HomeMy WebLinkAboutStaff Report 11743
City of Palo Alto (ID # 11743)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 12/15/2020
City of Palo Alto Page 1
Council Priority: Fiscal Sustainability
Summary Title: FY 2021 Finance Committee Referrals Update
Title: FY 2021 Finance Committee Referrals Update and Potential
Recommendations to the City Council
From: City Manager
Lead Department: Administrative Services
Recommendation
This report provides a status update of Council referrals requested, during the City Council Retreat and
annual Budget Process. Staff recommends the Committee review and accept this report, and potentially
provide any recommendation to the full City Council for additional action by staff.
Background and Discussion
This report provides an update to outstanding Council referrals to the Finance Committee as requested
during the February 2020 City Council Retreat and during the May 2020 Budget Process. The City Council
requested information on various items that are discussed in this report and is provided in coordination
with assigned departments. A summary table of the current referrals and status of them follows, with
additional information on the referrals after the summary table.
City of Palo Alto Page 2
Referral
Assigned
Department Status
FY2021 Budget:
Explore changing delivery
of services from a dominant
fire-oriented model to a
dominant medical-oriented
model.
Fire
Department
Nov 2020: See below
Included in the staff report is a summary of the
current status of Fire medical services delivery. Staff
recommends that considering the current medically
oriented agency status and complementary cross-
staffing model, that no immediate action be taken.
The Fire Department will continue to look for
efficiencies and methods for modernization of its
delivery of services.
FY2021 Budget:
A report or item on the JMZ
six months after it opens
and what it would look like
to eliminate the General
Fund Subsidy through a
fully cost recoverable
program.
Community
Services
Department
Nov 2020: The Junior Museum and Zoo (JMZ)
construction project is underway. In May 2020, staff
presented the preliminary operating plan to Council
(CMR 11222) along with adjustments to the municipal
fee schedule (memo). Due to the COVID-19 pandemic
re-opening for the new facility is anticipated in spring
2021. Staff will return with an analysis and modeling
of a fully cost recoverable program once JMZ is
completely operational.
FY2020 City Council
Retreat:
Direct the Finance
Committee to come up with
proposed thresholds for
Council to consider related
to Section 2.4.L, Consent
Calendar Categories, which
determines the eligibility
for items to be placed on
the Consent Calendar.
Administrative
Services
Department
Nov 2020: See below
Included in the staff report as well as further detailed
in Attachment A, staff in consultation with
Management Partners, has reviewed the contract
approvals by the City Council and the not to exceed
limits and whether they were approved as a consent
item or action item.
Options for potential recommendations that the
Finance Committee may consider for the full City
Council’s consideration and action:
1) Review the data analysis presented and affirm
current practice,
2) Clarify the types of purchase contracts that must
be placed on the Consent Calendar or as an Action
Item in the City Council Procedures and Protocols
Handbook,
3) Implement a contract dollar threshold for items
that must be placed on the Consent Calendar or as
an Action Item, and/or
4) Consider increasing thresholds for City Council
approval of contracts and/or include indexing
provisions for these thresholds.
City of Palo Alto Page 3
Explore changing delivery of services from a dominant fire-oriented model to a dominant medical-
oriented model.
Palo Alto Fire is currently recognized as a medically-oriented agency. In the most recent bi-annual report
(January 1, 2020- June 30, 2020), it was noted that Rescue and Emergency Medical Service (EMS) calls
account for sixty-two percent (62%) of total calls. Our ability to respond to EMS calls has exceeded our
response time standards:
• At least ninety percent (90%) of first responders arriving on scene to EMS calls within eight (8)
minutes. Palo Alto Fire arrived on the scene of EMS calls within eight minutes ninety-one
percent (91%) of the time,
• At least 90% of paramedic responders on scene to EMS calls within twelve (12) minutes. PAFD
paramedics arrived on the scene of EMS calls ninety-nine percent (99%) of the time.
The Palo Alto Fire Department exceeds the response time standards because of the following EMS
focused response models:
• Palo Alto Fire is the only fire agency in Santa Clara County that operates an emergency
ambulance transport service.
• Every fire unit (engine, truck, and ambulance) is always staffed with at least one paramedic.
• Multiple Palo Alto Fire engine crews simultaneously staff an ambulance, called “cross-staffing.”
This cross-staffing model allows a fire engine crew to put the fire engine out of service and
respond to the medical emergency based on need. Cross-staffing affords us the ability to rely on
County Ambulance resources to respond into Palo Alto to transport EMS patients to the
hospital, and consequently exceed the response time standards. Before the cross-staffing
model, County Ambulances were averaging sixty (60) responses a month into Palo Alto fire
patient transport. The cross-staffing model reduced County Ambulance responses into Palo Alto
to less than ten (10) responses a month, resulting in faster response times and a higher service
level to the Palo Alto community.
Direct the Finance Committee to come up with proposed thresholds for Council to consider related to
Section 2.4.L, Consent Calendar Categories, which determines the eligibility for items to be placed on
the Consent Calendar.
On February 1, 2020, the City Council conducted its annual retreat where the Council reviewed the
Council Meeting and Agenda Guidelines of the City Council Procedures and Protocols Handbook (Council
Handbook) was reviewed. The Council discussed Consent Calendar Categories and the following motion
was passed:
MOTION: Council Member Tanaka moved, seconded by Vice Mayor DuBois to direct the Finance
Committee to come up with proposed thresholds for Council to consider related to Section 2.4.L,
Consent Calendar Categories, which determines the eligibility for items to be placed on the
Consent Calendar. MOTION PASSED: 4-3 Cormack, Filseth, Fine no
Staff engaged the assistance of its Purchasing Special Advisor, Management Partners to review the
Council Handbook, analyze City Council awarded contracts and review average duration times for
meetings in Fiscal Years 2020 and 2019, and research typical agency practices. Results of this review can
be found in Attachment A.
City of Palo Alto Page 4
Specifically, Section 2.4.L of the Council Handbook outlines Consent Calendar Categories and describes
the Consent Calendar as “the section where administrative and non-controversial items shall be
presented. The Mayor and City Manager should be sensitive to high dollar value items and consider
placing those items in the action agenda section.” Furthermore, the Consent Calendar section may
include administrative matters that include contracts, appointments, approval of applications, and any
other matters. The focus of the analysis was placed on contracts associated with the purchase of goods
and services, as defined in the Council Handbook:
“A contract for goods, general services, professional services, public works projects, dark fiber
licensing contracts or wholesale commodities, purchases, as outlined in the Purchasing
Ordinance, provided such contracts represent the customary and usual business of the
department as included in the Adopted Budget. Examples include: routine maintenance
contracts, annual audit agreement; software and hardware support agreements, janitorial
services, copier agreements or postage machine agreements.” (Section 2.4.L.2)
Review and Analysis of Council Agendas
City Council Agendas were reviewed and each item, for both the Consent Calendar and Action, were
categorized into types of contracts and typical contract actions.
Table 1: Contract Types and Actions
Types of Contracts Contract Actions
Purchase of Goods, Services, and
Public Works Construction Initial approval and amendments
Wholesale utility commodities,
service purchase, and sale Time extensions
Intergovernmental Deferrals and removal from
agenda
Other (employment-related,
leases and licensing) Direction to staff, termination
Focus of the analysis was placed on contracts awarded for the purchase of goods, services and public
works construction. Within this contract type, initial approval and amendments contract action was
considered as this type of action has an associated dollar value impact that can be grouped into a
potential threshold for Consent Calendar Categories.
Table 2: Contracts on Council Agendas
Purchase Contracts Other Contracts/Actions
Total Scheduled
Agenda Items
FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020
Action Items 3* 4* 11 5 85 83
Consent
Calendar 75* 88* 43 31 229 200
Total 78 92 54 36 314 283
Table 2 summarizes discrete agenda items however there may be multiple contracts awarded in some
instances (as noted by the asterisk). In FY 2020, a total of 143 purchase contracts were awarded on
City of Palo Alto Page 5
consent and a total six contracts were awarded as an Action item, one of which was moved to the
Consent Calendar. For FY’s 2019 and 2020, City Council agenda items that were initial approval or
amendments of purchase contracts respectively total 25 percent and 32 percent of total scheduled
agenda items. Other Contracts/Actions includes intergovernmental agreements and wholesale
commodity purchases.
In addition to the presented in Table 2, Tables 3 and 4 illustrate the average number of purchase
contracts on Consent, Action, average elapsed time per Action item and groups these items by dollar
amount.
Table 3: Contract and Agenda Item Averages
FY 2019 FY 2020
Purchase Contracts on Consent 2.6 3.5
Consent Items per Meeting 6.7 5.9
Average Elapsed Time per Action Item 1:25 1:12
Action Items per Meeting 2.5 2.4
Table 4: Purchase Contracts on Consent by Dollar
Threshold
Dollar Value FY 2019 FY 2020
Up to $250,000 16 13
$250,001 to $500,000 16 20
$500,001 to $1,000,000 20 18
$1,000,001 to $5,000,000 15 28
Greater than $5,000,000 6 6
Total 73 85
In FY 2020, the average time per Action item was 1 hour and 12 minutes, with the actual time
distribution being between 31 minutes and 2 hours and 45 minutes. If a threshold of $1,000,000 were to
be selected, for example, based on FY 2020 activity, 34 additional Action items would be added to
Council agendas and would result in an additional 40 hours and 48 minutes across all Council meetings
throughout the year.
In addition to number of agenda times, time average, and grouping purchase contracts by dollar
amount, the distribution of these contracts is summarized by month in the below table.
City of Palo Alto Page 6
Table 6: Contracts on Consent Calendar by Month
As noted in the Council Handbook, “the Mayor and City Manager should be sensitive to high dollar value
items and consider placing those items in the action agenda section.” Considering this practice and
comparing it to potentially assigning a dollar threshold to whether purchase contract be placed as
Action, a chart comparing the elapsed time in minutes to the dollar value of the purchase contract was
compiled. It should be noted that discussion of these items focused on policy considerations, other
actions, and public comment and the time noted in this chart does not count the time focused on the
actual contract approval.
Table 7: Dollar Value and Action Agenda Time Duration
Based on the above chart, the contract having the lowest dollar value is the Independent Police Auditing
contract, totaling $75,000, that went to Council FY 2020; time spent on this item was 122 minutes. In
contrast, the largest dollar value contract, New California Avenue Garage, was discussed for 47 minutes
and totaled $48.4 million. Using the Independent Police Auditing and Pension Funding Policy items as
examples, both with much lower dollar values relative to the other contracts considered, the discussion
surrounding these items was focused on policy considerations and public comment.
City of Palo Alto Page 7
Agency Practices and Observations
The City’s current practice is aligned with the most common method used by California Cities, that is to
place contracts for approval on the Consent Calendar. These items are typically characterized as
administrative and/or routine in nature. Discretion is usually given to the City Manager, in consultation
with the Mayor and staff, to determine what contracts should be considered as Action items.
Comparable cities were selected through a combination of demographic information and proximity to
Palo Alto to review the contract approval process:
• Menlo Park
• Milpitas
• Mountain View
• Redwood City
• San Jose
• San Mateo
• Santa Clara
• Sunnyvale
In reviewing the contract approval practices of the cities listed above, all eight jurisdictions utilize the
consent calendar to award contracts. The City’s Purchasing Advisor also reviewed Council agendas from
several other Bay Area cities, all which place contracts on the consent calendar. These cities include
Campbell, Cupertino, Daly City, Fremont, Hayward, Pleasanton, Union City and Walnut Creek. While
some California cities may have policies or practices that require Council consideration of contracts as
action items, it appears to be uncommon.
In addition, some cities do not bring certain contracts forward for Council approval if funds are included
in the Adopted Budget. A summary of agency trends is summarized in the table below.
Table 8: Agency Trends
City Practice
Mountain View Goods and general service purchases do not require Council approval if budgeted
funds are available.
Redwood City Approval thresholds can be adjusted annually by lesser of CPI or 2%.
San Jose Goods and public works contracts less than $1,000,000 do not require Council
approval; approval thresholds can be periodically adjusted by CPI.
Santa Clara Goods procured with purchase orders do not require Council approval if budgeted
funds are available; increases to award thresholds and indexing anticipated.
In reviewing statistics of Council Agenda for the last two fiscal years together with agency trends, the
following observations should be noted:
Most California cities place contracts on the Consent Calendar. Contracts that are considered
administrative and routine in nature are placed on the Consent Calendar. Policies allow for members of
the public, Council, and staff to pull items from Consent to Action. Discretion is given to the City
Manager, in consultation with Mayor and staff to place items on Consent or Action. Used as an
important time management tool.
City of Palo Alto Page 8
Greater clarity could be provided in the Council Handbook. Current policy language focusing on high
dollar value contracts dilutes emphasis on controversial items and/or items of significant public interest
that may not come with substantial cost but are more appropriately considered as Action Items.
Agency Trends. Trends among the agencies noted increased thresholds for Council approval are being
reviewed and that indexing provisions are included in the policy; some have higher thresholds than Palo
Alto. Additionally, the periodic indexing of solicitation thresholds is a common practice done by federal
and state agencies.
Time Management Tool. Placing contracts of a predetermined high dollar value as Action Items will have
varying impacts on meeting scheduling and meeting times, and can impact operational effectiveness,
with more significant impacts occurring at critical times of the fiscal year. Contracts resulting from
competitive solicitations should come before Council when they are ready for award and may have time
sensitivity due to grant restrictions, timing for construction or service provision, timely receipt of goods,
or expiry. The high number of contracts presented near the end of the fiscal year typically includes
expiring contracts that must be renewed.
Stakeholder Engagement
This is an informational report to follow up on Council referral items and has been coordinated
internally among departmental parties.
Resource Impact
This is an information item to follow up on Council referral items and has no fiscal impact.
Environmental Impact
This is not a project under Section 21065 for purposes of the California Environmental Quality Act
(CEQA).
.
Attachments:
• Attachment A: Consideration of Potential Dollar Thresholds for Treating Contract
Awards as Action Items on City Council Agendas
City of Palo Alto
Finance Committee
Consideration of Potential Dollar Thresholds for
Treating Contract Awards as Action Items on City Council Agendas
December 15, 2020
Pete Gonda, Special Advisor
ATTACHMENT A
Areas of Focus
2
Background on
Council Referral
and Typical
Agency Practices
Analysis of Palo
Alto Contracts for
Two Fiscal Years
Observations
Gleaned from the
Analysis
A B C
ATTACHMENT A
City Council Referral
3
Research to include:
•Number of contracts awarded and dollar
“buckets”
•Review of other City policies
•Projection of additional Action items to be
added to Council agendas if Consent Calendar
approvals were limited by dollar value
Council Member Tanaka
moved, seconded by Vice
Mayor DuBois, to direct the
Finance Committee to come
up with proposed thresholds
for Council to consider related
to Section 2.4.L, Consent
Calendar Categories, which
determines the eligibility for
items to be placed on the
Consent Calendar.
ATTACHMENT A
City Council Procedures and Protocols Handbook
4
“The consent calendar portion is the
section where administrative and non-
controversial items shall be presented.
The Mayor and City Manager should be
sensitive to high dollar value items and
consider placing those items in the
action agenda section.”
ATTACHMENT A
Typical Consent Calendar Items
5
1.Ordinances and Resolutions
2.Administrative Matters Including Contracts, Appointments, Approval of
Applications, and Any Other Matter
3.Request to Refer Items to Any Council Standing Committee, Committee, Board,
Commission or Council Appointed Officer
4.Items Unanimously Recommended for Approval by a Council Committee Unless
Otherwise Recommended by the Committee, Mayor, City Attorney or City
Manager
5.Items Recommended for Approval by Council-Appointed Boards and
Commissions
ATTACHMENT A
Typical Consent Calendar Items: Contracts
6
•Contracts for which the subject or scope of work has been previously
reviewed by the City Council.
•A contract for goods, general services, professional services, public works
projects, dark fiber licensing contracts or wholesale commodities,
purchases, as outlined in the Purchasing Ordinance, provided such contracts
represent the customary and usual business of the department as included
in the Adopted Budget. Examples include:routine maintenance contracts,
annual audit agreement; software and hardware support agreements,
janitorial services, copier agreements or postage machine agreements.
ATTACHMENT A
Typical Agency Practices
7
➢Most common method by California cities for
approving contracts is to place them on the Consent
Calendar
✓Characterized as administrative and/or routine in nature
✓Discretion is usually given to the City Manager, in
consultation with Mayor and staff, to determine what
contracts are considered as Action items
ATTACHMENT A
Typical Agency Practices
8
➢Management Partners reviewed procedures for
eight Bay Area cities
➢Cities selected through combination of
demographic information, proximity to Palo Alto
ATTACHMENT A
Typical Agency Practices
9
All agencies reviewed use the Consent Calendar
for contract approvals:
Menlo Park, Milpitas, Mountain View,
Redwood City, San Jose, San Mateo,
Santa Clara, Sunnyvale
ATTACHMENT A
Trends in Agency Practices
10
✓Trends point to increased thresholds for Council
approval and including indexing provisions
✓Some cities do not bring certain contracts forward
for Council approval if funds are included in Adopted
Budget
ATTACHMENT A
Agency Trends
11
City Practice
Mountain View Goods, general services purchases do not require Council
approval if budgeted funds are available
Redwood City Approval thresholds adjusted annually by lesser of CPI or
2%
San Jose
Goods and public works contracts less than $1,000,000 do
not require Council approval; approval thresholds
periodically adjusted by CPI
Santa Clara
Goods procured with purchase orders do not require
Council approval if budgeted funds are available; increases
to award thresholds and indexing anticipated
ATTACHMENT A
Types of Contracts
Purchase of Goods, Services
and Public Works
Construction
Wholesale utility
commodities, services
purchase and sale
Intergovernmental Other (employment-related,
leases and licensing)
12
ATTACHMENT A
Contract Actions
Initial approval and
amendments
Time extensions
Deferrals and removal from
agenda
Direction to staff, termination
13
ATTACHMENT A
Contracts on Council Agendas
14
Purchase Contracts Other Contracts,
Actions
Total Scheduled
Agenda Items
FY2018-19 FY2019-20 FY2018-19 FY2019-20 FY2018-19 FY2019-20
Action Items 3*4*11 5 85 83
Consent Calendar 75*88*43 31 229 200
Total 78 92 54 36 314 283
*Represents discrete agenda items even though multiple contracts may have been
awarded in some instances. In FY 2019/20, a total of 143 purchase contracts were
awarded on Consent; 6 total purchase contracts were awarded from the Action
Calendar, with one moved to Consent.
ATTACHMENT A
Other Contracts –FY 2019-20
15
➢14 intergovernmental agreements
✓Cable-related, cost-sharing, grants, estimated costs/fiscal impacts
✓Three with direct award costs between $112,000 and $800,000
➢Four wholesale utility commodities and services purchase and
sale agreements
✓Annual expense cap of $5 million, no revenue limit (1)
✓Regulatory representation, program management (3)
➢16 of 18 on Consent
ATTACHMENT A
Palo Alto Contract Analytics -Two Fiscal Years
16
FY 2018-19
Average
FY 2019-20
Average
Purchase Contracts on Consent 2.6 3.5
Consent Items per Meeting 6.7 5.9
Average Elapsed Time per Action
Item 1:25 1:12
Action Items per Meeting 2.5 2.4
ATTACHMENT A
Contracts on Consent Calendar by Month
17
6
2
7
4
8
2 2 3
9
4
26
8
6
14
8 7
4
11
2 2 3
20
July August September October November December January February March April May June
FY 2018-19 FY 2019-20
0
ATTACHMENT A
Total Action and Consent Items by Month
18
1
22
10
26
19
34
7
14 10
16 16
54
0
23
11
25
19 19
13 17
9 8
14
42
3
11
2
6
6
10
8
7
4
9 5
14
0
3
7
5
7 8
9
8
7 4
5
20
4
33
12
32
25
44
15
21
14
25
21
68
0
26
18
30
26 27
22
25
16
12
19
62
FY 2018-19 FY 2019-20
Consent Action
ATTACHMENT A
Palo Alto Contract Analytics: Purchase Contracts
19
Purchase Contracts on Consent by Dollar Threshold
Dollar Value FY 2018-19 FY 2019-20
Up to $250,000 16 13
$250,001 to $500,000 16 20
$500,001 to $1,000,000 20 18
$1,000,001 to $5,000,000 15 28
Greater than $5,000,000 6 6
Total 73 85
ATTACHMENT A
“Number of additional
Action items to be
added to Council
agendas if Consent
Calendar approvals
were limited by dollar
value “
•Average of 1:12 hours per Action Item, with
actual distribution between 0:31 and 2:45
hours
•Number of Consent Calendar contracts greater
than $1,000,000 = 31
•Average number of Consent Calendar Items per
meeting greater than $1,000,000 = 3
•Uneven distribution of Consent Calendar
contracts greater than $1,000,000: Zero to 8
across all meetings; 1 to 12 by month
20
FY 2019-20
ATTACHMENT A
Hwy 101 Bike Bridge,
41 Minutes,
$15,549,772
Pension Funding Policy,
92 Minutes, $230,000
Independent Police Auditing,
122 Minutes, $75,000
New California Avenue
Garage, 47 Minutes,
$48,396,817
GreenWaste Agreement, 99 Minutes,
$22,183,000
Downtown Garage Final EIR,
120 Minutes, $2,287,866
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
0 20 40 60 80 100 120 140
Do
l
l
a
r
A
m
o
u
n
t
(
$
)
Elapsed Time (Minutes)
RPP Old Palo Alto,
43 Minutes,
$3,223,857
Dollar Value and Agenda Item Duration
(Action Calendar Contracts)
21
FY 2018-19
FY 2019-20
Legend
ATTACHMENT A
Observations
22
1. Most California cities place contracts on the Consent Calendar.
•Considered administrative and routine in nature.
•Allow for members of the public, Council and staff to pull items.
•Provide discretion to the City Manager to consult with Mayor and staff to place
controversial items, high value contracts and contracts with significant public
interest on the Action agenda.
•Used as an important time management tool.
ATTACHMENT A
Observations from Analysis
23
2. Greater clarity could be provided in the Council Procedures and
Protocols Handbook.
•Current policy language focusing on high dollar value contracts dilutes emphasis on
controversial items and/or items of significant public interest that may not come
with substantial cost but are more appropriately considered as Action Items.
ATTACHMENT A
Observations from Analysis
24
3. Trends point to increasing staff level contract approval thresholds (and
indexing them) that would reduce the number of contracts considered by
City Councils.
•Reflection of the impact of inflation.
•Viewed as efficiency tool at all levels of government.
ATTACHMENT A
Observations from Analysis
25
4. Placing contracts of a predetermined high dollar value on the Action
Calendar will have varying impacts on meeting scheduling and meeting
times, as well as operational effectiveness, with more significant impacts
occurring at critical times of the fiscal year.
•Contracts resulting from competitive solicitations come before Council when they are
ready for award and may have time sensitivity due to grant restrictions, timing for
construction or service provision, timely receipt of goods, or expiry.
•The high number of contracts presented near the end of the fiscal year typically
include expiring contracts that must be renewed.
ATTACHMENT A
Other Practical Considerations
26
•Analysis focused on purchase contracts of goods, services and public works
construction with enumerated dollar values and does not include:
▪Contracts with other governmental agencies
▪Contracts related to hiring or wages, hours and working conditions
▪Purchase and sale agreements for wholesale utility commodities and services
▪Revenue generating contracts or bond financings
•Most of these items are placed on the Consent Calendar and can have
significant fiscal impacts.
•Moving these types of contracts to the Action Calendar based on maximum
dollar value of fiscal impact will further impact meeting scheduling.
ATTACHMENT A
Questions and Comments
Pete Gonda, Special Advisor| pgonda@managementpartners.com
ATTACHMENT A