at a point on the northwesterly line of Loma Verda Avenue, formerly called· College Avenue, distant northeasterly upon said line 10.78 feet from the most southerly· corner of Lot 14, Block 21 Map No, 1 Map of Stanford City, Santa Clara County, California" recorded May 3, 1910 in the office of the Recorder of the County of Santa Clara, state of Califomia, in VoL "M" of Maps, page 97, records of Santa. Clara County, California: . thence southwesterly along a curve to the right, having a radius of 37b feet and a central angle ofl8°12', an arc distance of 117.53 feet; thence South 56° 42' West 4.8:2 feet; thence southwesterly along a curve to the right, having a radius of 20.00 feet and a central angle of 36° 48' 34", an arc distance of 12.84 feet to a point on the southwesterly line of Lot 18 of said Block; thence South 510 30' East 27.56 feet to the most southerly comer of said. Lot 18, () ) ) A.P.NO. 132-048-034 April 29 , 2002 thence North 38° 30' East along said Iilie of Loma Verda Avenue 130.28 feet to the point of beginning, being a part of Lots 14, 15, 16,17 and 18 of said Block 21 and . contain 0.025 acres, more or less. . Parcel contains 189,963 square feet or 4.3609.acres more or less. Parcel is shown on attached map Exhibit "El" and made a part hereof END OF DESCRIPTION Requested by: Bill Fellman _~_ Check by: Jay Remley f)-t Check by: James B9urquin-,-__ ::-:-::-=~.,.,-,:::::::--===-=E\,piies 6-30-03 JAMESIiA VID KIEELP.L.S. 7152 PREPARED BY / APPROVED' LEGAL: 13204834.word REVISION (1) 4-29-2002 PLAT: 13204834:DWG TITIE REPORT: #56901-52990146-PRT dated March 28,2002. This description is based upon information from record data and said title report. . 20F2 •• ( / , f\1 -'" U1 U1 PALO :ALTO SCHOOL DISTRICT OF, SANTA CLARA COUNTY I--t---~-----~-- A.P.NO. 132-048-034 REVISlDN, (1)04/29/2000 , DRAWING FILENAME, 13204834.DIJG t-----;:'~:;;:-;:~;;;-.;;-;:-;:~~------.I () ( ) ) AP.NO . .120-006-010 650 ADDISON AVENUE EXHIBITEI ADDISON SITE PROPERTY DESCRJPTION April 24, 2002 A portion ofrea1 property situated in the City of Palo Alto, County of Santa Clara, State of California more particularly described as foHows; ALL of Lots 1,2,3 and 4 of Block 81 as shown on the map titled "ORIGINAL MAP SHOWING SUBDIVISION OF UNIVESITY PARK, SANTA CLARA CO CALIFORNIA" and recorded in the office of the County Recorder of said Santa Clar~ County on February 27, 1889 in Book "D" of maps, at page 69 Parcel contains 200,000 square feet or 4.5913 acres more or less. Parcel is shown on attached map J>XHIBIT E-! and made a part hereof. END OF DESCRIPTION ... , expires 6-30-03 J~AMEC=-=::CS::-:D='A""VID=-:KIE=' ::::;m..=--P.L. S. 7152 PREPARED BY I APPROVED LEGAL: J200610,Word REVISION (1) 34-24-2002 PLAT: 120061O,DWG 'REFERENCE: TInE REPORT: #56901-52990147 -PRT Dated March 28, 2002, This d~cription are b~sed upon information from record data and said title Report , . EXHIBIT E1 ---C>RAWN BY, JAMES D. KiEHl---... - PALO ALTO HIGH SCHOOL DISTRICT OF, SANTA. CLARA COUNTY )-------1 LEGAL fiLENAME: 1200061O,WORO 1--__ 6_5_0_A_D_D_I_S_O_N_A_V_E_N_U_E_---I DRA'MNG FILENAME: 1200061O,QWG . CITY OF PALO ALTO, CALIFORNIA SCALE: 1" = 100' RE\QSION: (1) 04/24/2002 () ) ) AP.NO. 132-048-034 EXHIBITE2 EL CARMELO SITE PROPERTY DESCRIPTION April 30, 2002 A portion of real property' situated in the City of Palo Alto, County of Santa Clara, State of California more particularly described as follows; (Grant Deed Book 2126 page 525, dated July 2,1951) . ALL of Block 20 as laid d.own designated and delineated upon that certain map entitle, "Map No.1 Map of Stanford City, Santa Clara County, California" recorded May 3, 1910 in the office of the Recorder of the County of Santa Clara, State of California, in VoL "M" dfMaps, page 97 records of said County and (Resolutwn and order proclaiming the Abandonment of a County Road Book 2140 page 146, dated January 22,2951) El Capitan Road from its intersection with Ramona Street to its intersection with Bryant Street, as the same is delineated and designated upon that certain Map entitled "Map No. 1 Map of Stanford City, Santa Clara County, California" recorded May 3, 1910 in the office ·of the Recorde'r of the· County of Santa Clara, State of California, in VoL "M" of Maps, page 97 records of said County and . (Corporation Grant Deed Book 2143 page 135, dated January 30,1951) Lots 1 to 18 inclusive in Blpck .21 as laid down, designated and delineated upon that certain Map entitled, "Map No. 1 Map of Stanford City, Santa Clara County, California" recorded May 3, 1910 in the office of the Recorder of the County of Santa Clara, State of California, in Vol. "M" of Maps, page 97 records of said County and excepting therefrom: . . (Grant Deed Book 2455 page5~4,dated February 13, 1952) Beginning at Ii point on the northwesterly line of LomaYerda Avenue, formerly called College Avenue, distant northeasterly upon said line 10.78 feet from the most southerly· corner of Lot 14, Block 21 Map No. 1 Map of Stanford City, Santa Clara County, California" recorded May 3, 1910 in the office of the Recorder of the County of Santa Clara, Sfate of California, in Vol. "M" of Maps, page 97, records of Santa. Clara County, California: . thence southwesterly along a curve to the right, having a radius of 370 feet and a central angle of 18 0 12', an arc distance of 117. 53 feet; thence South 56° 42' West 4.82 feet; thence southwesterly along a curve to the right, having a radius of 20.00 feet and a central angle of 36° 48' 34", an arc distance of 12.84 feet to a point on the southwesterly line of Lot 18 of said Block; thence South 51 0 30' East 27.56 feet to the most southerly corner of said Lot 18, · " () !) ) AP,NO.132·048·034 April 29, 2002 thence North 38° 30' East along said line ofLoma Verda Avenue 130.28 feet to the point of beginning, being a part of Lots 14, 15,16, 17 and 18 of said Block 21 and contain 0.025 acres, more or less, Parcel contains 189,963 square feet or 4,3609 acres more or less, Parcel is shown on attached map Exhibit "E2" and made a part hereof END OF DESCRIPTION Requested by: Bill Fellman __ _ Check by: Jay Remley % Check by: James Bourquin -,-__ ~-=-:-:::~=-===::-c:'Expiies '6·30·03 JAMES,DA VID KIEHLP.L.S, 7152 PREPARED BY I APPROVED LEGAL: 13204834,Word REVISION (1) 4-29-2002 PLAT: '. 13404834,DWG TITLE REPORT: #56901-52990146·PRT . dated March 28 2002. , . This descriptionis based upon information from record data and said title report, 2·0n OJ '" U1 U1 LEGALF'ii:ENAM£, 13~04834,DOC DRAliflNG rJLENAM[, 13204834,D"'G PALO ALTO 'ffIGH SCHOOL DISTRICT OF, SANTA CLARA COUNTY A.P.NO. 132-048-034 CITY OF PALO ALTO, CALlFORNIA SCALE: I'" 100' REV1SlON, (1)04/2912002 ') \ ( ) ) ! J. ' ~ : ," !)I\\)~~)\\ • •••• j 1\ 1\)' /K '~'Ilil\fl\ JlUHIMI ~"Mq,it. . ',11i1llrrll1fi . "nl"" tJlIlI .. J~l" 1·\'Ali'~I. I JPl'Il .Ij'<ll" Ir ~1'1'?1(1i;I ;, ~.:, , ','" \ ",~, A'l"L'Ac.: 1:iM.l!a~ '1'· .LA Mr, SUndy Blond , Alb\l1i Schlllt;; 1ewlsh Comrn4nity COllier 6)J M.il'adero !lo~ llalo A!\Q, CA 943Q(i , IMr Sundy: ~i.~y9t.f.?J9./~~t9 D~PflNtJraIl! nl('.l1/rJIIl~71itJl S<1t!I{c,.~ TI,/j> 11I1~I'l!i9!l 9f til!; d;;Qj.!men\ 1$ 10 p6\ve (lw Y/~)' \.a 411dW u,IIJaw!;1h Commlll'lity Cel'ltl'll' intllrlm. 'Il~(t 9~ QYlil A $t thl,l ('.ub'tl4rley CQIlI!T'\1I)ily C;!QlltQI'. In tlli~ r~,!I.lU'd, the 1CC mil hr.vtl Q:\Qh.!1I1vr; urI' ol'qym A II! tho Cll\'!\lllrl .... y Ci:lmrnUl\ltyOe!ltet; t!1\'Q\I,I\1iOi\\ 1M y.-r, 'Wltll 'die exOtlJP'\Oll of , '~\(ldaysl 1$:30 p.lil. to 10:)0 p,m" !lll~ S(ltl1rdays, 11;30 #,111, to /lOOIlt slll'llng , AWAil&l i, 200'~., 'In ardono I/lXlflll~ 1>\1ab IIIlt ot(l~m A i(} Jhe J(:C Ill! I.ltlli() · !'\llllillillQnll.l prl,\8r~lI'\i thli.t I1r~ei1tly ,exist ill CYI11 'A Il1\.1sl b~ 'tnmst'\llr~ l() Ih~ 'J'~i'man;g>,l'!1, S\lQull) tho City changlll!4 PtO$r~liimi~ I!ellylHei il'i til(>. . . fu!u~l'l. tllll .ICC \IiI;lllbi have ill's!. "1I1It (If' U~\i of ftl~ Terman Clylll, · fi,ddltll:ll1,1l11,y. tb~ Oily Wll/ hiI tle~Jllle III !l9 p!'l~l\t'a:ali'l'dI1B m IIw Termflll 0YIll. and. Wbi!iil()VllI' po~lbIilj ot)Ua~gr'.41! with the JCC on ~iI'iims. 'I~lti OOI\ditIQq~ r,tf thl~ ~Q':'jll~t 'lifO $\,bjC\,.'i, to ,~\! QU~5~M IIpprovl'lli 01' a silbloo.se bIltWWi'llbo JC() I,IIId the Oitl of hlQ Al~& fOf the In!erim \l1I\l r)£ tllQ Cq'b\;I"I'I~y ComtnlJl1!W CM\\ot ul~Or Mil. CMI)O~ Ulf ,,,110. IAP")1 1\)1 ~((y tilled pII!'1y (!i1\)llIditl~ t~ PAUSD) unlll suol1 III)Pro'llai, . 1'his toit(jr illl1l li*I)1(), foli IIddon4umto the) Clly ofJ'ftl¢ Altull'al(J Alto Ulll~«l Sdl~..,l .l)j~!rivl ~tClt\elll nIt Jlllnt lJlIId \lnlAill'\!!£I.IJ alw; . . '. . , ' Ci'l~~lUOlI~ it. 'r~l'Il\(\n Middlil Sl)bQo1 ~YlliM.'l!um! · • 'I.'Il\), U~Q q( ~'C '~'Ill.\il\ 11:)"I~ (JJ.\t~I~~ efl> AUSI) ~a. 'Will bo &\lbedul~ Oni by tnb rcc. 'rh~ OILy !lcn tlllhodlllG ~t (Ilb$r limes hot usoo by Ih0 J(:C Md J'I AUSU. 1!lIeilflllons Itl1h1S poUey eli/; illS follow('!: .' a Ijeeltllllrlll Itl S~mber 1003, Ij).f; hlo Ai'tL) JI.~lillltlil~ Dlvish'l!\ will 11l1'l0 \i$1;t Qfllll) l\"OlIlln Gym MI)!ld~)' IhrouBli I<'riday, S.il1lIhl:r tliroij~h. luf\/.li rroRt ·3:)0, p.m. to' lO:~G I~.m. ~oo' SflMda~ I\nd SlllIdar&, 11:30 a,lit t!ll'(Ilitlh UI:~O p.m. ... . () : ) ) '. !)IVllIi\IIlH .... f II , II I\!I~ 1\.«\111\11'\1 ' IMI hili $\'1 VWI'\ 1111,,1110.'11 :' 1',Il~Y t. <I,ll! )1\'~I\;Hi\m, I, 'I\!l\ ~ltml'l} 'h~1qIMV , ATTACHMENT lA ~~~Qt P.?M9 AJ~Q DrpifY/t11f111 pI C9111/l1lililty ill'n>lc,'~ ; fJt£lril1lll€i In ZOO), YMCA !1~~kClbi1U wlil U5e tb\!: TeTman Oy In JanIJijljl i\\J'uugb M~!'ch '()!:~~h year, IJ.:JO a.liI, thro\l~h 6:00 II m. on ~$hrl'(:Ia)'~, ' • ,'fbI( JOe JIM iflforln!;d ~\\e CIty or ils il'ltqniiQfi, 10 tolll!i\U0 9pon~on;hip 'of !)\U\\h\Qt tiI/njl., at the 'li:\rm~1\ Gyln, a~ Is ~:II~ fQt lh01~1!t ~Q ylMl!'i. If fhQ Jt:O dr;!Ci JlOI SPOrlSlJf SUll'lmlltl'l1llltp .ClIYme~ hnb0 TermAn !tim, lhe my Qf 111110 :Alto tIlqw.lats (he ~pace to pr"Jifam OI!Ill'IPS frQm 11l1!1,l throu\jh .l\.l\bl~!, bilLllnl1ln£) in 2QO!l fl'9m 8:00 M'fI,' ~l\!\'l'gh 3:00 p,Iil,~ Mimd,lY 1l\('()llgil. IIridny, ' " ' , . ' , () ) ATTACHMENT 2 SCHOOL DISTRICT USE OF TERMAN PARK School District shall be entitled to the issuance of a'City permit under Chapter 22 of the Palo Alto Municipal Code for use of portions of Terman Park during certain hours. School District shall not be required to pay for such permit, and in any case where there is a contradiction between the terms of the permit and the terms of this Agreement, this Agreement shall govern. 1. Terman Tennis Courts a. Terman Middle School shall have first calIon the tennis courts between the hours of 7:30 a.m. and 3:30 p.m. on days when Terman Middle School is in regular session. b. School District shall pick up all litter and leave courts in good condition at end of every day of use. 2. Terman Playfields. a. Terman Middle School shall have first calIon the playing fields between, the hours of 7:30 a.m. and 3:30 p.m. on days when Terman Middle School is in regular session. School District will not have the right to routinely exclude members of the public from any dedicated playing field or parkland. School District will have the right to take reasonable actions to protect both its first calIon the playing fields and the safety of the students. No permanent fence or other barriers to public access will be constructed. b. School District shall pick up all litter and leave fields in good condition at end of every day of use. portions SchooL 011206 'yn 0090910 The public will have unrestricted access to those of Terman Park not being used by the Terman Middle 10 ( EXHIBITG Ul:.'f ~Ul:.@~ 2(5 " ~ (86')--- _ MIDDLEFIELD ROA~ __ ---S57'56'07"E 44Q,.o§.----. l------:r- /Iii. ~~irOOWl @IF ll'f!;,.rFil~1L NO N51'3Q'OO"W U~$ iMllIlQJ'fOWiNJ rFil~ Ul:.ilL Ill' Ul:.1Pl'irWl~IF!$ ILIP 'f~Ul:.<C'f WlO. il3il@ '8 @~lElNlfi\All.Eb\OOW if! IlllOOI){ 00 OIF cy. 1i\fj]b\1P Ul:.ir ~Ul:.@1E ,,,,, 00 "511 ~I k ,Jy ~ ID)00iJ{ 2500 19.60' ~/Iii.~ il2~ $/lii.lNJirA <CILA~Ul:. <C~iNJTY lLUl:.iNJlriJ$ OIF ~Ul:.W Ul:.1L ro $CIHlOOC IriJlI$mo<Cir :M5,3:!:! 00, IFf. '1.!in Ul:.<C~ii:$ I~ I~ ~ S51"30'00"E 10' PG&E GAS N43'26'42"E MAIN EASEMENT &l 71.13' -170.00' j BK. 748 PG. 467 ,-+---=---=+ --- --- - - - - - - ---, ----------------- N5B'26'42"E 1--9:2.20' ---t--P.O.B N17'54'07"E 37.65' N51'30'OIt'W·546.44' \~ /, . '~LEA &. SUNG ENGINEERING. INC. . ) -OIVlL ENGINEERS • LANO SUFWEYORS 2495 INDUSTRIAL PARKWAY WEST HAYWARD. CAUfORNIA 94545 (510) 887-4086 fAX (510) 867-3019 JOB NO. 201 0248 zoo ~ SCALE. 1" .. 100' EXHIBIT "G" PROPOSED LOT-LINE ADJUSTMENT PALO ALTO UNIFIED SCHOOL DISTRICT CUBBERLEY SCHOOL 4000 MIDDLEFIELD ROAD PALO ALTO, CALIFORNIA SANTA CLA A COUNTY APN: 147~08-003 JUNE 14, 2002 () ) ) I"NORTH .AMERICAN .TITLE IIiCOMPANY City of Palo Alto Attn: Janet Freeland 250 Hamilton Avenue Palo Alto CA 94303 Properly Address: 4000 Middlefield Road Palo Alto, California Our No.: 56901-51990229-PRT Customer No.: AOOO Middlefield Road ExhibitH Preliminary Report IN RESPONSE TO THE ABOVE REFERENCED APPLICATION FOR A POLICY OF TITLE INSURANCE, North American Tille Company, Inc. HEREBY REPORTS THAT IS PREPARED TO ISSUE, OR CAUSE TO BE ISSUED, AS OFTHE DATE HEREOF, A . POLICY OR POLICIES OF TITLE INSURANCE, DESCRIBING. THE LAND.AND THE ESTATE OR INTEREST HEREINAFTER SET FORTH, INSURING AGAINST LOSS WHICH MAY BE SUSTAINED BY REASON OF ANY DEFECT, LIEN, OR ENCUMBRANCE NOT SHOWN OR REFERRED TO AS AN EXCEPTION BELOW OR NOT EXCLUDED FROM COVERAGE PURSUANT TO THE PRINTED SCHEDULES, CONDITIONS AND STIPULATIONS OF SAID POLICY FORMS. THE PRINTED EXCEPTIONS AND EXCLUSION FROM THE COVERAGE OF SAID POLICY OR POLICIES ARE SET FORTH ON THE ATTACHED COVER, COPIES OF THE POLICY FORMS SHOULD BE READ, THEY ARE AVAILABLE FROM THE OFFICE WHICH ISSUED THIS REPORT. PLEASE READ THE EXCEPTIONS SHOWN OR REFERRED TO BELOW AND THE EXCEPTIONS AND EXCLUSIONS SET FORTH IN EXHIBIT A OF THIS REPORT CAREFULLY. THE EXCEPTIONS ARE MEANT TO PROVIDE YOU WITH NOTICE OF MATTERS WHICH ARE NOT COVERED UNDER· THE TERMS OF THE TITLE INSURANCE POLICY AND SHOULD BE CAREFULLY CONSIDERED. IT IS IMPORTANT TO NOTE THAT THIS PRELIMINARY REPORT IS NOT A WRITTEN REPRESENTATION AS TO THE CONDITION OF TITLE AND MAY NOT LIST ALL LIENS, DEFECTS, AND ENCUMBRANCES AFFECTING TITLE TO THE LAND. THIS REPORT (AND ANY SUPPLEMENTS OR AMENDMENTS THERETO) IS ISSUED SOLELY FOR THE PURPOSE OF FACILITATING THE ISSUANCE OF A POLICY OF TITLE INSURANCE AND NO LIABILITY IS ASSUMED HEREBY. IF IT IS DESIRED THAT LIABILITY BE ASSUMED PRIOR TO THE ISSUANCE OF A POLICY OF TITLE INSURANCE, A BINDER OR COMMITMENT SHOULD BE REQUESTED. . Dated as of October 15, 2001 at 07:30 am Pam Thompson/pu Title Officer/Examiner 4255 Hopyard Road, Suite 1, Pleasanton, CA 94588 Phone No.: (925) 399-3000 Fax No.: (925) 399-3028 The form of policy of title Insurance contemplated by this report Is: () Preliminary Report Only The estate or Interest In the land hereinafter described or referred to covered by this report Is: A fee Title to said estate or interest at the date hereof is vested in: Palo Alto Unified School District aka Palo Alto Unified School District of Santa Clara County ) ) Page 2 Order No.: 56901-51990229-PRT () ; ) Description: The land referred to herein is situated in the State of California, County of Santa Clara, City of Palo Alto, and is described as follows: BEGINNING AT THE MOST WESTERLY CORNER OF THE PARCEL OF LAND CONTAINING 42.27 ACRES DESCRIBED IN THE DECREE OF DISTRIBUTION MADE IN THE ESTATE OF JOHN MILLER, RECORDED OCTOBER 7,1937 IN BOOK 849 OF OFFICIAL RECORDS. AT PAGE 61, RECORDS OF SANTA CLARA COUNTY, CALIFORNIA; THENCE FROM SAID POINT OF BEGINNING NORTH 57° 42' 46" EAST ALONG THE NORTHWESTERL Y LINE OF SAID 42.27 ACRE PARCEL 327.41 FEET TO THE POINT OF INTERSECTION THEREOF WITH A LINE DRAWN PARALLEL WITH AND DISTANT 400 FEET, SOUTHWESTERLY AT A RIGHT ANGLE, FROM THE SOUTHWESTERLY LINE OF MIDDLEFIELD ROAD 60 FEET IN WIDTH; THENC~ SOUTH 57° 55' 14" EAST PARALLEL WITH AND DISTANT 400 FEET SOUTHWESTERLY AT A RIGHT ANGLE FROM SAID SOUTHWESTERLY LINE OF MIDDLEFIELD ROAD 572.04 FEET; THENCE AT RIGHT ANGLES TO THE LAST COURSE SOUTH 32° 04' 46" WEST 373.77 FEET TO THE SOUTHWESTERLY LINE OF THE 42.27 ACRE PARCEL; THENCE NORTH 51° 38' 17" WEST 717.99 FEET ALONG SAID LINE TO THE POINT OF BEGINNING. PARCEL TWO: BEGINNING AT A POINT ON THE CENTERLINE OF MIDDLEFIELD ROAD AT THE MOST SOUTHERLY CORNER OF TRACT 870 CHARLESTON GARDENS UNIT NO.1 AS SHOWN ON A MAP THEREOF WHICH WAS FILED IN BOOK 33 OF MAPS AT PAGES 26 AND 27 IN THE OFFICE OF THE COUNTY RECORDER OF THE COUNTY OF SANTA CLARA; THENCE FROM SAID POINT OF BEGINNING SOUTH 57° 42' 46" WEST 804.35 FEET TO AN IRON PIPE ON THE NORTHEASTERLY LINE OF LAND FORMERLY OF D.L. SLOAN; THENCE SOUTH 51° 37' 17" EAST 224.14 FEET TO A POST MARKED P.S. 7 AT THE MOST NORTHERLY CORNER OF LOT 11 OF THE J. J. MORRIS REAL ESTATE CO'S SUBDIVISION OF THE LOUOKS TRACT, A MAP OF WHICH IS OF RECORD IN THE OFFICE OF THE COUNTY RECORDER OF THE SANTA CLARA, STATE OF CALIFORNIA, IN BOOK "L" OF MAPS, PAGE 35 RECORDS OF SANTA CLARA; THENCE ALONG THE NORTHERLY LINE OF LOTS 10 AND 11 OF SAID SUBDIVISION SOUTH 38° 23' 31" WEST 657.32 FEET TO A POINT WHICH IS DISTANT ALONG THE NORTHERLY LINE OF LOTS 9 AND 10 OF SAID SUBDIVISION NORTH 3B" 23' 31" EAST 520.00 FEET FROM THE MOST EASTERLY CORNER OF LOT 6 OF SAID SUBDIVISION; THENCE PARALLEL WITH AND DISTANT NORTHEASTERLY 520 FEET FROM THE NORTHEASTERLY LIEN OF LOTS 4, 5 AND 6 NORTH 51" 36' 25" WEST 941 ,59 FEET TO A POINT WHICH IS DISTANT NORTHEASTERLY, MEASURED AT RIGHT ANGLES, 260 FEET FROM THE NORTHEASTERLY, BANK OF ADOBE CREEK; THENCE PARALLEL WITH AND DISTANT NORTH EASTERLY 260 FEET FROM SAID CREEK NORTH 14° 12' WEST 501.67 FEET TO A POINT WHICH IS DISTANT 657 FEET SOUTHEASTERLY MEASURED AT RIGHT ANGLES FROM THE CENTERLINE OF CHARLESTON ROAD; THENCE PARALLEL WITH AND DISTANT 657 FEET SOUTHEASTERLY FROM THE CENTER L1NEOF CHARLESTON ROAD NORTH 56° 26' 42" EAST 340.00 FEET TO A POINT ON THE CENTERLINE OF A 10 FOOT EASEMENT GRANTED TO THE PACIFIC GAS & ELECTRIC COMPANY BY DEED DATED NOVEMBER 21,1935 AND RECORDED DECEMBER 11, 1935 IN BOOK 748 OF OFFICIAL RECORDS, PAGE 487; THENCE NORTH 43° 26' 42" EAST 170.00 FEET TO A POINT WHICH BEARS SOUTH 57° 55' 14" EAST 70.00 FEET; SOUTH32" 04' 46" WEST 235.00 FEET AND SOUTH 56° 26' 42" WEST 265.00 FEET FROM A POINT ON THE CENTERLINE OF MIDDLEFIELD ROAD AT THE MOST WESTERLY CORNER OF THE ABOVE MENTIONED CHARLESTON GARDENS UNIT NO.1; THENCE NORTH 56° 26' 42" EAST 265.00 FEET; THENCE NORTH 32° 04' 46" EAST 235.00 FEET TO THE CENTERLINE OF MIDDLEFIELD ROAD; THENCE ALONG THE CENTERLINE OF MIDDLEFIELD ROAD SOUTH 52° 55'14" EAST 1212.79 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM, THAT PORTION CONVEYED TO ROLF GRABMEIER BY DEED RECORDED APRIL 8,1955,3138·82 PARCEL THREE: Page 3 Order No.: 56901·51990229-PRT ! ) BEGINNING AT A POINT ON THE NORTHWESTERLY LINE OF THAT CERTAIN PARCEL OF LAND CONVEYED BY RALPH GROBMEIER, ET UX, TO ROLF GROBMEIER, A MARRIED MAN BY DEED DATED AUGUST 14, 1954 AND RECORDED OCTOBER 15, 1954 IN BOOK 2983 OF OFFICIAL RECORDS, PAGE 211, DISTANT THEREON, S, 57 DEG, 42' 46" W, 221,83 FEET, FROM THE POINT OF INTERSECTION OF SAID NORTHWESTERLY LINE WITH THE SOUTHWESTERLY LIN E OF MIDDLEFIELD ROAD; THENCE ALONG THE NORTHWESTERLY LINE OF SAID GROBMEIER PARCEL, S, 57 DEG, 42' 46" W, 221.83 FEET TO THE MOST WESTERLY CORNER THEREOF; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID GROBMEIER PARCEL AND PARALLEL WITH SAlD LINE OF MIDDLEFIELD ROAD, S, 57 DEG. 55' 14" E, 95,97 FEET; THENCE LEAVING THE SOUTHWESTERLY LINE OF SAID GROBMEIER PARCEL AND RUNNING, N, 32 DEG, 04' 46" E, 200,00 FEET TO THE POINT OF BEGINNING AND BEING A PORTION OF THE RANCHO RINCONDE SAN FRANCISQUITO, PARCEL FOUR: BEGINNING ATTHE MOST SOUTHERLY CORNER OF LOT 11 IN BLOCK 1, AS SHOWN ON THE MAP OF TRACT 1310, GREENMEADOW, WHICH MAP WAS FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA ON JULY 7, 1954, IN BOOK 50 OF MAPS, PAGES 50 AND 51; THENCE ALONG A SOUTHWESTERLY LINE OF SAID LOT 11, N. 33" 33' 18" W., 40,00 FEET; THENCE ALONG A SOUTHEASTERLY LINE OF LOTS 11 AND LOT 12, IN BLOCK 1, AS SHOWN ON THE MAP HEREINABOVE REFERRED TO, S. 56° 26' 42" W., 50.00 FEEt; THENCE ALONG A NORTHEASTERLY LINE OF SAID LOT 12, S. 33° 33' 18" E" 40.00 FEET; THENCE ALONG THE NORTHEASTERLY PROLONGATION OF THE MOST SOUTHERLY LINE OF SAID LOT 12, N, 56" 26' 42" E., 50,00 FEET TO THE POINT OF BEGINNING, AND BEING A PORTION OF THE SANTA RITA RANCHO. ASSESSOR'S PARCEL NUMBER: 147-08-003 Page 4 Order No,: 56901-51990229-PRT () ) At the date hereof exceptions to coverage In addition to the printed exceptions and exclusions contained in said policy form would be as follows: 1. The Lien of Supplemental Taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and Taxation Code of the State of California. 2. Rights of the public, county and/or city in that portion iying within the street as it now exists: Middlefield Road. 3. An easement affecting the portion of said land and for the purpose stated herein, and incidental purposes. 4. In Favor of: Pacific Gas and Electric Company, a California corporation No representation is made as 10 the present ownership of said easement. Purpose: Reccrded: Book: Page: Affects: Gas pipeline December 11, 1935 748 487 . As therein described An easement affecting the portion of said land and for the purpose stated herein, and Incidental purposes. In Favor of: City of Palo Alto No representation is made as to the present ownership of said easement. Purpose: Recorded: Book: Page: Affects: Public street July 22, 1954 2920 557 The Southwesterly boundary of Parcel Two, as therein described 5. Any rights of parties in possession ofsaJd land, based on any unrecorded lease or leases, as disclosed by an inspection of said land aha/or Inquiry. Note: Please submit copies of leases for review. 6. Mailers which may be disclosed by an inspection or survey of said land or by inquiry of the parties In possession thereof. Note: An Inspection of said land should be ordered prior to close of escrow and upon lis compietion, we will advise you of our findings .. Page 5· Order No.: 56901-519902Z9-PRT !l,~~_ '"---' ",-/1/ I / I "1.'<"0 -"Ic: .... .f"l' G ~""!'o ..... _ ...................... . I',-",K.~l~ CLIlRI'I. (ouMT'I'~CAI.IFORt-aA /' -'\---..,.--j- 'I-~ 21---'.,.' :3il ~. a.FOlUllUlCElCl'IIsEl:.3:l:7 ! l i!l]\ ''B' 111: -.J I!f~~~= i Al..FRED ~ CARLSOfI!-ASSESSOR (s;\ v:v I-' u >< 00 \ ~ \ x~tnuaz ~ \. ¥,,,~'l~ \l -R.O.S.ISO-M-17 c==;~~~~=------:-:-----.J."i ~"'JS3Q;R& --~ MlDDLEF1ELD ---... _.. ROAD -RECOf~a.sV.H Y~'3:J7S91 TH/IO .J~m ........ 4DOD .. T/t.W-' 3'397 _z 4r.H-€ .,_ _ , ___ _ ,. ~S"T. -"'~1 =« , ... t:J _-. .. I ~ 112.3 I '12.<0 I .., .1, it! ~ PAlO ALTO UNlflto smoot DISTRICT . I , ,~ '. ~'<::'-'. -". '< <-'--( '" 0 r I "'----..... -"-----. ---.-. -" -... '-" •.••. --. -" -.. --r';'------•. _ •• -.... i'-.!i::"!.S0N ~. _:{. @ "!HE INFORMATIOn ON THIS P1JIJ IS PROVIDED FOR \'OUR CONVENIENCE AS A GUIDE TO lHE GENERAL WGJIJlON OFlHE SUBJECT PROPERlY. THE ACCURACY OFTHlS PLATIS NOT GUARANIffil. NOR IS IT A PART OF AN'( POlICY REPORT OR 6lJARAf\IlEE TO WHICH IT MAY BE ATlJICHED." '. 'i? ~ '-\) ... ~ "11"1_", E,I ~ 1§ ~ " . : 0 17 r:-. @ '\ /' ,.1.~ . ~6) cP /,,=,\,.,,, ~ .. .. "" ~. o , G) 0 ~ 0 \-:. "" h \ ~:::. 4.. 0 ~ '" ~ , City of P'ajo Alto City ManagerVs Report J._ ...... __ ..--....,"n'_'!"" ......... __ --.~ ..... , ...... ._ ... ~ ... ~,.....,,_,.., • ..-..-,.,... __ .... ~.~""~. ... • .--....,.,."'_-. ___ ....,.,.~ ......... __ , ....... __ ....... "'_.'. _, .. __ ~ ___ ......... """" ... ' ..... ~ .. "' ......... _ .... _"' ..... _., TO: HONORABLE CITY COUNCIL CITY MANAGER DATE: DECEMBER 10,2001 DEPARTMENT: CITY MANAGER'S OFFICE CMR:448:01 S'IJBJECT: TERMAN-CUBBERLEY PROPERTY EXCHANGE AGREEMENT WITH PALO ALTO IJNIFIED SCHOOL DISTRICT (LEASE AMENDMENT AND LAND EXCHANGE AGREEMENT, INCLUDING JOINT USE OF TERMAN SITE) RECOMMENDATION Staff recommends that the City Council approves the attached property exchange agreement between the City of Palo Alto and the Palo Alto Unified ,School District (PAUSD). The property exchange agreement allows the City to swap 8 acres of City- owned property at Tennan Community Center to PAUSD for 8 acres of District-owned property at the Cubberley Community Center. BACKGROIJND To accommodate PAUSD'splam to establish the third middle school at Terman, the City Council and the Board of Education jointly approved on January 29, 2001, a conceptual agreement to exchange 8 acres at Terman for 8 acres at Cubberley, (See Attachment A- for conceptual agreement.) The property exchange was also a central element in the 4- Party Memorandum of Understanding (MOU) to address the Middle School Challenge, involving the 'City, PAUSD, Jewish Commwlity Center (lCC), and Stanford University. The 4-Party MOD was approved by the City Council on September 10,2001. Under the provisions ofthe property exchange agreement, PAUSD receives ownership of 7.97 acres of buildings and parking lots at Tennan. In exchange, the City receives 7.97 acres of buildings and parking lots at Cubberley. (See AttachmentB for maps,) Other major provisions include the following: CMR448:01 Page 1 on 6 PAUSD will be the primary user of City-owned playgrounds at Terman during school hours. The parkland will be open for corrununity use and programming after school and on weekends and holidays. Terman Middle School facilities (e.g.) gym, pool, auditorium) will be availabie for joint use under terins of a City-PAUSD joint use agreement which is attached to the Lease Amendment and Land Exchimge Agreement., , » Should the District need to reclaim part of the Cubberley Community Center' for a compact high school prior' to the expiration of the City) s lease for Cubberley) the District, only needs to provide notice to the City and replace lost revenue to the City. ' POLICY IMPLICATIONS The property exchange agreement is consistent with the many policies and programs in ' the Comprehensive Plan promoting City-pistrict collaboration and the effective provision of community services, RESOURCE IMPACT , No monies are paid by the City or the District pursuant to the property exchange agreement. ' In 'terms of the City',s continuing l~ase of the remaining 27 'acres at Cubberley, the City's lease payments to the District are reduced by the amount equivalent --- to the City)s lost revenues from the ICC ($276,810 in 2001). j/1-. ,r<='( d L fl.-f.!) , {,'1/ -~>JJC-'_ /;?J' ( j $' ;2. 7 Ct7/ £l/)~,~\ PREP ARED BY: !r, ;')t$(9. ( enest City Manager CITY MANAGER APPROVAL: ~ " Frarik Benest City Manager Attachments: Attachment A -Conceptual Agreement Attachment B -Maps Lease Amendment and Land Exchange Agreement CMR:448:01 Page 2 of2 ' City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL ATTENTION: FINANCE COMMITTEE FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE SERVICES DATE: SUBJECT: NOVEMBER 18, 2003 CMR: 498:03 OPTION TO EXTEND THE LEASE AND COVENANT NOT TO DEVELOP AGREEMENT WITH THE PALO ALTO SCHOOL DISTRICT REPORT IN BRIEF Staff requests that the Finance Committee recommend to Council that the City exercise its option for a 10-year extension on the Lease and Covenant Not to Develop (Agreement) with the Palo Alto Unified School District (PAUSD), which will expire December 31, 2004. Under the Agreement as amended, the City provides PAUSD with annual revenue in exchange for 1) the City’s lease for the former Cubberley High School site; 2) a Covenant Not to Develop seven elementary school sites; and 3) an agreement that PAUSD provide space for extended day care at 12 elementary school sites. The terms of the Agreement have resulted in significant benefit for the community since its inception in 1991. The Cubberley Community Center has become a major hub of community participation with more the 900,000 people and 66 organizations using the Cubberley facilities on an annual basis. The Covenant Not to Develop has prevented the PAUSD from selling or developing sites for non School District purposes and has preserved a substantial amount of the City’s remaining open space. The seven covenanted sites provide athletic fields supporting a variety of sporting events for all ages. The Extended Day Childcare program provides space at 12 elementary school sites for City-operated extended day childcare services. Currently, 897 children are accommodated at these sites, which are running near capacity. The Agreement since 1990 has provided the PAUSD with over sixty million dollars, Revenue from the Agreement is now almost equal to 4% of the PAUSD annual budget. CMR:498:03 Page 1 of 6 Extending the Agreement for 10 years will result in cost to the General Fund projected to total $69,077,000 for payments to PAUSD, plus an additional estimated $1,800,000 for maintenance and repairs. Exercising the option to extend the Agreement is consistent with policies and programs in the Comprehensive Plan promoting City-PAUSD collaboration and the effective provision of community services. CMR:498:03 Page 2 of 6 RECOMMENDATION Staff requests that the Finance Committee recommend to Council that the City exercise its option to the 10-year extension on the Lease and Covenant Not to Develop (Agreement) with the Palo Alto Unified School District (PAUSD), which will expire December 31, 2004. BACKGROUND On September 1, 1989, the City and the PAUSD entered into the Agreement. Under the Agreement, the City provided PAUSD with annual revenue in exchange for the City receiving: 1) a lease on the former 35-acre Cubberley High School site, including 180,000 square feet in improvements to be used for community theater, sport and art groups; 2) a Covenant Not to Develop five neighborhood elementary school sites (Jordan, Jane Lathrop Stanford, Ohlone, Garland and Greendell); and 3) an agreement that PAUSD provide space for extended day care at each of eleven remaining elementary school sites. The Agreement was for 15 years, beginning January 1, 1990 and ending on December 31, 2004. There are three options to extend the lease. In the first option, the City has the sole option to extend the Agreement for an additional 10 years. This first option is the focus of this CMR. The second and third options are for two additional five-year terms and require the mutual agreement of both the City and PAUSD. Each year, the payment for the entire agreement is increased by an amount equal to the increase in the consumer price index (CPI). In July 1998, the Agreement was amended (Amendment # 1) to provide for the reopening of one of the covenanted sites (the "old" Ohlone site, now renamed Hoover School) and the substitution of two operating sites, Walter Hays and Juana Briones, for the covenanted site to be reopened. The amendment also provided for the addition of a twelfth extended day care site to be opened at the Hoover School. On January 29, 2001, to accommodate PAUSD’s plans to establish a third middle school at the City-owned former Terman School site, the City and PAUSD jointly approved a conceptual agreement to exchange 7.97 acres at Terman for 7.97 acres at the PAUSD- owned Cubberley site. The property exchange was also a central element in the Four- Party Memorandum of Understanding (MOU) to Address the Middle School Challenge, involving the City, the PAUSD, Jewish Community Center and Stanford University. The Four-Party MOU was approved by the City Council on September 10, 2001. On December 10, 2001, the City Council approved the Terman-Cubberley Property Exchange Agreement with the PAUSD (Lease Amendment #2 and Land Exchange Agreement). The property exchange agreement provided for the City to swap 7.97 acres of City-owned property at Terman to the PAUSD for 7.97 acres of PAUSD-owned property at Cubberley. Its provisions also included the following: 1) a reduction of the City’s lease payments to the PAUSD by an amount equivalent to the City’s lost revenues CMR:498:03 Page 3 of 6 from its lease of the Terman site to the Jewish Community Center ($23,490 per month); 2) joint use of the Terman site fields and special facilities; and 3) reopening of the covenanted Garland School site and the substitution of the Addison and E1 Carmelo school sites within the Covenant Not to Develop. DISCUSSION In the late 80’s, when the Agreement was negotiated, declining enrollment and post- Proposition 13 revenue reductions had placed the PAUSD in financial trouble. School enrollment was down, and the PAUSD was consolidating schools and selling surplus school sites to developers for housing (Attachment A). This produced the necessary funds for the PAUSD, but the City and community became concerned with the increased housing density and the loss of open space and recreational opportunities formerly provided by the neighborhood school sites. The City and PAUSD negotiated the Agreement for the purpose of providing revenue to help assure the continued existence of the City’s excellent school system, while still retaining the open space and recreational facilities for the community. The Agreement currently provides the following community benefits: 1) the Cubberley Community Center with its many and varied community programs; 2) space for extended day care at 12 elementary school sites; 3) the Covenant Not to Develop 7 school sites and 4) continued income for the PAUSD. Cubberley Community Center Since its inception in 1991, the Cubberley Community Center has steadily become a major hub for community participation. In total, more than 900,000 people and 66 organizations use Cubberley facilities on an annual basis - more than all of Palo Alto’s community facilities combined. (See Attachment B for full listing of program providers.) The Cubberley lease program offers affordable rates that attract and keep valuable community assets such as Foothill College, the Jewish Community Center, Palo Alto Adult School, the Cardiac Care program, Friends of the Palo Alto Library, and a variety of day care providers, schools and churches - just to name a few. The room rental program is just as valuable with more than 600 individual rentals a year, including weddings, receptions, parties, church affairs, public meetings, seminars and workshops. Cubberley has also become a focal point for all art disciplines. Groups who rehearse and perform at Cubberley include the E1 Camino Youth Symphony, Palo Alto Chamber Orchestra, Palo Alto Philharmonic, Zohar School of Dance, Dance Visions, and many more. There is also a visual artist colony providing professional artists low cost studios to create their work, while being able to afford to do so in Palo Alto. The Cubberley theatre also provides a rental space for myriad theatre groups who do not have a home stage of their own. CMR:498:03 Page 4 of 6 Sports also take center stage at Cubberley where organized groups and individuals throughout the year play organized soccer, softball, karate, football, table tennis, tennis, Lacrosse, and basketball. Covenant Not to Develop School Sites The Covenant Not to Develop portion of the Agreement was created to "prevent a further burden on the City’s infrastructure and in order to preserve a substantial amount of the City’s remaining open space." The Covenant prevents the District from: 1) subdividing, 2) selling, or 3) developing sites for non-School District purposes for the term of the Agreement. The covenanted sites now include 7 sites (Jordan, Jane Lathrop Stanford, Walter Hayes, Juana Briones, Addison, E1 Carmelo and Greendell). The Greendell site is currently the only covenanted site that is not being used as a school. Through the Covenant, vacant school sites were retained and residents have been greatly served through the continued availability and use of PAUSD-owned athletic fields, supporting a variety of sporting events for all ages. School fields, in addition to programs that are scheduled by PAUSD, are used most frequently by American Youth Soccer Organization (AYSO), California Youth Soccer Association (CYSA), Palo Alto Babe Ruth, Pop Warner, SVSA (adult soccer league), PAASL (adult soccer league), BAWSL (adult soccer league), Little League, girls’ softball, American Legion and the Palo Alto Tomahawks Lacrosse teams. PAUSD athletic fields are used most heavily between the after school hours of 3:30 p.m. and 7 p.m., Monday through Friday. These athletic fields are used by the same organizations on weekends from early morning to dusk. Adults play primarily on Sundays while youth organizations play on both days. The months when the heaviest use occurs are September through November and March through June. AYSO, which has approximately 2,500 participants in the fall, will have thousands of hours of use on elementary and middle school fields. Most recently, the Palo Alto Committee on Athletic Fields has pointed out that Palo Alto does not have adequate athletic fields to meet the identified need. Without the Covenant, this issue would be greatly exacerbated and many of the community teams would be without places to play. Extended Day Childcare Proaram The Agreement as amended provides space at 12 elementary school sites for the purpose of providing City-operated extended day child care services. The City pays PAUSD rent for the sites and in turn subleases them out to day care providers. Ten sites are subleased to Palo Alto Community ChildCare and two others are subleased to two private providers. Over the years, this program has seen steady, continued growth. Eleven of the sites have expanded from one classroom to two, and the one site that has not expanded, CMR:498:03 Page 5 of 6 due to lack of available land, has a waiting list. In total, 897 children can be accommodated at these sites, which are currently running near capacity. Revenue to PAUSD The Agreement provides for significant annual revenue to the PAUSD. Since the lease began in January of 1990, the City has paid PAUSD over sixty million dollars. Revenue from this agreement is now almost equal to 4% of the PAUSD annual budget. RESOURCE IMPACT Extending the Agreement for 10 years will result in costs to the general fund projected to total $.69,077,000 for payments to PAUSD, plus an additional estimated $1,800,000 for maintenance and repairs (See Attachment C). POLICY IMPLICATIONS Exercising the option to extend the Agreement is consistent with policies and programs in the Coanprehensive Plan promoting City-PAUSD collaboration and the effective provision of community services. ENVIRONMENTAL REVIEW Extension or re-negotiation of an existing lease and agreement does not constitute a project for purposes of the California Environmental Quality Act (CEQA). ATTACHMENTS Attachment A: Disposition Status of Surplus School Sites as of January 15, 1987 Attachment B: Cubberley Center Program Providers 2003-04 Attachment C: Lease and Covenant Not To Develop Revenue and Expenses 2003-2013 PREPARED BY: DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL WILLIAM W. FELLMAN Manager, Real Property CARL Services cc:PAUSD Assistant City Manager CMR:498:03 Page 6 of 6 ATTACHMENT A DISPOSTI.OI~ STATUS OF SURPLUS SCHOOL SITES AS OF JANUARY 15, 1987 C l.osHre Oa ~e B i re. Ross Road Fremont Hill s ~6178 Ventura .6¢7~ ?~bberl ey Crescent Park ~oovmr Status Sold FY 84-85 (retail) Sold FY 85-8~ (retail) Leased until 9188 with (3) 5Lyear .op~iomS.t~’r.e~ew-;.iment adjusted at: end. a{ each 5~.Y:e~r period to pre- ~ai?limg-:r.mte:i~or-.similar-properties~ ~P~S~:x~s~mi~ht-:t~ terminate with 1 y~.-_~ri.~.Odzi=m.in-ev,ent site .must be sold.; Les~s~t,:~as.bpti_~u~ purchase; lessee .Reopened to house PAUSD Adult ~ "~ ....PTA wardrobeiSpecial .Ed ~su.ppo t s~arr, Sold~FY 80~81 ~o-Oity of P.A. de~e~ined,@ .r.~apt~re of.-investme~t " v.alue or-.75.~---o~-fair m~rke~ value. ith .Cit-y:;o~ :P ~.A.. effective :Nov. 1981 (20- yea.us) ;;B~se,ire~,~. of ~475,000 pl us Leased .until: 3~me-:~ i;~91 w/opt ions $=4:~-00~0 .(.N) ~!44.~000: ~Y B6187 . $1.M-"F]’. -86 ~87 S236,:,0"~0 F’Y .86187 88187 $4M &181 Ohl.one U~im. PM/A~aszra Lmased until 618,/; 8 lessees; w~ll -:be-.rebid limB7 for ’5 yr term vacant; some:hourly use Of gym + MP; turf and pool le’ased to Ci:ty Sold FY 92-83 (whol esale) to Town o_~ Los A~ltos Hills -sold FY 85-86 (retail) 86/87 S2...~ N = Naylor purchase Revi.sed: II!5187 ATTACHIvIENTB ITenanCs Adolescent Counseling Services FH Artists Studios (2I)E,F,U California Law Revision D2 Children’s International School L1 Children’s Pre-School Center T1 Dance Connection L5 Dance Visions L3 Foothill College Administration I Friends of the PA Library Port Neighbor Montessori -K3 Hua Kuang Chinese Reading Rm H4 Jewish Community Center Port Office of Emergency Services D4 Palo Alto Preparatory School H2 Wildlife Rescue V Youth Community Service D3 Zohar School of Dance L4 Academy of Dance Libre DS African Dance with Wilfred Mark DS Congolese Dance with Regine DS Friday Night Ballroom Dancers Pav L’ecole de Danse DS Mayfield Morris & Sword DS Mystic Sun Mid-Eastern Dance DS Racies de Mexico L6 Red Thistle Dancers DS Rosen Method Movement DS Saturday Night Ballroom Dancers Pav Music El Camino Youth Symphony M4 Music for Children M3 Palo Alto Chamber Orchestra M1 Palo Alto Philharmonic H! Peninsula Barbershop Chorus M2 Peninsula Women’s Chorus M2 Peninsula Piano School M1 I Exerci.~e/Sports AYSO Soccer Field Basketball/Volleyball Camps Gyms California Karate Academy GAR Jazzercise Pav/Gym Keys School Gym Palo Alto Adult Soccer Field Palo Alto Girls Softball Field PACYSA Field Palo Alto Table Tennis Club Gym Palo Alto Tennis Club Courts Palo Alto Tomahawks Lacrosse Field Silicon Valley Soccer League Field Taijiquan Tutelage M4 Traditional Wushu Assocation M4 YMCA Basketball League Gyms IIOther l Acme Education Center A2,3,6,7 BA Amphibian/Reptile Society H1 Chinese Com. Cntr Lunch Prg Kitchen Christ Temple Church Pay First Fijian Assembly of God Pay Grossman Academy A2,3,6,7 Image Film Group H1 Innovative Education Center A2 Kumon Math and Reading A7 Mt. Calvary Baptist Church HI National Traffic Safety InsituteB4 PA Adult School - ESL Testing A3 Senior Friendship Day Aud Software Development Forum H-1 Theater du Coin M2 Vineyard ChristenFellowship Aud City of Palo Alto City Manager's Report TO: TRANSMITTAL OF FINANCE COMMITTEE RECOMMENDATION TO COUNCIL HONORABLE CITY COUNCIL 10 FROM: CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE: DECEMBER 15, 2003 CMR: 556:03 SUBJECT: OPTION TO EXTEND THE LEASE AND COVENANT NOT TO DEVELOP AGREEMENT WITH THE PALO ALTO SCHOOL DISTRICT RECOMMENDATION: Staff requests that the Finance Committee recommend to Council that the City exercise its option to the lO-year extension on the Lease and Covenant Not to Develop (Agreement) with the Palo Alto Unified School District (PAUSD), which will expire December 31, 2004. COMMITTEE REVIEW AND RECOMMENDATIONS: The Committee voted unanimously to accept staffs recommendation. In addition, the Committee requested that Council direct staff to work with the Cubberley Standing Committee and other shareholders to begin development of a new IO-year Lease and Covenant Not to Develop Plan. ATTACHMENTS Attachment 1: CMR: 498:03 Attachment 2: Revised Attachment C to CMR 498:03 CMR:556:03 Page I of2 PREPARED BY: _---!:::t/...:.::;! V:......G.~::::...!;:;.//~..I.<::Ju.~'AX41:::::..t:..L.-L-JrJ~, ;jL-.:~:""='-":""VUJ---~ __ WILLIAM W. FELLMAN Manager, Real Property DEPARTMENTAPPROVAL:~~~~==~~~====~ __ CITY MANAGER APPROVAL: ~.~ E YHARRISON Assistant City Manager CMR:556:03 Page 2 of2 TO: ATTENTION: FROM: DATE: SUBJECT: HONORABLE CITY COUNCIL FINANCE COMMITTEE CITY MANAGER DEP ARTMENT:ADMINISTRA TIVE SERVICES NOVEMBER 18,2003 CMR: 498:03 OPTION TO EXTEND THE LEASE AND COVENANT NOT TO DEVELOP AGREEMENT WITH THE PALO ALTO SCHOOL DISTRICT REPORT IN BRIEF Staff requests that the Finance Committee recommend to Council that the City exercise its option for a lO-year extension on the Lease and Covenant Not to Develop (Agreement) with the Palo Alto Unified School District (P AUSD), which will expire December 31,2004. Under the Agreement as amended, the City provides PAUSD with annual revenue in exchange for 1) the City'S lease for the former Cubberley High School site; 2) a Covenant Not to Develop seven elementary school sites; and 3) an agreement that P AUSD provide space for extended day care at 12 elementary school sites. The terms of the Agreement have resulted in significant benefit for the community since its inception in 1991. The Cubberley Community Center has become a major hub of community participation with more the 900,000 people and 66 organizations using the Cubberley facilities on an annual basis. The Covenant Not to Develop has prevented the PAUSD from selling or developing sites for non School District purposes and has preserved a substantial amount of the City'S remaining open space. The seven covenanted sites provide athletic fields supporting a variety of sporting events for all ages. The Extended Day Childcare program provides space at 12 elementary school sites for City-operated extended day childcare services. Currently, 897 children are accommodated at these sites, which are running near capacity. The Agreement since 1990 has provided the PAUSD "vith over si:x.1y million dollars. Revenue from the Agreement is now almost equal to 4% of the PAUSD annual budget. CMR:498:03 Page 1 of6 E:x.iending the Agreement for 10 years will result in cost to the General Fund projected to total $69,077,000 for payments to PAUSD, plus an additional estimated $1,800,000 for maintenance and repairs. Exercising the option to extend the Agreement is consistent with policies and programs in the Comprehensive Plan promoting City-P AUSD collaboration and the effective provision of community services. CMR:498:03 Page 2 of6 RECOMMENDATION Staff requests that the Finance Committee recommend to Council that the City exercise its option to the 10-year extension on the Lease and Covenant Not to Develop (Agreement) with the Palo Alto Unified School District (PAUSD), which will expire December 31,2004. BACKGROUND On September 1, 1989, the City and the PAUSD entered into the Agreement. Under the Agreement, the City provided P A USD with annual revenue in exchange for the City receiving: 1) a lease on the former 35-acre Cubberley High School site, including 180,000 square feet in improvements to be used for community theater, sport and art groups; 2) a Covenant Not to Develop five neighborhood elementary school sites (Jordan, Jane Lathrop Stanford, Ohlone, Garland and Greendell); and 3) an agreement that P AUSD provide space for extended day care at each of eleven remaining elementary school sites. The Agreement was for 15 years, beginning January 1, 1990 and ending on December 31, 2004. There are three options to extend the lease. In the first option, the City has the sole option to ex-tend the Agreement for an additional 10 years. This flIst option is the focus of this CMR. The second and third options are for two additional five-year terms and require the mutual agreement of both the City and PAUSD. Each year, the payment for the entire agreement is increased by an amount equal to the increase in the consumer price index (CPI). In July 1998, the Agreement was amended (Amendment #1) to provide for the reopening of one of the covenanted sites (the "old" Ohlone site, now renamed Hoover School) and the substitution of two operating sites, Walter Hays and Juana Briones, for the covenanted site to be reopened. The amendment also provided for the addition of a twelfth ex-tended day care site to be opened at the Hoover School. On January 29, 2001, to accommodate PAUSD's plans to establish a third middle school at the City-ovmed former Terman School site, the City and PAUSD jointly approved a conceptual agreement to exchange 7.97 acres at Terman for 7.97 acres at the PAUSD- owned Cubberley site. The property exchange was also a central element in the Four- Party Memorandum of Understanding (MOU) to Address the Middle School Challenge, involving the City, the PAUSD, Jewish Community Center and Stanford University. The Four-Party MOU was approved by the City Council on September 10,2001. On December 10, 2001, the City Council approved the Terman-Cubberley Property Exchange Agreement with the P AUSD (Lease Amendment #2 and Land Exchange Agreement). The property exchange agreement provided for the City to swap 7.97 acres of City-mvned property at Terman to the PAUSD for 7.97 acres of PAUSD-owned property at Cubberley. Its provisions also included the following: 1) a reduction of the City's lease payments to the PAUSD by an amount equivalent to the City's lost revenues CMR:49S:03 30f6 from its lease of the Tennan site to the Jewish Community Center ($23,490 per month); 2) joint use of the Tennan site fields and special facilities; and 3) reopening of the covenanted Garland School site and the substitution of the Addison and El Carmelo school sites within the Covenant Not to Develop. DISCUSSION In the late 80's, when the Agreement was negotiated, declining enrollment and post- Proposition 13 revenue reductions had placed the P AUSD in financial trouble. School emollment was down, and the P AUSD was consolidating schools and selling surplus school sites to developers for housing (Attachment A). This produced the necessary funds for the PAUSD, but the City and community became concerned with the increased housing density and the loss of open space and recreational opportunities formerly provided by the neighborhood school sites. The City and P AUSD negotiated the Agreement for the purpose of providing revenue to help assure the continued existence of the City's excellent school system, while still retaining the open space and recreational facilities for the community. The Agreement currently provides the following community benefits: 1) the Cubberley Community Center with its many and varied community programs; 2) space for extended day care at 12 elementary school sites; 3) the Covenant Not to Develop 7 school sites and 4) continued income for the PAUSD. Cubberlev Communitv Center Since its inception in 1991, the Cubberley Community Center has steadily become a major hub for community participation. In total, more than 900,000 people and 66 organizations use Cubberley facilities on an annual basis -more than all of Palo Alto's community facilities combined. (See Attachment B for full listing of program providers.) The Cubberley lease program offers affordable rates that attract and keep valuable community assets such as Foothill College, the Jewish Community Center, Palo Alto Adult School, the Cardiac Care program, Friends of the Palo Alto Library, and a variety of day care providers, schools and churches -just to name a few. The room rental program is just as valuable with more than 600 individual rentals a year, including weddings, receptions, parties, church affairs, public meetings, seminars and workshops. Cubberley has also become a focal point for all art disciplines. Groups who rehearse and perfonn at Cubberley include the EI Camino Youth Symphony, Palo Alto Chamber Orchestra, Palo Alto Philharmonic, Zohar School of Dance, Dance Visions, and many more. There is also a visual artist colony providing professional artists low cost studios to create their \vork, \vhile being able to afford to do so in Palo ,AJtO. The Cubberley theatre also provides a rental space for myriad theatre groups who do not have a home stage of their own. CMR:498:03 Page4of6 Sports also take center stage at Cubberley where organized groups and individuals throughout the year play organized soccer, softball, karate, football, table tennis, tennis, Lacrosse, and basketball. Covenant Not to Develop School Sites The Covenant Not to Develop portion of the Agreement was created to "prevent a further burden on the City's infrastructure and in order to preserve a substantial amount of the City's remaining open space." The Covenant prevents the District from: 1) subdividing, 2) selling, or 3) developing sites for non-School District purposes for the term of the Agreement. The covenanted sites now include 7 sites (Jordan, Jane Lathrop Stanford, Walter Hayes, Juana Briones, Addison, EI Carmelo and Greendell). The Greendell site is currently the only covenanted site that is not being used as a school. Through the Covenant, vacant school sites were retained and residents have been greatly served through the continued availability and use of PAUSD-owned athletic fields, supporting a variety of sporting events for all ages. School fields, in addition to programs that are scheduled by PAUSD, are used most frequently by American Youth Soccer Organization (A YSO), California Youth Soccer Association (CYSA), Palo Alto Babe Ruth, Pop Warner, SVSA (adult soccer league), PAASL (adult soccer league), BAWSL (adult soccer league), Little League, girls' softball, American Legion and the Palo Alto Tomahawks Lacrosse teams. P A USD athletic fields are used most heavily between the after school hours of 3:30p.m. and 7 p.m., Monday through Friday. These athletic fields are used by the same organizations on weekends from early morning to dusk. Adults play primarily on Sundays while youth organizations play on both days. The months when the heaviest use occurs are September through November and March through June. AYSO, which has approximately 2,500 participants in the fall, will have thousands of hours of use on elementary and middle school fields. Most recently, the Palo Alto Committee on Athletic Fields has pointed out that Palo Alto does not have adequate athletic fields to meet the identified need. Without the Covenant, this issue would be greatly exacerbated and many of the community teams would be without places to play. EA'tended Dav Childcare ProQram The Agreement as amended provides space at 12 elementary school sites for the purpose of providing City-operated extended day child care services. The City pays PAUSD rent for the sites and in tum subleases them out to day care providers. Ten sites are subleased to Palo Alto COIn..'11unity ChildCare and nvo oth.ers are subleased to two private providers. Over the years, this program has seen steady, continued gro\\rth. Eleven of the sites have expanded from one classroom to two, and the one site that has not expanded, CMR:498:03 Page 5 of6 due to lack of available land, has a waiting list. In total, 897 children can be accommodated at these sites, which are currently running near capacity. Revenue to PAUSD The Agreement provides for significant annual revenue to the PAUSD. Since the lease began in January of 1990, the City has paid PAUSD over sixiy million dollars. Revenue from this agreement is now almost equal to 4% of the PAUSD annual budget. RESOURCE IMPACT Extending the Agreement for 10 years will result in costs to the general fund projected to total $69,077,000 for payments to PAUSD, plus an additional estimated $1,800,000 for maintenance and repairs (See Attachment C). POLICY IMPLICATIONS Exercising the option to exiend the Agreement is consistent with policies and programs in the Comprehensive Plan promoting City-PAUSD collaboration and the effective provision of community services. ENVIRONMENTAL REVIEW Extension or re-negotiation of an existing lease and agreement does not constitute a project for purposes of the California Environmental Quality Act (CEQA). ATTACHMENTS Attachment A: Disposition Status of Surplus School Sites as of January 15, 1987 Attachment B: Cubberley Center Program Providers 2003-04 Attachment C: Lease and Covenant Not To Develop Revenue and Expenses 2003-2013 PREPARED BY: WILLIAM W. FELLMAN Manager, Real Property DEPARTMENT HEAD APPROVAL: ~~~~-'::~~::::::::iI~~""""""" .......... =- CITY MANAGER APPROVAL Assistant City Manager cc:PAUSD CMR:498:03 Page 6 of6 ATTACHMENT A DISPOSTION STATUS OF SURPLUS SCHOOL SITES AS OF JANUARY 15, 1987 . .:itIIrtor,~.t.m.l.5 ';'. Closure .~ Site Stat.U:5 . ;'slyd1ni lnt9t""es·· .. · . . 6/1'6 Dr'te9= Sord FY84-85 (retail) one, Ross Road Sold FY 85-86 (retail) . . . . 6/1.6 Fremont Hills Leased until -li!!.96~1 th(3) 5~year Qf:lti:on$to r~;'rent adjusted at .end of "e,aI::ii S.ye#rperi ocitopre- !\ta§.'.~ci.m9 r,a.t~:f~·simi 1 ar ·properties-; ,f"At.(S!t,J'las;l"i9htto'terminate with 1 ¥E:aJ'" ,n;trt:il:ein.e-vent sitemL!st besoid; ~Le5:s.e€ha.:so!ftian to purchase; lessee pno¥~'.des ownS!!T'vlces bn66reendellR~opened tohoL!se PAUSn Adul t. Ed \ Special Ed.'sl..111Port. st.aff I F'TFt wardrobe :617£ VEntura. So~,d FY 80-81 to Ci ty of F'. A. 6/78 Terman -. 6179 ,sriand · (2.2A pre-Naylor creditl';:PurchaS'E price de-t:'ENnined ·@r-ec~?tl.!re of investment' . value or' 7S~o:f' f.air market valuE. · Lea-se-pur'cnase 'agre~me~twith .C.l ty ;of P .A. e.ffectiy,e ~Nov. 1981' . (20. ye~l"'s j ;;Basere~t .. of $475 IO(lO . P 1 u~ interest on-princip.aJ.; . ~ ,~ Leased until JlJ~el99J.· w/optionsto r.enew far 1"0' moP"e ~rs; · tur'f . Teased t-oCJty' . Sol dFr 85-8bkef:a.il> 6/79tubberley Le'ases to.be renegotiated to terminat.e b192; · 31I teased ;121 esse!!s 43% ,'tlour'fy-arokerage ZZ'~-'PAUSrf«c::upl-ed . :n ... vac:ant 1i.50f JuneJ996 11 .S ~·s lea'sed to CftylNayl:or · 1 05,~tO{jSFC1.assl"'Qom space 75iQ0'lo 'SF :Spec:i a~F a;'cil iot i es 6/91 .Crescent ParkSol.a. FY ·84--85 {retail ~ S2..SM ... ·$b4'IOQO(N) NlA $9M $11'\ F"Y 6q lE7 $2 .• 1I!l .$.EH. ,OOO{·m SSl,vikfOG FY 86/87 S2.B~ $305,.0'00 on 6/81 Ohlone !!:lIas Jordan Unim • PMIA 1 e.x is UHim. P~IAra5t.ra ttl -=Naylor purchase Ls.as~d unt.i 1 6/87; 8 1 esSees i . wi llbe·l"'.eo'id 11'87 +01"'5 ¥I'" ter.m vac4nt; somehoul"'ly use of gym + HPj tUl"'f .nd pool le'a.sed to City sold F'Y82-S3(whol esal e) to Town of Los· Altos Hi' 1 5 $i70,.OOOfY B6/86 -'$5.0,000 .ae';i:H e6lS'?' $2.7:M $.9H Revised 1/15/87 f.'E ATT ACHMEl\T}' B II II Exercise/Sports II II Tenants AYSO Soccer Field Adolescent Counseling Services FH BasketballIVolleyball Camps Gyms Artists Studios (21) Ef,U California Karate Academy GAR California Law Revision D2 Jazzercise Pav/Gym Children's International School L1 Keys School Gym Children's Pre-School Center T1 Palo Alto Adult Soccer Field Dance Connection L5 Palo Alto Girls Softball Field Dance Visions L3 PACYSA Field Foothill College Administration I Palo Alto Table Tennis Club Gym Friends of the PA Library Port Palo Alto Tennis Club Courts Neighbor Montessori K3 Palo Alto Tomahawks Lacrosse Field Hua Kuang Chinese Reading Rm H4 Silicon Valley Soccer League Field Jewish Community Center Port Taijiquan Tutelage M4 Office of Emergency Services D4 Traditional Wushu Assocation M4 Palo Alto Preparatory School H2 YMCA Basketball League Gyms Wildlife Rescue V Youth Community Service D3 II Other II Zohar School of Dance L4 Acme Education Center A2,3,6,7 II ~ SA Amphibian/.t<eptiJe Society HI Dance Chinese Com. Cntr Lunch Prg Kitchen Christ Temple Church Pav Academy of Dance Libre DS First Fijian Assembly of God Pav African Dance with Wilfred Mark DS Grossman Academy A2,3,6,7 Congolese Dance with Regine DS Image Film Group Hi Friday Night Ballroom Dancers Pav Innovative Education Center A2 L'ecole de Donse DS Kumon Math and Reading A7 Mayfield Morris & Sword DS Mt. Calvary Baptist Church Hi Mystic Sun Mid-Eastern Dance DS National Traffic Safety Insitute B4 Rocies de Mexico L6 PA Adult School -ESL Testing A3 Red Thistle Dancers DS Senior Friendship Day Aud Rosen Method Movement DS Software Development Forum H-l Saturday Night Ballroom Dancers Pav Theater du Coin M2 II Music II Vineyard Christen Fellowship Aud EI Camino Youth Symphony M4 Music for Children M3 Palo Alto Chamber Orchestra M1 Palo Alto Philharmonic Hi Peninsula Barbershop Chorus M2 Peninsula Women's Chorus M2 Peninsula Piano School MI With Inflation ATTACHMENT C Lease & Covenant Revenues and Expenses 2003-2015 (Fiscal Year Basis) ACTUAL Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected Projected 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Revenues Property Rental (long term leases) 1,421,596 1,464,244 1,508,171 1,553,416 1,600,019 1,648,019 1,697,460 1,748,384 1,800,835 1,854,860 1,910,506 1,967,821 2,026,856 Facilities Rental (hourly rental) 793,354 833,022 874,673 918,406 964,327 1,012,543 1,063,170 1,116,329 1,172,145 1,230,752 1,292,290 1,356,905 1,424,750 Cubberley Rental (City office space) 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 73,000 ITotaf Revenue 2,287,950 2,370,266 2,455,844 2,544,823 2,637,346 2,733,562 2,833,630 2,937,713 3,045,980 3,158,613 3,275,796 3,397,726 3,524,6061 Expenses Payments to PAUSD Lease 3,353,693 3,637,453 3,914,202 4,012,250 4,132,618 4,256,596 4,384,294 4,515,823 4,651,298 4,790,837 4,934,562 5,082,599 5,235,077 Covenant Not To Develop 1,458,069 1,482,886 1,512,544 1,550,432 1,596,945 1,644,854 1,694,199 1,745,025 1,797,376 1,851,297 1,906,636 1,964,041 2,022,962 Child Care Sites 491,758 500,129 510,131 522,910 538,597 554,755 571,397 588,539 606,196 624,381 643,113 662,406 682,278 Utilities (child care sites) 25,927 30,175 29,156 30,778 30,778 31,702 30,315 31,224 31,224 32,161 32,161 33,126 33,126 Subtotal PAUSD 5,329,647 5,850,642 5,966,032 6,116,371 6,298,938 6,487,907 6,680,206 6,880,612 7,086,094 7,298,676 7,516,672 7,742,172 7,973,443 Departmental Expenditures lor Cubberley Lease Management and Maintenance (PWD and ASD) 501,403 526,473 552,797 580,437 609,458 639,931 671,928 705,524 740,801 777,641 816,733 857,569 900,448 Non-maintenance Operating Expense (CSD) 1,448,846 1,521,288 1,597,353 1,677,220 1,761,081 1,649,135 1,941,592 2,038,672 2,140,605 2,247,636 2,360,017 2,478,018 2,601,919 Subtotal Departmental Expenditures 1,950,249 2,047,761 2,150,150 2,257,657 2,370,540 2,489,067 2,613,520 2,744,196 2,881,406 3,025,476 3,176,750 3,335,588 3,502,367 [Total Expenses 7,279,896 7,898,403 8,116,182 8,374,028 8,669,478 8,976,973 9,293,726 9,624,808 9,967,500 10,324,153 10,693,422 11,077,760 11,475,8101 INet (4,991,946) (5,528,138) (5,660,338) (5,829,205) (6,032,133) (6,243,411) (6,460,096) (6,687,096) (6,921,519) (7,165,540) (7,417,626) (7,680,034) (7,951,205)1 Cubberley Opera lions Only Rev 2,287,950 2,370,266 2,455,844 2,544,823 2,637,346 2,733,562 2,833,630 2,937,713 3,045,980 3,158,813 3,275,798 3,397,726 3,524,606 Exp 1,950,249 2,047,761 2,150,150 2,257,657 2,370,540 2,489,067 2,613,520 2,744,196 2,881,406 3,025,478 3,178,750 3,335,588 3,502,367 Net 337,701 322,504 305,694 287,166 266,806 244,496 220,110 193,516 164,574 133,136 99,046 82,138 22,239 Factor 1.173 1.157 1.142 1.127 1.113 1.098 1.084 1.071 1.057 1.044 1.031 1.019 1.006 Cubberley Capital Projects Since 1995-96 Name Number Adopted Year Bud et Appropriated Cubberley Code Roof Repair 19018 647,000 95-96 Cubberley Athletic Field Irrigation Improvements 19905 30,000 98-99 Cubberley Theatre Improvements 19911 120,000 98-99 Cubberley and Children's Theatre Stage Floor Replacement AC04010 50,000 03-04 Cubberley Building I Air Conditioning Replacement PF04012 175,000 03-04 Cubberle Mechanlcel and Electrical U rades PF04010 425,000 03-04 Total 1.647.000 11/20/2003 Cubb Actuals 2003-2015.xI5 City of Palo Alto COLLEAGUES MEMO February 24, 2014 Page 1 of 2 (ID # 4493) DATE: February 24, 2014 SUBJECT: COLLEAGUES MEMO FROM COUNCIL MEMBERS BERMAN, BURT, HOLMAN, AND KLEIN REGARDING CREATION OF A PALO ALTO BUSINESS REGISTRY Goal: Palo Alto needs a Business Registry as soon as possible to answer such basic questions as how many people work in Palo Alto and for what types of businesses. We should implement a Registry in 2014. Background and Discussion: Impacts of commercial development and activity, such as traffic and parking impacts, are at the forefront of community concerns. The City Council made addressing these issues a council priority in 2013 and again in 2014. However, the City lacks adequate, reliable, and updated data to analyze the issues, structure best policies or programs and to measure their effects. Palo Alto is one of the few cities in the region without a business registry or a business license. Most cities rely on these tools for obtaining and analyzing critical information about the characteristics of businesses in their communities for purposes such as informing zoning decisions and public safety planning and service response. In addition, the Council has committed to developing a strong Transportation Demand Management (TDM) program in 2014 to reduce the traffic and parking impacts in our community. Good data is essential to design a sound program, establish baselines and monitor progress. Recommendation: We recommend that Council direct Staff to return to Council not later than the end of March with a proposal for a business registry which would include: An online registry to reduce costs, accelerate implementation and provide for efficient data analysis. Fees limited to cost recovery. February 24, 2014 Page 2 of 2 (ID # 4493) A simplified, low cost questionnaire for very small businesses and exemption from registration for home based businesses. Questions designed to obtain information on the number of employees, types of businesses and other information that would be valuable for effective planning purposes. Staff Impact: The City Manager and the City Attorney have reviewed this Memorandum and have the following comments: Effective implementation and enforcement methods for collecting and updating data will be important. Staff will evaluate using existing software programs first as means to keep implementation costs down. City of Palo Alto (ID # 4502) City Council Staff Report Report Type: Action Items Meeting Date: 2/24/2014 City of Palo Alto Page 1 Summary Title: Caltrain Go Pass Pilot Program and Agreement Title: City Council Authorization to Staff and the City Manager to Enter into an Agreement with the Peninsula Corridor Join Powers Board to Introduce the Caltrain Go Pass into the Civic Center Transportation Demand Management Program From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council authorize the City Manager to enter into an Agreement with the Peninsula Corridor Joint Powers Board to participate in the Caltrain Go Pass Program. Participation would allow the City to implement a 9-month trial program that provides free train passes to City employees. The program will provide an incentive to ride public transit, reduce automobile trips and also free up parking in the Civic Center Garage. Executive Summary As part of the City’s growing Transportation Demand Management (TDM) program, Staff is recommending City participation in the Caltrain Go Pass Program. City employees participating in the program would receive a free Go Pass in exchange for surrendering their City-issued parking permit, freeing up spots in the Civic Center Garage. Staff would monitor the program during the trial period to confirm the number of spots made available in the garage to determine whether the program should be continued. Background At the March 18th meeting, Council directed staff to explore a variety of strategies aimed at increasing the supply and availability of downtown parking: Implement an attendant parking trial at select downtown parking garages or lots (Lot R City of Palo Alto Page 2 – High St Garage); City commitment to reduce 50-100 employee permit spaces in the City Hall garage; Evaluation of potential public-private partnerships for a new parking garage at Lot P; Evaluation of restrictions on the creation/use of transfer development rights (TDRs); and Elimination of revising zoning exemptions from parking requirements. Initiation parking restrictions and/or permit parking in adjacent residential neighborhoods. Staff has made progress on each of the above items since: City staff has developed a Request for Proposals (RFP) to solicit bids from vendors to operate an attendant parking program at Lot R and options for expansion of the program into Lot S (Bryant St Garage), Lot CW (Cowper-Webster Garage), and Lot CC (Civic Center Garage) if successful. The RFP was active during the development of this staff report and is available online at: http://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=37471 The proposed Go Pass Program responds to the Council’s direction to reduce the number of currently occupied permit spaces in the City Hall and adjacent downtown parking spaces by 50-100 vehicles. City Council discussed a public-private development proposal at Lot P on June 10, 2013 and directed staff to continue to explore public-private partnerships for construction of garages within the Downtown and California Avenue Business Districts. Staff is currently developing RFPs for policy input and consideration in 2014. City Council updated its TDR and Parking Exemption policies on October 21, 2013 and restricted the development of future TDRs and parking exemptions. Staff introduced a framework for Residential Permit Parking Districts in January 2014, and will be developing an ordinance for an RPP process, as well as conducting stakeholder engagement for a Downtown RPP District, in 2014. In researching opportunities to reduce the Civic Center employee permit space demand, staff initiated discussions with Caltrain to discuss opportunities for trial Go Pass Programs not only for City employees downtown but also for the Greater Downtown districts. However, the City’s request for a demonstration Caltrain program for the Greater Downtown was not approved by Caltrain staff, which cited current high Caltrain ridership at University Station and the concern of providing equitable programs with active participating companies. Given Caltrain’s decision, staff submitted a Letter of Intent for the City to participate in the Go Pass program to continue to reduce permit parking demand within the city hall garage (Attachment A). City of Palo Alto Page 3 The Caltrain Go Pass Program allows employees of partnering employers to ride Caltrain through all zones, any day of the week, without boarding restrictions, in return for a fixed rate paid by the partnering employer. The fee structure is currently consistent to all participating employers and includes one of the two fee options, whichever is greater: 1. Minimum participation fee of $13,750, or 2. $165 per eligible employee. Eligible employees include any regular employee working more than 20 hours per week, excluding contractors, temporary employees, interns, and consultants The Civic Center currently includes 466 full-time or permanent part-time employees. The estimated cost for participation into the program is: 466 employees x $124.50 (prorated) per employee = $58,017. The Caltrain Go Pass agreement and fee schedule is provided in Attachment B. Discussion Implementing a Caltrain Go Pass program can be an effective Transportation Demand Management tool as it helps reduce employee parking demand and vehicle trips. Twenty-two Palo Alto-based companies currently participate in the Go Pass Program in addition to Stanford University and the Stanford University Medical Center. Since the start of Stanford University’s participation into the Go Pass Program, the University has realized a transit ridership increase from 8% to 28% for employees. For Civic Center employees (City Hall, Police Department, Development Center, and Downtown Library) who live within a mile of Caltrain stations, the Go Pass Program could provide a viable alternative to solo driving. The City currently has an estimated fifty employees regularly taking Caltrain for some portion of their travel mode, about thirty of whom receive benefits through the Commuter Check Program. The City’s current costs for the pre-tax commute program benefits for Caltrain participants average $40 per participant per month, or $480 per year. The City would continue to provide commute incentives for riding bikes ($20/month), van-pooling (25% of monthly costs up to $60) or carpooling ($30/month), since distance between residence and a Caltrain station preclude riding Caltrain for the majority of City employees. The City Manager has asked that we review those incentive programs too in order to see if we can achieve more uptake and traffic offset. Table 1 below highlights the current cost for an employee traveling to work via Caltrain with a 2-zone monthly pass, such as San Mateo to Palo Alto or San Jose Diridon to Palo Alto, and City of Palo Alto Page 4 shows the net financial benefit of participation in the Go Pass program: Table 1 Civic Center Employee - Caltrain Ridership Analysis Total No. of Working Days in Palo Alto 196 days Caltrain Monthly Pass Cost (2 Zone) – San Jose to Palo Alto $126 Annual Cost of 2 Zone Pass (12 months) per Rider $1,512 Current Employee Benefit for Annual Parking Permit -$466 Employee Benefit to Participate in Go Pass Program: +$1,046 Proposed Civic Center Go Pass Program The Civic Center Go Pass Program is proposed to be offered as an incentive to reduce motor vehicle commute travel to Palo Alto and to free up parking permits currently held by employees. The specifics of the program include the following: 1. Parking Permit Release Staff recommends offering Caltrain Go Passes to employees in exchange for the return of their parking permit. Currently there are 437 parking permits issued to City of Palo Alto employees for Downtown lots, almost all of which are used at Lot CC (Civic Center). Go Pass will be offered to all benefits-eligible Civic Center employees. 2. Emergency Day Pass Parking Employees participating in the program may at times be required to drive to work to accommodate scheduled family or personal matters. Recognizing that the loss of a parking permit may discourage employees from opting into the program, Staff proposes making available up to two (2) Emergency Day Pass Parking Permits for participating employees each month. The Emergency Day Pass would only be valid at Permit Parking spaces at Lot CW (Cowper-Webster). Typical Day Passes sold by the City allow purchases to park in either 3-Hour Visitor or Permit parking spaces for the day purchased. The Emergency Parking Permits would be released by Revenue Collections. When three or more Emergency Day Passes are required by an employee they will be made available at a discounted price of $10.00 per pass. It is important to note that the actual cost of a permit is $17.50 and the City of Palo Alto Page 5 staff is proposing to offer a subsidized daily pass with a $7.50 subsidy. Timeline Employer participation into the Program is introduced quarterly. Palo Alto is scheduled to opt into the program on April 1, 2014, if the program is approved by Council. Resource Impact The cost of the nine-month trial Civic Center Go Pass Program is $58,017, based on a pro-rated annual rate of $124.50 per employee. If, after assessing the program at the end of the Trial the City decides to continue the program, the City would be responsible for any annual cost increases. The cost of the program would be paid for through the City’s General Benefits Fund. Table 2 shows the projected expenditures and costs of the program. Table 2 ASSUMPTIONS: 50 employees opt into the program. Each employee purchases one (1) parking permit per month in addition to the two free passes. REVENUES: Total Revenue expected from permit sales 50 employees x $10 permit x 9 months $ 4,500 Employees turning in annual parking permits: $466 x 50 eligible employees $23,300 Total Revenues: $27,800 EXPENSES: Total fee payable to Caltrain for trial program: $58,017 Cost to City for issuing additional parking permits $3,375 Estimated costs of additional parking permits, assuming a bulk permit purchase: $2,300 Total Expenses: $63,691 City of Palo Alto Page 6 NET COST TO CITY: $35,892 With each additional employee opting into the program with the revenues and costs outlined in the table above, the cost of the program would go down by $489. With these assumptions, if 123 employees opted into the program, it would be cost neutral. This expense will run through the General Benefits and Insurance Fund. There are sufficient resources within this fund to support this additional expense. More importantly, the costs of building a new parking space in a garage is $50,000-60,000 per space. We should look at the slim costs and 50-100 go pass uptake possibility, the program is hugely cost effective. Policy Implications The Civic Center Go Pass Program supports the Council 2013 priority of Parking and Transportation improvements within the Downtown community, and also to the Comp plan Goal T-1, Less Reliance on Single-Occupancy Vehicles. The program demonstrates the City’s commitment to a more comprehensive Transportation Demand Management program which will reduce burden on existing parking infrastructure and encourage a cleaner, healthier and more livable Downtown. Attachments: Attachment A: Caltrain Executed Go Pass Agreement and Invoice (PDF) Attachment B: Palo Alto Go Pass Letter of Intent (PDF) To:City of Palo Alto Date:January 21, 2014 Planning & Community Environment Dept. Address:Attn: Jessica Sullivan Invoice:312 GP 250 Hamilton Ave. Palo Alto, CA 94301 DATE DESCRIPTION AMOUNT 01/21/14 58,017.00$ 58,017.00$ TOTAL DUE INVOICE 650.508.6292 Peninsula Corridor Joint Powers Board Attn: Dept. 35160-02 P.O. Box 39000 San Francisco, CA 94139 2014 Go Pass Program - Initial Fee (466) Employees at $124.50 (Pro-rated April 1) Checks should be made payable to Caltrain. Payments should be mailed to the address above. Late fees apply to payments received after 30 days from the date of the invoice. 2 5974444.1 TERMS AND CONDITIONS This Go Pass Agreement (“Agreement”) is made between the Peninsula Corridor Joint Powers Board, a public agency ("JPB") and the employer (“Company”) identified on page 1 of this Agreement. 1. PROGRAM: JPB operates the “Caltrain” rail service between San Francisco and Gilroy, California, and Company desires to provide a transit benefit for use on Caltrain to all of the Company's regular employees working more than 20 hours per week as well as all employees working less than 20 hours a week and/or interns provided Company selects one or more Options identified on Page 1 of the Agreement (hereafter referred to as “Employees”), in the form of a sticker affixed to a valid Company-issued employee photo identification card (hereafter referred to as "Go Pass"). In order to facilitate the Caltrain Go Pass Program (“Program”) JPB shall provide the necessary stickers and accept the Go Pass as valid fare media for travel on the Caltrain system. 2. ELIGIBLE PARTICIPANTS: Only individual companies are eligible to participate in the Program. Companies with multiple locations, branches or campuses are eligible to participate in the Program and must provide an employee count for each individual company site. However, such companies must enroll in the Program under a single Go Pass Agreement and designate a single corporate contact and administrator. Such companies’ employees at non-participating locations are not eligible to participate in the Program. Temporary employees, contractors and consultants of participating companies are not eligible to participate in the Go Pass Program. If one or both of the Options identified on Page 1 are not selected, interns and/or employees working less than 20 hours per week are also not eligible to participate in the Go Pass Program. 3. ELIGIBLE EMPLOYEE VERIFICATION: Go Passes must be purchased for each and every Employee at each Company work site participating in the program (“Participating Site(s)”). Company will be required, prior to the JPB issuing the Go Pass stickers, to provide JPB with a Letter of Intent (“Letter”) signed by the Human Resources Director or an officer of the Company verifying the then-current number of Employees of the Company at each Participating Site. If there are multiple Participating Sites, the Letter must indicate the individual work site address and the number of then-current Employees at each site. Neither Company nor any of its affiliates shall be required to participate in the Program with respect to other work sites other than the Participating Site(s) identified in the Letter. 4. Go PASS IDENTIFICATION: Company must have an official Company-issued photo ID card in order to participate in the Program and must supply a copy of that ID card to the JPB for review. Any company that doesn’t have a photo ID card must create one. The ID card must display a clear employee photo, employee name, have a 1” x 1” square space for the Go Pass sticker and display the Company name, logo or both. The ID cannot contain Caltrain’s logo as part of the design. If the ID changes, it is the Company’s responsibility to submit the new version to the JPB. The JPB will produce and issue serialized Go Pass stickers which will be distributed to Company so that Company can affix them to the Company-issued Employee ID card. Company shall place the Go Pass sticker on each eligible Employee’s ID card, preferably on the front; Company shall not distribute the Go Pass stickers to Employees, as this practice may lead to unauthorized use of the sticker. Company shall be responsible for retaining the Employee’s ID card or removing the Go Pass sticker from an Employee’s ID card when an Employee Go Pass holder leaves the employment of the Company or relocates to non-participating location. Returned ID cards or stickers shall be presented to the JPB for verification upon request. A photocopy of the identification card with the Go Pass sticker attached is acceptable as proof that the Go Pass is no longer in use by an Employee who has left the employment of Company. All Go Pass stickers allotted to the Company at the beginning of the Company’s participation in the Program that are not issued to Employees are to be returned to the JPB by December 15 of the Agreement year. 5. PROGRAM RECORDS: Company will create and maintain a file of documents to be available for review upon JPB request (“Go Pass File”). The Go Pass File must include a report listing the qualifying Employees by name as of the date this Agreement is signed. The Company shall maintain in its Go Pass File a log (Go Pass Log) of its Employees who currently hold Go Passes. The Go Pass Log shall include the Employee’s first and last name, unique serial number for the individual pass each Employee holds, pass status, date of issue, date of Employee separation, if applicable, and any other pertinent information. 6. SURVEY AND ACKNOWLEDGEMENT: Prior to affixing the Go Pass sticker to the Employee’s Company-issued ID card, Company shall require each Employee receiving a Go Pass to complete an online questionnaire. Once the survey is complete, Company administrator will receive an e-mail confirmation from the Employee via the JPB. As part of completing the survey, the Employee will be required to acknowledge that he or she understands the proper use of the Go Pass. The surveys may be used to analyze the success of the Program and develop ridership projections for the Program. However, the surveys are subject to disclosure under requests made pursuant to the California Public Records Act. Prior to disclosing surveys, any identifying information concerning the Company and/or the Employee shall be redacted. 7. PROGRAM ANALYSIS AND AUDIT: JPB reserves the right to audit Company’s Go Pass Program at any point during the Program year with five (5) working days' notice. The purpose of the audit is to ensure that appropriate accounting, sticker distribution and security procedures are in place. JPB has the right to audit any internal Company Go Pass- 3 5974444.1 associated records, including Company’s Go Pass File. A current list of qualifying Employees shall be provided to the JPB upon request. Within 10 working days of receipt of any audit report from the JPB, Company must, in conjunction with JPB staff, develop a mutually agreeable action plan to satisfy any audit findings. If no mutually agreeable plan can be developed, JPB may terminate the Program upon 10-days’ notice pursuant to the terms of Section 12, Termination. 8. PARKING PERMITS: Monthly parking permits for Caltrain lots may be purchased through any Caltrain station Ticket Vending Machine (TVM). Go Pass holders will be required to complete an application for an access code in order to purchase the permit through the TVM. 9. LOST, STOLEN, DAMAGED AND REPLACEMENT Go PASSES: For lost or stolen Go Passes, JPB will charge a $165 first-time replacement fee. Company must submit to the JPB documentation including the Employee name and Go Pass serial number. For stolen Go Passes, the JPB will replace the Go Pass at no additional charge provided that a police report is supplied to the JPB which describes the Go Pass as stolen. If the same Employee loses the Go Pass or has the Go Pass stolen a second time, the replacement fee will be $250 regardless of whether a police report is provided to the JPB. If a replacement Go Pass is issued and then the original is found, JPB will not provide a refund. Company may not resell the Go Passes to employees at a rate higher than the replacement fee. A Go Pass will not be issued as a replacement for lost or stolen Go Passes a third time. For damaged Go Passes: If the Company or an Employee damages a Company-issued ID card and thus renders the Go Pass sticker unusable, or if the sticker itself is damaged, a replacement Go Pass sticker may be issued to the Employee or taken from the Company’s Go Pass inventory, provided that the Company documents that the Go Pass sticker has been taken out of circulation in its Go Pass File. Company must retain the damaged ID card or Go Pass sticker in its Go Pass File. If no additional stickers remain in the Company inventory, the Company shall return damaged Go Pass stickers or ID cards, or a photocopy, with complete documentation to the JPB prior to the JPB issuing a replacement Go Pass sticker to Company at no charge. This courtesy will be extended no more than two times per Employee per calendar year, after which the replacement cost for a damaged Go Pass sticker will be $165. For Separated Employees: If the Employee separates with the Company, Company shall retain the separated Employee ID card or Go Pass sticker in its Go Pass File and document that the Go Pass sticker has been taken out of circulation in its Go Pass Log (See Section 5 above). If no additional stickers remain in the Company inventory, the Company shall return separated employee Go Pass stickers or ID cards, or a photocopy, prior to the JPB issuing a replacement Go Pass sticker to Company at no charge. For Missing Go Passes: Company shall be responsible for safeguarding the Go Pass stickers prior to distribution to Employees and shall be liable for any loss of Go Pass stickers. Replacement Go Pass stickers shall be issued under the lost terms above. 10. QUARTERLY REPORTING: Company must submit a quarterly report to JPB by 3/1/14, 6/1/14, 9/1/14 and 12/1/14. The quarterly report must list all lost, stolen, damaged and replacement Go Passes issued and separated Employees. It must include the reason for replacement, if applicable, Employee name and corresponding Go Pass serial number and the current number of Employees working at the work site(s) enrolled in the program. Company may submit its Go Pass Log (See Section 5 above) in lieu of the quarterly report. 11. PAYMENT: Company must submit payment for any invoices within 30 days of the date shown on the invoice. Payments after 60 days will be charged a late fee of $5 per day. 12. TERMINATION: Either party may terminate this Agreement by giving the other party written notice at least 90 days prior to the desired termination date, which shall be the last day of a calendar month. If either party terminates the Agreement pursuant to this provision, JPB shall refund to Company a pro-rata portion of Company’s total payment in accordance with the Proration Schedule attached to and incorporated in this Agreement as Exhibit A, less the Administration Fee, as listed on Page 1, within 30 days of the termination date, provided that within 10 working days of the effective termination date: (a) all undistributed Go Passes issued to Company are returned to JPB and (b) Company verifies in writing that it has made every Good faith effort to collect or destroy all Go Passes that have been distributed to employees. In the event Company fails to comply with the terms of this Agreement, JPB may terminate this Agreement with 15 days’ notice. Non-compliance by Company may make Company ineligible to participate in the Go Pass program in subsequent years. This Agreement shall automatically terminate if Company discontinues its business at the Participating Site(s). 13. MISUSE OF Go PASS: The Go Pass constitutes a Go Pass sticker affixed to a valid, Company-issued employee photo ID card. Any other use of the Go Pass sticker is prohibited and will not be valid for fare on Caltrain. All Go Pass holders shall be subject to JPB's fare inspection regulations. JPB may confiscate and/or destroy the Go Pass stickers and pursue claims or demands against, or seek prosecution of, anyone who duplicates, alters, transfers, sells or commits unauthorized use of the Go Pass. Unauthorized use of the Go Pass includes, but is not limited to, allowing a non-eligible person to use a Go Pass or affixing a Go Pass sticker to any form of identification other than a valid Company-issued employee ID card. JPB agrees not to pursue any claims or demands against Company for an Employee's unauthorized use of the Go Pass, unless the unauthorized use is the result of Company's failure to follow the sticker issuance procedures in 4 5974444.1 Section 4, gross negligence or willful misconduct. JPB may cancel any individual Go Pass if it has reason to believe that the Go Pass was issued and/or used in a manner that fails to comply with the requirements herein. JPB will notify Company if it has any such concerns and, after appropriate investigation, revoke those passes in question. Company agrees to cooperate with JPB in such an investigation, including assisting the JPB in determining the identity of the Employee(s) who are alleged to have misused the Go Pass. Company waives all remedies and rights to refunds for any Go Passes revoked for misuse. 14. PROTECTION OF PRIVACY: JPB acknowledges that it may review documents in the Go Pass File or other materials that contain personal or confidential information about the Company or the Employee (“Information”). Except as required to administer the Go Pass Program in accordance with this Agreement or as otherwise required by law, JPB agrees not to use or to disclose to third parties the Information. JPB may use Company’s name in promotion of the Go Pass Program. Notwithstanding the foregoing, JPB shall be free to use and disclose to third parties information in an aggregate format that does not personally identify an Employee. 15. ENTIRE AGREEMENT: This contract contains the entire Agreement between the parties hereto for the term specified on Page 1 of this Agreement and cannot be changed or altered except by written agreement signed by both parties hereto. Neither party shall be bound by any oral agreement or other understandings contrary to or in addition to the terms and conditions as stated herein. 16. SUCCESSORS AND ASSIGNS: The terms, covenants and conditions contained in this Agreement shall bind and inure to the benefit of Company and JPB and, except as otherwise provided herein, their personal representatives and successors and assigns. 17. NO THIRD-PARTY BENEFICIARIES: There are no third-party beneficiaries to this Agreement. 18. NO JOINT VENTURE: It is expressly agreed that Company is not, in any way or for any purpose, a partner of the JPB in the conduct of JPB’s business or a member of a joint enterprise with JPB, and does not assume any responsibility for JPB’s conduct or performance of this Agreement. It is expressly agreed that JPB is not, in any way or for any purpose, a partner of the Company in the conduct of Company’s business or a member of a joint enterprise with Company, and does not assume any responsibility for Company’s conduct or performance of this Agreement. 19. ATTORNEYS’ FEES: In the event that either JPB or Company fails to perform any of its obligations under this Agreement or in the event a dispute arises concerning the meaning or interpretation of any provision of this Agreement, the defaulting Party or the Party not prevailing in such dispute, as the case may be, shall pay any and all costs and expenses incurred by the other Party in enforcing or establishing its rights hereunder, including, without limitation, court costs and reasonable attorneys’ fees. 20. GOVERNING LAW: This Agreement shall be governed and construed in accordance with the laws of the State of California. Any action relating to, and all disputes arising under, this Agreement shall be instituted and prosecuted in a court of competent jurisdiction in the State of California. 21. NOTICES: All notices, payments, requests, demands and other communications to be made or given to Company under this Agreement shall be addressed as shown on page 1 of this Agreement. All notices, payments, requests, demands and other communications to be made or given to JPB shall be addressed as follows: To JPB: Peninsula Corridor Joint Powers Board (Caltrain) 1250 San Carlos Ave. San Carlos, CA 94070-1306 Attn: Rita Haskin, Executive Officer, Customer Service & Marketing 5974444.1 Exhibit A Proration Schedule Effective Termination Date (falling in month) Portion of Total Fee Returned per Employee (less administration fees) February $148.50 March $135.00 April $121.50 May $108.00 June $94.50 July $81.00 August $67.50 September $54.00 October $40.50 November $27.00 December $13.50